Reservoir Media, Inc..

Good morning, everyone, and thank you for participating in today's earnings conference call. Reservoir Media issued a press release with results for its third quarter of fiscal 2025, ended December 31st, 2024, earlier this morning. If you did not receive a copy of our earnings press release, you may access it from the investor relations section of our website at investors.reservoir-media.com. With me on today's call are Goldnar Kozrashahi, founder and chief executive officer and Jim Heindelmeyer, Chief Financial Officer. As a reminder, this call is being simultaneously webcast and will be recorded and archived on the Investor Relations section of our website. Before I turn the call over to Gulnar and Jim, I'd like to note that today's discussion will contain forward-looking statements that reflect the current views of Reservoir Media about our business, financial performance, and future events, and as such, involve certain risks and uncertainties. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that our expectations, beliefs and projections will result or be achieved. Please refer to our earnings press release and our filings with the Securities and Exchange Commission for more information on the specific risks, uncertainties and other factors that could cause our actual results to differ materially from our expectations, beliefs and projections described in today's discussion. Any forward-looking statements that we make on this call or in our earnings press release are as of today, and we undertake no obligation to update these statements as a result of new information or future events, except to the extent required by applicable law. In addition to financial results presented in accordance with generally accepted accounting principles, we plan to present during this call certain financial measures that do not conform to U.S. GAAP if we believe they are useful to investors or if we believe they will help investors to better understand our performance or business trends. Reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures are included in our earnings press release. I would now like to turn the call over to Gulmar.

Thank you, Jackie. Good morning, everyone, and thank you for joining us today to discuss our results for the third quarter of fiscal year 2025. I'm pleased to share that Reservoir posted another strong quarter across both the top and bottom lines. Our total revenue of $42.3 million represented a 19% improvement over this time last year, driven by a 16% improvement in music publishing revenue and a 20% improvement in recorded music revenue. The caliber of our roster, the demand for their content, and our ability to capture the usage of that content has accelerated our growth. Further, our commitment to cost containment and closely managing our business operations led to an adjusted EBITDA of 17.3 million, representing a 26% improvement from the year-ago quarter. Jim will discuss our financial results in greater detail later in the call. Looking back on the first three quarters of the fiscal year, we have continued to focus on growing and diversifying our portfolio of music and our roster of creators. We've done this by consistently executing on off-market deals brought in through our extensive relationships across the industry. These relationships remain an important differentiator for the company and a key contributor to our successful execution of M&A. Year to date, we have deployed over $70 million across catalog acquisitions, and we have also added to our active frontline roster with notable talent such as Snoop Dogg and Katie Ling. We expect to remain active in the market through year end. Last quarter, we announced the acquisition of the rights to the catalog of Grammy Award-winning, legendary South African composer Lebo Hangmaraki, professionally known as Lebo M. Lebo is best known as the voice and spirit of the Lion King, and he wrote and performed the opening of the legendary song Circle of Life, among other contributions to the soundtracks and scores of the franchise. In addition to the highly successful stage musical of The Lion King and various films, Lebo worked with Lin-Manuel Miranda in composing music for the recently released feature film, The Lion King. The film has grossed over $653 million worldwide to date. We also recently announced the acquisition of the publishing catalog of La Strada Entertainment. The catalog includes over 5,600 compositions dating from the 1960s to today with chart-topping and Grammy Award-winning titles and evergreen hits such as Jim Croce's Bad, Bad Leroy Brown and Time in a Bottle, Love Will Keep Us Together by Captain and Tennille, More Bounce to the Ounce by Zap, and The Whispers and The Beat Goes On, among many others. Frequent and innovative sampling of the catalog over the years resulted in newer mega hits such as multi-platinum number one California Love by Tupac, Grammy-winning six-time platinum number one We Belong Together by Mariah Carey, Will Smith's culturally defining Miami, and many more. Reservoir's creative and synchronization teams are already building on this successful strategy. We are pleased to continue growing our catalog with great music from the past 60 years especially as Luminate's year-end report shows catalog streams in the United States continue to eclipse current music, representing over 73% of all on-demand audio streams. Also this past quarter, we have continued to cultivate the active roster. This includes an extension of our deal with global hitmaker Sherban Kazan, Sherban first became a member of the Reservoir family in 2022 and has co-written and co-produced multiple worldwide dance hits from 2023's Can't Forget You by James Carter and Offenbach, featuring James Blunt, to Mantra, the latest solo single by Jennie, a member of K-pop supergroup Blackpink. With over 244 million streams on Spotify, Mantra is a commercial success Storming the charts around the world and reaching number two on the billboard global Excluding us chart and number three billboard global 200 Active songwriters on the roster contributed to the company's position on billboards publishers quarterly for q3 of the calendar year reservoir took the sixth largest market share of top radio airplay and the eighth largest share of the hot 100 and Reservoir Talent also contributed to four songs on the Billboard Hot 100 year-end chart, including Steph Jones' smash hit co-write Espresso by Sabrina Carpenter and No. 7. And this past weekend, the industry presented its highest honors, the 2025 Grammy Awards. Reservoir celebrated six wins across our roster. Blue Raincoat management client Arlo Parks co-wrote Yaya off Beyonce's Album of the Year and Country Album of the Year winner Cowboy Carter. Steph Jones contributed to three awards for her Sabrina Carpenter co-write Espresso, Best Pomp Vocal Performance, Best Remixed Recording, and Best Pomp Vocal Album. And Chris Brown's 1111, which features collaborations by Joyner Lucas and Breland, took home Best R&B Album. Congratulations to all on a memorable night and an extraordinary year in music. With that, I'd like to turn the call over to Jim to discuss our third quarter financial performance in greater detail. Jim?

Thank you, Goldmire, and good morning, everyone. Our third quarter results embodied another robust quarter, exceeding our internal expectations for the period and giving us confidence to raise our fiscal 2025 guidance range as we head into Q4. The success of our affiliated roster of talent and the work of the ResVoir team has allowed us to succeed financially, further aided by our focus on maintaining our notable operating leverage through cost controls on our higher revenues. Revenue for the third fiscal quarter was $42.3 million, a 16% year-over-year improvement on an organic basis and a 19% increase when including acquisitions. This was led by a 16% increase in music publishing revenue and a 20% increase in recorded music revenue that was mainly driven by price increases at multiple music streaming services, a royalty recovery related to underreported usage from a specific music catalog, and acquisitions of catalogs. Total cost increased 13% compared to the prior year quarter due to a 17% increase in administration expenses, a 14% increase in cost of revenue, and a 6% increase in amortization and depreciation expenses. This supported expanding gross margins given our 19% revenue growth. Turning to operating performance for the third quarter, AWBDA was $16.3 million, an increase of 26% year-over-year, and adjusted EBITDA was also up 26% year-over-year to $17.3 million. Both the web debt and adjusted EBITDA benefited from revenue growth and an improved gross margin. Interest expense was $5.8 million for the quarter, an increase of $405,000 from the prior year due to an increase in borrowings to support our M&A strategy and effective interest rates. Net income for the third quarter was approximately $5.3 million compared to a net loss of $2.9 million in the third quarter of fiscal 2024. The increase was attributable to improved gross margin and a gain on fair value of swaps during the quarter compared to a loss on fair value of swaps in the year-ago period. This increase was partially offset by a higher income tax expense. Earnings per share for the quarter was $0.08 compared to a loss of $0.05 in the year-ago quarter. Our weighted average diluted outstanding share count during the quarter was $66 million. Diving into our segment review for the quarter, music publishing revenue increased 16% year-over-year to $26.9 million. This was mainly driven by revenue growth from the existing catalog, which benefited from price increases at multiple music streaming services, resulting in an increase within publishing digital revenue of 20%. Mechanical royalties also contributed to revenue growth, largely due to the strength of physical sales and the acquisition of new catalogs. In our recorded music segment, revenue increased by 20% year over year to $12 million, stemming from a royalty recovery related to underreported usage of a music catalog. Recorded music revenue also benefited from continued music streaming growth and price increases at multiple music streaming services. The revenue growth in digital, physical, and synchronization was partially offset by a modest decline in neighboring rights revenue. Now let's turn to our balance sheet. As of December 31, 2024, cash provided by operating activities increased by 10.7 million year over year to 33.1 million owing to an increase in earnings and royalty advance recoupments. We have total liquidity of 92 million consisting of 17.8 million of cash on hand and 74.2 million available under our revolver. We ended the quarter with total debt of 371.8 million which was net of $4 million of deferred financing costs, and thus we maintain $354 million of net debt. That compares to net debt of $312.7 million as of March 31, 2024. Relating to our guidance range, we are increasing our full-year revenue guidance range of $150 million to $153 million to now reflect $155 million to $158 million which at the midpoint implies growth of 8% versus fiscal 2024. Similarly, we're raising our adjusted EBITDA guidance range of $59 million to $62 million to now be $61.5 million to $64.5 million, which signals growth of more than 13% over the prior year at the midpoint of the range. Looking ahead to the fourth fiscal quarter, we are well positioned to end the full fiscal year in line with our guidance. Our capital deployment strategy continues to drive long-term value for ResVar as we've affiliated ourselves with some of the most successful and promising talent across the globe, which combined with our efforts internally at the company will continue to facilitate robust growth of operating cash flows as we look forward to the fourth quarter of 2025 and fiscal year 2026 as a whole. We'll now open the line for questions.