Reservoir generated $16.7m in calendar Q2 – and paid out $6m in songwriter royalties and publishing prices
New York-based Reservoir Media this week confirmed its latest financial results, revealing that total revenue for the year ended March 2021 was $ 81.1 million – a 28% year-over-year increase.
For the second quarter of the calendar year (the three months ended June), Reservoir returned $ 16.7 million, up 23% year over year.
In the same quarter – the first quarter of the fiscal year – the company generated $ 12.3 million from music publishing, 8% more than a year earlier, and an additional $ 4.2 million from phonograms.
Recordings revenue rose 94% year-over-year, “primarily driven by strong physical sales of the Chrysalis catalog, continued growth in streaming services and the acquisition of Tommy Boy Music,” according to Reservoir.
Reservoir announced in June that it had acquired Tommy Boy for around $ 100 million.
Today’s story reflects a new level of transparency regarding Reservoir’s tax results achieved through a merger with a SPAC (Special Purpose Acquisition Company) in July due to the company’s IPO on NASDAQ.
MBW did a bit of browsing through Reservoir’s calendar results for the second quarter, of course, to see if anything else interesting came out – and it does.
On the one hand (see above) Reservoir breaks down in the calendar Q2 2021 exactly where both the income from the music publisher and the recorded music came from.
The largest driver of the company’s quarterly publishing revenue for the period was Digital at $ 6.65 million, followed by performance revenue at $ 2.66 million.
The biggest driver of phonogram revenue was digital at $ 2.8 million, followed by physical sales, which contributed $ 969,000 in the quarter.
“Our recurring revenue model and growing brand puts us in a strong position to benefit from the strong long-term tailwind we are seeing in the music business and around the world.”
Golnar Khosrowshahi, reservoir
In terms of Reservoir’s combined revenue ($ 16.7 million), just over half ($ 8.66 million) was generated in the United States, with the remainder from outside the United States.
In terms of profitability, Reservoir posted operating income of $ 282,000 and OIBDA of $ 4.36 million (income before depreciation) for the second quarter.
Reservoir further confirmed, “When you adjust for the impact of the one-time benefit of $ 617.0,000 from the company’s first quarter 2021 paycheck protection loan waiver, OIBDA rose 6%, even with the added cost … be a stock corporation. “
One last interesting tidbit: Reservoir has also broken down its costs in calendar Q2 (Fiscal Quarter 1) for investors.
That cost included $ 6.02 million in “author licenses and other publishing costs” – a number that is up 15% year over year.
Author royalties and other publishing costs as a percentage of Reservoir’s music publishing revenue increased to 49% in the calendar quarter of the second quarter, up from 46% in the corresponding period in 2020.
Reservoir said the margin decline here “is due to the change in the composition of revenue by lyrics and songwriting clients, with their specific contractual royalties applied to revenue.”
Artist royalties and other recorded music costs rose 154% year over year to $ 1.67 million, in part due to the acquisition of Tommy Boy.
Artist royalties and other recorded music costs as a percentage of recorded music income increased from 30% in the three months ended June 30, 2020 to 40% in calendar quarter 2 2021.
“This was caused in part by the higher cost to sales due to increased physical sales for the three months, as well as higher costs for distributed products,” said Reservoir.
Golnar Khosrowshahi, Founder and Chief Executive Officer of Reservoir, commented on the calendar results for the second quarter / first quarter: “Our financial and operational successes during the first [fiscal] Quarter 2022 were indicative of the impressive team and the dynamism that we have built up at Reservoir.
“These accomplishments have included several acquisitions that have increased the strength of our catalog, as well as adding to our roster of talented songwriters and producers, with several signings in recent months.
“We’re the first publicly traded independent music company based in the United States, and our recurring revenue model and growing brand put us in a strong position to capitalize on the strong secular tailwind we’re seeing in the music business and around the world.”Music business worldwide