Reservoir Media, Inc. (RSVR) FY 2025 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Reservoir Media, Inc.'s 10-K for fiscal year 2025. Filing date: 2025-05-28. Report date: 2025-03-31. Accession: 0001410578-25-001379.

This page reproduces the company's own Item 7 MD&A text from the linked SEC filing. It is filer text, not grepcent analysis, scoring, or investment advice.

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high.

Company profile: RSVR · All MD&A years: index · Previous year: FY 2024 · Next year: FY 2026

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of Reservoir Media, Inc.’s financial condition and results of operations should be read in conjunction with Reservoir Media, Inc.’s consolidated financial statements, including the accompanying notes thereto contained elsewhere in this Annual Report on Form 10-K (this “Annual Report”). Certain statements contained in the discussion and analysis set forth below include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. Unless the context otherwise requires, the terms “we,” “us,” “our,” the “Company” and “Reservoir” refer collectively to Reservoir Media, Inc. and its consolidated subsidiaries.

Introduction

We are a holding company that conducts substantially all of our business operations through Reservoir Media Management, Inc. (“RMM”). RMM is one of the world’s leading independent music companies. We operate a music publishing business, a recorded music business, a management business and a rights management entity in the Middle East.

Our fiscal year ends on March 31. Unless otherwise noted, all references to Fiscal 2025 represent the fiscal year ended March 31, 2025 and all references to Fiscal 2024 represent the fiscal year ended March 31, 2024.

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Business Overview

We are an independent music company operating in music publishing and recorded music. Both of our business areas are populated with hit songs dating back to the early 1900s and represent an array of artists across genres and geography. Consistent with how we classify and operate our business, our company is organized in two reportable segments: Music Publishing and Recorded Music. A brief description of each segment’s operations is presented below.

Music Publishing Segment

Music Publishing is an intellectual property business focused on generating revenue from uses of the musical composition itself. In return for promoting, placing, marketing and administering the creative output of a songwriter or engaging in those activities for other rightsholders, our Music Publishing business garners a share of the revenues generated from use of the musical compositions.

The operations of our Music Publishing business are conducted principally through RMM, our global music publishing company headquartered in New York City, with operations in multiple countries through various subsidiaries, affiliates and nonaffiliated licensees and sub-publishers. We own or control rights to a vast collection of musical compositions, including numerous pop hits, American standards, and motion picture and theatrical compositions. Assembled over many years, our catalog represents a diverse range of genres, including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, techno, alternative and gospel. In addition to the catalog, we represent many active songwriters who are consistently generating new music.

Music Publishing revenues are derived from five main sources:

Column 1	Column 2	Column 3
	●	Digital––the rightsholder receives revenues with respect to musical compositions embodied in recordings distributed in streaming services, download services and other digital music services;

Column 1	Column 2	Column 3
	●	Performance––the rightsholder receives revenues if the musical composition is performed publicly through broadcast of music on television, radio and cable and in retail locations (e.g., bars and restaurants), live performance at a concert or other venue (e.g., arena concerts and nightclubs), and performance of music in staged theatrical productions;

Column 1	Column 2	Column 3
	●	Synchronization––the rightsholder receives revenues for the right to use the musical composition in combination with visual images such as in films or television programs, television commercials and video games;

Column 1	Column 2	Column 3
	●	Mechanical––the rightsholder receives revenues with respect to musical compositions embodied in recordings sold in any machine-readable format or configuration such as vinyl, CDs and DVDs; and

Column 1	Column 2	Column 3
	●	Other––the rightsholder receives revenues for use in sheet music and other uses.

The principal costs associated with our Music Publishing business are as follows:

Column 1	Column 2	Column 3
	●	Writer Royalties and Other Publishing Costs––the A&R costs associated with (i) paying royalties to songwriters, co-publishers and other copyright holders in connection with income generated from the uses of their works and (ii) signing and developing songwriters, all of which are classified as cost of revenue; and

Column 1	Column 2	Column 3
	●	Administration Expenses––the costs associated with general overhead, and other administrative expenses, as well as selling and marketing.

Recorded Music Segment

Our Recorded Music business consists of three types of sound recording rights ownership. First is the active marketing, promotion, distribution, sale and licensing of newly created frontline sound recordings from current artists that we own and control (“Current Artist”). This is a new area of focus for us and does not yet produce significant revenue. The second is the active marketing, promotion, distribution, sale and license of previously recorded and subsequently acquired catalog recordings (the “Catalog”). The third is acquisition of full or partial interests in existing record labels, sound recording catalogs or income rights to a royalty stream associated

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with an established recording artist or producer contract in connection with existing sound recordings. Acquisition of these income participation interests are typically in connection with recordings that are owned, controlled, and marketed by other record labels.

Our recorded music businesses are both primarily handled by our Chrysalis Records label based in London and our Tommy Boy label based in New York City. In addition, we own and manage some select Catalog recorded music under our Philly Groove Records and Reservoir Recordings labels. We have a small roster of Current Artists for whom we release new music. We also own income participation interests in recordings by The Isley Brothers, The Commodores, Wisin and Yandel, Alabama and Travis Tritt, and an interest in the Loud Records catalog containing recordings by the Wu-Tang Clan. Our core Catalog includes recordings under the Chrysalis Records label by artists such as Sinéad O’Connor, The Specials, Generation X and The Waterboys, and De La Soul, as well as recordings under the Tommy Boy record label by artists such as House of Pain, Naughty By Nature, and Queen Latifah.

Our Current Artist and Catalog recorded music distribution is handled by a network of distribution partners. Chrysalis Records’ current frontline releases are distributed through Secretly Distribution, with prior frontline releases distributed via PIAS. Chrysalis Records and Tommy Boy catalogues are distributed via our agreements with MERLIN, AMPED, Proper and other partners.

Through our distribution network, our music is sold in physical retail outlets as well as in physical form to online physical retailers, such as amazon.com, and distributed in digital form to an expanding universe of digital partners, including streaming services such as Amazon, Apple, Deezer, SoundCloud, Spotify, Tencent Music Entertainment Group and YouTube; radio services such as iHeart Radio and SiriusXM; and to download services. We also license music digitally to fitness platforms such as Apple Fitness+, Equinox, Hydrow and Peloton and to social media outlets, such as Facebook, Instagram, TikTok and Snap.

Recorded Music revenues are derived from four main sources:

Column 1	Column 2	Column 3
	●	Digital––the rightsholder receives revenues with respect to streaming and download services;

Column 1	Column 2	Column 3
	●	Physical––the rightsholder receives revenues with respect to sales of physical products such as vinyl, CDs and DVDs;

Column 1	Column 2	Column 3
	●	Neighboring Rights–– the rightsholder receives royalties if sound recordings are performed publicly through broadcast of music on television, radio, and cable, and in public spaces such as shops, workplaces, restaurants, bars and clubs; and

Column 1	Column 2	Column 3
	●	Synchronization––the rightsholder receives royalties or fees for the right to use sound recordings in combination with visual images such as in films or television programs, television commercials and video games

The principal costs associated with our Recorded Music business are as follows:

Column 1	Column 2	Column 3
	●	Artist Royalties and Other Recorded Costs––the A&R costs associated with (i) paying royalties to recording artists, producers, songwriters, other copyright holders and trade unions, (ii) signing and developing recording artists and (iii) creating master recordings in the studio; and product costs to manufacture, package and distribute products to wholesale and retail distribution outlets, all of which are classified as cost of revenue; and

Column 1	Column 2	Column 3
	●	Administration Expenses––the costs associated with general overhead and other administrative expenses as well as the costs associated with the promotion and marketing of recording artists and music, including costs to produce music videos for promotional purposes and artist tour support.

Use of Non-GAAP Financial Measures

We prepare our financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”). However, this Management’s Discussion and Analysis of Financial Condition and Results of Operations also contains certain non-GAAP financial measures to assist readers in understanding our performance. Non-GAAP financial measures either exclude or include amounts that are not reflected in the most directly comparable measure calculated and presented in accordance with GAAP. Where non-GAAP financial measures are used, we have provided the most directly comparable measures calculated and presented in accordance with U.S. GAAP, a reconciliation to GAAP measures and a discussion of the reasons why management believes this information is useful to them and may be useful to investors.

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Results of Operations

Income Statement

Our income statement was comprised of the following amounts (in thousands):


						Fiscal 2025
	Fiscal		Fiscal		vs. Fiscal 2024
	2025		2024		$ Change	% Change
Revenues	$	158,706		$	144,856	$	13,850	10	%
Costs and expenses:
Cost of revenue		57,430			55,478		1,952	4	%
Amortization and depreciation		26,299			24,986		1,313	5	%
Administration expenses		39,915			39,816		99	—
Total costs and expenses		123,645			120,280		3,365	3	%

Operating income		35,061			24,576		10,485	43	%

Interest expense		(21,883)			(21,088)		(795)	4	%
Gain (loss) on foreign exchange		578			(102)		680	NM
Loss on fair value of swaps		(4,214)			(1,125)		(3,089)	NM
Other income (expense), net		330			(1,089)		1,419	(130)	%
Income before income taxes		9,872			1,172		8,700	NM
Income tax expense		2,141			335		1,806	NM
Net income		7,731			837		6,894	NM
Net loss (income) attributable to noncontrolling interests		19			(192)		211	(110)	%
Net income attributable to Reservoir Media, Inc.	$	7,750		$	645	$	7,105	NM

NM - Not meaningful

Revenues

Our revenues were comprised of the following amounts (in thousands):


						Fiscal 2025
	Fiscal		Fiscal		vs. Fiscal 2024
	2025		2024		$ Change	% Change
Revenue by Type
Digital	$	60,520		$	51,572	$	8,948	17	%
Performance		21,090			22,796		(1,705)	(7)	%
Synchronization		18,227			15,144		3,084	20	%
Mechanical		3,859			3,428		431	13	%
Other		3,714			3,254		460	14	%
Total Music Publishing		107,412			96,193		11,219	12	%

Digital		30,738			26,900		3,838	14	%
Physical		6,158			8,943		(2,786)	(31)	%
Neighboring rights		4,218			3,611		607	17	%
Synchronization		3,136			2,911		224	8	%
Total Recorded Music		44,250			42,367		1,884	4	%

Other revenue		7,043			6,296		747	12	%
Total Revenue	$	158,706		$	144,856	$	13,850	10	%

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						Fiscal 2025
	Fiscal		Fiscal		vs. Fiscal 2024
	2025		2024		$ Change	% Change
Revenue by Geographical Location
U.S. Music Publishing	$	62,187		$	56,253	$	5,934	11	%
U.S. Recorded Music		24,388			23,255		1,134	5	%
U.S. Other Revenue		7,043			6,296		747	12	%
Total U.S.		93,619			85,803		7,816	9	%
International Music Publishing		45,225			39,941		5,285	13	%
International Recorded Music		19,862			19,112		750	4	%
Total International		65,087			59,053		6,034	10	%
Total Revenue	$	158,706		$	144,856	$	13,850	10	%

Revenues

Total revenues increased by $13,850 thousand, or 10%, during Fiscal 2025 compared to Fiscal 2024, driven by a 12% increase in Music Publishing revenue, a 4% increase in Recorded Music revenue, and a 12% increase in Other revenue related to the Company’s artist management business. Music Publishing revenues represented 68% and 66% of total revenues during Fiscal 2025 and Fiscal 2024, respectively. Recorded Music revenues represented 28% and 29% of total revenues during Fiscal 2025 and Fiscal 2024, respectively. U.S. and international revenues represented 59% and 41% of total revenues, respectfully, during Fiscal 2025 and Fiscal 2024.

Total digital revenues increased by $12,786 thousand, or 16%, during Fiscal 2025 compared to Fiscal 2024. Total digital revenues represented 58% and 54% of consolidated revenues during Fiscal 2025 and Fiscal 2024, respectively.

Music Publishing revenues increased by $11,219 thousand, or 12%, during Fiscal 2025 compared to Fiscal 2024. This increase in Music Publishing revenue was mainly driven by revenue from the existing catalog, which benefitted from price increases at multiple music streaming services that contributed to an increase in digital revenue, and acquisitions of catalogs. Additionally, synchronization revenue increased during Fiscal 2025, driven primarily by the timing of licenses. These factors were partially offset by a decrease in performance revenue, partially due to the timing of hit songs.

On a geographic basis, U.S. Music Publishing revenues represented 58% of total Music Publishing revenues during Fiscal 2025 and Fiscal 2024. International Music Publishing revenues represented 42% of total Music Publishing revenues during Fiscal 2025 and Fiscal 2024.

Recorded Music revenues increased by $1,884 thousand, or 4%, during Fiscal 2025 compared to Fiscal 2024. This increase in Recorded Music revenue includes royalty recoveries during Fiscal 2025 related to underreported usage for music catalogs (the “Royalty Recovery”). In addition to the Royalty Recovery, Recorded Music revenue also benefited from continued growth at music streaming services and price increases at multiple music streaming services, and the acquisition of new catalogs. These increases were partially offset by a decrease in physical revenue after robust sales of new De La Soul releases in Fiscal 2024.

On a geographic basis, U.S. Recorded Music revenues represented 55% of total Recorded Music revenues during Fiscal 2025 and Fiscal 2024. International Recorded Music revenues represented 45% of total Recorded Music revenues during Fiscal 2025 and Fiscal 2024.

Cost of Revenue

Our cost of revenue was comprised of the following amounts (in thousands):


						Fiscal 2025
	Fiscal		Fiscal		vs. Fiscal 2024
	2025		2024		$ Change	% Change
Writer royalties and other publishing costs	$	45,161		$	41,867	$	3,294	8	%
Artist royalties and other recorded music costs		12,269			13,611		(1,342)	(10)	%
Total cost of revenue	$	57,430		$	55,478	$	1,952	4	%

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Cost of revenue increased by $1,952 thousand, or 4%, during Fiscal 2025 compared Fiscal 2024, primarily as a result of an increase in revenues. Cost of revenue as a percentage of revenues decreased to 36% during Fiscal 2025 from 38% during Fiscal 2024, reflecting decreases in cost of revenue as a percentage of revenue for the Music Publishing and Recorded Music segments, as well as an increase in Other revenue related to the Company’s artist management business, which does not have a corresponding cost of revenue.

Writer royalties and other publishing costs for the Music Publishing segment increased by $3,294 thousand, or 8%, during Fiscal 2025 compared to Fiscal 2024, primarily as a result of the increase in Music Publishing revenues. Writer royalties and other publishing costs as a percentage of Music Publishing revenues decreased to 42% during Fiscal 2025 from 44% during Fiscal 2024, driven primarily by the change in the mix of revenues by type and songwriting clients with their specific contractual royalty rates being applied to the revenues.

Artist royalties and other recorded music costs for the Recorded Music segment decreased by $1,342 thousand, or 10%, during Fiscal 2025 compared to Fiscal 2024, primarily as a result of the decrease in physical sales. Artist royalties and other recorded music costs as a percentage of Recorded Music revenues decreased to 28% during Fiscal 2025 from 32% during Fiscal 2024, driven primarily by the change in the mix of sales by type to a lower percentage of physical sales, which carry higher costs than other types of revenues, and the Royalty Recovery, which did not have a corresponding cost of revenue.

Amortization and Depreciation

Our amortization and depreciation expenses are comprised of the following amounts (in thousands):


						Fiscal 2025
	Fiscal		Fiscal		vs. Fiscal 2024
	2025		2024		$ Change	% Change
Music Publishing amortization and depreciation	$	18,691		$	18,966	$	(276)	(1)	%
Recorded Music amortization and depreciation		7,512			5,925		1,588	27	%
Other amortization and depreciation		96			95		2	2	%
Total amortization and depreciation	$	26,299		$	24,986	$	1,313	5	%

Amortization and depreciation expense increased by $1,313 thousand, or 5%, during Fiscal 2025 compared to Fiscal 2024, primarily driven by the acquisition of additional music catalogs.

Administration Expenses

Our administration expenses are comprised of the following amounts (in thousands):


						Fiscal 2025
	Fiscal		Fiscal		vs. Fiscal 2024
	2025		2024		$ Change	% Change
Music Publishing administration expenses	$	24,907		$	25,442	$	(535)	(2)	%
Recorded Music administration expenses		9,232			9,615		(383)	(4)	%
Other administration expenses		5,777			4,759		1,018	21	%
Total administration expenses	$	39,915		$	39,816	$	99	—

Total administration expenses were relatively flat during Fiscal 2025 compared to Fiscal 2024, reflecting the nonrecurrence of $2,700 thousand related to the write-off of recoupable legal expenses and attorneys’ fees incurred in connection with the Royalty Dispute described in Note 16, “Contingencies and Commitments” to the accompanying consolidated financial statements (the “Recoupable legal fee write-off”), partially offset by an increase in costs to support the Company’s growth, as well as an increase in Other administration expenses. Expressed as a percentage of revenues, administration expenses decreased to 25% during Fiscal 2025 from 27% during Fiscal 2024, primarily as a result of the nonrecurrence of the Recoupable legal fee write-off and improved operating leverage as revenues increased.

Music Publishing administration expenses decreased by $535 thousand, or 2%, during Fiscal 2025 compared to Fiscal 2024. Expressed as a percentage of revenues, Music Publishing administration expenses decreased to 23% during Fiscal 2025 from 26% during Fiscal 2024, primarily as a result of the nonrecurrence of the Recoupable legal fee write-off.

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Recorded Music administration expenses decreased by $383 thousand, or 4%, during Fiscal 2025 compared to Fiscal 2024. Expressed as a percentage of revenue, Recorded Music administration expenses decreased to 21% during Fiscal 2025 from 23% during Fiscal 2024, primarily due to taking advantage of operating leverage on the Recorded Music platform.

Other administration expenses increased by $1,018 thousand, or 21%, during Fiscal 2025 compared to Fiscal 2024, primarily due to selling expenses associated with our artist management business, consisting mostly of manager compensation.

Operating Income

Operating income increased by $10,485 thousand, or 43%, during Fiscal 2025 compared to Fiscal 2024, primarily driven by revenue growth, an improvement in cost of revenue as a percentage of revenues and the nonrecurrence of the Recoupable legal fee write-off. Operating income margin (operating income expressed as a percentage of revenues) increased to 22% during Fiscal 2025 compared to 17% during Fiscal 2024, primarily as a result of an improvement in cost of revenue as a percentage of revenues, the nonrecurrence of the Recoupable legal fee write-off and improved operating leverage as revenues increased.

Music Publishing operating income increased by $8,736 thousand, or 88%, during Fiscal 2025 compared to Fiscal 2024, primarily driven by revenue growth, an improvement in cost of revenue as a percentage of revenues and the nonrecurrence of the Recoupable legal fee write-off. Music Publishing operating income margin increased to 17% during Fiscal 2025 compared to 10% during Fiscal 2024, primarily as a result of an improvement in cost of revenue as a percentage of revenues, the nonrecurrence of the Recoupable legal fee write-off and improved operating leverage as revenues increased.

Recorded Music operating income increased by $2,021 thousand, or 15%, during Fiscal 2025 compared to Fiscal 2024, primarily driven by revenue growth, an improvement in cost of revenue as a percentage of revenues and a decrease in Administration expenses. Recorded Music operating income margin increased to 34% during Fiscal 2025 compared to 31% during Fiscal 2024, primarily as a result of an improvement in cost of revenue as a percentage of revenues and improved operating leverage as revenues increased.

Interest Expense

Interest expense increased by $795 thousand, or 4% during Fiscal 2025 compared to Fiscal 2024. The increase in interest expense was driven primarily by an increase in borrowings due to use of funds in acquisitions of music catalogs and writer signings and an increase in effective interest rates. The Company’s interest expense increased on the portions of its borrowings that are hedged beginning in October 2024, as its previous swap contracts matured on September 30, 2024, and new swap contracts became effective on the same date. These factors were partially offset by the nonrecurrence of $620 thousand incurred in connection with settlement of the Royalty Dispute described in Note 16, “Contingencies and Commitments” to the accompanying consolidated financial statements.

Gain (Loss) on Foreign Exchange

Gain on foreign exchange was $578 thousand during Fiscal 2025 compared to a loss on foreign exchange of $102 thousand during Fiscal 2024. This change was due to fluctuations in the two foreign currencies we are directly exposed to, namely the British pound sterling and the euro.

Loss on Fair Value of Swaps

Loss on fair value of swaps was $4,214 thousand during Fiscal 2025 compared to $1,125 thousand during Fiscal 2024. This change was due to the marking to market of our interest rate swap hedges. This change was driven primarily by the September 2024 decrease in the Secured Overnight Financing rate (“SOFR”), as well as the time value of the swaps that expired on September 30, 2024, partially offset by marking to market our current interest rate swap hedges.

Other Income (Expense), Net

Other income, net during Fiscal 2025 consisted of a $104 thousand gain recorded on the disposal of an equity investment during the period (the “Investment Gain”) and the Company’s share of proceeds related to underreported usage for acquired music catalogs that pertained to periods prior to the Company’s acquisition of the music catalogs, which totaled $823 thousand (the “Recovery Income”). These factors were partially offset by a $500 thousand impairment of an investment (the “2025 Investment Write-down”) and the Company’s share of loss recorded by an equity method investment (the “EMI Loss”). Other expense, net during Fiscal 2024

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consisted primarily of a $991 thousand impairment to write-down an equity investment to its estimated fair value (the “2024 Investment Write-down”). See Note 2, “Summary of Significant Accounting Policies – Investments in Equity Affiliates” to the accompanying consolidated financial statements for discussion about the Investment Gain, 2025 Investment Write-down and 2024 Investment Write-down.

Income Tax Expense

Income tax expense increased to $2,141 thousand during Fiscal 2025 compared to $335 thousand during Fiscal 2024. The increase in the income tax expense during Fiscal 2025 was primarily due to the increase of income before income taxes, partially offset by a lower effective income tax rate.

The Company’s effective income tax rate during Fiscal 2025 was 21.7% compared to 28.6% during Fiscal 2024. The decrease in the effective income tax rate during Fiscal 2025 reflects the non-recurrence of incremental tax expense due to a non-deductible impairment charge to write-down an equity investment in the U.K. to its estimated fair value, which increased the Company’s effective income tax rate by 21.1% during Fiscal 2024. Additionally, the Fiscal 2025 effective income tax rate reflects return to provision reconciliation related to certain international tax liabilities, as well as an increase in earnings, which reduced the relative impact of statutory limitations on certain deductions. These factors were partially offset by the non-recurrence of an incremental tax benefit arising from a change in estimate of the applicable tax rate used to measure the Company’s state and local deferred tax liabilities in the U.S., which decreased the Company’s effective income tax rate by 34.6% during Fiscal 2024.

Net Income

Net income increased by $6,894 thousand, to $7,731 thousand during Fiscal 2025 compared to $837 thousand during Fiscal 2024, driven primarily by a $10,485 thousand increase in operating income and a $1,419 increase in other income (expense), net during 2025. These factors were partially offset by a $3,089 thousand increase in Loss on fair value of swaps and a $1,806 thousand increase in income tax expense during Fiscal 2025.

Non-GAAP Reconciliations

We use certain financial information, such as OIBDA, OIBDA Margin, EBITDA and Adjusted EBITDA, which are non-GAAP financial measures, which means they have not been prepared in accordance with U.S. GAAP. Reservoir’s management uses these non-GAAP financial measures to evaluate our operations, measure its performance and make strategic decisions. We believe that the use of these non-GAAP financial measures provides useful information to investors and others in understanding our results of operations and trends in the same manner as our management and in evaluating our financial measures as compared to the financial measures of other similar companies, many of which present similar non-GAAP financial measures. However, these non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by our management about which items are excluded or included in determining these non-GAAP financial measures and, therefore, should not be considered as a substitute for net income, operating income or any other operating performance measures calculated in accordance with GAAP. Using such non-GAAP financial measures in isolation to analyze our business would have material limitations because the calculations are based on the subjective determination of our management regarding the nature and classification of events and circumstances. In addition, although other companies in our industry may report measures titled OIBDA, OIBDA Margin and Adjusted EBITDA, or similar measures, such non-GAAP financial measures may be calculated differently from how we calculate such non-GAAP financial measures, which reduces their overall usefulness as comparative measures. Because of these limitations, such non-GAAP financial measures should be considered alongside other financial performance measures and other financial results presented in accordance with GAAP. Reconciliations of OIBDA to operating income and EBITDA and Adjusted EBITDA to net income are provided below.

We consider operating income before non-cash depreciation of tangible assets and non-cash amortization of intangible assets (“OIBDA”) to be an important indicator of the operational strengths and performance of our businesses and believe this non-GAAP financial measure provides useful information to investors because it removes the significant impact of amortization from our results of operations and represents our measure of segment income. However, a limitation of the use of OIBDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses and other non-operating income. Accordingly, OIBDA should be considered in addition to, not as a substitute for, operating income, net income attributable to us and other measures of financial performance reported in accordance with GAAP. In addition, our definition of OIBDA may differ from similarly titled measures used by other companies. OIBDA Margin is defined as OIBDA as a percentage of revenue.

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EBITDA is defined as earnings (net income or loss) before net interest expense, income tax (benefit) expense, non-cash depreciation of tangible assets and non-cash amortization of intangible assets and is used by management to measure operating performance of the business. Adjusted EBITDA is defined as EBITDA further adjusted to exclude items or expenses such as, among others, (1) any non-cash charges (including any impairment charges, loss on early extinguishment of debt and to write-down an equity investment to its fair value), (2) any net gain or loss on foreign exchange, (3) any net gain or loss resulting from interest rate swaps, (4) equity-based compensation expense and (5) certain unusual or non-recurring items. Adjusted EBITDA is a key measure used by our management to understand and evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. However, certain limitations on the use of Adjusted EBITDA include, among others, (1) it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue for our business, (2) it does not reflect the significant interest expense or cash requirements necessary to service interest or principal payments on our indebtedness and (3) it does not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments. In particular, Adjusted EBITDA measure adds back certain non-cash, unusual or non-recurring charges that are deducted in calculating net income; however, these are expenses that may recur, vary greatly and are difficult to predict. In addition, Adjusted EBITDA is not the same as net income or cash flow provided by operating activities as those terms are defined by GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs.

Reconciliation of Operating Income to OIBDA

We use OIBDA as our primary measure of financial performance. The following tables reconcile operating income to OIBDA (in thousands):


	Consolidated
							Fiscal 2025
	Fiscal		Fiscal		vs. Fiscal 2024
	2025		2024		$ Change		% Change
Operating income	$	35,061		$	24,576		$	10,485	43	%
Amortization and depreciation expenses		26,299			24,986			1,313	5	%
OIBDA	$	61,360		$	49,562		$	11,798	24	%

OIBDA Margin		39	%		34	%


	Music Publishing
							Fiscal 2025
	Fiscal		Fiscal		vs. Fiscal 2024
	2025		2024		$ Change		% Change
Operating income	$	18,654		$	9,918		$	8,736	88	%
Amortization and depreciation expenses		18,691			18,966			(276)	(1)	%
OIBDA	$	37,345		$	28,884		$	8,460	29	%

OIBDA Margin		35	%		30	%


	Recorded Music
							Fiscal 2025
	Fiscal		Fiscal		vs. Fiscal 2024
	2025		2024		$ Change		% Change
Operating income	$	15,237		$	13,216		$	2,021	15	%
Amortization and depreciation expenses		7,512			5,925			1,588	27	%
OIBDA	$	22,749		$	19,141		$	3,609	19	%

OIBDA Margin		51	%		45	%

OIBDA

OIBDA increased by $11,798 thousand, or 24%, during Fiscal 2025 compared to Fiscal 2024, driven by an $8,460 thousand increase in Music Publishing OIBDA and a $3,609 thousand increase in Recorded Music OIBDA. Expressed as a percentage of revenue, OIBDA

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Margin increased to 39% during Fiscal 2025 from 34% during Fiscal 2024, primarily as a result of a decrease in cost of revenue as a percentage of revenues, the nonrecurrence of the Recoupable legal fee write-off and improved operating leverage as revenues increased.

Music Publishing OIBDA increased by $8,460 thousand, or 29%, during Fiscal 2025 compared to Fiscal 2024. Expressed as a percentage of revenue, Music Publishing OIBDA Margin increased to 35% during Fiscal 2025 compared to 30% during Fiscal 2024, reflecting a decrease in cost of revenue as a percentage of revenues, the nonrecurrence of the Recoupable legal fee write-off and improved operating leverage as revenues increased.

Recorded Music OIBDA increased by $3,609 thousand, or 19% during Fiscal 2025 compared to Fiscal 2024. Expressed as a percentage of revenue, Recorded Music OIBDA Margin increased to 51% during Fiscal 2025 from 45% during Fiscal 2024, reflecting a decrease in cost of revenue as a percentage of revenues and improved operating leverage as revenues increased.

Reconciliation of Net Income to EBITDA and Adjusted EBITDA


						Fiscal 2025
	Fiscal		Fiscal		vs. Fiscal 2024
	2025		2024		$ Change	% Change
Net income	$	7,731		$	837	$	6,894	NM
Income tax expense		2,141			335		1,806	NM
Interest expense		21,883			21,088		795	4	%
Amortization and depreciation		26,299			24,986		1,313	5	%
EBITDA		58,054			47,246		10,808	23	%
(Gain) loss on foreign exchange(a)		(578)			102		(680)	NM
Loss on fair value of swaps(b)		4,214			1,125		3,089	NM
Non-cash share-based compensation(c)		4,385			3,387		999	29	%
Recoupable legal fee write-off(d)		—			2,695		(2,695)	(100)	%
Other (income) expense, net(e)		(330)			1,089		(1,419)	(130)	%
Adjusted EBITDA	$	65,745		$	55,644	$	10,102	18	%

NM - Not meaningful

(a) Reflects the loss (gain) on foreign exchange fluctuations.

(b) Reflects the non-cash loss or (gain) on the mark-to-market of interest rate swaps.

(d) Reflects the write-off of recoupable legal expenses and attorneys’ fees incurred in connection with the Royalty Dispute described in Note 16, “Contingencies and Commitments” to the accompanying consolidated financial statements.

(e) Reflects the Investment Gain, Recovery Income, 2025 Investment Write-down and EMI Loss during Fiscal 2025 and reflects the 2024 Investment Write-down during Fiscal 2024.

Consolidated Adjusted EBITDA increased by $10,102 thousand, or 18%, during Fiscal 2025 compared to Fiscal 2024, primarily as a result of revenue growth, a decrease in cost of revenue as a percentage of revenues and improved operating leverage as revenues increased.

Liquidity and Capital Resources

Capital Resources

As of March 31, 2025, we had $388,135 thousand of debt (net of $3,694 thousand of deferred financing costs) and $21,386 thousand of cash and equivalents.

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Cash Flows

The following table summarizes our historical cash flows (in thousands).


	Fiscal		Fiscal
	2025		2024		$ Change
Cash provided by (used for):
Operating activities	$	45,279		$	36,193	$	9,086
Investing activities	$	(96,719)		$	(50,553)	$	(46,166)
Financing activities	$	54,518		$	17,560	$	36,958

Operating Activities

Cash provided by operating activities was $45,279 thousand during Fiscal 2025 compared to $36,193 thousand during Fiscal 2024. The primary driver of the $9,086 thousand increase in cash provided by operating activities during Fiscal 2025 as compared to Fiscal 2024 was an increase in earnings. This factor was partially offset by a reduction in cash provided by working capital, driven primarily by the timing of collections of accounts receivable and payments of accounts payable.

Investing Activities

Cash used for investing activities was $96,719 thousand during Fiscal 2025 compared to $50,553 thousand during Fiscal 2024. The increase in cash used for investing activities was primarily due to an increase in acquisitions of music catalogs.

Financing Activities

Cash provided by financing activities was $54,518 thousand during Fiscal 2025 compared to $17,560 thousand during Fiscal 2024. The increase in cash provided by financing activities in Fiscal 2025 reflects a $32,000 thousand increase in borrowings used for investing activities and a $6,000 thousand decrease in repayments towards the secured line of credit.

Liquidity

Our primary sources of liquidity are the cash flows generated from our subsidiaries’ operations, available cash and cash equivalents and funds available for drawing under our Senior Credit Facility (as described below). These sources of liquidity are needed to fund our debt service requirements, working capital requirements, strategic acquisitions and investments, capital expenditures and other investing and financing activities we may elect to make in the future.

We believe that our primary sources of liquidity will be sufficient to support our existing operations over the next twelve months.

Existing Debt as of March 31, 2025

As of March 31, 2025, our outstanding debt consisted of $391,828 thousand borrowed under the Senior Credit Facility. As of March 31, 2025, remaining borrowing availability under the Senior Credit Facility was $58,172 thousand.

We use cash generated from operations to service outstanding debt, consisting primarily of interest payments through maturity, and we expect to continue to refinance and extend maturity on the Senior Credit Facility for the foreseeable future.

Debt Capital Structure

RMM is a borrower under a revolving credit agreement (as amended or supplemented from time to time, the “RMM Credit Agreement”) governing RMM’s Senior Credit Facility. The maturity date of the loans advanced under the Senior Credit Facility is December 16, 2027.

The interest rate on borrowings under the Senior Credit Facility is equal to, at our option, either the sum of a base rate plus a margin of 1.00% or the sum of a Secured Overnight Financing Rate (“SOFR”) rate plus a margin of 2.00%, in each case subject to a 0.25% increase based on a consolidated net senior debt to library value ratio. RMM is also required to pay an unused fee in respect of unused

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commitments under the Senior Credit Facility, if any, at a rate of 0.25% per annum. The Senior Credit Facility also includes an “accordion feature” that permits RMM to seek additional commitments in an amount not to exceed $150,000 thousand.

Subject to market conditions, we expect to continue to take opportunistic steps to extend our maturity dates and reduce related interest expense. From time to time, we may incur additional indebtedness for, among other things, working capital, repurchasing, redeeming or tendering for existing indebtedness and acquisitions or other strategic transactions.

Certain terms of the Senior Credit Facility are described below.

Guarantees and Security

The obligations under the Senior Credit Facility are guaranteed by us, RHI and subsidiaries of RMM. Substantially all of our, RHI’s, RMM’s and other subsidiary guarantors’ tangible and intangible assets are pledged as collateral to secure the obligations of RMM under the Senior Credit Facility, including accounts receivable, cash and cash equivalents, deposit accounts, securities accounts, commodities accounts, inventory and certain intercompany debt owing to us or our subsidiaries.

Covenants, Representations and Warranties

The Senior Credit Facility contains customary representations and warranties and customary affirmative and negative covenants. The negative covenants contained in the Senior Credit Facility limit the ability our, RHI’s, RMM’s and certain of its subsidiaries ability to, among other things, incur debt or liens, merge or consolidate with others, make investments, make cash dividends, redeem or repurchase capital stock, dispose of assets, enter into transactions with affiliates or enter into certain restrictive agreements.

Events of Default

The Senior Credit Facility includes customary events of default, including nonpayment of principal when due, nonpayment of interest or other amounts, inaccuracy of representations or warranties in any material respect, violation of covenants, certain bankruptcy or insolvency events, certain Employee Retirement Income Security Act (“ERISA”) events and certain material judgments, in each case, subject to customary thresholds, notice and grace period provisions.

Covenant Compliance

The Senior Credit Facility contains financial covenants that requires us, on a consolidated basis with our subsidiaries, to maintain, (i) a fixed charge coverage ratio of not less than 1.10:1.00 for each four fiscal quarter period, and (ii) a consolidated senior debt to library value ratio of no greater than 0.45:1.00, subject to certain adjustments.

Non-compliance with the fixed charge coverage ratio and consolidated senior debt to library value ratio could result in the lenders, subject to customary cure rights, requiring the immediate payment of all amounts outstanding under the Senior Credit Facility, which could have a material adverse effect on our business, cash flows, financial condition and results of operations. As of March 31, 2025, with a fixed charge coverage ratio of 3.67x and a consolidated senior debt to library value ratio less than 30%, we were in compliance with both of the financial covenants and all non-financial covenants under the Senior Credit Facility.

Interest Rate Swaps

At March 31, 2025, RMM had the following interest rate swaps outstanding, under which it pays a fixed rate and receives a floating interest payment from the counterparty based on SOFR with reference to notional amounts adjusted to match the original scheduled principal repayments pursuant to the Senior Credit Facility (in thousands):


	Notional
	Amount at		Pay Fixed
Effective Date	March 31, 2025		Rate		Maturity
September 30, 2024	$	100,000		2.946	%	December 2027
September 30, 2024	$	50,000		3.961	%	December 2027

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On September 30, 2024, three previous interest rate swaps expired with original notional amounts of $8,875 thousand, $88,098 thousand and $53,030 thousand, respectively. Through the expiration date of these previous interest rate swaps, RMM paid fixed rates of 1.53%, 1.422% and 0.972%, respectively, to the counterparty and received a floating interest payment from the counterparty based on SOFR with reference to notional amounts adjusted to match the original scheduled principal repayments pursuant to the indenture agreement.

Dividends

Our ability to pay dividends to Reservoir Media, Inc.’s shareholders is restricted by covenants in the Senior Credit Facility. We did not pay any dividends to Reservoir Media, Inc.’s shareholders during Fiscal 2025.

Summary

Management believes that funds generated from our operations, borrowings under the Senior Credit Facility and available cash and equivalents will be sufficient to fund our debt service requirements, working capital requirements and capital expenditure requirements for the foreseeable future. However, our ability to continue to fund these items and to reduce debt may be affected by general economic, financial, competitive, legislative and regulatory factors, as well as other industry-specific factors such as the ability to control music piracy and the continued transition from physical to digital formats in the music publishing and recorded music industries. It could also be affected by the severity and duration of natural or human-made disasters, including pandemics. We and our affiliates continue to evaluate opportunities to, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, seek to pay dividends or prepay outstanding debt or repurchase or retire our outstanding debt. The amounts involved in any such transactions, individually or in the aggregate, may be material and may be funded from available cash or from additional borrowings or equity raises. In addition, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity, and other factors, we may seek to refinance the Senior Credit Facility with existing cash and/or with funds provided from additional borrowings.

Contractual and Other Obligations

Firm Commitments

The following table summarizes the Company’s aggregate contractual obligations as of March 31, 2025, and the estimated timing and effect that such obligations are expected to have on liquidity and cash flow in future periods.


	Less Than							After 5
Firm Commitments and Outstanding Debt	1 Year		2-3 Years		4-5 Years	Years		Total
		(in thousands)
Secured line of credit	$	—		$	391,828	$	—		$	—	$	391,828
Interest on secured line of credit(1)		24,778			42,428		—			—		67,206
Operating leases		1,398			2,095		1,898			3,112		8,503
Artist, songwriter and co-publisher commitments(2)		2,383			2,560		—			—		4,943
Asset acquisition and share purchase acquisition commitments(3)		6,966			521		70			—		7,557
Total firm commitments and outstanding debt	$	35,525		$	439,432	$	1,968		$	3,112	$	480,037

The following is a description of our firmly committed contractual obligations as of March 31, 2025:

Column 1	Column 2	Column 3
	(1)	Interest obligations under the Credit Facility are based on principal amounts outstanding and interest rates in effect as of March 31, 2025. Interest does not include amortization of deferred financing costs or effects of interest rate swaps.

Column 1	Column 2	Column 3
	(2)	The Company routinely enters into long-term commitments with songwriters and recording artists for the future delivery of music. Such commitments generally become due only upon delivery or release and Reservoir’s acceptance of future musical compositions by songwriters and publishers or albums from the artists. Because the timing of payment, and even whether payment occurs, is dependent upon the timing of delivery of albums and musical compositions, the timing and amount of payment of these commitments as presented in the above summary can vary significantly.

Column 1	Column 2	Column 3
	(3)	The Company routinely enters into asset acquisition agreements, which can have deferred minimum funding commitments and other related obligations, as reflected in the table above.

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Critical Accounting Policies and Estimates

We believe that the following accounting policies and estimates involve a high degree of judgment and complexity. Accordingly, these are the policies and estimates we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of our operations. See Note 2, “Summary of Significant Accounting Policies” to the accompanying consolidated financial statements for the fiscal years ended March 31, 2025 and 2024, contained in Part II, Item 8 of this Form 10-K for a description of our other significant accounting policies. The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those financial statements and related notes thereto. We believe we have used reasonable estimates and assumptions in preparing the consolidated financial statements. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.

Revenue and Cost Recognition

Revenues

As required by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), Reservoir recognizes revenue when, or as, control of the promised services or goods is transferred to its customers and in an amount that reflects the consideration to which Reservoir is expected to be entitled in exchange for those services or goods.

Music Publishing

Music Publishing revenues are earned from the receipt of royalties relating to the licensing of rights in musical compositions and the sale of published sheet music and songbooks. The receipt of royalties principally relates to amounts earned from the public performance of musical compositions, the mechanical reproduction of musical compositions on recorded media including digital formats and the use of musical compositions in synchronization with visual images. Music publishing royalties, except for synchronization royalties, generally are recognized when the sale or usage occurs. The most common form of consideration for publishing contracts is sales- and usage-based royalties. The collecting societies submit usage reports, typically with payment for royalties due, often on a quarterly or biannual reporting period, in arrears. Royalties are recognized as the sale or usage occurs based upon usage reports and, when these reports are not available, royalties are estimated based on historical data, such as recent royalties reported, company-specific information with respect to changes in repertoire, industry information and other relevant trends. Synchronization revenue is typically recognized as revenue when the customer has a right to access the license, which is when control is transferred to the customer.

Recorded Music

Revenues from the sale or license of Recorded Music products through digital distribution channels are typically recognized when the sale or usage occurs based on usage reports received from the customer. Digital licensing contracts are generally long-term with consideration in the form of sales- and usage-based royalties that are typically received monthly. For certain licenses where the consideration is fixed and the intellectual property being licensed is static, revenue is recognized at the point in time when control of the licensed content is transferred to the customer. Revenues from the sale of physical Recorded Music products are recognized upon delivery, which occurs once the product has been shipped and control has been transferred.

Accounting for Royalty Costs and Royalty Advances

Reservoir incurs royalty costs that are payable to our recording artists and songwriters generated from the sale or license of our music publishing copyrights and recorded music catalogue. Royalties are calculated using negotiated rates in accordance with songwriter and recording artist contracts. Calculations are based on revenue earned or user/usage measures or by a combination of these calculations. There are instances where such data is not available to be processed and royalty cost calculations may be complex or involve judgments about significant volumes of data to be processed and analyzed.

In many instances, Reservoir commits to pay our recording artists and songwriters royalties in advance of future sales. Reservoir accounts for these advances under the related guidance in FASB ASC Topic 928, Entertainment — Music (“ASC 928”). Under ASC 928, Reservoir capitalizes as assets certain advances, which it believes are recoverable from future royalties to be earned by the recording artist or songwriter, when paid. Recoverability is assessed upon initial commitment of the advance based upon Reservoir’s forecast of

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anticipated revenue from the sale of future and existing sound recordings or musical compositions. Reservoir regularly updates the recoverability assessment as additional data is available. In determining whether the advance is recoverable, Reservoir evaluates the current and past popularity of the songwriter or recording artist, the sales or license history of the songwriter or recording artist, the initial or expected commercial acceptability of the product, the current and past popularity of the genre of music that the product is designed to appeal to, and other relevant factors. Advances vary in both amount and expected life based on the underlying songwriter or recording artist. To the extent that a portion of an outstanding advance is no longer deemed recoverable, that amount will be expensed in the period the determination is made.

Acquisitions and Business Combinations

In conjunction with each acquisition transaction, Reservoir assesses whether the transaction should follow accounting guidance applicable to an asset acquisition or a business combination. This assessment requires an evaluation of whether the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, resulting in an asset acquisition or, if not, resulting in a business combination. If treated as an asset acquisition, the assets are recorded on a relative fair value basis and related acquisition costs are capitalized as part of the asset.

If treated as a business combination, Reservoir recognizes identifiable assets acquired, liabilities assumed, and non-controlling interests at their fair values at the acquisition date. Any consideration paid in excess of the net fair value of the identifiable assets and liabilities acquired in a business combination is recorded to goodwill and acquisition-related costs are expensed as incurred.

Intangible Assets

Intangible assets consist primarily of music catalogs (publishing and recorded). Intangible assets are recorded at fair value in a business combination and relative fair value in an asset acquisition. Intangible assets are amortized over their expected useful lives using the straight-line method.

Reservoir periodically reviews the carrying value of its amortizable intangible assets, whenever events or changes in circumstances indicate that the carrying value may not be recoverable or that the lives assigned may no longer be appropriate. To the extent the estimated future cash inflows attributable to the asset, less estimated future cash outflows, are less than the carrying amount, an impairment loss is recognized in an amount equal to the difference between the carrying value of such asset and its fair value. If it is determined that events and circumstances warrant a revision to the remaining period of amortization, an asset’s remaining useful life would be changed, and the remaining carrying amount of the asset would be amortized prospectively over that revised remaining useful life.

New Accounting Pronouncements

See Note 2, “Summary of Significant Accounting Policies” to the accompanying consolidated financial statements for the fiscal years ended March 31, 2025 and 2024, contained in Part II, Item 8 of this Form 10-K.

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