Reservoir Media Inc Aktie

Greetings. Welcome to the Reservoir Q2 FY '27 Earnings Call. [Operator Instructions] Please note, the conference is being recorded. I will now turn the conference over to Jackie Marcus at Alpha IR. Thank you, Jackie. You may begin.

Thank you, operator. Good morning, everyone, and thank you for participating in today's earnings conference call. Reservoir Media issued a press release with results for its second quarter of fiscal year 2027 ended September 30, 2026, 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 Golnar Khosrowshahi, Founder and Chief Executive Officer; and Jim Heindlmeyer, 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 Golnar 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 Golnar.

Thank you, Jackie. Good morning, everyone, and thank you for joining us today. Over the last 2 decades, Reservoir has built a reputation as a trusted partner for our talent, partners and shareholders alike. During the second quarter, we continued to deliver against that reputation, advancing our strategy across both publishing and recorded music, adding proven creative talent, expanding existing partnerships and pursuing opportunities in attractive markets.

Our recent investments reflect our ability to identify value across different stages of the music life cycle from supporting active talent whose efforts will yield new untapped copyrights over the coming years to stewarding established catalogs with enduring cultural and commercial significance.

Today's earnings results continue to reinforce the strength of those fundamental strategic pillars with another successful quarter. In the second fiscal quarter, we extended our run of top line growth with revenue up 10% year-over-year and organic growth of 4%. Looking first at our publishing business, we continue to strengthen our roster with established songwriters and producers whose track records position them for continued success.

In September, we announced a futures publishing deal with London-based songwriter and producer, Fred Ball. Fred co-wrote and co-produced Rihanna's Diamond-certified Love on the brain and his work spans records with Deane, JZ, M&M, Alicia Keys, Mariah Carey and Olivia Dean, among many others. He remains a sought-after collaborator among leading artists, and we are excited to be part of the next chapter of his career. We also signed Grammy-nominated songwriter and producer, Jake Sinclair, to a publishing deal for his future works. Jake has written and produced hits for Falloutboy, Weezer, 5 Seconds of Summer and Panic at the Disco, including their diamond-certified track, High hopes.

Alongside the publishing deal, we formed a joint venture with Jake to identify and develop emerging songwriters and artists, combining Jake's creative instincts with Reservoir's global platform and publishing expertise. We believe this approach can generate attractive opportunities to build incremental value for both Reservoir and Jake by further aligning our interests.

We also expanded our frontline roster across key genres and markets. In the U.K, we welcomed Scottish Indie Rock Band The Snuts and Ivor Novello winning Singer Songwriter -- or [ La Gardlet. ] Across country and Fok Music, we announced deals with songwriter Justin Dukes, Singer Songwriters Eva Liv Mabry and Riley Veterer and Singer Songwriter Duo the Recloss.

Together, these signings demonstrate our continued commitment to developing a globally diverse roster of talent. By investing in creators across genres, geography and career stages, we strengthened the range of opportunities available across our publishing business. Beyond our active roster, we continue to build on long-standing relationships with established catalogs and their representatives. During the quarter, we announced the acquisition of Billy Straayhorn's publishing catalog in addition to participating in rights to his name, image and likeness.

Widely regarded as one of the great composers in Jazz's history, Straayhorn was Duke Ellington's long-time creative partner and wrote enduring standards, including, Take the A Train and Luslife. Reservoir has published his catalog for more than a decade, working closely with his estate to champion his music, and we are honored to continue to steward his legacy in the years to come.

In recorded music, we expanded our portfolio through a deal with legendary Puerto Rican singer songwriter, Jose Feliciano, to acquire master recording rights to his catalog as well as shared rights to his name, image and likeness. Over a career spanning 6 decades, Jose has released more than 60 albums crossing over into Anglo American Pop and earning multiple Grammy awards, a star on the Hollywood Walk of Fame and the National Medal of Arts, among numerous other honors. He is also the writer and original recording artist behind Feliz Navidad, one of the world's most enduring and widely played holiday songs to this day. But the recording, which returns to the charts each holiday season and recently reached #6 on the Hot 100 was inducted into the Grammy Hall of Fame in 2010 and just this year was selected by the Library of Congress for preservation in the National Recording Registry.

This deal builds upon our existing investments in Latin music, which remains one of the fastest-growing areas of global music demand. Jose's remarkable catalog combines blasting cultural relevance with continued audience engagement, reflecting our strategy of partnering with influential artists and investing in music with the potential to resonate across generations and markets.

Notably, through the deals with Billy Strehorn and Jose Feliciano, Reservoir is taking part in the NIL value chain, a facet of transactions we have leveraged throughout the last 12 months during the Miles Davids Centennial. Introducing Miles and his music to new fans through key brand partnerships has been an important way of continuing to bring value to his portfolio, both culturally and financially.

Structuring deals with NIL components is a thoughtful way we continue to seek opportunities to enhance the value of Reservoir's assets and share them to a wider audience. In looking at the broader music landscape, several trends are particularly relevant to our business. Subscription pricing continues to present opportunities for growth as streaming services implement price increases and consumers consistently demonstrate the value they place on access to music.

Additionally, sentiment around catalog transactions remains positive, reinforcing our view that well-managed catalogs are durable long-life assets. And third, for many established artists, touring and brand partnerships now drive more of their economics than a traditional record contract. Together, these trends reinforce our conviction in the long-term value of music copyrights and the opportunities available to companies with the expertise to manage, market and monetize them effectively.

We remain focused on positioning Reservoir to participate in this growth while maintaining the financial discipline that has guided our investment decisions. One other trend worth noting is the potential industry growth from new AI licensing revenue as noted in Goldman Sachs Annual Music and MA report. You may have recently seen Reservoir's litigation against certain AI platforms. Reservoir's business is rooted in our responsibility to protect the rights and creative legacies of our songwriters, artists, estates and partners.

And when we believe their work has been exploited without authorization, we will hold AI platforms legally accountable to ensure those rights are upheld. We will continue to advocate for a framework that supports technological progress while protecting the creative work at the heart of our industry.

Jim will take you through the details of our financial performance shortly, but I wanted to emphasize that the consistency of our revenue and cash generation is what allows us to continue investing in our team, our infrastructure, our creators and new strategic opportunities without compromising financial discipline.

Before turning to our financial performance, I'd like to briefly address the previously disclosed nonbinding and unsolicited acquisition proposals received by the company. In March 2026, the Board formed a special committee of independent and disinterested directors to evaluate the proposals, and the special committee engaged Morgan Stanley & Company LLC as its financial adviser and Watetel, Lipton, Rosen & Katz as its legal counsel. While the special committee's review continues, our team remains focused on executing our long-term strategy and the process does not change our day-to-day priorities.

I will now turn the call over to Jim to discuss our fiscal second quarter financial performance. Jim?

Thank you, Golnar, and good morning, everyone. Our strong second fiscal quarter results reflect our impressive catalog of in-demand assets as we continue acquiring more catalogs, deepen existing relationships and identify opportunities.

Revenue for the second fiscal quarter was $49.9 million, a 4% year-over-year improvement on an organic basis and a 10% increase when including acquisitions. This was led by the 18% growth in our Recorded Music segment and the 8% increase we had in Music Publishing.

Turning to our operating expenses. The total cost of revenue increased 7% compared to the prior year quarter, while our administration expenses and amortization and depreciation costs grew 7% and 12%, respectively, versus the prior year. The increase in administration expenses was driven by higher expenses within Music Publishing and Recorded Music segments. Amortization costs grew due to the acquisition of additional music catalogs.

Looking at operating performance for the second quarter, OIBDA was $20.7 million, an increase of 14% year-over-year, and adjusted EBITDA was also up 14% to $22.1 million compared to our Q2 and fiscal 2026. The increases in OIBDA and adjusted EBITDA were due to higher revenues, partially offset by increases in cost of revenue and administration expenses, as I just mentioned.

Interest expense was $7 million for the quarter versus $6.7 million in the prior year, driven primarily by increased debt balances used to fund acquisitions of music catalogs and writer signings.

Net income for the second quarter was approximately $4.6 million compared to net income of $2.2 million in the second quarter of fiscal 2026. The increase in net income was primarily driven by the increase in operating income and the higher gain on fair value of swaps and gain on foreign exchange, partially offset by increases in interest expense and income tax expense.

This resulted in $0.07 diluted earnings per share for the quarter, up from a diluted earnings per share of $0.03 in the prior year quarter. Our weighted average diluted outstanding share count during the quarter was approximately 66.8 million.

Now let's dive into our segment review for the quarter. Music Publishing had an 8% increase in revenue versus the prior year quarter at $33.2 million, largely due to a 10% increase in digital revenue, which was driven by the acquisition of additional music catalogs and continued growth at music streaming services. Additionally, synchronization revenue expanded by 13% within Music Publishing, driven by the timing of licenses.

Moving to our Recorded Music segment. We had an 18% increase to $15.4 million in revenue compared to our Q2 last year. This was driven by a 33% increase in digital revenue, which was also supported by the acquisition of additional music catalogs and continued growth at music streaming service. Robust neighboring rights revenue driven by the acquisition of additional music catalogs and new affiliations also supported our strong growth in Recorded Music.

Turning to our balance sheet. For the 6 months ended September 30, 2026, cash provided by operating activities was $21.6 million, which was a decrease of $3.7 million compared to the same period last year, primarily due to a change in cash used for working capital resulting from the timing of royalty payments to creators and payments of accounts payable, partially offset by the timing of royalty advance recoupments.

We had total available liquidity of $113.9 million, consisting of $24.8 million of cash on hand and $89.2 million available under our [indiscernible]. We ended the quarter with total debt of $458.6 million, which was net of $2.2 million of deferred financing costs, and thus, we maintained $433.8 million of net debt. That compares to net debt of $429.8 million as of March 31, 2026.

Given our strong first half performance, we are narrowing and raising our full year guidance ranges. We now expect revenue of $188 million to $192 million, which at the midpoint implies growth of 8% versus fiscal 2026. We are also raising our adjusted EBITDA guidance range to $77 million to $80 million, which signals growth of 7% over the prior year at the midpoint of that range. We will continue to review our outlook as the year progresses and look forward to providing an update when appropriate.

After the first half of fiscal 2027, the drivers behind our performance are consistent with our strategy, acquiring catalogs that continue to grow under our stewardship and active roster contributing to today's hits and continued cost discipline. Between our consistent cash flows and our measured approach to capital deployment, we remain confident that we'll be able to deliver on our raised fiscal 2027 guidance.

With that, I'll now pass the call back to Golnar.

Thank you, Jim. We are pleased with the first half of fiscal 2027 and with the opportunities we've identified ahead of us as Reservoir heads into its 20th anniversary in calendar year 2027. This quarter's activity from futures partnerships with Fred Ball and Jake Sinclair to investments in talent like Orla Gartland and Riley Beeterer and to our agreements with Jose Feliciano and the Billy Shrehorn Estate shows the range of Reservoir investments across genres, eras, geography and deal structures. Our pipeline remains robust, and we look forward to sharing more proof points of our strategy.

With that, we will now open the line for questions.

[Operator Instructions] Our first question is from Griffin Boss with B. Riley Securities.

I just wanted to start off on OIBDA. So on the recorded side, specifically, there was a meaningful step-up in the margin year-over-year. Just curious, Jim, is that more a function of timing? Or are you seeing structurally higher margins on new acquisitions and affiliations?

Yes. Sometimes with our new acquisitions, when we are acquiring rights that have very low, if any, expenses, it's going to improve that margin. And I think that's really what we're seeing in the quarter relative to last year, given some of the acquisitions that we've done in the past year.

Understood. And then just sticking on profitability. So it's good to see the raise and narrow guide, but that does imply a slightly slower growth in EBITDA than what you're expecting on the top line. So I just want to dig into kind of how much of that could be maybe conservatism versus expectation for higher administrative or other expenses in the back half of the year?

Yes. I think that with respect to the administration expenses, it's really like our Q2 run rate is probably a good proxy for the rest of the year. I think that there's an appropriate level of conservatism built into our guidance, and it's probably what's impacting what you're seeing there.

Okay. Got it. And then if I could just sneak one more in here, maybe for Golnar. There are other large public labels, of course, publicly traded labels, one of which supposedly held talks earlier this year, entertaining the idea of going private, just given kind of what seems to be steep discounts in the public market.

So I'm curious if you're seeing in your M&A activities, any step down in multiples versus what you've seen historically given what we're seeing in the public markets for music assets?

I guess if we keep saying that, maybe we'll see it. But unfortunately, we haven't really seen any loss in -- or any decrease in these purchase multiples. We continue to execute at attractive multiples and that information or updated information will be included when we disclose the next investor presentation. But on balance, as far as the deals that we see trading and those that we're participating in, we are not seeing any decrease in expectations whether as a result of or separate from this disparity in value between the sort of asset value and where these stocks are trading.

Our next question is from Richard Baldry with ROTH Capital Partners.

You talked about the administrative expenses being a good run rate from here. The level in the quarter was down from both first quarter and even the fourth quarter of last year. Can you talk a little bit about sort of where you've gained some efficiencies there, why that's sustainable? And does that just naturally sort of step up year-over-year when we move out to fiscal '28?

Yes. I think on the overhead side, the administration expenses, our Q1 is sometimes impacted by some of the activity in our Q1, which is to be true-ups of year-end accruals. There's some bonus activity in Q1 that hits that's not recurring throughout the the rest of the year. So there's a few things there that are impacting that. And I think that as you look at the Q2 run rate, it really should be pretty steady from there for Q3 and Q4, some minor variances with some of the things that just fluctuate throughout the year, but it's a pretty good run rate.

And I think of it as more of a hands-on sort of company dealing with your clients. But beyond that, is there any back office ability to sort of leverage newer AI technologies to automate maybe some of the accounting end of the table that might be more manual today than it could be down the road as an efficiency gain?

Yes. Our teams are certainly very active with AI tools to find areas where things that have historically been a pretty manual process or time-consuming process where we can leverage those AI tools to find efficiencies. And that's been happening quite a bit over the past kind of 6 to 9 months, as you can imagine.

And turn to the new JV, for example, can you talk about sort of how a development like that works? How much resources you typically would put in? What payback periods you're thinking about? I assume these are fairly long tail events.

Rich, I'm sorry, which JV are you referring to?

You were noting one with a younger artist.

I mean every deal is different. These JVs are structured such that we are able to capitalize on the talent and the access that, that talent brings. We are never fully tied in that we can always make a decision to sort of alter course on that front. We're not talking about significant dollar amounts, and we are talking about investment that is made on an as-you-go basis. Again, these are mostly futures deals. So the investment number, the absolute value is not a significant number.

Okay. And last for me. It looks like an unusually good cash generation quarter and sort of your net debt number came in pretty good. I don't have the queue yet to sort of go through that. Can you talk about if there's any unusual sort of onetime events in there or just traditional seasonality that's driving that so I can better understand.

Yes, sure. Typically, our Q2 and Q4 are pretty strong cash-generative quarters for us. So I think that you're certainly seeing some of that. That's probably the most significant thing. It was a fairly light quarter for us on the M&A front, which happens quarter-to-quarter. We can't control the timing of deal flow, and that's not something that's linear throughout the year. But I think it's just those 2 things that are coming together.

Maybe one last one. If you look in your M&A pipeline, is the balance of opportunities changing at all, whether it's by geography, recorded publishing or still just opportunistic as the best thing sort of plug into each sector?

I think I would look at it 2 ways. One is what's coming in and what's coming in varies quarter-by-quarter. Obviously, we can't predict deal flow, but I think it's a pretty well-balanced grouping of publishing targets and recorded targets as well as emerging markets assets. As far as what is making it across the sort of exclusivity line and into our short-term deal flow, I believe that, that is also mirroring the general deal flow, which is, again, a good balance across the board.

We may end up having some concentration in any given quarter on publishing acquisitions or Masters acquisitions, but that is not really an indication because it's just such a small time frame to be looking at. We are always looking to do the best deals we possibly can.

So at certain points, that might concentrate on recorded publishing, emerging markets, what have you. But we're seeing a very good balance of deals in front of us.

We have reached the end of the question-and-answer session. I would like to turn the floor back over to Golnar Khosrowshahi for closing comments.

Thank you, everyone. We appreciate your support and interest in Reservoir. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Greetings. Welcome to RSVR Q1 '27 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Jackie Marcus. Thank you. You may begin.

Thank you, operator. Good morning, everyone, and thank you for participating in today's earnings conference. [indiscernible] issued a press release with results for its first quarter of fiscal year 2027 ended June 30, 2026, 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 Golnar Khosrowshahi, Founder and Chief Executive Officer; and Jim Heindlmeyer,, 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 Golnar 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 the 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 Golnar.

Thank you, Jackie. Good morning, everyone, and thank you for joining us today.

We reported another quarter of consistent top line growth as we began fiscal 2027. Our first quarter results reflect the continued execution of our long-term strategy, expanding our catalog with high-quality assets, investing in exceptional creative talent, strengthening our Recorded Music business and deepening our presence in high-growth markets around the world. Together, these initiatives continue to enhance the quality and diversity of our portfolio while positioning Reservoir to deliver sustainable long-term value for all of our shareholders.

This quarter, we delivered top line growth of 12%, including 6% organic growth and continue to see healthy demand for our portfolio across both our Music Publishing and Recorded Music businesses, both of which grew year-over-year. Our performance was driven by contributions from recent acquisitions, success from our active roster, continued price increases across streaming services and subscriber growth in many of the international markets where we have strategically invested.

The broader global music industry continues to demonstrate its resilience and attractive long-term growth profile as evidenced by healthy industry deal flow, increased global consumption and strong momentum in emerging markets. Latin America, in particular, remains one of the industry's fastest-growing markets. According to the IFCI, in 2025, the region achieved the highest revenue growth rate worldwide of 17.1%, marking its 16th consecutive year of growth. Latin Music has firmly established itself as a global commercial force transcending physical borders and language barriers to produce global hits by artists reaching listeners around the world.

Our most recent investments in Latin Music come through 2 new complementary strategic partnerships designed to strengthen both our existing catalog and our future pipeline. In June, we announced a joint venture with TU Publishing, a creator-first company focused on discovering and developing the next generation of Latin songwriters and producers. Under this partnership, Reservoir is the publisher for all current and future writers signed to TU Publishing, creating a platform for long-term creative collaboration and songwriter development.

Reservoir and TU Publishing have also joined forces to co-sponsor a series of writing camps designed to cultivate opportunities for emerging and established artists, songwriters and producers to collaborate and create commercially competitive music for today's global Latin audience. A few weeks ago, we acquired the catalogs of independent Latin music label, Nacional Records and its publishing arm, Canciones Nacionales. We additionally entered a joint venture to sign and develop recording artists and songwriters. Founded in 2005 by Tomas Cookman, Nacional has become one of the leading independent labels in Latin music, developing artists across various Spanish-speaking markets and genres with the Los Angeles Times dubbing Nacional as the defining voice of Latin alternative in the U.S. just last year.

These partnerships with Nacional and TU combine valuable established catalogs with active creative platforms led by highly respected local partners allowing us to participate in everything from talent discovery and development to long-term catalog ownership.

We believe that Latin Music is not a regional story, but a global one, and Reservoir is committed to being at the center of it. Our relationship-driven approach to investing was also evident with our Recorded Music business as we completed a key venture with U.K. A&R executive, Ollie Hodge, to bring his nascent record label Some Action to Reservoir, further expanding Reservoir's frontline capabilities and artist development. Ollie is a seasoned A&R executive who has worked with Mumford & Sons, Glass Animals and George Ezra, just to name a few. He and his team are based out of the Reservoir and Chrysalis Records London office, facilitating organic synergies across our label platform. To date, the label has signed McGraw, J.P. O'Grady and El Devine, 3 artists who represent a strong foundation in line with some action and Reservoir's broader vision for artist development.

Across each of these deals, we consistently maintain our objectives of partnering with people or companies excelling in their verticals, championing independent music across the globe and strengthening the long-term value of our business. Beyond these notable strategic transactions, we also continue to grow our publishing roster with outstanding creative talent. We announced a partnership with multi-Platinum and Grammy Award-winning hip-hop icon TI in a deal that spans his entire publishing catalog and future work, including his new album, Kill the King, which debuted in the top 10 on Billboard's top RMB hip-hop album, marking TI's 13th top 10 album on that chart. We also welcomed multi-Platinum Global Pop songwriter and producer, Adam Kapit, Songwriter U.K. producer and multi-instrumentalist, Fretworm; and Singer songwriter, Jarrett Doherty, the frontman of Al Pop Rock Duo JD.

The deal with Doherty also marks the launch of a joint venture with Tinman, a publishing company founded by Reservoir writer Sam Tinnesz, further expanding our relationship with Hip. As Jim will discuss in greater detail, our business continues to generate healthy, predictable revenue and cash flows that give us the flexibility and the resources to invest in our people, our operations, our ever-growing community of creators across the globe and myriad strategic opportunities across business verticals, all while maintaining financial discipline. Before turning to our financial performance, I'd like to briefly address the previously disclosed nonbinding and unsolicited acquisition proposals received by the company.

In March 2026, the Board formed a special committee of independent and disinterested directors to evaluate the proposals, and the special committee engaged Morgan Stanley & Company LLC as its financial adviser and Wachtell Lipton, Rosen & Katz as its legal counsel. Beyond that, we have no additional updates to share today, and we'll provide further information as appropriate. I will now turn the call over to Jim to discuss our fiscal first quarter financial performance. Jim?

Thank you, Golnar, and good morning, everyone. Our first fiscal quarter results were in line with our expectations for another strong quarter and is a direct result of our diverse portfolio of quality assets and our ability to easily integrate new talent into our existing infrastructure. Revenue for the first fiscal quarter was $41.5 million, a 6% year-over-year improvement on an organic basis and a 12% increase when including acquisitions. This was led by the 35% growth in our Recorded Music segment and the 6% increase we have in Music Publishing. Turning to our operating expenses. The total cost of revenue increased 12% compared to the prior year quarter, while our administration expenses and amortization and depreciation costs grew 16% and 13%, respectively, versus the prior year.

The increase in administration expenses was driven by higher administrative expenses within Music Publishing and Recorded Music segments, partially offset by a decrease in other administration expenses. Amortization costs grew due to the acquisition of additional music catalogs. Looking at operating performance for the first quarter, OIBDA was $13.7 million, an increase of 7% year-over-year, and adjusted EBITDA was up 13% to $15.7 million compared to our Q1 in fiscal 2026. The increases in OIBDA and adjusted EBITDA were due to higher revenues, partially offset by an increase in administration expenses, as I just mentioned. Interest expense was $6.9 million for the quarter versus $6.3 million in the prior year, driven primarily by increased debt balances used to fund acquisitions of music catalogs and writer signings.

Net loss for the first quarter was approximately $508,000 compared to a net loss of $644,000 in the first quarter of fiscal 2026. The decrease in net loss was primarily driven by the gain on fair value of swaps, partially offset by the loss on foreign exchange and an increase in interest expense. This resulted in breakeven diluted earnings per share for the quarter, up from a diluted loss per share of $0.01 in the prior year quarter. Our weighted average diluted outstanding share count during the quarter was approximately 66 million. Now let's dive into our segment review for the quarter. Music Publishing had a 6% increase in revenue versus the prior year quarter at $26.5 million, largely due to a 7% increase in digital revenue, which was driven by the acquisition of additional music catalogs and continued growth of music streaming services.

Additionally, performance revenue expanded by 17% within Music Publishing, driven by hit songs. Both of those were partially offset by declines within the sync, mechanical and other categories. Moving to our Recorded Music segment. We had a 35% increase to $14.1 million in revenue compared to our Q1 last year. This was driven by a 23% increase in digital revenue, which was also supported by the acquisition of additional music catalogs and continued growth at music streaming services. Robust synchronization revenue and an increase in fiscal revenues due to the timing of our release schedules also supported our strong revenue growth in Recorded Music. Turning to our balance sheet. As of June 30, 2026, cash used in operating activities was $1.4 million, which was a decrease of $7.4 million compared to the year ago quarter, primarily due to the timing of royalty payments and the recoupment of royalty advances.

We had total available liquidity of $98.9 million, consisting of $13.7 million of cash on hand and $85.2 million available under our revolver. We ended the quarter with total debt of $462.2 million, which was net of $2.7 million of deferred financing costs, and thus, we maintained $448.5 million of net debt. That compares to net debt of $429.8 million as of March 31, 2026. Consistent with our prior first quarter earnings calls, we are maintaining our recently announced full year guidance ranges. To remind everyone, our revenue guidance range stands at $186 million to $191 million and at the midpoint implies growth of 7% versus fiscal 2026.

We similarly reiterate our adjusted EBITDA guidance range of $75 million to $79 million, which signals growth of 5% over the prior year at the midpoint of that range. We continually review our forecast for the full year and look forward to providing an update when appropriate. After our first quarter results, we remain confident that our consistent strategy of acquiring high-quality assets and successfully enhancing their value through our team's efforts will facilitate Rescore delivering on our anticipated revenue and adjusted EBITDA guidance for fiscal 2027. With that, I'll now pass the call back to Golnar.

Thank you, Jim. We are encouraged by the momentum we've built to begin fiscal 2027. The deals we executed this quarter reflect our investment thesis to seek and develop the next generation of hitmakers, grow our presence in high-growth markets around the world and build a diversified portfolio. Our investment pipeline remains active. Our catalog continues to perform well across both Publishing and Recorded Music, and we remain confident in our strategy and ability to create long-term value for our shareholders. With that, we will now open the line for questions.

[Operator Instructions]

Our first question is from Griffin Boss with B. Riley Securities.

Just wanted to start out on the operating cash flow. You attributed the outflow to the timing of royalty payments and advanced recruitment. Can you just help us understand the mechanics here on the payment side, specifically, are you seeing any structurally longer payment cycles? Or is this really just short term and expected to reverse in future quarters? And then on the recruitment side, curious if there's any change in the performance of the underlying writers that you're making advances to.

Sure. I'll take that, Griffin. So on the advance side, it's -- obviously, our outgoing advances also sit in operating activities. And we had some slightly higher advances this year relative to last year. So that's going to impact those cash flows. On the recruitment side, we're not seeing any real shift. It just so happens that this quarter, we had lower recruitment versus the prior year. There were probably some specifics that fell into that, but nothing that really changes our outlook on the advances.

Okay. Great. That's good enough. And then just shifting to digital. How can we think about organic growth here? Does that carry a similar organic growth rate to the overall business, call it, kind of mid-single digits?

Yes. I think that we certainly look at digital and expect that kind of mid-single-digit organic growth. There are certainly one-off items that can impact that, but that's the range that we look at for that category.

Okay. Got it. And then just one more, if I could sneak it in. On Sync, we saw a huge spike year-over-year in recorded music. But that is the third quarter in the past 4 where that Sync revenue on the recorded side has been elevated like this. So curious if you could just kind of expand on that. Are these 1 or 2 very large deals? Or are you getting more successful at marketing your overall catalog for these sync opportunities?

Yes. Well, I think that generally, our Sync team does a great job of maximizing the value of our catalog. And we have had a number of great opportunities come our way in the last, like you said, a handful of quarters. There were a couple of large syncs that we closed during the quarter. But I think that generally, it's really a testament to our Sync team and the work that they do to maximize the value that we can achieve from the catalog.

Our next question is from Richard Baldry with ROTH Capital Partners.

Given the far faster growth on the recorded side, can you talk about whether that's due to an underlying shift in the return on investments you're seeing there? Or is it really simply a matter of more opportunistic deal flow on that side of the business, and it could swing back or forth on -- just depending on what you see going ahead?

Yes. I mean I think that we're certainly seeing the impact on the recorded side of some of our recent acquisitions, and that's great to see. We have -- as we just touched on with the Sync opportunities that come up, those are not linear throughout the year. So we had a really outsized impact coming from Sync this quarter-over-quarter. But generally, I think that we are seeing a really healthy growth with our catalog on the recorded side as well as some great acquisitions that are starting to roll into the results.

Okay. And it seems like you talked a lot about some new partnerships. And I'm just curious, what types of resources do you have to bring to those? Is there upfront investments you put into those to kind of launch them? Or are the people and artists you're working with bringing most of that to the table and you bring sort of an infrastructure they can leverage on top of?

I think each of those deals varies as far as what we are bringing to the table. In some cases, we're acquiring catalog. In other cases, we are applying existing overhead and committing those resources to those new partnerships. We likely have structures where we are committing with review to new signings and additions to the roster in those partnerships. So each of those deals varies, but the intent of all of that is, as I said, to partner with people who are extremely knowledgeable and resourceful in their verticals and bring the operational synergies that we can to continue to expand the business.

And the administrative expense side stepped up a bit in the quarter. Is any of that sort of pulled forward from the back end of the year? Or is it sort of a new level we should be looking at? How do we think about that on a steadier state basis?

Yes. I would say that the -- our Q1 overhead certainly has some things in there that have elevated the run rate for that quarter. I don't think that you should look at Q1 and just take that as the baseline for the next 3 quarters of the year. I think that Q1 is a bit elevated for us.

And last for me would be, can you talk a little bit about sort of the seasonality? There are some swings within the revenue segments, et cetera. So should we use past years as a model? Or are there anything we should be calling out as sort of unusual this year to make sure we're thinking about it correctly?

Yes. I think that it's -- while we do our best with our accruals to reflect revenue properly by quarter, we still have some, call it, payment cycle impact that leads to seasonality where you might see slightly elevated revenue more in our Q2 and Q4 versus our Q1 and Q3. So I think that to your question, yes, you can look at prior years and model it based on that type of cadence as we move through this year.

This now concludes our question-and-answer session. I would like to turn the floor back over to Golnar Khosrowshahi for closing comments.

Thank you, operator. We appreciate your support and interest in Reservoir, and we look forward to sharing our second fiscal quarter results this fall. Thank you very much.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines, and have a wonderful day.

Greetings, and welcome to Reservoir Media's Fourth Quarter and Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Jackie Marcus. Thank you. You may begin.

Thank you, operator. Good morning, everyone, and thank you for participating in today's earnings conference call. Reservoir Media issued a press release with its results for its fourth quarter and fiscal year 2026 and ended March 31, 2026, earlier this morning. If you did not relieve a copy of our earnings press release, you may access it from the Investor Relations section of our website at investors.reservoir mia.com.

With me on today's call are Golnar Khosrowshahi, Founder and Chief Executive Officer; and Jim Heindlmeyer, 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 Golnar 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 Golnar.

Thank you, Jackie. Good morning, everyone, and thank you for joining us today. Reservoir delivered another strong year, generating 11% in revenue growth with 6% organic growth and 12% adjusted EBITDA growth in fiscal 2026. These results reflect the continued success of our disciplined acquisition strategy, the strength of our catalog and the performance of our growing team around the world. Fiscal 2026 was a milestone year as we deployed approximately $120 million across acquisitions and advances for both publishing and recorded rights. This enabled us to retain exceptional creators, sign leading contemporary hitmakers and further expand and diversify our catalog by genre, by era and geographic representation.

In September, we acquired the catalog of music and culture icon Miles Davis. As we officially marketed [ Centennial ] this week, we have launched a global campaign with countless activations and press moments. Highlights from this week alone included the Voice of miles, a symponic celebration by Park Avenue Artist, a billboard in Times Square on the Nasdaq Tower, and an event with the New York public library for the Performing Arts and [ Simon Schuster ] for the Centennial Edition of Miliatobiography. With more to come this year, we look forward to continuing to celebrate Miles as legacy, and it is an honor to steward his extraordinary body of work and bring it to new audiences.

We also continue to invest today's hitmakers signing talent, including Disco [indiscernible] country Pop songwriters, Allison VelsCruise and Samtani, U.K. Singer songwriter, Benjamin Frances Leitch and multi-genesong writer, Britain Newbuild, to name a few. At the same time, we reinforced our long-standing relationships extending deals with legendary singer-songwriter, Jody Mitchell; Grammy-winning writer-producer ChriseTeimes and the estate of seminal Artist [indiscernible], as well as entering into a new deal with long-term client Academy Award winning Composer, Hans Zimmer. Our relationship with Zimmer extends as investors in [ Palam ] music, an innovative Piano school with a novel methodology for teaching. This past Sunday, Paon music and Zimmer were featured on CBS 60 minutes, highlighting the school's successful approach to Piano Education and Zimmer's involvement in advancing its mission.

We are proud to support Paion music to help nurture the next generation of P&S through technical training while fostering a lifelong love of music. During this fiscal year, we also continued to expand Reservoir's Recorded Music division, including a multifaceted deal with independent record label fools gold records. The transaction included the acquisition of Catalog master rights of several of the labels artists and an exclusive partnership to market and distribute all their recordings on Tools gold via the reservoir label platform.

Internationally, we expanded our presence in key growth markets. We launched our Mumbai-based subsidiary, Pop India and signed a publishing deal with [indiscernible] while also extending our publishing agreement with multi-platinum Indian hip-hop artists design. Pop India also executed its first catalog deal, acquiring the publishing and master rights to the entire music craft entertainment catalog. The establishment of Pop India marks an important step in building a meaningful on-the-ground presence in India, one of the fastest-growing music markets globally with the streaming market alone projected to reach over $4.8 billion by 2030 with a compound annual growth rate of over 17%.

This April, together with Papa Arabia, our partner in MENA region, we completed the acquisition of label and digital distribution company, Viral Wave. A transformational transaction that significantly expands both the scale and capabilities of the Pop Arabia platform. Beyond increasing Pop Rabia's team to over 30 employees across Egypt, Morocco and the UAE -- the acquisition establishes a fully integrated distribution infrastructure alongside the company's existing publishing and label services creating one of the region's most comprehensive independent music platforms. Importantly, this move deepens reservoirs operational footprint and strategic positioning across MENA and creates additional opportunities for cross-border collaboration and global reach for regional artists.

In addition, in fiscal year 2026, we acquired the publishing and recorded music catalog of Iraqi production house HFM production and Kuwaiti Singer-Songwriter Essa [indiscernible] and executed a publishing deal with Moroccan Artists producer, 88 Young. MENA continues to be one of the fastest-growing regions with recorded revenues increasing by 15.2% in 2025 and with growth projections reaching $8.5 billion by 2030, driven by streaming and digital adoption. We believe the proven success and expertise of our team and platform in MENA will continue to provide us a competitive advantage in securing top talent and capitalizing on the momentum across the region.

Our ability to attract high-caliber talent globally is due in large part to the quality and performance of our existing portfolio, unlocking value for our assets and identifying opportunities to introduce our music to the next generation of fans are key factors of that growth. In the last fiscal year, we partnered with leading global brands, including Anthoropic, Volkswagen, Netflix, Lexus and Amazon and had placements in major feature films and television shows such as hoppers, Happy Gilmore 2, Marvel's Fantastic 4 and Stranger Things. This drove continued strength in our Sync business with growth of 5% in Music Publishing and 39% in recorded music year-over-year.

As we have previously noted, the music industry continues to demonstrate resilience within overall market fluctuations. The recorded music industry grew 6% globally in 2025, according to the IFPI, while music publishing global revenues grew 9.5% globally, according to music and copyright 2026 report. Against this backdrop, Reservoir also continued our growth trajectory. Digital revenue increased 7% in Music Publishing and 18% in recorded music. We were also proud to be included in Billboard's full year top 10 market share ranking with Sabrina Carpenter, espresso co-written by Steph Jones contributing to the company's position. In addition to market share, Reservoirs music boasted commercial and charting successes as well as countless awards throughout fiscal 2026, demonstrating the widely recognized value of the assets and the creators. We curate not only catalogs but also relationships with the creators behind them and are honored to be the partner of choice for so many talented songwriters.

Before turning to our financial performance, I would like to briefly address the previously disclosed nonbinding and unsolicited acquisition proposals received by the company. In March 2026, the Board formed a special committee of independent and disinterested directors to evaluate the proposals, and the special committee engaged Morgan Stanley & Company LLC as its financial adviser and Walktell Lipton, Rosen and Cat as its legal counsel. Beyond that, we have no additional updates to share today, and we'll provide further information as appropriate.

I will now turn the call over to Jim to discuss our fourth quarter and full fiscal year financial results as well as our fiscal 2027 guidance in greater detail. Jim?

Thank you, Golnar, and good morning, everyone. As Golnar highlighted, we executed at a very high level in fiscal 2026, drove strong growth across all our key performance metrics and expect that to continue into fiscal 2027. These results affirm the effectiveness of our strategy, the quality of our portfolio of assets and our ability to acquire new assets for Reservoir's platform while unlocking the fullest potential of their value.

Let's start with a review of the fourth quarter. Revenue for the fourth fiscal quarter was $47.5 million, which was a 15% increase compared to the fourth quarter of fiscal 2025. Strong growth across both segments was led by 27% growth in recorded music and 11% growth in our Music Publishing segment, inclusive of the acquisition of various catalogs. With respect to our operating expenses for the quarter, our overall cost of revenue increased 13% versus the prior year quarter. Our depreciation and amortization costs increased 20% year-over-year due to our continued catalog acquisitions, Company administration expenses saw a 16% increase year-over-year, partially due to costs incurred with our acquisition of viral wave.

Turning to operating performance. fourth quarter OIBDA increased 16% year-over-year to $19.9 million. Adjusted EBITDA increased 16% to $21.2 million, which was largely driven by strong top line growth particularly in our digital category across both segments, partially offset by higher administration expenses. Interest expense was $6.8 million for the quarter compared to $6.1 million in the same period last year. Net income for the fourth quarter of fiscal 2026 was $4.1 million versus $2.7 million in the fourth quarter of fiscal 2025. This resulted in diluted earnings per share for the quarter of $0.07 compared to $0.04 per share in the prior year period.

Moving to our full fiscal year 2026 results. Revenue was $175.7 million above the top end of our previously stated guidance range. This beat was the result of growth in both the Music Publishing and Recorded Music segments, which posted annual growth of 9% and 16%, respectively. Turning to our operating expenses for fiscal 2026. Our overall cost of revenue saw an 8% increase from fiscal 2025. This increase was attributed to a higher revenue base resulting from acquisitions and value enhancement efforts. The lower increase in cost of revenue as compared to the increase in revenue resulted in a higher gross margin in fiscal year 2026. Administration expenses for fiscal 2026 rose 12% from the prior year to $44.7 million, primarily due to higher administrative expenses in both the Music Publishing and Recorded Music segments, and, to a lesser extent, increase in other administrative expenses.

We also incurred costs in fiscal 2026 associated with our acquisition of Iowa. OIBDA in fiscal 2026 increased 12% year-over-year to $69 million, while adjusted EBITDA grew 12% to $73.6 million. These increases were mostly attributable to increased revenues and higher gross margin. As a reminder, we have reconciliations for these metrics in our earnings press release and 10-K filing. Our interest expense was $26.5 million for the full year compared to $21.9 million last year. The higher interest expense was due to an increase in debt resulting from acquisitions of music catalogs and rider signings. Net income for fiscal 2026 was $7.8 million versus $7.7 million last year. The increase in net income was primarily the result of increased operating income as well as a decrease in the loss on fair value of interest rate swaps, partially offset by higher interest expense and income tax expense. This resulted in diluted earnings per share for the year of $0.13 compared to $0.12 per share for fiscal 2025. Our weighted average diluted outstanding share count for the full year is 66 million.

Turning to our segment breakdown for the fourth quarter. Music Publishing generated revenue of $30.9 million in the quarter, which represents an 11% increase when including acquisitions versus the same period last year. Our digital revenue increased $3.2 million or 24% to $16.9 million and performance revenue decreased by 16% to $5.5 million. Synchronization revenue in the Publishing segment totaled $5.8 million, a 6% increase from the fourth quarter of last year. This is primarily due to the timing of licenses. Mechanical revenue within the Publishing segment posted a 16% increase year-over-year to $1.3 million. Other revenue within the Publishing segment was $1.4 million, an increase of 20% year-over-year. Our Recorded Music segment generated $15.2 million in revenue, representing an increase of 27% versus the prior year quarter. Digital revenue within the reported segment increased 17% and primarily due to subscriber growth and price increases at DSPs, while physical revenue increased 35%. Our synchronization revenue increased 161% as a result of the timing of licenses, while neighboring rights increased 18% to $1.4 million, in part due to additional direct affiliations with collection societies.

For the full year, our Music Publishing segment revenue rose 9% compared to the prior year. Our improvement is largely a result of price increases at multiple music streaming services as well as the expansion of our catalog through M&A. Additionally, synchronization revenue increased because of the timing of licenses and performance revenue grew 14% as a result of hit songs. Recorded music revenues increased 16% compared to fiscal 2025. The growth is attributable to the acquisition of additional music catalogs and continued user growth and price increases at multiple streaming services. This was partially offset by the nonrecurrence of royalty recoveries in the prior year related to underreported usage for music catalogs. Additionally, the increase in revenue was aided by an increase in synchronization revenue driven by the timing of licenses.

Let's move on to our balance sheet. As of March 31, cash flows from operating activities increased by $4.9 million year-over-year to $50.1 million due to an increase in earnings as well as an increase in cash provided by working capital. We closed the year with total liquidity of $117.1 million comprised of $25.9 million of cash on hand and $91.2 million available under our revolver, which gives us the capital to fund our strategic objectives. We ended the year with $455.7 million of total debt which was net of $3.1 million of deferred financing costs, and thus, we maintained $429.8 million of net debt. That compares to net debt of $366.7 million as of last fiscal year-end.

Turning to the 2027 fiscal year. We expect revenue to be in the range of $186 million to $191 million and adjusted EBITDA to be in the range of $75 million to $79 million. After our strong results in fiscal year 2026, we believe we are well positioned to continue our track record of growth. Remaining true to our proven capital deployment strategy and value enhancement efforts combined with disciplined cost management and consistent operating cash flows should enable us to deliver on our initiated fiscal year 2027 guidance ranges.

With that, I'll now pass the call back to Golnar.

Thank you, Jim. At Reservoir, we take a long-term view, focused on protecting our creators, growing the value of their work and running the business with discipline. That approach has driven strong growth and consistent cash flow since our debut as a public company and positions us well for sustained long-term growth.

With that, we will now open the line for questions.

[Operator Instructions] Our first question comes from Griffin Boss with B. Riley Securities.

Apologize for a background noise here. I just want to start off on viral wave. Golnar, you mentioned the over 30 employees that come with that acquisition, cross-border collaboration activities. But is there any more context you could give us as to the size or scale of the catalog that viral wave brings? Is that more early days and there's opportunity for expansion? Just curious if there's anything on the financial side there. You could elaborate on?

Not specifically. I will say that it is a business that comes with a stable of existing clients and existing relationships and existing product, hence the headcount. and we plan on expanding on that, but it's an investment in an entity that is already an established business.

Yes. And I would just add to that Griffin that, as Golnar said, it's an established business. It's a distribution business. So a little different than some of the other businesses that we've been in, a little bit lower margin, but we are excited about the way it will expand our opportunities in the region.

Okay. I appreciate that color. And then -- so next for me on the guidance Jim, if you take the midpoint there, it looks like it's implying a slight step down in EBITDA margin for '27. Is the expectation there just higher administrative expenses going forward? Or is it something else?

Yes. There's a couple of things there. I would say, one, not that viral wave is the most significant piece certainly of our consolidated financials, but it is a lower-margin business. So that slightly impacts that, and we are continuing to make some investments on the frontline side of the recorded business, and that is certainly an area where we are very cautious about the revenue and conservative with respect to the cost associated with it. So that's why you're seeing a little bit of that step down in guided EBITDA margin.

Okay. Got it. That's helpful. And then just one more if I could squeeze it in. I'm just curious if I could get any insights from Golnar into the CRB proceedings Obviously, we're relatively early days there, but I would love to hear kind of what your expectation is, generally speaking, if you have one in terms of kind of what you're looking for to get negotiated there over the next couple of years?

Yes. There isn't any material update at this point, still sort of in discussion phase. I think we remain optimistic, but that's not optimism that we bake into our own forecast. We do, however, remain optimistic [ Insofar ] as getting to an agreement and having a positive impact of the share of income for songwriters and publishers.

[Operator Instructions] Our next question comes from Richard Baldry with Roth Capital.

I want to see if you dig a little deeper into the gross margins. On a blended basis, they set a record high. So I'm sort of curious -- are they trending behind that sustainable? Or do you view it sort of as an outlier and understanding that there is some headwind from the viral wave acquisition. Just curious about the underlying trends to that.

Yes. Certainly, I think the gross margin ticking up a little bit this year. It's a result of some of the acquisitions that we did to the extent that we are acquiring assets where we may retain 100% of the revenue. That's obviously going to have a positive impact on our overall gross margin. And I think you saw a couple of deals this past year that had that type of impact for us. So we don't expect that our gross margin is going to change significantly on a percentage basis, but we may have opportunities for that to tick up slightly, depending on the types of acquisitions that we do. But certainly, as you noted, with respect to the go forward, forecast, we will have the impact of lower-margin deals such as viral wave impacting the gross margins as we move to fiscal '27.

And on an overall sort of adjusted EBITDA basis, is international a headwind at this point because it has yet to get sort of the scale of the rest of the business? Or is it sort of curious that impact and where that heads to.

Yes. I think if you were to isolate just our kind of international operations, certainly, it would be a lower EBITDA margin than our core business. But again, even though we are excited about these regions, and we see a lot of growth opportunity there. It's a very small part of our overall business. So just keep that in mind as you think about it.

Got it. And maybe last for me. You look at the revenue and earnings for fiscal '27. If you talk about seasonality, the business is sort of changing and evolving over time. So curious how seasonal you expect the top and the bottom lines to be next year? And whether that's similar to prior years or is sort of changing

Well, I'd like to think that it's pretty flat quarter-to-quarter. We do sometimes have -- have things that impact and cost spikes in our revenue. It's less about seasonality, though, more about it could be -- in the prior year, we had the royalty recovery wasn't anything to do with seasonality. I just happened to be when we resolve that issue. So we'll continue to have some things that cause our revenue to spike from time to time. But on a baseline view, I expect us to be pretty consistent quarter-to-quarter.

Maybe last for maybe when you look out to the fiscal '27 guide, how much of that do you think is sort of assuming a steady organic growth or any tailwinds from streaming pricing versus acquisitions you know or acquisitions you expect to do?

Yes. I think that from an organic growth standpoint, we expect things to be pretty steady, kind of mid-single digits. We are always tough looking at our catalog at a pretty granular level. So to the extent that we have frontline successes in 1 year, we don't necessarily project those frontline successes going into the next year. We will project the decay that's expected on those new or young copyrights. So you have that impacting our overall view of revenue that's baked into our guidance. Having said that, we have a pretty good track record of having new frontline successes every year. So as we move through the year, we will continue to evaluate where we are.

We have reached the end of the question-and-answer session. I'd now like to turn the call back over to Golnar Khosrowshahi, for the closing comments.

Thank you, operator. The strength of our portfolio and our proven ability to attract award-winning and legendary talent across genres and geographies continues to distinguish our business. We are excited about fiscal year 2027 and look forward to updating you on our progress in a few months. Thank you.

This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.

Greetings, and welcome to the Reservoir Media's Third Quarter Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jackie Marcus, Investor Relations. Thank you. You may begin.

Thank you, operator. 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 year 2026 ended December 31, 2025, 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 Golnar Khosrowshahi, Founder and Chief Executive Officer; and Jim Heindlmeyer, 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 Golnar 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 risk, 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 Golnar.

Thank you, Jackie. Good morning, everyone, and thank you for joining us today. We continue to execute our strategy in the third fiscal quarter with a sustained focus on deepening relationships with our top-tier talent through new ventures, investing in the next generation of hitmakers and expanding our presence in emerging markets.

Organic growth was up 5% year-over-year, underscoring the strength and demand for our catalog. Music Publishing revenue grew another 12%, while Recorded Music revenue for the quarter was up 8% compared to the year ago period. Both Music Publishing and Recorded Music's revenue growth were driven by acquisitions, an increase in Digital revenue and continued growth of music streaming services.

Before reviewing our operational highlights, I want to congratulate the nominees and winners of music's highest honor, the Grammys, held on Sunday in Los Angeles. Our roster contributed to 10 wins across multiple genres. Khris Riddick-Tynes' collaboration Folded by Kehlani won Best R&B Song and Best R&B Performance. Sarah Jarosz and her group, I'm With Her, took home Best Folk Album for Wild and Clear and Blue and Best American Roots Song for Ancient Light. Jony Mitchell received the Best Historical Album Grammy, and Miles Davis' Miles '55, The Prestige Recordings, won Best Album Notes. Our songwriters, Michael League, Steph Jones, Robert Augusta, Mike Chapman, Simon Pilton and John Marco also contributed to wins for Best Alternative Jazz Album, Best Contemporary Country Album, Best Dance Electronic Album and Best Tropical Latin Album. Congratulations to all on a memorable night and an extraordinary year in music.

Turning to the quarter's highlights. Reservoir's portfolio is distinguished by its diversification, spanning iconic catalogs and genre-defining artists alongside new and emerging creators across global markets. This quarter reflected that balance. We announced the acquisition of the publishing and recorded music rights of yacht rock icon, Bertie Higgins, adding evergreen hits, including Key Largo to our portfolio.

As noted last quarter, Reservoir acquired the Miles Davis catalog in September. This January marks the official launch of his centennial year, and we are working closely with the estate and partners to honor his legacy through a global celebration with key integrated moments all year long, including the feature of Miles Davis' Blue In Green as well as his artwork in a recent ad campaign for Lexus. The debut of celebratory centennial logos, numerous planned releases across the various label partners, a co-branded Miles Davis centennial cigar from premium cigar and accessories company, Ferio Tego, a deal between the states official global merchandising and brand licensing partner, Periscope, and premium men's retailer, John Varvatos, a centennial edition of Miles, The Autobiography, several live performances and festival appearances and more.

This quarter was also marked by new partnerships with 2 music icons, R&B legend Gladys Knight, and HipHop icon, TI. The agreement with Gladys Knight includes rights to her income streams across both publishing and master recording catalogs. The deal with TI will see Reservoir work with the acclaimed rap superstar across his entire publishing back catalog and future works as well as select recorded music interests, including master recordings, artist royalties and neighboring rights. These agreements mark our team's proven ability to structure and execute unique flexible deals with legendary talent and further build our portfolio of evergreen hits that are accretive to the portfolio as a whole.

Alongside partnerships with established and legacy talent, investing in the next generation of hitmakers remains central to our growth strategy. We welcomed critically acclaimed band, Say She She, with a global publishing deal covering past and future works. This female-led band is redefining discodelic soul and recently kicked off a North American tour. We also added Allison Veltz Cruz, an in-demand songwriter, in the popular country pop space, with #1 hits and credits for artists, including Matt Stell, Tenille Arts, Jason Aldean, Luke Combs and Lady A.

Also joining the roster this quarter is Britten Newbill, whose pop and R&B song writing and producing credits include hits by Cap Burns, Olivia Dean, Daya, Meghan Trainor and more.

We also continue to invest in high-growth emerging markets. We extended our publishing agreement with multi-platinum Indian hip-hop artists, Divine, now overseen through Reservoir's recently launched subsidiary, PopIndia. Originally signed in 2020, this partnership, including our joint venture with Divine's umbrella company, Gully Gang Entertainment, has helped cultivate new talent across India's hip-hop ecosystem, and we are excited to continue supporting the genre's global growth.

Additionally, we entered into a joint venture with Dan's Hall publisher, Abood Music, and Jamaican Star Cordel Skatta Burrell. Skatta's hit record Coolie Dance Rhythm exemplifies how enduring works can reach new audiences through inventive sampling. With uses in global hits by Pitbull, Lil John, Whitney Houston, Fatman Scoop, Nina Sky, 2025 Grammy-nominated gold selling global hit After Hours by Kehlani and more, Coolie Dance reinforces the long-term value of culturally significant music. Through the joint venture, Reservoir and Abood Music will acquire catalogs and sign and develop Jamaican creators, aimed at further advancing the new generation of Jamaica's music scene.

Our emerging market strategy remains highly impactful with favorable acquisition multiples and streaming growth rates that continue to outpace both the U.S. and Europe. Our performance this quarter is taking place against the backdrop of sustained growth in the global music economy. As reported by music economist Will Page in December, the global value of music copyright reached an all-time high of $47.2 billion for the year prior.

Streaming services continue to follow a relatively regular cadence of price increases, which serve as additional tailwinds for general industry growth. We believe our focus on premium assets, long-term creator partnerships and emerging markets positions us well to drive growth and maximize value creation for our songwriters, our artists and shareholders over time.

I will now turn the call over to Jim to discuss our fiscal third quarter financial performance. Jim?

Thank you, Golnar, and good morning, everyone. Our third quarter results demonstrated another quarter of financial strength, stemming from our ability to acquire quality catalogs and maintain substantial operating leverage. Our confidence to raise our fiscal 2026 guidance as we head into our fourth fiscal quarter is supported by our impressive roster of talent, and we are excited to continue to build upon a successful first 3 quarters of fiscal 2026.

Revenue for the third fiscal quarter was $45.6 million, a 5% year-over-year improvement on an organic basis and an 8% increase when including acquisitions. At a segment level, we posted a 12% increase in Music Publishing revenue and an 8% increase in Recorded Music revenue, both of which were largely driven by an increase in Digital revenue due to the acquisition of additional music catalogs and continued growth at music streaming services.

Total cost increased 8% compared to the prior year's quarter due to a 3% increase in administration expenses, a 7% increase in cost of revenue and a 16% increase in amortization and depreciation expenses. This led to an expansion of operating margins given our 8% revenue growth.

Turning to operating performance for the third fiscal quarter. OIBDA was $18.1 million, an increase of 11% year-over-year, and adjusted EBITDA was also up 11% year-over-year to $19.2 million. Both OIBDA and adjusted EBITDA benefited from revenue growth, but was slightly offset by an increase in administrative expenses.

Interest expense was $6.6 million for the quarter, an increase of $800,000 from the prior year due to an increase in borrowings to support our M&A strategy, which was partially offset by a decrease in interest rates.

Net income for the third fiscal quarter was approximately $2.2 million compared to net income of $5.3 million in the third fiscal quarter of the prior year. The decrease in net income was primarily driven by a loss on fair value of swaps compared to a gain in the prior year period as well as increased interest expense and the change in other income. This was all partially offset by an increase in operating income and a decrease in income tax expense.

Earnings per share for the quarter were $0.03 compared to $0.08 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 12% year-over-year to $30.1 million. This was mainly due to an increase in performance revenue, driven by the strong results from hit songs, and an increase in Digital revenue due to the acquisition of additional catalogs and continued growth of music streaming services.

In our Recorded Music segment, revenue increased by 8% year-over-year to $12.9 million. Recorded Music revenue benefited from Digital revenue growth, driven by continued music streaming growth and the acquisition of catalogs and an increase in neighboring rights revenue. This growth was partially offset by a decrease in Synchronization revenue due to the timing of licenses.

Now let's turn to our balance sheet. As of December 31, 2025, cash flows from operating activities increased by $5.1 million year-over-year to $38.2 million, owing to an increase in OIBDA and cash provided by working capital.

We had total liquidity of $114.8 million, consisting of $20.6 million of cash on hand and $94.2 million available under our revolver. We ended the quarter with total debt of $452.3 million, which was net of $3.6 million of deferred financing costs, and thus, we maintained $431.7 million of net debt. That compares to net debt of $366.7 million as of March 31, 2025.

With respect to our guidance range, we are increasing our full year revenue guidance range of $167 million to $170 million to now reflect $170 million to $173 million, which, at the midpoint, implies growth of 8% versus fiscal 2025.

Similarly, we're raising our adjusted EBITDA guidance range of $70 million to $72 million to now be $71.5 million to $73.5 million, which signals growth of more than 10% over the prior year at the midpoint of the range.

Looking at the fourth fiscal quarter of the year, we believe we are well positioned to achieve our increased full fiscal year guidance ranges. Remaining true to our proven capital deployment strategy continues to position Reservoir to provide long-term value as a partner of choice for worldwide talent, which, combined with our ability to grow the top line without an excess of additional cost, should allow us to continue our track record of growth in the coming quarter and fiscal year 2027.

With that, I'll now pass the call back to Golnar.

Thank you, Jim. As you've heard today, we continue to make progress toward our top line goals while maintaining discipline across costs and the balance sheet. Reservoir remains a trusted partner for songwriters and artists around the globe with a commitment to our creators and value enhancement. Our pipeline is strong and diversified with landmark transactions at attractive returns. We look forward to closing out the fiscal year in the coming weeks.

With that, we will now open the line for questions.

[Operator Instructions] Our first question comes from Griffin Boss with B. Riley Securities.

So first off, given the step-up in debt, I would say it appears to be another robust quarter for catalog acquisition, and you mentioned several of the deals that occurred. Is there anything you can say about how the fourth quarter is shaping up for deal activity? Do you expect it to stay at what has been an elevated clip the past 2 quarters?

Yes, we do. We are on track with continued M&A for this quarter. And obviously, things are subject to timing and timing shifts, but we anticipate to be continuing at the same clip.

Okay. Great. And Golnar, you did mention in your prepared remarks favorable acquisition multiples. So I guess the question is, is it safe to say that you're not seeing any material change generally to the weighted average multiples that you've paid historically?

That's correct, we are not.

Okay. Okay. Great. And then just last one for me, and I'll pass it off. I'm just curious if there's anything that you'd like to say or comment on regarding the activist investors amended 13D filing last night. I think you've been engaged with that specific shareholder for quite a while now, so just curious if there's anything that you wanted to share about the nature of those discussions.

No, I don't have anything to add. I don't have any information to share. We're very much focused on continuing to grow the business and delivering value for all of our constituents.

[Operator Instructions] Our next question comes from Richard Baldry with ROTH Capital.

Fourth quarter implied revenues looks like down a little bit sequentially seasonally. And that is what happened last year, but I feel like third quarter had an unusually high other income line. And in prior years, fourth quarter has typically been seasonally pretty strong. Are there any call-outs on unusual onetime events this time around? Or do you think just typical conservatism?

Rich, last year, we did call out royalty recoveries related to an audit that we completed. There were actually 2 audits we completed last year, 1 in Q3, 1 in Q4. So those certainly impacted the numbers last year. There's nothing unusual that we are expecting in Q4 this year, but we'll have that dynamic with respect to the comps year-over-year.

Okay. And the G&A number had -- last quarter had been up pretty meaningfully year-over-year. This quarter, it's almost flat year-over-year. How do we think about the trending on that, and how to look at it on a go-forward basis?

Well, I think some of those ups and downs in G&A is driven by the small other segment that we have related to our management business, where, as that revenue goes up or down, the commissions that we pay to the actual managers is impacted, and that sits in our G&A line. So that's driving some of those ups and downs that you see. But I think that what you're looking at for this quarter is -- and certainly, when you look at it on a segment level, it's really where we expect to be. We have normal inflationary pressures on our G&A. But other than that, there's nothing that stands out there.

And then last one would be, if you look at the ROIs on deals and the pricing, is there a meaningful difference between international versus domestic? Will that sort of skew where you're looking for deals in the future? How do we think about those sort of growth trends?

It's not a secret that we can acquire at more favorable multiples in the emerging markets or at least in some of the emerging markets. I wouldn't necessarily put Latin in that same category, given that, that pricing is pretty mature and on par with Western markets. So from that point, I would say that given the expansion and the growth that is occurring and projected to continue in those emerging markets, we're looking at some equally more favorable returns on those investments as well.

Got it. And then maybe last one from a very macro level, when you think about price increase at streamers and royalty rates agreements at the highest level, are there any tailwinds, headwinds we should be thinking about as we look out to '27?

I think there's a bit of both. I think we have uncertainty around CRB, and that process is underway. Obviously, that's not a process that is new to us, and we've gone through that before. We have tailwinds in so far as subscription number increases, tailwinds in so far as just the emerging markets expansion, people coming online, price increases across streaming platforms. So I would say there's a bit of both, but we continue to be -- we continue to believe that, on a net basis, there are -- we are looking at tailwinds and continued growth in music.

We have reached the end of our question-and-answer session as there are no further questions at this time. I would now like to turn the floor back over to management for closing comments.

Thank you, operator. We appreciate your support and interest in Reservoir, and we look forward to sharing our full fiscal year results with you later this spring. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Greetings, and welcome to the Reservoir Media Q2 Fiscal 2026 Earnings Conference Call. Please note this conference is being recorded. I will now turn the conference over to your host, Ms. Jackie Marcus. Please go ahead. Greetings, and welcome to

The Reservoir Media Call. Reservoir Media issued a press release with results for its second quarter of fiscal year 2026 ended September 30, 2025, 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 Golnar Khosrowshahi, Founder and Chief Executive Officer; and Jim Heindlmeyer, 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 Golnar 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 Golnar.

Thank you, Jackie. Good morning, everyone, and thank you for joining us today. Our performance in the second fiscal quarter reflects the effectiveness of our long-term growth strategy, leveraging a diverse high-quality catalog and scaling through a balanced mix of catalog development strategic signings and global diversification. This disciplined approach continues to strengthen our market position and create new opportunities for value creation. We grew 12% on the top line with 7% from organic revenue and 5% from acquisitions. We continue to see great demand for our assets with notable and high-value sync placements, increased engagement in emerging markets and strong listenership of our catalog.

Reservoir's established reputation as caretakers of legacies recently earned us the exciting opportunity to welcome the catalog of the iconic innovator and pop culture figure, Miles Davis. In September, we announced our acquisition of Davis' publishing catalog as well as rights to his recorded music and name and likeness. With the objective of growing digital listenership and cultivating new lines, together with the estate, we have hit the ground running to pursue and collaborate on celebrations commemorating the 100th anniversary of Davis' birth next year in 2026.

A few of those activities include miles and Juliet, the upcoming feature film recounting Davis' Love affair with Julie at Greco developed in partnership with River Road Entertainment and Mixesackers Jodi films. A live symptomatic show, pairing gave us is iconic sound with original orchestrations and cherished footage bringing his legacy to life. An international tour of MEB formerly miles electric band with 4 nights of special programming at San Francisco Jazz in March of next year reissues and releases of Davis' music including a box set of the complete live of the plug nickel 1965 live album expected January 30 and others.

Plus co-branded collaborations across fashion, lifestyle, tech and entertainment products and offerings, a widespread press and digital marketing campaign and more. Capitalizing on the Centennial of a once-in-a-lifetime talent, we are excited to celebrate Miles and his music while also enhancing the long-term value of the catalog. Last month, we also announced the extension of our publishing deal for the catalog of seminal musician, Nick Drake as well as a new deal with the Drake state to now also represent the catalog of Nick's mother Molly Drink a pot and songwriter. Since 2021, Reservoir has represented the Nick catalog with our partners at Blue Rico Music Publishing.

These renewed and expanded agreements not only reinforce the strength of our long-standing relationships, but also highlight our strong track record in client retention. Our ability to consistently maintain and grow these partnerships speaks to the trust our clients place in us, the value we deliver and the proactive collaborative approach we take in managing and developing iconic catalogs over time. Expanding our geographic footprint is another critical component of our long-term growth strategy.

Just a few weeks ago, we announced 2 new deals in conjunction with Pop Arabia for the catalogs of Iraqi production house, HFM production; and of Kuwaiti Singer-Songwriter [indiscernible]. These deals mark Reservoir and Pap Arabia's first-ever Iraqi and QAD catalogs, an important milestone as we continue to grow our presence in the MENA region. Both HFM and ESA have demonstrated an ability to create high-quality music, which has cultivated a fan base that extends throughout their home countries and also across the region.

We also welcomed Moroccan Rapper, Singer-Songwriter and producer, 88 Young to the family. And our boots on the ground approach to building relationships and earning the trust of some of the most influential and up-and-coming artists in these growing and evolving markets has proven to be both highly effective and replicable. We are excited to grow our portfolio with these diverse catalogs, while providing support to expand their reach to more of MENA and beyond.

We further grew our catalog this quarter with the additions of talent, including Emily Reed, a platinum selling songwriter who just took home to SocanCountry Music Awards. Dave Pittenger, a Grammy and Britt award-nominated songwriter and producer; and Bobby Vincent, the celebrated 1960s Teen idle, whose evergreen hit, Mr. Lonely continues to be a sync and sample mainstay to this day. Another component of our growth strategy is identifying and cultivating the next generation of hit makers who are driving the future of music across genres.

Reservoirs roster contributed to some of the most highly anticipated albums and most streamed songs during the quarter. And just a few of these notable collaborations and achievements include Morgan Wallen album, I'm the problem, which featured 2 Wizz collaborations, Missing and Smile held the #1 spot on the top 200 for 14 weeks straight through the end of August. Two number one, by 2 chains for his co-rights Yukon by Justin Beber, topping the hot R&B song chart and Salut of CartV's #1 top 200 album, am I the drama.

Madison McFerron feature and a reservoir catalog cut sample on Tyler the creators album, don't tap the glass, which reached #1 on both the top 200 and top hip-hop album charts. A strong indication of the value of the catalog can be found in the year-over-year growth in our sync revenue across both segments for the quarter. Brands continue to utilize our timeless classics from John Denver, Dr. Dre, Poland Dalal to occur in hits from Future Flex, Rene Rap and Saidi to connect with consumers.

Our SYNC team continues to deliver placements in some of the season's most popular media from hit summer television shows such as the Summer I turn pretty and 2 of Netflix's series, Too Much and Hit Makers to feature films like this summer's hit blockbusters Happy Gilmore 2, I Know What You Did Last Summer and Marvel's Fantastic 4.

Moreover, we continue to unlock value across our evergreen catalog. As recently announced, we have granted an option to Meramec for the classic Halloween hit Monster Mash to be adapted into a new feature-length animated film currently in development. Our industry is built on relationships and we are proud of our reputation as a curator of catalogs and a platform for the next generation to bring their art to life, backed by a highly skilled team with a sharp eye for value-enhancing opportunities, we continue to identify and unlock growth across our portfolio. The quality of an enduring demand for our assets drive reliable cash flows, positioning us to further scale our business strategically across all key growth areas. I will now turn the call over to Jim to discuss our second fiscal quarter financial results in greater detail. Jim?

Thank you, Golnar, and good morning, everyone. PAUSE Our second fiscal quarter results exceeded our expectations and exhibit not only the quality of our portfolio of assets, but also the ongoing execution of our proven strategy to integrate those assets into our platform and enhance their value. Revenue for the second fiscal quarter was $45.4 million, a 7% year-over-year improvement on an organic basis and a 12% increase when including acquisitions. This was led by the 21% growth in our Recorded Music segment and the 8% increase we had in Music Publishing. Turning to our operating expenses.

The total cost of revenue increased 11% compared to the prior year quarter, while our administration expense and amortization nation costs grew 15% and 18%, respectively, versus the prior year. Looking at operating performance for the second quarter, OIBDA was $18.2 million, an increase of 10% year-over-year and adjusted EBITDA was also up 10% to $19.4 million compared to our fiscal Q2 in the prior year. The increases in OIBDA and adjusted EBITDA were due to an increase in revenue and gross margin partially offset by an increase in administration expenses. Interest expense was $6.7 million for the quarter versus $5 million in the prior year driven primarily by a higher debt balance due to the use of funds and acquisitions of music catalogs and rider signings as well as an increase in effective interest rates.

Net income for the second quarter was approximately $2.2 million compared to net income of $152,000 in the second quarter of fiscal 2025. The increase in net income was driven primarily by the decrease in loss on fair value of swaps and an increase in operating income, partially offset by increases in interest expense, loss on foreign exchange and income tax expense.

This resulted in diluted earnings per share for the quarter of $0.03 compared to $0.00 per share in the prior year quarter. Our weighted average diluted outstanding share count during the quarter was approximately $66.3 million. Now let's dive into our segment review for the quarter. Music Publishing had an 8% increase in revenue versus the prior year quarter at $30.9 million due to an increase of 47% in performance revenue driven by the strength of hit songs an increase in mechanical revenue from physical sales and the acquisition of new catalogs as well as an increase in digital revenue. These increases were partially offset by a decrease in publishing synchronization revenue driven by the timing of licenses.

Moving to our Recorded Music segment. We had a 21% increase to $13 million in revenue compared to our Q2 last year. This increase was primarily due to an impressive 20% increase in digital revenue driven by the acquisition of catalogs and continued growth of music streaming services and real synchronization revenue driven by the timing of licenses to run to our balance sheet.

As of September 30, 2025, cash provided by operating activities was $25.3 million, which was an increase of $3.4 million compared to the prior year period primarily due to an increase in cash provided by working capital and an increase in earnings. We had total available liquidity of $152.1 million consisting of $27.9 million of cash on hand and $124.2 million available under our revolver. We ended the quarter with total debt of $421.8 million, which was net of $4 million of deferred finance costs, and thus, we maintained $393.9 million of net debt. That compares to net debt of $366.7 million as of March 31, 2025.

Relating to our guidance range, we are increasing and narrowing our revenue guidance range of $164 million to $169 million to now reflect $167 million to $170 million which at the midpoint implies growth of 6% versus fiscal 2025. Similarly, we are bringing up the bottom end and narrowing our adjusted EBITDA guidance range of $68 million to $72 million to now be $70 million to $72 million, which signals growth of 8% over the prior year at the midpoint of the range. We will continue to monitor our forecast for the second half of the fiscal year, and we'll provide any refinements to our guidance when it's prudent to do so.

As we look forward to the balance of fiscal year 2026, we will continue to utilize our successful value enhancement efforts to drive above-market growth on our acquisitions. We believe that those efforts, along with our growing operating cash flow and sound capital deployment strategy will allow us to achieve our increased forecasted revenue and adjusted EBITDA guidance ranges for the full year. With that, I'll now pass the call back to Golnar.

Thank you, Jim. Having just reached the halfway point of our fiscal year, we are well positioned to achieve our full year financial goals. The addition of musical icon Miles Davis to our portfolio of assets provides us with access to unique value enhancement opportunities. It also serves as another proof point for states and Living Legends that the most important artists of genre or generation placed their trust with reservoir. We have an active and robust deal pipeline of over $1 billion and look forward to sharing news of our next partnerships with you.

With that, we will now open the line for questions.

[Operator Instructions] And our first question comes from Griffin Boss with B. Riley Securities.

So strong organic growth, that's great to see 7% year-over-year. Is there any context or further context you can give it to what's driving that? Or maybe how you see that comparing to the broader industry? Is this a result of initiatives that reservoir itself has implemented after acquiring certain catalogs or rights? Or is this just -- is it primarily maybe a function of favorable timing on existing catalog?

Griffin, so I think that with respect to 7% organic growth, that's really about where we would expect to be with some of the tailwinds in the industry and expected growth in the industry. We're always working to maximize and grow the new assets that we acquire. We're often able to add value and really see some significant organic growth on those assets when we first bring them into the fold. We're certainly looking forward to doing that on miles Davis. But we also have specific factors that might go the other way, as we have hit on in the prior year that come down in the current year. All that goes into organic growth. But I would say 7% is kind of the baseline of where we would expect to be, and we always strive to do better than the industry. So that's kind of how we look at it.

And then I wanted to chip over, I just have a couple of quick ones regarding Davis catalog, then I'll pass it off. But in terms of that acquisition, Golnar, you just mentioned that pipeline still sits at over $1 billion, which is nice to see. Was Mile Davis a part of that pipeline that you saw? Or was this an off-market deal? Can you just discuss maybe the dynamics there?

Sure. It was -- Malls Davis was included in the pipeline. I wouldn't characterize it as off market as there was a process around that transaction. PAUSE with a conversation that began with the state in November of 2023. And then from there, the relationship evolved and a formal process was kicked off.

Okay. Got it. And just in terms of -- when you're talking about collaborating with the estate there on these value enhancement opportunities, and you mentioned the number expected for the centennial in 2026. Is there going to be maybe a step-up in administration administrative expenses or other OpEx associated with that versus maybe what you would expect to see had you not acquired that catalog?

No. From an administration standpoint, it doesn't have an impact on our ingestion and the resources around our ingestion we would be reallocating marketing resource to focus on these initiatives, but that's all being handled through our internal teams at this moment.

Understood. -- it's great to see the ongoing process here.

And our next question comes from Richard Baldry with Roth Capital Partners.

You talked about sort of the scale or timing of some of the onetime things that appear to be ahead like the Monster Mash movie or Miles Data birthday events. Are they similar to things like we've seen when you did Dalal, -- would it be less pronounced or more? And when would those tend to be roll into the P&L.

Those are certainly onetime events, and I anticipate both of the examples that you cited would be coming through in calendar '20 -- beginning in calendar '26. PAUSE Specific to miles, that's exactly -- that's when the Centennial begins, and we look at that as a 12- to 18-month window of activation that would be contributing. So -- and we view those as onetime events that would contribute to long-term value. So there would be some sustainable benefits that we would have -- and the G&A side.

Came down a little bit sequentially. How do we think about that going forward? Is sort of the first half run rate, what we should be thinking about? Was there something onetime in the first quarter that came down until second quarter is more where we should be thinking for modeling?

Yes. I think that we -- the driver of changes in -- on the G&A side is largely driven by the management business. You see that in the other revenue that we report and the manager compensation sits in G&A, but it's really driven by that revenue. So as that goes up or down from quarter-to-quarter, it's going to have an impact our G&A.

I would say that putting that piece aside, we're really at about the run rate that we expect to be in Q2 for the balance of the year. some minor pushes and pulls, but nothing significant on the other 2 segments.

Last for me. If we look at the organic growth, is there a way to piece to the park, you hear more and more about pricing on the sort of digital subscription side. How much of that you think is baked in already? Or it's just sort of you think will be a steady-state organic expander versus PAUSE your own efforts to drive things like zinc and broader you sit to the catalog.

Yes. It's really a mix of all of that. When we think about industry growth, we certainly think about subscriber growth. We think about price increases that are anticipated and expected. And then we have the things that are more within our control, our own initiatives of increasing the value on assets that maybe we have recently acquired or taking advantage of specific opportunities for things that have been in our catalog for a long time. Monster Mash is a good example of that, where we look forward to increasing the revenue on PAUSE asset as opportunities arise, and we'll have that coming into next year. So it's really a mix of all of those things.

This now concludes our question-and-answer session. I would like to turn the floor back over to Golnar Khosrowshahi for closing comments.

Thank you, operator. We remain on track to achieve our full year financial guidance through top line expansion and continued cost containment. We believe our portfolio is a best-in-class representation of the importance of diversity and music and its ability to bring fans from around the world together. We appreciate your support and interest in reservoir, and we'll speak with you in the new year. Thank you. Ladies and gentlemen, thank you for your.

Participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.