Reservoir Media (NASDAQ:RSVR) reported financial results for its second quarter of fiscal 2026, delivering a top-line revenue beat while earnings per share fell short of analyst expectations. The market reaction in pre-market trading reflected this mixed outcome, with shares trading lower.
Quarterly Performance Versus Estimates
The independent music company reported revenue of $45.4 million for the quarter, which represents a 12% increase year-over-year. This figure surpassed the analyst consensus estimate of $44.0 million. However, the company's non-GAAP earnings per share came in at $0.03, which was below the estimated $0.044.
The key quarterly comparisons are as follows:
- Revenue: $45.4 million reported vs. $44.0 million estimated
- Earnings Per Share (Non-GAAP): $0.03 reported vs. $0.044 estimated
Financial and Operational Highlights
Beyond the headline earnings figures, the quarter was marked by solid operational growth and strategic catalog expansion.
- Revenue Growth: Total revenue grew 12% year-over-year to $45.4 million. On an organic basis, revenue increased by 7%.
- Segment Performance: The company's two main segments both showed strength.
- Music Publishing revenue rose 8% to $30.9 million.
- Recorded Music revenue saw a significant 21% jump to $13.0 million, driven by digital and synchronization revenue growth.
- Profitability Metrics: Adjusted EBITDA increased 10% to $19.4 million. Net income was $2.2 million, a substantial improvement from $0.2 million in the prior year's quarter.
- Strategic Acquisitions: The quarter was highlighted by the acquisition of the publishing catalog of jazz legend Miles Davis, alongside rights to his recorded music and name and likeness. The company also extended its publishing deal for the catalog of Nick Drake and executed new agreements in emerging markets.
Raised Fiscal 2026 Outlook
Providing further insight into its performance trajectory, Reservoir Media raised its financial outlook for the full fiscal year 2026. The company now expects:
- Revenue: Between $167 million and $170 million
- Adjusted EBITDA: Between $70 million and $72 million
This updated guidance suggests a mid-point revenue growth of approximately 6% and Adjusted EBITDA growth of 8% for the fiscal year. The company's revenue outlook appears conservative compared to the current analyst sales estimate of $170.08 million for the full year, while providing a clear forecast for profitability growth.
Market Reaction and Analysis
The negative pre-market price action following the earnings release suggests investor focus may have settled on the earnings per share miss, despite the revenue beat and raised full-year guidance. The company's increased debt level, used to fund acquisitions like the Miles Davis catalog, and associated higher interest expense were factors in the lower net income relative to operational gains. The market appears to be weighing the short-term earnings pressure against the long-term value of the newly acquired music rights and the company's demonstrated top-line growth.
For a detailed look at upcoming earnings dates and analyst estimates, you can review the earnings and estimates page for RSVR.
Disclaimer: This article is for informational purposes only and is not intended as investment advice.
