Shares of Reservoir Media, Inc. (NASDAQ: RSVR) rose 3.7% to $7.49 on Thursday, following the independent music company’s third-quarter fiscal 2026 results. Strong demand for its music catalog and digital streaming drove an 8% increase in total revenue, prompting management to upgrade its full-year 2026 outlook.
Company Description
Reservoir Media, Inc. is an independent music company headquartered in New York City with a global presence across major hubs, including Nashville, London, Abu Dhabi, and Mumbai. The company operates primarily in music publishing and recorded music, representing a catalog of over 150,000 copyrights and 36,000 master recordings. Its end markets include digital streaming platforms, film and television synchronization, and physical media distribution.
Market Performance and Valuation
- Current Stock Price: $7.49 (as of Feb 5, 2026)
- Market Capitalization: Approximately $491.26 million
- 52-Week Context: Shares have traded between a low of $6.56 and a high of $8.95 over the past year. The current price reflects a recovery as the company integrates recent high-profile acquisitions.
- Valuation: Reservoir carries a trailing P/E ratio of 51.56x. This premium valuation is consistent with high-growth independent music rights owners, reflecting the compounding nature of streaming-based royalty assets.
Third Quarter and YTD Fiscal 2026 Results
Reservoir reported results for the quarter ended December 31, 2025:
- Q3 Revenue: $45.6 million, an 8% increase year-over-year (5% organic growth), exceeding the $42.6 million consensus.
- Adjusted Diluted EPS: $0.03, compared to $0.08 in the year-ago period, but beating the $0.02 estimate.
- Profitability Metrics: * OIBDA: Increased 11% to $18.1 million.
- Adjusted EBITDA: Rose 11% to $19.2 million, driven by improved operating leverage.
- Nine-Month Revenue: $128.2 million, up 9% year-over-year.
- Net Income: Fell to $2.2 million (from $5.3 million in Q3 FY25), primarily due to non-operating factors including higher interest expenses and a $0.3 million loss on interest rate swaps.
Updated Fiscal 2026 Guidance
The company raised its full-year targets to reflect strong digital performance:
- Revenue Guidance: Increased to $170 million to $173 million (previously $167M–$170M).
- Adjusted EBITDA: Raised to $71.5 million to $73.5 million, targeting double-digit growth.
Macro Pressures and Risk Factors
- Interest Expense & Leverage: Total debt rose to $452.3 million as the company utilized its credit facility for catalog M&A. Quarterly interest expense jumped to $6.6 million, impacting GAAP net income despite strong operating cash flow of $38.2 million.
- Emerging Markets: The company highlighted new joint ventures in India (Pop India) and Jamaica (Abood Music). While these markets offer favorable acquisition multiples and high streaming growth, they present currency and regulatory risks.
- Catalog Management: Management emphasized plans for the upcoming Miles Davis centennial, leveraging the catalog for merchandise, licensing, and live performances to drive high-margin synchronization and mechanical revenue.
SWOT Analysis
| Strengths | Weaknesses |
| Strong 12% growth in core Music Publishing revenue. | High debt-to-equity ratio driven by catalog financing. |
| Robust operating cash flow ($38.2M) and liquidity ($114.8M). | GAAP earnings sensitivity to interest rate swap valuations. |
| Opportunities | Threats |
| Aggressive expansion into high-growth emerging markets. | Shifts in streaming payout structures by major platforms. |
| High-margin “centennial” licensing for the Miles Davis catalog. | Macro-inflationary impact on physical media and sync demand. |