Thank you for standing by and welcome to Reservoir's First Quarter Fiscal 2023 Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Alec Buchmelter, Investor Relations. Please go ahead.

Thank you. operator. Good morning, everyone and thank you for participating in today's earnings conference call. Reservoir Media issued an earnings press release with results for its first quarter fiscal year 2023, ended June 30, 2022 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 US 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. Golnar?

Thank you, Alec. Good morning, everyone and thank you for joining us today. I'm extremely excited to be here today to discuss our fiscal Q1, 2023 results. We started fiscal 2023 very strong carrying over the positive momentum we had last year. And that puts us on track to achieve our objectives for the year. During the quarter, we remained focused on our goal of building and optimizing our already diversified portfolio through organic growth and strategic M&A. This execution against our growth strategy coupled with continued tailwinds from a healthy music industry drove an impressive quarter for the company. Notably we exceeded our internal expectations with 46% top line growth during the quarter of which 14% was organic. We also expanded our core profitability as measured by OIBDA and adjusted EBITDA at 56% and 73% respectively, showing the power and operating leverage potential of our business model. Before I turn the call over to Jim to discuss our financial performance in more detail, I'd like to share a high-level view of the industry trends that we are seeing. How Reservoir is positioned within to benefit from these trends and share some notable deal highlights. Even with a cloudy macroeconomic environment, we continue to see strong secular growth in the music industry. Having worked in this industry for most of my career I want to offer that this has proven to be a very consistent business across a variety of economic cycles. In addition to that resilience, the world is still in the relatively early stages of the streaming era which includes not just growth in traditional consumption, but a lot of innovation leading to a proliferation of novel access points. We are seeing expanded opportunities emerge day after day including new ways to consume music through video gaming and…

Thank you, Golnar and good morning, everyone. As Golnar mentioned, we're off to a strong start in fiscal 2023, as we surpassed our internal expectations for the quarter on revenue and adjusted EBITDA while continuing to utilize a significant cash-generating power of our business to deploy capital towards strategic M&A and further diversifying our roster with accretive catalog and future deals. Now let's touch on our financial results for the first quarter and our expectations and priorities for the remainder of the year. Revenue for the first fiscal quarter was $24.3 million, which represented a 46% increase from the first quarter of fiscal 2022. That included 14% growth organically, which was largely driven by the hard work of our value enhancement teams. Our improvement on the top line in Q1 was driven by double-digit growth across both of our segments, which included 80% year-over-year growth in our recorded music segment. Looking at operating expenses for the quarter, our overall cost of revenue saw a 30% increase from the first quarter of fiscal 2022. As noted on the last couple of calls, our depreciation and amortization cost increased year-over-year due to our continued catalog acquisitions. Company administration expenses saw an increase of 63% from the prior year due to non-cash stock-based compensation related to our public listing and the ongoing cost of being a public company that we did not have in Q1 last year. Note that this will be the last quarter where the comparable year ago period does not have costs associated with being a public company. Going forward, these costs will be embedded in the prior year period, making our year-over-year operating expenses more comparable. We believe there is inherent operating leverage in our business that will be exhibited throughout the year, as our operating expenses become more…

Thank you Jim. As we look forward, our business is ideally positioned to benefit from long-term secular growth in the music industry. Our organic growth remains strong and we will continue to add to our roster through disciplined and strategic M&A. Our financial and operational performance continued to show stability and resilience. And as Jim mentioned, we are reiterating our financial outlook for the year. Despite rising interest rates and market uncertainty, we are maintaining our expectations for the fiscal year because we are confident in our durable business model and our ability to execute on our pipeline of potential deals including off-market deals. Stated on the last call with our friendly debt covenants and the predictable cash flows our business generates, we have the ability to deploy the capital required to meet our fiscal 2023 strategic investment target. We will continue to focus on optimizing the operations of our existing business while executing on our inorganic growth strategy by pursuing high quality deals with significant upside. We are building Reservoir for the long-term and remain extremely confident about our positioning and our strategy. We also will continue to be disciplined in our approach to achieve sustainable growth and margin improvement. As previously stated the music industry continues to grow and our roster has appreciated in value with the industry and with the innovation we bring to enhance it. To conclude, we remain focused on continuing to create value for our roster of artists as well as our shareholders. Overall, we are very pleased with the strong start to the year and we are very excited for what the future holds at Reservoir. With that, we will now open the line for questions.

Thank you. [Operator Instructions] Our first question comes from Richard Baldry with ROTH. You may proceed.

Thanks. Congrats on the great quarter. Sort of curious, can you talk a little bit more about the CRB decision in terms of are there any other appeal avenues for the service providers to keep trying to fight that, or have those essentially all been exhausted? So kind of understand the certainty around that and maybe any timing to kind of move forward with the retroactive payments? Thanks.

Sure. How are you doing, Richard? This is Jim. So the CRB process, it still has various procedural pieces to get through. There may be one point where either of the parties can file some additional motions. Although, I think that's more to do with procedure than going back into an appeal is kind of where we fall out with that. With respect to timing, our expectation is that over the coming months, the CRB will finalize what they need to do in terms of a final determination that's reviewed by the parties. It's ultimately submitted to the US copyright office and will eventually be published to the Federal Register, which is when the rates will become effective. And from that point the services will have six months to complete their analysis of the retroactive adjustments. So, we're expecting in terms of timing for payment to really be mid to late 2023.

Great. And my understanding is that that still affects a year's old decision-making. So maybe talk about what the drivers are on the next sort of rate setting. What do you feel what are the timing outlook or the drivers behind them? Does it still look like those rates can go higher over the long-term with the next rate setting?

Hi, Rich. How are you? It’s Golnar. So as far as CRB four goes that process is underway and we're really not in a position to define what those rates will be. Hopefully, they will move upwards. But at this point, it is -- we don't have any information to provide.

Okay. So – and switching gears sort of curious in the deal pipeline macro. I know you're insulated in terms of your current business, but sort of curious whether the massive disturbances in the macro world are changing with pipelines expectations from deal terms or if the deal pipeline is also as insulated as the revenue streams are. Thanks.

I think, we're -- still a little too early for us to tell. Deal flow is robust. Perhaps expectations may change. I think the macroeconomic issues affect everybody insofar as cost of capital goes. And perhaps we will see some impacts there over the course of the next few months on deal flow on how transactions trade at what multiples, et cetera. There's not enough movement in data as yet to quantify any kind of impact there. I will say that I suppose the part that has shown the most insulation thus far is the deal flow and that remains quite robust.

Thanks. And last for me would be the organic growth has continued to be very strong. I know you're proactive sync efforts are a lot of that, but also the growth in the digital end markets. Can you kind of revisit how much or how little incremental internal investments you need to support that? A lot of companies with that organic growth would have to be adding a lot internally to keep up. I think you're in a much different position, but maybe talk about how little you need to do to keep up that type of growth? Thanks.

Sure. So on that front, I'd say, over the last quarter or two, we have added a couple of resources on our synchronization team and that's already paying dividends. But to your point, it's really pretty minimal in terms of incremental costs that we add or incremental resources that we add to be able to achieve those results. It's something that we are always evaluating and we want to be prudent about adding resources both to take advantage of the opportunities that are in front of us, but also with an eye towards controlling our costs. So the synchronization team is certainly an area that we constantly focus on for that. And also I would say on our digital licensing, we are always looking to make sure that we are properly resourced there to take advantage of the licensing opportunities in front of us, whether it's new alternative revenue sources or existing platforms where that may require more focus. But similar to the synchronization side, we do not need to add significant resources there. We're well placed to be able to handle what's in front of us and still achieve good organic growth on that front.

Great. Thanks and congrats again on the quarter.

Thanks.

Thank you.

Thank you. One moment for question. Our next question comes from Alex Fuhrman with Craig-Hallum. You may proceed.

Great. Thanks guys for taking my questions and congratulations on another very strong and very consistent quarter. I wanted to ask about the guidance a little bit. It seems like you just grew something like 14% organically in the first quarter. And I know obviously that's a small quarter seasonally for you usually the June quarter, but coming off of 20% growth organically in the quarter before it. Your guidance is looking for the year for growth a little bit less than 14%. So just trying to size that up a little bit. Is that maybe just being a little bit conservative given that the vast majority of the year is still in front of us, or is it just the natural evolution that as you get bigger and your catalog becomes more seasoned and you make more acquisitions that kind of 14% to 20% growth we've seen over the last couple of quarters? Is it inevitable but that will slow down into sort of the low to mid-teens over the next couple of years? If you could just help us size that up a little bit that would be helpful.

Sure. So we've articulated in the past that a lot of times we achieve significant value enhancement and putting that into the bucket of organic growth in the first 12 months to 24 months that we acquire assets. We get them up to what we consider to be more of a proper run rate. And then we're going to see a little bit lower growth on those assets as we move forward. As our base of our catalog gets bigger and our ongoing acquisitions are potentially a smaller piece of the pie as we move forward you may see some of that inching down of our overall organic growth. Again to your point as we get bigger and acquisitions are a smaller piece of that. And then there's also certainly a little bit of the seasonality that might be playing into some of those for the first quarter. As you pointed out, Q1 is typically our lightest quarter. I think that we are seeing that change a little bit as we're always looking to refine our process around accruals to be more accurate to be more comprehensive in those so that we can accurately reflect quarter-to-quarter what the revenue is without regard to payment timing. We're always going to have the issue around large payments or maybe on a semiannual basis that come in September and March where we're truing up to our accruals. But I think that we're doing a better job as we move forward of just refining our processes. So that's playing into it a little bit as well.

Okay. Great. That’s really helpful. And then it sounds like the company is having a lot of success growing your business in emerging markets. Can you talk about as you think about your priorities for capital deployment in terms of M&A and other development? How much of your incremental spend do you think we should expect to see in emerging markets over the next few years?

The thing about the emerging markets is that we could do high-volume deals, but at significantly lower price tags than what we do in Europe potentially in North America et cetera. On a percentage basis, I don't see us really shifting capital allocation on an absolute dollar amount in the emerging markets from what we have done previously. That still results in significant transactions and capital deployment from a deal standpoint in that region the latest example being Mohamed Ramadan and 100 copies and a few others. So I don't really see that shifting insofar as how we're allocating the capital.

Definitely helpful. Thanks, Golnar. Thanks, Jim.

Thank you.

Thank you. One moment for question. Our next question comes from Marc Riddick with Sidoti. You may proceed.

Hey. Good morning.

Hey, Marc.

So I wanted to piggyback a little bit on the last commentary around the international opportunities and the development. I was wondering if there's any historical precedent or a way to look at the possibility of seeing acceleration or slowdown given macro concerns particularly around the currency shifts that you're seeing there, or does it seem to be a steady state? Certainly your numbers would indicate things are doing pretty well. But I was wondering if there's sort of a leading indicator that we would generally look for there.

I think around the emerging markets while there's significant growth and we expect that growth to continue notwithstanding any macroeconomic impacts. We do expect those markets to continue to grow, and we're excited about the opportunities there. But it's still a very small part of our business. Its not really going to – any of those things aren't going to move the needle significantly on our overall business. But it's certainly an area that, we are excited to take advantage of the opportunities that are there and we expect that those opportunities will continue in those markets.

Okay. Great. And then I was wondering, if you could spend a little bit of time, and I know a few days ago that you had the opportunity to release your ESG report first as a publicly traded company. I was wondering, if you could sort of maybe touch a little bit on some of the highlights there and some of the things that folks maybe haven't had to see or talk about as of yet.

Sure. The first highlight was getting the report out. So that in and of itself was quite an undertaking. I think the highlights in that report, certainly, has to do with our people our outlook, and sort of how we approach DEI, how we approach our management team, the appointment of so many women in this organization in leadership positions, across every functional area. We've learned a lot along the way about our business. And in the context of ESG, we run a business that has basically all of its assets in digital form. We do very little physical business. We don't run a business that has inventory management et cetera. So there are components of ESG that are extremely relevant and some that may be more relevant to other businesses really don't concern us. It's also underscored to us the areas that we need to learn more about. One of those is just for example the carbon footprint. And that's something an area we need to do more work on and learn more about. So a great learning experience for us, as we have gone through to put the report together, and again, I would say the highlight was just getting it out in a way that was accurate and that we were very pleased with.

Congratulations, and it was certainly a good read. So, thank you very much. And I’ll turn it over. Thank you.

Thank you.

Thanks, Mach.

Thank you. I’m not showing any further questions. At this time, I would now like to turn the call back over to management for any closing remarks.

Thank you, Operator. Our performance in the first quarter is indicative of both the strength of our team at Reservoir, and the quality of assets that we have assembled. I thank you for joining us this morning. We look forward to updating you on our progress later in the fall. Thank you.