Greetings, and welcome to the Reservoir Media Q2 Fiscal Year ' 25 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 second quarter of fiscal 2025 ended September 30, 2024 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 to discuss our results for the second quarter of fiscal year 2025. In a quarter marked by multiple headline investments to expand our roster, we posted revenue of $40.7 million, up 6% compared to the year-ago period, and adjusted EBITDA of $17.6 million, up 11% compared to the year-ago period. Our financial results were driven by strength in our Music Publishing business with our margin expansion and good cost discipline supporting our overall growth and profitability. Jim will discuss our financial results in greater detail. This past quarter, Reservoir achieved several important milestones, including ushering in deals with talent who have defined popular culture for decades. In late September, we signed a deal with rap superstar and cultural icon, Snoop Dogg and his record label, Death Row Records. Reservoir now publishes Snoop's entire catalog of works and future releases domestically in addition to the catalog of Snoop-owned Death Row Records, the storied label founded over 30 years ago and home to hits by Snoop, Dr. Dray and more. With Snoop coming off an eventful summer as a featured commentator for NBC's Paris Olympics, transitioning into his current position as judge on NBC's The Voice, and announcing new music on the way, this is an exciting time to be on Team Snoop. Grammy and Juno Award-winning singer-songwriter, k.d. lang is now also a Reservoir songwriter. She has been inducted into multiple halls of fame and was called the best singer of her generation by the late Tony Bennett. k.d. was also awarded Canada's highest civilian honor, the Order of Canada, for her contributions to the music industry and inspiring generations of young musicians. We also recently announced the acquisition of the producer rights of celebrated record producer, Jack…

Thank you, Golnar, and good morning, everyone. Our second quarter results built on a strong first quarter, taking us above our previous expectations for fiscal year 2025 and giving us confidence in raising our guidance range. The cash flows and financial strength of Reservoir are derived from the impressive roster of talent we boast while we also remain disciplined on costs and our ability to expand profitability on higher revenues. Revenue for the second fiscal quarter was $40.7 million, a 5% year-over-year improvement on an organic basis and a 6% increase when including acquisitions. This was led by a 10% increase in Music Publishing revenue, partially offset by a 1% decrease in Recorded Music revenue that was largely attributable to the release of De La Soul's catalog in physical and digital formats last year. Total costs decreased 5% compared to the prior-year quarter due to a 20% decrease in administration expenses, partially offset by a 3% increase in cost of revenue, which represents expanding gross margins given the 6% revenue growth, and a 3% increase in amortization and depreciation expenses. Turning to operating performance for the second quarter. OIBDA was $16.6 million, an increase of 34% year-over-year, and adjusted EBITDA was up 11%, to $17.6 million compared to our Q2 in fiscal 2024. The increase in OIBDA benefited from the non-recurrence of the write-off of recoupable legal fees in the prior-year quarter, while both metrics benefited from revenue growth and improved gross margins. Interest expense was $5 million for the quarter, a decrease of $800,000 from the prior year. As a reminder, our interest expense in Q2 of fiscal 2024 included a onetime charge incurred in connection with the settlement of a royalty dispute. Net income for the second quarter was approximately $200,000 compared to net income of $700,000 in…

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

Hi, good morning. Thanks for taking my question. I'll start off on Publishing. So margins, I believe, were a record high, at least since you've gone public. That's off a record-high top line, and you also cited the non-recurrence of the legal fee as well as just general improvement in margins. So I want to focus on that last bit. Is that margin improvement that you noted sustainable, or is it also a function of the strong Sync revenue? Just curious about the mix there and the outlook looking forward.

Yes. Hi, Griffin. On the margins, those are going to vary slightly based on the revenue mix from quarter-to-quarter. It's also impacted by the types of deals that we close to the extent that we have some deals come in that are, where we've acquired writer share and we're maintaining 100% of that revenue, that can impact the margins positively. But we'll see some slight ups and downs from quarter-to-quarter. It's really based on the mix of the revenue types and the deals that we've closed.

Okay. Great. Makes sense. And then shifting to the pipeline outlook. You obviously discussed the several publishing deals you completed over the past 3 months, which is great to see. Do you see that strong cadence of deals sustaining through the remainder of the fiscal year? Or how is the pipeline looking after the past 3 months?

Good morning, Griffin. I would say the pipeline is very strong, and given that we are now over halfway through the year, we have very good visibility into what that looks like as far as our plans for the rest of the fiscal year. It continues to be comprised of attractive opportunities where we are looking at investments with more than satisfactory return potential and value enhancement potential. So we're very excited about what the rest of the fiscal year holds as far as that pipeline goes.

Okay. And then specifically on the catalog acquisition, are multiples trending in either direction up or down materially from the weighted average historical purchase multiple you've referenced in the past of slightly north of $0.15?

I think it's -- our information is obviously based on what we're looking at. And I think we are looking at opportunities where we're able to execute at better multiples, but I still continue to see a substantial number of transactions trading at high-teen multiples. And I think the long-term value of these assets is recognized, thus warranting those kinds of multiples. We've always been able to execute mostly off market and look at opportunities where we're able to create more upside and so that we've benefited from that. So that's just based on what we are seeing.

The next question is from Richard Baldry from ROTH Capital.

Thanks. Can you talk about some of the factors to win some of the sort of headline highly recognizable deals you did in the quarter like Snoop or k.d. lang? I think a lot of people assume that they'd end up with larger competitors. So sort of what do you think differentiated you in those? And how repeatable is that?

I think we have an extraordinarily high-quality creative team, and we have always been able to attract top-tier talent. And I think we will continue to be able to do that. It is a very high-touch person-to-person creative service team that we have focused on building and expanding because we believe that there continues to be value in those relationships. And the value is essentially as we are seeing here to have such high-quality talent join the roster. But that has been the focus of the creative team for years now and will continue to be so as we -- that's really the area where we invest significantly in our people and in the team-building, especially as we see other parts of our business get more and more automated.

And given some of the positives you're talking about international opportunities, can you talk a little bit about how different is sourcing deals there? Do you feel like you have the people in markets to sort of understand how those are working? Sort of it seems a bit different than here. So just any overall view into that process and maybe how it differs from domestic?

Sure. We really don't believe that you can go into a market, particularly any of those markets and do business by proxy. And that's why we have a team on the ground who have been on the ground there for years, who are local, who are based in Abu Dhabi, Dubai, Egypt, Morocco. And that's how we source a lot of the deals that we do there. And they are familiar with the region, speak the language, are familiar with the nuances around the different types of music from within the region. I spend probably three weeks during every calendar year in the region as well. And it's very much a relationship-driven deal sourcing mechanism, which is really not too dissimilar from what happens here, or I suppose, in non-emerging markets. The key point being, being on the ground and continuing to develop and nurture those relationships, which I would say, again, is a constant for us.

Great. Just sort of a mechanical question for Jim maybe. You talk about the swaps charge sort of the reason. I think it was a little larger than we're sort of used to. How does that play out across balance sheet P&L just so we know what to think about going forward?

Sure. So we obviously mark-to-market our swaps, and we had some very attractive swaps that were expiring as of September 30. So you saw the fair value of those swaps coming down to 0 at September 30 as they approach their maturity. Going forward, we continue to have $150 million hedged. You can see that detail in our filings. But I would expect a little less volatility in the fair value of those swaps, again, depending on what happens with interest rates. But now that we have reached the maturity of those -- that first batch of 3 swaps that expired September 30 with such favorable rates.

And maybe last one for me. There has been some increased pricing across sort of the streaming world. How much do you think that impact has already hit your revenue versus is ahead of you?

Those price increases come to us pretty quickly. When prices go up, the streaming services account a month later, that cash gets to us 3 months after that. But we are -- as part of our accrual process, we're always evaluating what's in the pipeline. And we factor those price increases in. So it's pretty quick. Some of the international markets are going to be more delayed just because of the process of that cash making its way to us and the visibility that we have to it. But it's fairly quick.

Maybe one last one I'll squeeze in. Your adjusted EBITDA set a pretty substantial new high. When you look at that and with your lenders, do you sort of accordion that access higher sort of on a steady-state basis? Do you wait to stair-step your availabilities sort of intermittently? Sort of just curious about the liquidity step-up that you'll get in tandem with that EBITDA step-up.

Well, remember, we have a revolver. It's a set facility. We do not have a leverage ratio in our revolver. So we have full access to our revolver as we need it. We have incredibly supportive lenders. So to the extent that we needed to expand that facility, which we don't have any plans to right now, we would be able to go to them to the extent that there was a need to. But at this point, we have full access to our revolver, and we're obviously very happy with our expanding EBITDA and our expanding EBITDA margins. But that's really not impacting our ability to access our revolver. It's independent of that.

The next question is from Alex Fuhrman from Craig-Hallum.

Hey, guys. Thanks very much for taking my question. I think you had said part of the reason that Sync revenues were up so much in the quarter was the timing of licenses. Can you give us a little sense of kind of how healthy the Sync business is excluding that sort of onetime item? And just generally speaking, where have you been seeing more demand on the Sync side? Has it been more entertainment or advertising? I think you've mentioned in the past, video games have been a source of strength there. Just curious what you are seeing in that area.

Yes. Just with respect to the strong performance in the quarter, we referenced timing because we don't always have control. We frequently do not have control over the timing of those licenses. Opportunities come to us and we execute on the opportunities that make the most sense to us. And we have seen really robust demand in this quarter. We had some great opportunities that came to us. But that's not necessarily indicative of a run rate. Sync is a bit of an up-and-down business, but we have an incredible team that focuses on Sync. And I don't want to downplay the impact that they have on driving this revenue. They do a great job of facilitating these opportunities and taking advantage of them as they come to us. Maybe in terms of the demand, and I'll turn it over to Golnar to address that.

As far as the demand goes, I think that there's still -- not that I think that this is the feedback we're getting, there continues to be a hangover on film and TV and that getting back up to pre-strike levels as far as licensing goes. If I look at the quarter and the licenses that were issued, the significant ones continue to be driven by advertising licenses and sprinkled in there with film and trailers. Trailers has always been a source of high-placement syncs for us. We do see that continuing to improve, but it's pretty much the same theme that we saw in the last few quarters, which is that advertising is really driving our performance there.

There are no further questions at this time. I would like to turn the floor back over to Golnar Khosrowshahi, Chief Executive Officer, for closing comments.

Thank you, operator, and thank you, everybody, for joining us this morning. The team and I are incredibly excited about the opportunities that lie ahead for Reservoir, and we look forward to sharing our progress with you early next year. Thank you.

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