Revenue Performance - Total revenues for the three months ended September 30, 2024, were $28,148,491, an increase of 33.2% compared to $21,120,930 for the same period in 2023[199]. - Active management revenue increased to $26,967,575 for the three months ended September 30, 2024, up 42.5% from $18,926,144 in the prior year[199]. - Portfolio servicing revenue rose by $4,177, or 7.5%, to $59,847 for the three months ended September 30, 2024, compared to $55,670 in the same period of 2023[204]. - Related party servicing revenue decreased by $112,360, or 66.5%, to $56,539 for the three months ended September 30, 2024, primarily due to a reduction in policies serviced for the Nova Funds[202]. - Total active management revenue for the nine months ended September 30, 2024, increased by $33,857,270, or 84.8%, reaching $73,778,331 compared to $39,921,061 in 2023[209]. - Total revenue for the portfolio servicing segment decreased by $275,417, or 33.8%, for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to a net decrease in policies serviced[251]. - Total revenue for the active management segment increased by $33,857,270, or 84.8%, for the nine months ended September 30, 2024, compared to the same period in 2023[255]. - Total revenue for the originations segment decreased by $905,687, or 46%, for the three months ended September 30, 2024, compared to the same period in 2023[256]. - Total revenue for the originations segment increased by $2,424,020, or 123%, for the nine months ended September 30, 2024, compared to the same period in 2023[258]. Profitability Metrics - Gross profit for the three months ended September 30, 2024, was $25,960,510, compared to $17,755,973 for the same period in 2023, reflecting a 46.1% increase[199]. - Operating income for the three months ended September 30, 2024, was $6,849,971, compared to $6,300,012 in the prior year, indicating a growth of 8.8%[199]. - Gross profit for the nine months ended September 30, 2024, increased by $33,181,368, or 87.6%, to $71,059,365 compared to $37,877,997 in the same period of 2023[219]. - Gross profit from the active management segment increased by $33,408,976, or 88.3%, for the nine months ended September 30, 2024, compared to the same period in 2023[255]. - Gross profit from the originations segment decreased by $833,663 for the three months ended September 30, 2024, compared to the same period in 2023[257]. Expenses and Costs - Total cost of revenue for the three months ended September 30, 2024, was $2,187,981, a decrease from $3,364,957 in the same period of 2023[199]. - Sales and marketing expenses increased by $3,534,943, or 113.4%, to $6,651,942 for the nine months ended September 30, 2024, compared to $3,116,999 in 2023[222]. - General and administrative expenses increased by $30,282,964, or 272.5%, to $41,396,346 for the nine months ended September 30, 2024, compared to $11,113,382 in 2023[224]. - Cost of revenues (excluding depreciation and amortization) increased by $2,829,918, or 58.7%, to $7,649,844 for the nine months ended September 30, 2024, compared to $4,819,926 in 2023[217]. - Depreciation and amortization expense increased by $3,480,791, or 205.1%, for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to the amortization of acquired Abacus intangible assets[227]. Net Income and Loss - Net loss attributable to common stockholders for the three months ended September 30, 2024, was $(5,125,055), compared to net income of $903,361 for the same period in 2023[199]. - Adjusted Net Income for the three months ended September 30, 2024, was $14,879,252, compared to $9,020,747 for the same period in 2023[264]. - Adjusted EPS for the nine months ended September 30, 2024, was $0.50, compared to $0.44 for the same period in 2023[264]. - Adjusted EBITDA for the three months ended September 30, 2024, was $16,666,306, compared to $10,796,500 for the same period in 2023[270]. - The company experienced a net loss of $974,901 for the six months ended June 30, 2023, compared to a loss of $318,098 for the three months ended June 30, 2023[295]. Cash Flow and Financing - The company reported a net cash used in operating activities of $116,827,478 for the nine months ended September 30, 2024, compared to $50,232,674 for the same period in 2023, representing an increase of $66,594,804[280]. - Net cash provided by financing activities increased to $111,815,591 for the nine months ended September 30, 2024, up from $54,259,604 in 2023, a rise of $57,555,987[283]. - Cash flows from investing activities showed a net cash outflow of $1,167,166 for the nine months ended September 30, 2024, compared to a net inflow of $2,569,437 in 2023, a decrease of $3,736,603[282]. - The company has a share repurchase plan approved for $15,000,000, with $2,974,863 remaining available for repurchases as of September 30, 2024[278]. - The company plans to support its operating and debt service needs through current cash and cash equivalents and planned life settlement policy trading activity for the next 12 months[279]. Operational Insights - The company operates in 49 states and the District of Columbia, holding licenses in 43 jurisdictions for life and viatical settlements[194]. - The company utilizes a proprietary "heat-map" technology platform to assess the risk and viability of life insurance policies, enhancing its origination and management processes[191]. - The number of policies serviced decreased by 329, or 21.4%, for the nine months ended September 30, 2024, compared to the same period in 2023[274]. - The number of policy originations to external parties increased by 57, or 167.6%, for the nine months ended September 30, 2024, compared to the same period in 2023[274]. - The number of policies sold under the fair value method increased to 340 for the nine months ended September 30, 2024, compared to 89 in 2023[211]. Market and Future Outlook - The company may seek additional equity or debt financing in the future to support its capital requirements and potential acquisitions[277]. - Management uses non-GAAP financial measures, including Adjusted EBITDA, to evaluate business performance and make strategic decisions[315].
EAST RESOURCES A(ERES) - 2024 Q3 - Quarterly Report