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 2023[204]. - 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 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[254]. - Total revenue for the originations segment increased by $2,424,020 for the nine months ended September 30, 2024, compared to the same period in 2023, representing a 123% increase[258]. Profitability Metrics - Gross profit for the three months ended September 30, 2024, was $25,960,510, compared to $17,755,973 in the same period of 2023, reflecting a 46.2% increase[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 2023[219]. - 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 three months ended September 30, 2024, was $0.20, compared to $0.14 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]. 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 prior year[199]. - Sales and marketing expenses increased by $465,043, or 27.3%, to $2,169,197 for the three months ended September 30, 2024, compared to $1,704,154 in 2023[220]. - General and administrative expenses increased by $5,650,552, or 57.4%, to $15,489,503 for the three months ended September 30, 2024, compared to $9,838,951 in 2023[223]. - General and administrative expenses for the nine months ended September 30, 2024, increased by $30,282,964, or 272.5%, to $41,396,346 compared to $11,113,382 in 2023[224]. - Cost of revenue (excluding depreciation and amortization) decreased by $1,169,425, or 34.8%, to $2,187,551 for the three months ended September 30, 2024, compared to $3,356,976 in 2023[216]. Losses and Financial Challenges - 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 in the same period of 2023[199]. - Loss on change in fair value of debt increased by $3,726,462, or 1202.6%, for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to changes in the risk-free fair value of market-indexed notes[235]. - 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]. Cash Flow and Financing - Financing activities provided $111,815,591 of net cash during the nine months ended September 30, 2024, an increase of $57,555,987 compared to $54,259,604 in the same period of 2023[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 the same period of 2023[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]. 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%, from 1,539 in 2023 to 1,210 in 2024[274]. - The value of policies serviced decreased by $984,218,408, or 29.9%, from $3,290,222,030 in 2023 to $2,306,003,622 in 2024[274]. - The number of policy originations to external parties increased by 57, or 167.6%, from 34 in 2023 to 91 in 2024[274]. Tax and Regulatory Matters - Income tax expense increased by $442,436, or 19.8%, for the nine months ended September 30, 2024, compared to the same period in 2023, driven by limitations on stock-based compensation expense deductions[247]. - Provision for income taxes for the six months ended June 30, 2023 was $2,289, primarily due to annual report filing fees[313]. Strategic Outlook - The company plans to support future capital requirements through revenue growth and potential acquisitions or investments in complementary businesses[277]. - The company operates as a single operating segment, with performance assessed based on total originations, revenue, gross profit, and adjusted EBITDA[314]. - Management uses non-GAAP financial measures, including Adjusted EBITDA, to evaluate business performance and make strategic decisions[315].
ET.RES.ACQ(ERESW) - 2024 Q3 - Quarterly Report