Ben(BENF) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Management Commentary & Outlook Beneficient's Fiscal 2025 was transformative, streamlining operations, resolving legal issues, and transitioning leadership, now focusing on expanding liquidity programs and automation - Fiscal 2025 was a turning point for Beneficient, marked by streamlined operations and execution of its business plan[3] - Following fiscal year-end, the company continued to resolve legal issues and completed a key executive transition[3] - Beneficient is positioned to help clients unlock value from their alternative assets through innovative solutions[3] - Future plans include expanding Preferred Liquidity Provider and Primary Commitment programs, and improving automation and technology-driven service enhancements[4] Fourth Quarter Fiscal 2025 and Recent Highlights Beneficient reported a decrease in investments' fair value and net loan portfolio, with operating expenses significantly declining in Q4 and FY25 due to reduced non-cash goodwill impairment and loss contingencies, alongside key legal settlements and new executive leadership appointments Investments and Loan Portfolio Overview | Metric | March 31, 2025 | March 31, 2024 | Change | | :-------------------------------- | :------------- | :------------- | :----- | | Investments (Fair Value) | $291.4 million | $329.1 million | -11.5% | | Net Loan Portfolio | $244.1 million | $256.2 million | -4.7% | - Completed three additional Primary Capital transactions with an initial value totaling $11.8 million, as part of the ExchangeTrust Product Plan[4] Operating Expenses (GAAP) | Period | FY25 | FY24 | Change | | :-------------------- | :----- | :----- | :----- | | Q4 Operating Expenses | $14.3 million | $151.9 million | -91% | | FY Operating Expenses | $16.2 million | $2.5 billion | -99% | Operating Expenses (Excluding Non-Cash Items) | Period | FY25 | FY24 | Change | | :-------------------- | :----- | :----- | :----- | | Q4 Operating Expenses | $14.3 million | $28.8 million | -50% | | FY Operating Expenses | $67.5 million | $140.6 million | -52% | - Received approval from the Bankruptcy Court for the settlement to resolve all claims related to previously disclosed lawsuits concerning GWG Holdings, Inc[4] - Completed the sale of certain investments held by Customer ExAlt Trusts for over $36 million in gross proceeds, used to pay down debt and provide working capital[4] - Appointed Thomas O. Hicks as Chairman of the Board and James G. Silk as interim Chief Executive Officer on July 21, 2025[4][5] Loan Portfolio Overview Business Strategy Beneficient's core business provides financing for alternative asset liquidity or early exits, resulting in a balance sheet primarily composed of loans collateralized by a diversified alternative asset portfolio, guided by patent-pending OptimumAlt technology - Ben's business plan focuses on providing financing for liquidity or early investment exits for alternative asset marketplace participants[6] - The balance sheet is organically developed and largely comprised of loans collateralized by a well-diversified alternative asset portfolio[6] - The ExAlt Loan origination strategy is built on the portfolio endowment model for fiduciary financings, utilizing patent-pending OptimumAlt technology[7] Portfolio Diversification As of March 31, 2025, Ben's loan portfolio is highly diversified across approximately 210 private market funds and 710 investments, spanning seven asset classes, over 11 industry sectors, and at least six countrywide exposures, with a net loan balance of $244.0 million - Loan portfolio is supported by a highly diversified alternative asset collateral portfolio, providing diversification across approximately 210 private market funds and 710 investments[8] - Diversification spans seven asset classes, over 11 industry sectors, at least six countrywide exposures, and multiple vintages of investment dates[7] Loan Portfolio Balance (March 31, 2025) | Metric | Amount (in thousands) | | :------------------------------------ | :-------------------- | | Gross Loan Balance | $586,500 | | Allowance for Credit Losses | $342,500 | | Net Loan Balance | $244,000 | - The Company has been granted an extension to regain compliance with Nasdaq listing rules, subject to reporting and bid price requirements[12] - The Company is proactively investigating the validity of obligations under HCLP credit agreements to protect shareholder interests and strengthen its financial position[12] Business Segment Performance Segment Performance Overview (Narrative) In Q4 FY25, Ben Liquidity's interest income decreased due to nonaccrual loans, leading to an increased operating loss, while Ben Custody maintained stable revenues and improved operating income due to fewer credit losses, despite a decrease in NAV; for the full FY25, both segments saw significant operating loss improvements from reduced goodwill impairment and credit losses, despite revenue declines Ben Liquidity Performance Ben Liquidity experienced a Q4 FY25 interest income decline and increased operating loss due to nonaccrual loans, but its FY25 operating loss significantly improved due to lower non-cash goodwill impairment and credit losses Ben Liquidity Q4 FY25 Performance | Metric | Q4 FY25 (in thousands) | Q3 FY25 (in thousands) | Change % QoQ | | :-------------------- | :--------------------- | :--------------------- | :----------- | | Interest Income | $8,459 | $11,297 | -25.1% | | Operating Loss | $(12,340) | $(2,853) | NM | - Q4 FY25 interest income decline primarily due to a higher percentage of loans being placed on nonaccrual status[17] Ben Liquidity FY25 Performance | Metric | FY25 (in thousands) | FY24 (in thousands) | Change % YoY | | :-------------------- | :------------------ | :------------------ | :----------- | | Interest Income | $42,583 | $46,947 | -9.3% | | Operating Loss | $(12,802) | $(1,810,964) | +99.3% | | Adjusted Operating Loss | $(12,797) | $(41,177) | +68.9% | - FY25 operating loss improved significantly due to lower non-cash goodwill impairment ($1.7 billion in FY24) and credit losses[17] Ben Custody Performance Ben Custody maintained stable Q4 FY25 revenues with improved operating income due to fewer credit losses, despite a decrease in NAV, and saw significant FY25 operating income improvement from reduced non-cash goodwill impairment Ben Custody Q4 FY25 Performance | Metric | Q4 FY25 (in thousands) | Q3 FY25 (in thousands) | Change % QoQ | | :-------------------- | :--------------------- | :--------------------- | :----------- | | Revenues | $5,396 | $5,410 | -0.3% | | Operating Income | $4,165 | $3,507 | +18.8% | | Adjusted Operating Income | $4,632 | $4,847 | -4.4% | Ben Custody NAV | Metric | March 31, 2025 (in millions) | March 31, 2024 (in millions) | Change | | :------------------------------------ | :--------------------------- | :--------------------------- | :----- | | NAV of Alternative Assets in Custody | $338.2 | $381.2 | -11.3% | - Decrease in NAV driven by distributions and unrealized losses, partially offset by $1.4 million of new originations[17] Ben Custody FY25 Performance | Metric | FY25 (in thousands) | FY24 (in thousands) | Change % YoY | | :-------------------- | :------------------ | :------------------ | :----------- | | Revenues | $21,574 | $24,534 | -12.1% | | Operating Income (Loss) | $13,288 | $(588,811) | NM | | Adjusted Operating Income | $18,522 | $19,764 | -6.3% | - FY25 operating income improvement primarily due to significantly lower non-cash goodwill impairment ($3.4 million in FY25 vs $583.3 million in FY24)[17] Consolidated Financial Tables Beneficient's consolidated financial tables for Q4 and YTD FY25 show a substantial improvement in GAAP revenues and operating loss, largely due to reduced non-cash goodwill impairment and loss contingencies, with the balance sheet indicating a decrease in total assets but a significant improvement in total equity deficit year-over-year Consolidated Fiscal Fourth Quarter Results (Income Statement Summary) Consolidated Fiscal Fourth Quarter Results (in thousands) | Metric | Fiscal 4Q25 | Fiscal 4Q24 | Change % vs. Prior Quarter | YTD Fiscal 2025 | YTD Fiscal 2024 | Change % vs. Prior YTD | | :------------------------------------ | :---------- | :---------- | :------------------------- | :-------------- | :-------------- | :--------------------- | | GAAP Revenues | $(30,969) | $(42,957) | NM | $(7,943) | $(98,696) | 92.0 % | | Adjusted Revenues | $(30,963) | $(39,717)