Ben(BENF) - 2025 Q3 - Quarterly Results

Executive Summary Beneficient strengthened its financial and operational foundation in Q1 Fiscal 2026, improving cost management, completing new primary capital transactions, increasing liquidity, and becoming current on SEC filings Company Overview Beneficient (Ben) is a technology-enabled platform providing exit opportunities and primary capital solutions, along with trust and custody services, to alternative asset holders via its proprietary online platform, AltAccess - Beneficient (NASDAQ: BENF) operates a technology-enabled platform, AltAccess, offering exit opportunities, primary capital solutions, and related trust/custody services for alternative asset holders[1] First Quarter Fiscal 2026 Highlights The first quarter of fiscal 2026 saw Beneficient make significant progress in strengthening its financial and operational foundation, marked by improved cost management, new primary capital transactions, increased liquidity through asset sales, and becoming current on SEC filings - The company made meaningful progress in strengthening its financial and operational foundation, focusing on reducing expenses, completing new primary capital transactions, and generating additional liquidity through asset sales[2] - Beneficient became current on its SEC filings, demonstrating compliance with Nasdaq's reporting requirements within the granted extension period[5] - Board Chairman Thomas Hicks and interim CEO James Silk converted an aggregate of $52.6 million of personally held BCH Preferred Series A-1 holdings into shares of the Company's Class A common stock on October 15, 2025, as part of plans to regain Nasdaq compliance[5] Business Segments and Loan Portfolio Beneficient operates through Ben Liquidity, offering financing for alternative asset exits, and Ben Custody, providing trust and custody administration, supported by a highly diversified loan portfolio strategy Business Segments Description Beneficient operates through two primary business segments: Ben Liquidity, which provides financing for alternative asset exits, and Ben Custody, offering full-service trust and custody administration Ben Liquidity Ben Liquidity provides simple, rapid, and cost-effective liquidity products through proprietary financing and trust structures, facilitating the exchange of customer alternative assets for consideration - Ben Liquidity offers simple, rapid, and cost-effective liquidity products through proprietary financing and trust structures (Customer ExAlt Trusts), facilitating the exchange of customer alternative assets for consideration[10] Interest Income | Metric | Fiscal 1Q26 (June 30, 2025) | Fiscal 4Q25 (March 31, 2025) | Change % vs. Prior Quarter | | :--------------- | :-------------------------- | :--------------------------- | :------------------------- | | Interest Income | $8.8 million | $9.2 million | -4.5% | - The decrease in interest income was primarily due to a higher percentage of loans being placed on nonaccrual status, partially offset by compounding interest on remaining loans[12] Operating Loss | Metric | Fiscal 1Q26 (June 30, 2025) | Fiscal 4Q25 (March 31, 2025) | Change % vs. Prior Quarter | | :--------------- | :-------------------------- | :--------------------------- | :------------------------- | | Operating Loss | $(6.0) million | $(12.3) million | 51.3% (Improvement) | - The improvement in operating performance was due to lower intersegment credit losses in the current fiscal period, partly because of the disposition of certain investments that generated earlier loan payments[12] Ben Custody Ben Custody offers full-service trust and custody administration for Customer ExAlt Trusts, earning fees based on assets in custody - Ben Custody provides full-service trust and custody administration services to trustees of Customer ExAlt Trusts, earning fees calculated as a percentage of assets in custody[11] NAV of Alternative Assets in Custody | Metric | As of June 30, 2025 | As of March 31, 2025 | | :----------------------------------- | :------------------ | :------------------- | | NAV of alternative assets in custody | $298.1 million | $338.2 million | - The decrease in NAV was driven by dispositions of certain alternative assets, distributions, and unrealized losses on existing assets, offset by $11.8 million of new originations[11] Loan Portfolio Strategy and Diversification Beneficient's loan portfolio strategy, built on the OptimumAlt endowment model, focuses on diversification across various alternative asset classes, industry sectors, geographies, and investment vintages. As of June 30, 2025, the portfolio was highly diversified, supporting a net loan portfolio of $230.7 million - Ben's balance sheet strategy for ExAlt Loan origination is based on the portfolio endowment model, utilizing patent-pending OptimumAlt technologies to guide diversification across seven alternative asset classes, over 11 industry sectors, and at least six countrywide exposures[5][6] - As of June 30, 2025, the loan portfolio was supported by a highly diversified alternative asset collateral portfolio, spanning approximately 200 private market funds and 590 investments across various asset classes, industry sectors, and geographies[7] Fair Value of Investments and Net Loan Portfolio | Metric | As of June 30, 2025 | As of Prior Fiscal Year End | | :----------------------------------- | :------------------ | :-------------------------- | | Fair Value of Investments (Collateral) | $263.8 million | $291.4 million | | Net Loan Portfolio | $230.7 million | $244.1 million | - Reported investments for June 30, 2025, include three additional primary capital transactions with an initial aggregate value of $11.8 million[5] - The collateral for the Company's ExAlt loan portfolio is expected to increase by more than $11.7 million of interests in alternative assets due to three new primary capital transactions entered into during the fiscal 2026 first quarter[5] - Asset sales of certain investments held by Customer ExAlt Trusts generated $38.1 million in gross proceeds, used to pay down debt and provide working capital[5] Loan Balance Breakdown | Metric | As of June 30, 2025 | | :----------------------------------- | :------------------ | | Total Gross Loan Balance | $583.4 million | | Total Allowance for Credit Losses | $352.7 million | | Loan Balance Net of Allowance for Credit Losses | $230.7 million | Financial Results Beneficient reported a consolidated GAAP revenue of $(12.6) million and a net loss of $(65.1) million for Q1 Fiscal 2026, with total assets decreasing and liabilities increasing, while segment performance varied Consolidated Fiscal First Quarter Results Beneficient reported a consolidated GAAP revenue of $(12.6) million and a net loss attributable to common shareholders of $(65.1) million for Q1 Fiscal 2026. Total assets decreased by 5.7% to $334.5 million, while total liabilities increased to $364.4 million Consolidated Income Statement The consolidated income statement for Q1 Fiscal 2026 shows GAAP revenues of $(12.6) million and a net loss attributable to common shareholders of $(65.1) million Consolidated Income Statement Metrics | Metric | Fiscal 1Q26 (June 30, 2025) (in thousands) | Fiscal 4Q25 (March 31, 2025) (in thousands) | Fiscal 1Q25 (June 30, 2024) (in thousands) | Change % vs. Prior Quarter | | :------------------------------------------ | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | :------------------------- | | GAAP Revenues | $(12,623) | $(30,969) | $10,046 | 59.2% | | Adjusted Revenues | $(12,622) | $(30,963) | $10,411 | 59.2% | | GAAP Operating Income (Loss) | $(92,648) | $(45,295) | $44,338 | NM | | Adjusted Operating Income (Loss) | $(25,438) | $(42,945) | $(4,725) | 40.8% | | Basic Class A EPS | $(7.19) | $12.11 | NM | NM | | Diluted Class A EPS | $(7.19) | $0.17 | NM | NM | Consolidated Income Statement Summary | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Total revenues | $(12,623) | $10,046 | | Total operating expenses | $80,025 | $(34,292) | | Net income (loss) before income taxes | $(92,648) | $44,338 | | Net income (loss) attributable to Beneficient common shareholders | $(65,076) | $47,667 | | Class A - basic EPS | $(7.19) | $12.11 | | Class A - diluted EPS | $(7.19) | $0.17 | - Operating expenses for Fiscal 1Q26 were $80.0 million, including a $62.8 million loss contingency accrual, compared to $(34.3) million in Fiscal 1Q25, which included a $(55.0) million release of loss contingency accrual and a $3.4 million goodwill impairment[5] - Excluding non-cash goodwill impairment and loss contingency accruals/releases, operating expenses declined 1% to $17.2 million in Fiscal 1Q26 from $17.3 million in Fiscal 1Q25[5] Consolidated Balance Sheet The consolidated balance sheet as of June 30, 2025, indicates total assets of $334.5 million and total liabilities of $364.4 million, with a significant equity deficit Consolidated Balance Sheet Assets | Metric | As of June 30, 2025 (in thousands) | As of March 31, 2025 (in thousands) | Change % | | :--------------------------- | :--------------------------------- | :---------------------------------- | :------- | | Investments, at Fair Value | $263,769 | $291,371 | (9.5)% | | All Other Assets | $57,723 | $50,490 | 14.3% | | Goodwill and Intangible Assets, Net | $13,014 | $13,014 | —% | | Total Assets | $334,506 | $354,875 | (5.7)% | Consolidated Balance Sheet Liabilities and Equity | Metric | As of June 30, 2025 (in thousands) | As of March 31, 2025 (in thousands) | | :--------------------------- | :--------------------------------- | :---------------------------------- | | Cash and cash equivalents | $7,612 | $1,346 | | Total liabilities | $364,377 | $299,274 | | Total equity (deficit) | $(120,397) | $(34,925) | Business Segment Financial Performance (Attributable to Ben's Equity Holders) Segment revenues attributable to Ben's equity holders decreased by 8.4% quarter-over-quarter to $13.1 million. Ben Liquidity saw a revenue increase, while Ben Custody and Corporate & Other experienced declines. Total segment operating loss significantly widened to $(76.4) million Segment Revenues Total segment revenues attributable to Ben's equity holders decreased by 8.4% to $13.1 million, with Ben Liquidity revenues increasing and Ben Custody and Corporate & Other revenues declining Segment Revenues Attributable to Ben's Equity Holders | Segment | Fiscal 1Q26 (June 30, 2025) (in thousands) | Fiscal 4Q25 (March 31, 2025) (in thousands) | Fiscal 1Q25 (June 30, 2024) (in thousands) | Change % vs. Prior Quarter | | :---------------------------- | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | :------------------------- | | Ben Liquidity | $8,837 | $8,459 | $10,849 | 4.5% | | Ben Custody | $4,183 | $5,396 | $5,382 | (22.5)% | | Corporate & Other | $38 | $398 | $4 | (90.5)% | | Total Segment Revenues Attributable to Ben's Equity Holders | $13,058 | $14,253 | $16,235 | (8.4)% | - Revenues applicable to Ben Custody were $4.2 million for Fiscal 1Q26, a decrease from $5.4 million in Fiscal 4Q25, primarily due to lower NAV of alternative assets held in custody at the beginning of the period[17] Segment Operating Income (Loss) Total segment operating loss attributable to Ben's equity holders significantly widened to $(76.4) million, driven by a substantial loss in Corporate & Other, despite an improved operating loss in Ben Liquidity Segment Operating Income (Loss) Attributable to Ben's Equity Holders | Segment | Fiscal 1Q26 (June 30, 2025) (in thousands) | Fiscal 4Q25 (March 31, 2025) (in thousands) | Fiscal 1Q25 (June 30, 2024) (in thousands) | Change % vs. Prior Quarter | | :---------------------------- | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | :------------------------- | | Ben Liquidity | $(6,015) | $(12,340) | $(514) | 51.3% | | Ben Custody | $3,128 | $4,165 | $1,287 | (24.9)% | | Corporate & Other | $(73,549) | $(8,487) | $44,091 | NM | | Total Segment Operating Income (Loss) Attributable to Ben's Equity Holders | $(76,436) | $(16,662) | $44,864 | NM | Adjusted Segment Operating Income (Loss) Attributable to Ben's Equity Holders | Segment | Fiscal 1Q26 (June 30, 2025) (in thousands) | Fiscal 4Q25 (March 31, 2025) (in thousands) | Fiscal 1Q25 (June 30, 2024) (in thousands) | Change % vs. Prior Quarter | | :---------------------------- | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | :------------------------- | | Adjusted Ben Liquidity | $(6,015) | $(12,340) | $(509) | 51.3% | | Adjusted Ben Custody | $3,128 | $4,632 | $4,416 | (32.5)% | | Adjusted Corporate & Other | $(6,340) | $(6,143) | $(8,459) | (3.2)% | | Total Adjusted Segment Operating Income (Loss) Attributable to Ben's Equity Holders | $(9,227) | $(13,851) | $(4,552) | 33.4% | - Ben Custody's operating income decreased to $3.1 million from $4.2 million in the prior quarter, mainly due to declining revenues and increased employee and professional services expenses, partially offset by intersegment credit losses[17] Capital and Liquidity As of June 30, 2025, Beneficient held $7.6 million in cash and cash equivalents and had total debt of $108.4 million, supported by distributions from alternative assets and proceeds from asset dispositions Cash and Debt | Metric | As of June 30, 2025 | | :--------------------------- | :------------------ | | Cash and cash equivalents | $7.6 million | | Total debt | $108.4 million | Distributions and Proceeds | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Distributions received from alternative assets | $3.7 million | $7.2 million | | Proceeds from disposition of certain investments | $24.1 million | N/A | - Total investments (at fair value) of $263.8 million at June 30, 2025, supported Ben Liquidity's loan portfolio[17] Non-GAAP Financial Measures Beneficient provides non-GAAP financial measures, including Adjusted Revenues and Adjusted Operating Income (Loss), to offer insights into underlying business trends and recurring core operating results, with detailed reconciliations and definitions Non-GAAP Reconciliations Beneficient provides detailed reconciliations for its non-GAAP financial measures, including Adjusted Revenues and Adjusted Operating Income (Loss), to their most directly comparable GAAP measures across consolidated and segment levels for the reported periods Consolidated Non-GAAP Reconciliation (Three Months Ended June 30, 2025) | Metric | Consolidated (in thousands) | | :------------------------------------------ | :-------------------------- | | Total revenues (GAAP) | $(12,623) | | Mark to market adjustment on interests in GWG Wind Down Trust | $1 | | Adjusted revenues | $(12,622) | | Operating income (loss) (GAAP) | $(92,648) | | Mark to market adjustment on interests in GWG Wind Down Trust | $1 | | Accrual (release) of loss contingency related to arbitration award | $62,831 | | Share-based compensation expense | $461 | | Legal and professional fees | $3,917 | | Adjusted operating income (loss) | $(25,438) | Consolidated Non-GAAP Reconciliation (Three Months Ended March 31, 2025) | Metric | Consolidated (in thousands) | | :------------------------------------------ | :-------------------------- | | Total revenues (GAAP) | $(30,969) | | Mark to market adjustment on interests in GWG Wind Down Trust | $6 | | Adjusted revenues | $(30,963) | | Operating income (loss) (GAAP) | $(45,295) | | Mark to market adjustment on interests in GWG Wind Down Trust | $6 | | Share-based compensation expense | $487 | | Legal and professional fees | $1,857 | | Adjusted operating income (loss) | $(42,945) | Consolidated Non-GAAP Reconciliation (Three Months Ended June 30, 2024) | Metric | Consolidated (in thousands) | | :------------------------------------------ | :-------------------------- | | Total revenues (GAAP) | $10,046 | | Mark to market adjustment on interests in GWG Wind Down Trust | $365 | | Adjusted revenues | $10,411 | | Operating income (loss) (GAAP) | $44,338 | | Mark to market adjustment on interests in GWG Wind Down Trust | $365 | | Goodwill impairment | $3,394 | | Accrual (release) of loss contingency related to arbitration award | $(54,973) | | Share-based compensation expense | $994 | | Legal and professional fees | $1,157 | | Adjusted operating income (loss) | $(4,725) | Non-GAAP Definitions and Limitations Beneficient uses non-GAAP financial measures like Adjusted Revenues and Adjusted Operating Income (Loss) to provide insights into underlying business trends and recurring core business operating results. These measures exclude specific non-recurring or non-cash items but are not substitutes for GAAP measures and have limitations regarding liquidity assessment - Non-GAAP financial measures are presented to help investors understand underlying business trends and facilitate period-to-period comparison of recurring core business operating results[39] - Adjusted revenue excludes the effect of mark-to-market adjustments on related party equity securities, specifically interests in the GWG Wind Down Trust[40] - Adjusted operating income (loss) adjusts GAAP operating income (loss) for revenue adjustments, credit losses on related party debt securities, non-cash asset impairment, share-based compensation, and specific legal/professional fees related to bankruptcy, lawsuits, and arbitration[41] - These non-GAAP measures are not GAAP performance or liquidity measures, are unaudited, and should not be considered alternatives or more meaningful than GAAP revenues or operating income (loss)[42] - They do not reflect significant cash flow uses like capital expenditures, interest payments, or debt repayments[42] Corporate Information This section provides information on Beneficient's investor relations activities and important legal disclaimers regarding forward-looking statements and securities offerings Investor Relations Beneficient plans to host an investor webcast and conference call to update on company performance, strategy, and transactions. Contact information for investor inquiries is provided - Beneficient expects to host a webcast and conference call in the coming weeks to provide investors with an update on the Company's performance, strategy, and transactions[29] Legal Disclaimers and Forward-Looking Statements The communication is for informational purposes only and does not constitute an offer of securities. It contains forward-looking statements subject to risks and uncertainties, including the ability to consummate liquidity transactions, regain Nasdaq compliance, and obtain stockholder approval for a reverse stock split. The company disclaims any obligation to update these statements - The information provided is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities[32] - The press release contains forward-looking statements regarding demand for solutions, market growth, transaction negotiation, loan portfolio diversification, and shareholder value, identified by words like 'anticipate,' 'expect,' 'plan,' and 'will'[33] - These forward-looking statements are subject to risks and uncertainties, including the ability to consummate liquidity transactions, timely demonstrate Nasdaq bid price compliance, regain Nasdaq stockholders' equity requirement compliance, cure other Nasdaq Listing Rule deficiencies, and obtain stockholder approval for a reverse stock split[33] - The company expressly disclaims any obligation to publicly update or review any forward-looking statements, except as required by applicable law[33]