B RILEY FINANCIA(RILYL) - 2025 Q1 - Quarterly Report

Financial Performance - Total revenues decreased by $111.5 million to $186.1 million for the three months ended March 31, 2025, compared to $297.6 million for the same period in 2024, representing a decline of 37.5%[348]. - Revenues from services and fees fell by $55.2 million, with significant decreases in the Capital Markets segment ($35.1 million) and the Communications segment ($17.9 million)[348][349]. - The operating loss for the three months ended March 31, 2025, was $61.5 million, compared to an operating loss of $16.0 million for the same period in 2024[345]. - Net loss attributable to B. Riley Financial, Inc. was $9.975 million for the three months ended March 31, 2025, a decrease of 79.7% compared to a net loss of $49.2 million in the prior year[345]. - The Capital Markets segment reported a revenue decrease of 58.2%, falling to $25.2 million from $60.3 million year-over-year[350]. - Wealth Management segment revenues from services and fees decreased by $4.5 million to $46.7 million for the three months ended March 31, 2025, down from $51.2 million in the same period of 2024[351]. - Communications segment revenues from services and fees decreased by $17.9 million to $63.2 million for the three months ended March 31, 2025, primarily due to a $17.6 million drop in subscription revenue[352]. - The company generated a net loss of $10.0 million for the three months ended March 31, 2025, compared to a net loss of $49.2 million in the same period in 2024[381]. Investment and Asset Management - As of March 31, 2025, total securities and other investments owned amounted to $231.8 million, down from $282.3 million as of December 31, 2024, representing a decrease of approximately 17.9%[331]. - The carrying value of public equity securities decreased to $79.7 million as of March 31, 2025, from $124.9 million as of December 31, 2024, a decline of about 36.1%[331]. - The carrying value of private equity securities was $97.7 million as of March 31, 2025, down from $107.6 million as of December 31, 2024, indicating a decrease of approximately 9.2%[335]. - Total assets under management (AUM) were approximately $18.4 billion as of March 31, 2025, down from $25.8 billion as of March 31, 2024, reflecting a significant decline[351]. - The Company maintains a diverse investment portfolio, including public and private equities, corporate bonds, and other fixed income securities[331]. Business Operations and Segments - The Company operates through five reportable segments: Capital Markets, Wealth Management, Communications, Consumer, and E-Commerce, focusing on tailored financial solutions[320]. - The Wealth Management segment provides services to individuals, families, and small businesses, emphasizing personalized financial planning and investment management[324]. - The Communications Segment includes businesses like Lingo and magicJack, focusing on cloud communications and managed services, with plans for future acquisitions[325]. - The E-Commerce segment saw a revenue increase of 100%, contributing $3.5 million in the current period[347]. - E-Commerce segment revenues were $3.5 million during the three months ended March 31, 2025, consisting of commission fees from Nogin, acquired in Q2 2024[353]. Cash Flow and Financing - Cash provided by operating activities decreased to $0.2 million in Q1 2025 from $135.4 million in Q1 2024, a reduction of $135.2 million[395]. - Cash provided by investing activities increased to $59.2 million in Q1 2025 from $18.3 million in Q1 2024, an increase of $40.9 million[397]. - Cash used in financing activities decreased to $172.5 million in Q1 2025 from $190.9 million in Q1 2024, a reduction of $18.4 million[398]. - The company expects to utilize existing cash and proceeds from business sales to meet debt service obligations over the next twelve months[383]. - As of March 31, 2025, the company had $138.3 million in unrestricted cash and cash equivalents and $1.6 billion in borrowings outstanding[382]. Debt and Interest - Approximately 86% of the company's debt obligations bore interest at fixed rates as of March 31, 2025[402]. - A 1% change in floating interest rates would result in a $0.5 million change in interest expense[403]. - Interest income from loans decreased by $18.9 million to $3.2 million for the three months ended March 31, 2025, down from $22.1 million in the same period of 2024[358]. - Interest income from securities lending decreased by $37.0 million to $0.8 million for the three months ended March 31, 2025, from $37.8 million in the same period of 2024[359]. - Interest expense decreased by $34.7 million to $0.7 million for the three months ended March 31, 2025, due to a reduction in securities loaned and loan participations sold from $2.0 billion to $33.0 million[370]. Dividends and Stock - Common stock dividends declared for Q1 2025 were $0.50 per share, consistent with the previous quarter[391]. - Series A Preferred Stock dividends are at a cumulative rate of 6.875%, with $2.0 million in arrears as of March 31, 2025[392]. - Series B Preferred Stock dividends are at a cumulative rate of 7.375%, with $1.3 million in arrears as of March 31, 2025[393]. Other Financial Metrics - Realized and unrealized losses on investments were $14.5 million for the three months ended March 31, 2025, an improvement from a loss of $34.9 million in the same period in 2024[372]. - The benefit from income taxes was $3.0 million for the three months ended March 31, 2025, compared to $21.3 million in 2024, with an effective tax rate of 13.2% versus 25.8%[376]. - Selling, general and administrative expenses decreased by $11.6 million to $167.4 million for the three months ended March 31, 2025, down from $178.9 million in the same period of 2024[363]. - Direct cost of services decreased by $17.0 million to $42.7 million for the three months ended March 31, 2025, primarily due to a $16.2 million decrease in the Communications segment[361]. - Cost of goods sold decreased by $2.1 million to $36.7 million for the three months ended March 31, 2025, from $38.8 million in the same period of 2024[362].