Beneficient (BENF) 15 Nov 242025 Q2 Earnings call transcript

Welcome to the Beneficient Second Quarter Fiscal 2025 Earnings Call. [Operator Instructions] As a reminder, this call may be recorded.

I would now like to turn the call over to Dan Callahan, Director of Communications. Please go ahead.

Good morning, everyone. us Beneficient's joining XXXX Second for Call. Conference you today Fiscal for Quarter Thank

this issued company's of call, release to be being addition In we replay a posted shareholders.trustben.com. webcast will the recorded at and that on an to Shareholders website section the our available Today's is website. was press earnings

forward-looking those discussed Risk because in Form filings and in described Actual cause that our of Commission. results with section press those risks these and XX-K to the In statements management's remarks prepared subject and made could of in from events today's subsequent Securities future differ may we that and factors release are actual could and materially our earnings call, discussed to the Factors today. contain Exchange forward-looking statements from results uncertainties differ

Forward-looking obligation no future. Beneficient statements to in estimates, update management's represent the and statements forward-looking assumes current any

financial which website our contains financial to measures. measures. comparable Today's refer certain GAAP disclosures important to for available call is including the regarding such most non-GAAP also reconciliations Please measures, release, on press earnings our

meeting the to take this On Heppner, Greg the Ezell, Heppner. are our Mr. Chief call Financial Brad it hand I'll away. Chairman; and Brad, Officer. CEO morning and over

developments. of thank quarter. progress assets. Good management private all transaction delivering high the how ending our for team second first investment September and with types us the with in morning, fiscal other week The everyone, conferences you Corp the is busy at including this services of Gov in earlier the and meeting quarter participation and democratizing investor custody number quarter equity alternative build this has is to XX, the joining Forum earlier for morning. Ben and positive of community, on our In Interest also we been a continued

products for all holders of alternative that and and and was provide deliver assets. types Ben services liquidity of managers to fiduciary created primary capital

institutions been to in comes high exiting business markets when and have who target of addition particularly focus on midsized maturity our alternative mid- to general are partners. to to it individuals underserved their worth to net We developing prior the assets to small

to now estimate net the for billion than We with net demand account asset in and $XX billion within secondary than alone U.S. $X.X the X small growing annually, their liquidity general high for seeking to $XXX an more of institutions is partners the annually. excess restructurings limited to $XXX annual for trillion worth over the Further, in years. midsized partners investors next in liquidity that of billion through mid- more value, markets for of unmet market

The traditional liquidity these consuming, and long investors and over means year of secondary addresses market process combined, billion mid- as if expensive, be LPs investors all. our growing. and and seeking to more, is as small general platform institutions it's net time smaller partners for often months or demand and when a liquidity high for worth that mid-sized from XX liquidity at It's incredibly found to per can complex. taking That $XXX

we introduction completing or an as in problem, system, now our goal as AltAccess, the machine I discuss transactions platform MAPS, with days these few own which called built will of It's XX time potentially our pricing a for this address in FinTech with To shortly. that of online automated application, new the fraction important Ben of short.

assets. liquidity demand into our new a from for primary alternative addition market demand In to faces more for assets, substantial capital alternative

is The has data average to sourcing seeking this equity ago. shows the has funds, news and years of their become what are good of now their foundations it taking which raise partners stockholders. markets to few have that increasingly there partners capital, our have just we for X approximately progress our of that is an for needs, XX which private tailored problem. to general these produced are solutions difficult, both a been understand double it in row months this them solve a and general innovative profitable of solutions business and PEI For X took new quarters

XXXX, As our quarter ended June first a recap, during of provided positive XX, a number we announcements.

large starting a which funds, as detailed, see financing market I the capital a just adjacent which, fiduciary First, fiduciary announced being we our primary to liquidity I as new -- unique product as general robust, we financings. related partner

MAPS, handle algorithmic the assets. enhanced MAPS for pricing higher ExAlt alternative and potentially little designed as are by of initiated with as streamlines greater XX we which to volume reduced days. Second, efficiency to a capabilities backed an transaction integrates our Loans transactions that time

Third, the billion product ExchangeTrust to transactions. $X our approved complete through Directors up Board ExAlt plan financings to fiduciary ExAlt of Customer of to Trusts trust

model profitable first possess. a last And to operating believe our These fourth, we as we quarter of competitive dynamics on quarter, improved we enhancements Beneficient, a reported the the public provided meaningful already company. developments

But on delivering earnings to quarter positive successes, our we fully per for which share a work our And Greg in a just moment. build those XX, continued not consecutive in the second is fiscal XXXX, diluted will September discuss second common done. of shareholders, ended quarter

business on numbers, key get touch into we want However, the a I highlights. few before to

$XXX $XXX.X permanent that that equity it of such First, $XX.X we equity our of involved deficit improvement million. a from This of million equity in by to adjusted reclassification permanent transaction a deficit to certain million. September, preferred improved announced our

quarter through that toward will permanent on will transactions We our turn completing a to this the deficit equity. plan of continue surplus

assets which capital. for our statement represent shares to balance filing this backed A further issuance our requirements stock, common I'm Beneficient provide purchase up significant well with These for X as million a undertook standby well and fiduciary are alternative could just as to expansion of we listing effect Additionally, ago. operating part significant a capital important of to by report effective to to plan of registration funds sheet. our Class was of meet completing equity days a that source agreement transactions for XXX provide as of declared put pleased as financings, into SEC growth registration

company developed for officer and the in Assistant Ben, broker-dealers Next, to and compliance experience Mr. and Compliance holding of held Mr. to Patrick a Officer identifying years expertise policies those the XX legal effectively for of company's including independent an Donegan bank as compliance, almost capital Donegan Counsel procedures in companies as member of banking legal, securities risks. Donegan Through manage risks and General markets and his company. senior establishing compliance roles, has an announced appointment experience brings various Board. having Chief October, and the as positions,

banking Mr. industry market efforts and capital best rules related the our processes enhance understanding and across of our Donegan's practices organization. regulatory to maintain

licenses, Certified XX Specialist obtained Association, He Over the career, serves his holds Anti-Money American of Audit including of certification. Board, on Regulatory including Compliance Certified currently the Bankers X Donegan the from Mr. multiple Beneficient Laundering and certifications committees course a Managers the has Committee. FINRA designation our

listing parent liquidation in much a public our common our of trust Class XXXX, Beneficient. with June XX% company's holder, A a the shares listed since prior in as of as liquidating company their stock single charged the publicly early hands in Finally, of was

months, a amount Over that the course selling has the significant trust of holdings. in the last Beneficient XX market, the roughly been consistently of

an market. a XX% about As of X% now broader resulted to year performance that is our of having shareholder a of overhang and our on on reduction has October past into price over the over distribution base. or stock much of the position weighed the date our their X, sold outstanding their more This last filing the holds significant shares, trust across in shares

the to XXXX. first fiscal very our X I'm of quarters efforts proud of

have to standby more in the with improve scale. company, of to become our business, a balance our leaner, liquidity agreement. been We efficient sheet of ready adjacent our new for structure product need and taken and to purchase solutions improved cost streamlined the equity We've our offerings steps introduced expand markets

outstanding and methodically our are now should issues, selling largest the shareholders legal the abating. stock and headwinds be from We their regulatory managing

to will We're we and year. our in who initiatives are, shareholders. to second growth represent improvements forward, these the value fiscal half market continuing do and opportunity progress of through continue motion, the to look on moving forward I report on work we for the to what this educate and we With key we

turn the to over Greg? go call our our results. to Greg and I'll Ezell, operating CFO, that, financial over with Now

Thank you, Brad.

September Let's now turn XXXX. and of financial XX, to our as position quarterly results

I'll start few the a with from First, highlights quarter.

for reported Ben portfolio a the fiscal Liquidity's with $XXX.X fair million, collateral million loan sequentially our investments million, We of $XXX.X from investments for value up net end at million of period. as respectively, same serve These and $XXX.X of year. $XXX.X prior the

the prior that to mark-to-market the GAAP million a fiscal GAAP and second $XX.X principally in serve revenues million positive in as $XX.X the Ben's million year-to-date periods million collateral investments XXXX $XX.X adjustments quarter revenues portfolio. for loan and to on compared $X.X a negative were as reflect year. and

in and release quarter year-to-date a reflects primarily of benefits. and XXXX quarter goodwill as period, improvements the million loss period, and applicable, comp which in decline and XX.X% related were in in year-to-date second noncash $XX.X expenses the the impairment was $XX.X accrual periods. the Excluding to of million in the contingency operating each XX.X% The and improvement

periods. more quarter to expense public expense the throughout related $XX.X compared higher related share-based organization. year prior lower The $XX.X million associated sales and the June compensation cost a the certain also in reduction million benefits year is year-to-date with the focused to respective headcount The $X.X were versus for for prior periods. effort share-based reflects million quarter in was $X.X $XX.X listing our year-to-date of higher IT Comp of lower and development, and the the areas in million a million The prior $XX.X to in and compensation period level million reduction as in automation fiscal XXXX. primary compared to

income for earnings per year share period, the basic of common for and to for GAAP was quarter $XX.XX the quarter stock. per and per $XX.X for the the for fiscal current which current million $X.X the A share share million led $X.XX Class net year-to-date

XXXX. segments had equity quarter to On deficit the of loss year operating basis compared of loss improved XXXX, attributable the September June $X.X an segment million segment we and million loss prior as a from as of million $X.X million periods. operating respective XX, of $XX.X Permanent million $XXX.X XX, fiscal $XX.X holders, of a second an loss to as a million to $XX.X the of operating operating for Ben's to for equity deficit in year-to-date adjusted compared

balance our we'll supplying generates which use Ben the of Liquidity, platform trust revenue Custody, liquidity off for the the interest which and primary Next, revenue segments: move for to sheet; fee and Ben business services. produces

their with holders. equity Ben's Corporate As my these it's focusing operations typical, I business accrues & discussion on to segments that will be along as Other

quarter prior due Ben second base slightly driven value in the fiscal receivable Liquidity interest quarter credit interest, higher million higher of carrying revenue, to $XX.X loans compounding the for During by a offset XX.X% losses. up of by XXXX, allowances recognized from

to was collateral to to higher Operating of adjustments along adjusted for the was of the compared the better income revenue. for primarily credit loan and due million quarter $X.X performance operating loss $X.X operating an prior due quarter. income The improvement loss comparable million with lower portfolio,

Moving were period Custody. Revenues assets Custody end the the Ben million XX, million offset securities million was Ben $XXX.X period. increase and as The at alternative of during custody assets NAV driven to quarter. distributions sequentially onto $X.X gains on XXXX. $XXX.X applicable and for by other unrealized at existing of to was flat March by compared

and impairment in goodwill to quarter. operating million the increased lower primarily quarter from cost. quarter, million prior million of compared prior lower increase an current slightly due current to $X.X as $X.X to compared Adjusted $X.X of income Operating $X.X million, for $X.X million income for slightly $X.X $X.X charges to revenues was higher reflecting the the the in compared quarter million, million

debt the Distributions equivalents million million. period the and $XX.X the $X.X securities for and of held and in received from year-to-date million had same total compared million year. the other to of At alternative and the end $XX.X the million million totaled assets of cash in company quarter prior and custody quarter, for $X.X $XXX.X cash $XX.X

the for remarks my concludes That quarter.

Michael Our with Research. Kim first comes question Instructions] Zacks [Operator from Small-Cap

get you First, seeing what your trends on just of terms to be and thoughts loan in curious demand originations. be I'd may

following plan. ExchangeTrust of just and So the just in pricing MAPS recent product Board's introduction more system wondering you've if authorization of activity seen a the step-up the the

efforts And advertising to perspectives capitalize that your that, to just then on related demand? and just any marketing on

been speaking attending it's market there's private industry by anything, your is other this question pent-up the demand I'll all that seeing your today. vantage to to for for some Brad. allocate as and the largely appreciate continue continues Michael, about at liquidity solutions. to point. grow, assets, is from we're for demand If investors we've I the unmet address not still private abated from here. time our market What demand assets,

demand believe the I've don't the industry. X the always over near said We've distributions pursue snake. like the to is the experience amount rat got to out in come here their to last there's a completely been I through a years, lot for liquidity. amount have enough of and industry, continue X The capital a investors that slowing need slowing of demand, going once in and

we're to beta, came MAPS have Now and It launched it. excited of we past quarter. launched this out

to results value it's and assets XX private market to underwrite that reduce as going days. continue encouraged the the be time as by We little to to required

that they have documentation, we're can take. is XX we reduce We on integrity rolling are because and and that increased of get transactions potential further for XXXX. by with to because compares institutional into as hoping for now time, banking able continuing the how have to plan MAPS, functionality for to our the customers. MAPS the that days. regulators that down examined to And that we we to months. take XX standardized long But long as Now safety That's developments

and limited our number stockholder customer seeking offerings. in due -- new authorized We in these issuance limited finance for been liquidity addressed our this stock despite primary that ability that's includes to particular for ability us to balance key to do the and to our that's of Ben through takes But our fiscal awareness of in received GP creating involved -- again in increase our And business, pushes in in be fuels and during Ben's were quarter. transactions close liquidity the common We segments. capital the our with shares We later October. X close this shoots unit that strategy for our deals working that stock. and It actively begin we to a or sheet We've marketing We're order proprietary our services. to approval of the encouraging channel. market everything products position green in authorization of in that channels includes the time second expect that quarter. transactions, to It are seeing areas advertising very advisory solutions digital attractive content. through and we've sourcing closing

have conferences to their now course, industry lead and generation of lead events, And we active then, us. which become much for own more in

our Now commitment ExchangeTrust market primary in this market specifically product strategy overall solutions has products. resulted suite, GP continued and our awareness across program all of our

Beneficient. quarter getting So the It's efforts of that to we're bring in and home that our fourth performance particularly out encouraged all of results need second now those the we're here for third we quarter. of the right

Brad. and Got related that And it. services That's initiatives Appreciate around new very that, on then lending? updates helpful. any previously alternative your mentioned business securities you've

Yes.

and focused with a dedicated a We of with -- team. continue those both on to work focus

-- in I within reiterate that growing be these addressable years our think from NAV billion, $XX market, I our expect with the I $XXX the Relations total next it trillion to the in we answer alone. U.S. $XX an target net the -- particular, trillion in alone. We billion to deck. billion. value may question, range, $XXX about over mean markets in We $X for billion market. target $X liquidity do said is need to I this our X show target -- held investments. be There's Now in additional $X in our want demand that markets the to It's over alternative to trillion alone. over global have Ben's in to Investor markets asset held reiterate

we The industry could that overall can scalable a liquidity. lending platform. that overall the This with solution participants, expand exceed for

surpassed borrowing. if So against investors see $XX effectively and demand their from could billion banks, that we as just growing we for be commercial borrow billion, by $XXX to borrow see could portfolios example,

but us. and believe To lenders of potentially credit help for positioned And second, We happen. that with second in more borrow commercial provide could forth. We market not we're lenders, to as so to nicely we provide can lenders, and those private attractive lenders potential platform introduce compliance, introduce systems. their sizes a -- more, just make attractive seeking covenant lean can against alternatives, the investors We middle that management to sit market all infrastructure provide can and the we the the providing that. provide will

that private key the first the will and ecosystem introduce and So partners we're have half with investors productive lending hopefully market a alternative to solutions across platform of continuing in XXXX. conversations for and assets customers

are ongoing. So those

big, that in if systems designed of and type view than be I to AltAccess bigger, our platform. current that our to are summary, facilitate not the market, right as to our in sit lending of Just market off middle

just then and maybe see finally, new new liquidity? of a might need just needs a administration the And and how focused in, to that anticipate the coming it. curious the starting support that Got with could investment you in capital drive potentially would trend for businesses on that renewed cycle step-up we

press the friendly in will for general States, assumption changes, various reading Regulatory and be might we say. by question. following it alternative that this that leadership regulatory from you that out in of Corp at that asset much United first liquidity the conferences what to just coming the course, of the election. hearing a of first that changes of start great the and does And the answering I going we're the press. It's on And point discussion point, And led this capital Gov economy about completed standpoint conference Conference. it's of asked more the point. on lot need be of is I specifically mean we're a portfolios. here And industry the in about to already I one think formation this

that. to the transactions have months first so robust initial When And And to of deals offering done market, improved public you conference closely of are leads and that then also XX and overall. expectation outcome distributions the that And alternative very liquidity, done. and correlated. is particularly out and asset market. the coming When you participants away. for we potential the have the liquidity an see about it's in offering that expansion step outcome excited will going you But -- of correlated which a be public more much is getting have portfolios, outcome that a means getting uptick then

Let's keep in X equity about years fundraising the dry of money not big we're of to with that go like results in great mind but for of very top off it's okay? firms, coming of XX largest industry, in powder poor we're coming work. the to So amount a private

to we actually an improvement it, seeing to thing like of liquidity. we're Since XX seeing to start I've lead demand more seen months to back months investments. a is near-term liquidity into liquidity actually First in other it and get economy going industry this alternative turning from and it it's XX to then to new participants and invest Beneficient around for out, and that turn need get or people XX

for step Beneficient money can in. happen have summary, More liquidity deals brief, enough out has in got powder expansion of of going age. to the hand in there investments to new to We this hand in see done. we've that's be and realized, don't getting here and advantage golden potential take for where dry So to an got

to this to offering with be then and it improved done, will market. We M&A the met That to so forth the improved an to ready market public into of needs that with that of be get and needs realization be transactions expedite end new money the liquidity. -- to help work go met will

are everybody turning, feeling I've X We the first to go. talking out how people is know done to And about have like whereas been is been deals going prior machine from And lifting. now, storm conferences years down. it's the long where conference getting hunker is storm the about don't this

the we standpoint, hear already we're encouraged industry are days. we my what from of reading So what in last and XX very by participants

comes Our next with from question Brendan Sidoti. McCarthy

seeing the to underlying on color off on are -- is asset and then alternative portfolio. you underlying collateral distribution Can some that performing start are And to incremental monetization pick starting you how asset wanted up? signs I provide more that broadly?

few then and with a Brendan, it's performance related broadly. collateral portfolio, Greg. views to share I'll Brad comments industry the provide more our will some

has with we're the that's when over asset generally speaking, I speaking, last that performance. our But excluding few today, the reduction the think we've quarters, collateral very sheet, company the That we seen the of X because last quarters, the unrealized balance distributions. total you doesn't increased. on reported performance, obviously underlying NAV with the positive in quarter quarters, interest with mean the out Broadly of look of including increases X the increased parent NAV last that NAV necessarily pleased at and our distributions on X have in portfolio. total over

the percentage each the is think of distributions terms to fall XX% When In NAV as does norms to year-to-date period, in distributions, period it expect year. those the prepared comments, a a about as in for rate, same you I a in seen that well might long-term the have the as equate we you last distribution about that mentioned of portfolio. compared off decline which beginning

I been describe we're what of in slower to for as distributions potential as it years. potential related might lead a the distributions that in observing the in the that have innings activity early to in of last the space future, and far few As the seeing alternative being portfolio asset collateral the would following

signs that to process. But actually innings variety future it's early coming beginning in happen we're coming letters factors fruition. And Our all that to events of the in being our general observations executed, launched, intent mentioned, of IPO could starting that sales or portfolio obviously of good processes the are sales there's distributions company about for and/or from are coming be quarters. hearing the I portfolio, from of that to influence collateral partners explorations which be could as a those in comments

do you about some have want that to Brad, then the industry? you views share And

join at first, I Yes, we look appreciate time you If call I here. well, to -- -- the and would. industry historically to year. here. norms welcome of XX% alternative seen distribution industry the you diversified to portfolio, in a us questions overall, asset vintage by net if the the our rate per asset about The value taking look year I diversified an want your Brendan, your has for of

many So broadly across years, many of a that's subclass across diversified vintage alternatives.

should XX% on expect about You year basis. per median a

add between Now band Good the -- years portfolios. okay? each XX% that if you value, XX% for asset of of year to XX% variability that a above other provides of about band In portfolios X% net NAV. of of a you median words, reach NAV,

years have years, the sorry, about for XX% the X ago unheard economy. low the specifically for of and below the of -- and I'm XX% starting Now industry below distribution X%. X%. a of the XX% the of That's XX% portfolio rates past end to band. diversified seen It's high it's mid, drop almost end. X we the in That's

story, It's producing overall the little a third The quartile. below by in fourth performing tell of, none. been They've doesn't that quartile and distributions to is okay? even led drop the no speak Now median funds more concerning.

continued That's only half, funds managed years. that So distributions to deliver last the over best your have X.X it's okay?

very So economy. troubling that's in the

performance funds overall skewing very large private shops. our are the base of equity So for a

asset haven't hedge net improving a our of steady like These improvement in forever, changes with here It's about them. convert In last -- good going slight and unrealized economy such improvement changes new are to distributions. take while to that handful only unrealized to days. values, are we investments that okay? values some rates very we're maintaining They the to positioned on been portfolio increases Now These industry going seen come. inflation distribution pretty in values in to seeing upcoming realized, we've distributions have speak XX remain can we So companies. right? we're just gains, read those what good gone are we're what some and on portfolio, properly realized our seeing this in not it's that disappointed type seen past,

cause, slowing I -- said as to getting deals, doesn't last deals it's it answer, correlated slowing to correlated with -- distributions, with my Now it's in but done.

You want into so to invest they realizations economy. back can the see

time. up. to in, facilitate the is to order have catch of liquidity that So in liquidity those That's that's take provides Again, movement Ben going to going steps where funds. to

have seen to the this we're not bills is steam and sector that continue the forward the one continue troubling to that in business well, deals. of factors do years. private past real probably forth They confluence infrastructure economic the in infrastructure type equity speaks for catalysts we only roll pretty so fairly to The They and few well.

So summary my Ben's we is to our had should comparable. on it's compared -- portfolio this We've industry, distributions. overall the

real has slow seeing That's forecast. our That's to are to It's no As slow -- to change we of distribution its projected said, experience up Greg to now. going now more start distributions But change. first-ever industry distribution the really coming overall. had be here, more going more quickly.

temporary the regulatory great. -- equity And me. you can perspective? the That's One I to Can of benefits discuss transaction for through you more was or $XXX question think it capital there. a appreciate equity. Really the color then walk permanent million that us roughly reclassified from

It's Yes, Brendan, Greg. that good it's I'll take a question. one.

So existing new security. the into transaction itself is the dividing a security A preferred simply Series of portion a

existing feature the So a new XX% previously security. did than redemption to balance related remain has not is and new then XX% security other of the as security will previously under there same it cash terms that a existing the the into

the the the that are really that feature. cash combination held equity a redemption X equity preferred features feature be due to was So an was classified previously, It in of factors to holder. temporary then also under that security as that -- was required U.S. and and conversion GAAP, security or by

cash security the have does no to our sheet. With reclassed not the equity in into permanent to temporary the meet that longer this such allows the a that be security redemption move of balance new feature, can equity XX% it classification

of net kind or requirements equity our really benefit specifically in $XX positive is permanent primary -- the not included permanent a features $X.X continued are temporary it's listing equity. positive to market a that and the Those million, X compliance It's component. Now $X.X a with is million of capitalization equity income pertains there, which Nasdaq. of million

$XXX.X that net about goodwill which that you had losses it permanent year, deficit that think principally due the equity, reflected large numbers, earlier. When drove we last in our our discussed of XXXX we impairments to million

$XXX the equity equity So closer we'll that compliance get to term. of million I we permanent company the the able we'll be the require mean also company. requirement, permanent equity the moves the demonstrate maintain once to the reclassification to the company compliant, from important for and forward to long going to to obviously temporary really have that's

I'd back There are to turn no call like further Callahan Dan questions. for over closing remarks. the any to

thank wish want will of section the And for to trustben.com. that a reminder I a have call available the Shareholders everyone this attending this And replay of morning. Just everybody Friday. -- be want to on great

for does you Thank program. your participation. conclude the This

a now You have disconnect. may great day. Everyone,