Burford Capital Ltd (BUR)·Q2 2025 Earnings Summary

Executive Summary

• Burford delivered a strong Q2: Burford-only total revenues rose to $171.5M and diluted EPS to $0.39, with net income of $88.3M; YoY comps were materially higher and sequentially up vs Q1, driven by higher unrealized gains and solid realized gains in Principal Finance .
• Significant beats vs Wall Street: EPS of $0.39 vs consensus $0.356 and revenue of $178.0M vs $146.1M; both beats are likely to prompt upward estimate revisions and positive sentiment around portfolio momentum in H2’25*.
• New business acceleration: New definitive commitments surged to $361M in Q2 (highest in two years), with portfolio base up 15% YTD; deployments were $81M and realizations $62M with implied ROIC of 76% .
• Liquidity and capital: Cash/marketable securities were $440M at quarter-end; post-quarter Burford issued $500M 7.50% Senior Notes (oversubscribed), extending WAL to 5.2 years pro forma and reinforcing a durable funding moat .
• YPF matters: Continued legal progress; fair value of YPF-related assets rose to ~$1.6B, with oral arguments tentatively set for late October and a favorable SDNY turnover order on YPF Class D shares under appeal .

What Went Well and What Went Wrong

What Went Well

• New commitments strength: “New definitive commitments of $361 million in 2Q25 significantly higher than any quarter in the past two years,” supporting growth targets and pipeline quality .
• Financial outperformance: Capital provision income reached $155M in Q2 and EPS rose to $0.39; CFO cited favorable discount rate moves (~20 bps) and duration impacts as drivers, alongside milestone progress in cases .
• Funding moat: “We raised a half billion dollars of new capital in two days… underscores Burford’s scale as a formidable competitive moat,” positioning Burford to fund growth and refinance near-term maturities on attractive terms .

What Went Wrong

• Asset management income softer: Q2 asset management income fell to $7.1M vs $11.5M in 2Q24; management noted fund hurdles and a strategic focus on balance sheet funding over legacy fund growth .
• Operating expenses up YoY in Q2: Compensation and benefits increased primarily due to non-cash deferred comp movements tied to share price, and higher long-term incentive accruals; though G&A normalized vs Q1 .
• Cash receipts light in Q2: Burford-only cash receipts were $48.1M (vs $107.4M in 2Q24), reflecting episodic realization timing; however, YTD receipts of $305.9M remained +25% YoY .

Financial Results

Segment breakdown (Burford-only):

KPIs and portfolio activity:

Estimates vs Actuals (S&P Global, Q2 2025)*:

*Values retrieved from S&P Global.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Burford saw sharp increases in revenue and profitability… In July we raised a half billion dollars of new capital in two days… underscores Burford’s scale as a formidable competitive moat.” — Christopher Bogart, CEO .
• “Discount rates were favorable this period… ~20 bps in the quarter… interest rates down → fair value up. Plus duration impact and milestones as cases progress.” — Jordan Licht, CFO .
• “We remain the only litigation finance firm accessing US public debt markets… a significant competitive moat.” — Christopher Bogart, CEO .
• On YPF timing: “Tentative oral argument date in October… difficult to predict decision timing; measured in months.” — Christopher Bogart, CEO .
• On asset management: “Historical funds need to hit European hurdles; focus is on building balance sheet funding.” — Jordan Licht, CFO .

Q&A Highlights

• YPF appeals and enforcement: Management clarified the two-track appeal and stay process at the Second Circuit and noted uncertainty on decision timing; SDNY turnover order for YPF shares is a positive step but under appeal .
• Fair value drivers: Q2 YPF-related unrealized gains were influenced by enforcement progress, duration, and discount rate changes; specifics remain confidential .
• Asset management income modeling: Lower Q2 asset mgmt income tied to fund hurdle mechanics and strategic emphasis on balance sheet activity; model expectations should reflect that mix shift .
• Regulatory environment: Despite ongoing debates, management emphasized the role of litigation finance in fair justice systems and consistent global acceptance; July US legislative outcomes were favorable .

Estimates Context

• EPS beat: $0.39 actual vs $0.356 consensus in Q2; likely to drive upward revisions given strong unrealized gains and accelerating commitments*.
• Revenue beat: $178.0M vs $146.1M consensus in Q2; reflects robust capital provision income and portfolio model impacts*.
• Estimate implications: With YTD capital provision income up and new commitments elevated, Street models may need higher FY25 revenue/EBIT assumptions and a modest increase in EPS, while keeping caution on asset management income cadence*.
  *Values retrieved from S&P Global.

Key Takeaways for Investors

• Q2 was a clean beat on EPS and revenue; strength came from unrealized gains and portfolio momentum—constructive for near-term sentiment .
• New commitments inflected higher, supporting forward earnings capacity; watch deployment pacing and milestone flow into H2 .
• Funding advantage reinforced by $500M notes; pro forma ladder aligns asset WAL and reduces near-term refinancing risk .
• Asset management income is likely less of a growth driver near term; balance sheet-funded Principal Finance remains the core engine .
• YPF progress is tangible but litigation risk persists; updates around October oral arguments and enforcement appeals are key catalysts .
• Cash receipts are episodic; the softer Q2 prints should normalize across periods; YTD receipts remain ahead of last year .
• Actionable: Lean long-biased into H2 with a focus on realization cadence and YPF appellate/enforcement milestones; estimate revisions skew upward on EPS/Revenue, but monitor expense variability from non-cash comp accruals .