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Cannae Holdings, Inc. (CNNE)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 total operating revenue was $106.9M, down 6.1% year over year, with diluted EPS from continuing operations at $(1.06); revenue slightly beat consensus while EPS missed materially as equity losses surged on Alight’s $1.3B goodwill impairment .
  • Capital return accelerated: $163M repurchased since the start of Q3 (8.6M shares at a 31% discount to NAV), $275M YTD; quarterly dividend paid was $8M and the board previously raised the dividend 25% to $0.15 per share .
  • Balance sheet de-risked: Cannae repaid the entire $141M margin loan and amended it with reduced capacity ($50M), a lower spread, and extended maturity to August 2028; Dun & Bradstreet sale closed, delivering $630M of proceeds to fund buybacks/dividends and debt repayment .
  • Strategic focus sharpened: Board directed management to concentrate efforts in sports-related assets (BKFC) and monetize non-core public/private positions to utilize expiring tax attributes (target up to ~$55M cash tax refunds) .
  • Near-term catalysts: remaining $25M buyback to complete the $300M 2025 plan, continued NAV discount narrowing (35.2% as of Nov 7), and BKFC operating momentum (record player trading profit; stadium redevelopment with mid-teens ROIC) .

What Went Well and What Went Wrong

What Went Well

  • Robust capital returns: $163M Q3 buybacks; $275M YTD repurchases; $8M dividend paid in Q3; cumulative >$1B returned since May 2021; discount to NAV narrowed ~20% since the start of 2024 .
  • BKFC strength: record player trading profits, strong on-field performance at AFC Bournemouth, and a two-phase stadium expansion targeting mid-teens unlevered ROIC; “sports is evolving into an institutional asset class” positioning Cannae for outsized returns .
  • Alight operational improvement: Adjusted EBITDA up 17% YoY to $138M with margin expanding 460bps to 25.9%, and FCF of $151M for the first nine months; portfolio value-add despite top-line softness and impairment .

What Went Wrong

  • EPS miss and elevated losses: Equity in losses of unconsolidated affiliates rose to $(57.5)M, driven by Alight’s non-cash $1.3B goodwill impairment; diluted EPS (continuing) at $(1.06) materially below consensus .
  • Revenue contraction and restaurant pressures: Total operating revenues fell to $106.9M (from $113.9M in Q3 2024), with consolidated restaurant revenue down 7.3% YoY, reflecting reduced guest counts and fewer locations .
  • Guidance reductions at Alight: 2025 revenue, Adjusted EBITDA, and FCF ranges lowered, highlighting project softness and commercial headwinds; while strategic partnerships continued, near-term expectations reset .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Total Operating Revenues ($USD Millions)$103.2 $110.2 $106.9
Diluted EPS - Continuing Operations ($USD)$(0.59) $(3.75) $(1.06)
Operating Loss ($USD Millions)$(21.4) $(60.9) $(13.2)
Total Operating Expenses ($USD Millions)$124.6 $171.1 $120.1
Equity in (Losses) of Unconsolidated Affiliates ($USD Millions)$(1.9) $(95.7) $(57.5)

Segment/Revenue Mix

MetricQ1 2025Q2 2025Q3 2025
Restaurant Revenue ($USD Millions)$99.1 $101.9 $94.6
Other Operating Revenue ($USD Millions)$4.1 $8.3 $12.3
Total Operating Revenues ($USD Millions)$103.2 $110.2 $106.9

Actuals vs Wall Street Consensus (S&P Global)

MetricQ1 2025Q2 2025Q3 2025
Revenue Estimate ($USD Millions)105.3*110.0*104.8*
Revenue Actual ($USD Millions)103.2 110.2 106.9
Primary EPS Estimate ($USD)$(0.403)*$(0.275)*$(0.295)*
Diluted EPS - Continuing Actual ($USD)$(0.59) $(3.75) $(1.06)

Key Portfolio KPIs (Select)

KPIQ3 2025 Value
Share Repurchases Since Start of Q3$163M (8.6M shares at 31% discount to NAV)
YTD Share Repurchases$275M (14.4M shares, ~22.9% of prior year-end shares)
Dividend Paid in Q3$8M; dividend expected to total $30M in 2025
Margin Loan Status$141M fully repaid; amended: collateral changed, capacity $50M, lower spread, maturity Aug 2028
Discount to NAV35.2% (as of Nov 7, 2025), ~20% reduction since start of 2024
Alight Q3 Revenue / Adjusted EBITDA$533M / $138M; Adjusted EBITDA margin 25.9%
BKFC Q2 (lagged) Revenue / EBITDA incl. Player Trading$95.6M / $95.5M; Adj. EBITDA ex. player trading $21.4M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Alight Revenue ($USD Billions)FY 2025$2.28–$2.33 $2.25–$2.28 Lowered
Alight Adjusted EBITDA ($USD Millions)FY 2025$620–$645 $595–$620 Lowered
Alight Free Cash Flow ($USD Millions)FY 2025$250–$285 $225–$250 Lowered
CNNE Quarterly Dividend per Share ($USD)Recurring$0.12 (prior) $0.15 (25% increase) Raised
CNNE Share Repurchases ($USD Millions)2025Plan $300 (commitment) $25 remaining to reach $300 Maintained; nearing completion

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Capital ReturnsPlan to use D&B proceeds ($300M buybacks; margin loan repay; dividend reserve); $150M repurchased by Q2; dividend raised to $0.15 $163M repurchased since start of Q3; $275M YTD; $25M remaining to reach $300M; $8M dividend paid Accelerating buybacks; dividend sustained
Portfolio RebalancingTransition away from public stakes; D&B sale expected; public exposure down toward ~22% post-close Public portion reduced to 20%; closed D&B sale; plan to monetize non-core assets to utilize expiring tax attributes ($55M refunds) De-risking; tax optimization
Sports/BKFC StrategyCapital raise ~$130M; Vitality Stadium acquisition; multi-club pathway; AFC Bournemouth record season Stadium expansion (two phases) targeting mid-teens ROIC; record player trading profits; board directing focus to sports Focus intensifying; operating momentum
Restaurant OperationsNinety Nine solid; O’Charley’s under pressure; cost rationalization and closures Revenue down YoY; fewer locations; higher average checks; operating expenses down $12M YoY Mixed; operational tightening
AlightAffirmed guidance in Q1; lowered revenue but maintained EBITDA in Q2 Further lowered revenue/EBITDA/FCF; $1.3B non-cash goodwill impairment; Adjusted EBITDA/margin improved Reset expectations; margins/FCF improving
Tax/EstimatesQ2: Management actions ahead of annual meeting; D&B proceeds deployment Monetize loss positions to generate ~$55M tax refunds Tax-aware monetizations
AI/Tech RiskNot highlighted in Q1/Q2 materialsManagement views AI as efficiency driver; no portfolio obsolescence seen Monitoring; constructive stance

Management Commentary

  • “Our Board has directed our management team to concentrate our efforts in sports and sports-related assets where Cannae has proven a durable competitive edge… [and] dispose of a number of non-core assets… to take advantage of expiring tax benefits” .
  • “We believe sports is evolving into an institutional asset class… evidenced by value creation at both Black Knight Football and the Vegas Golden Knights” .
  • “Since the start of the third quarter, Cannae has… repurchased $163 million of stock at an average discount to NAV of 31%… year to date… $275 million” .
  • Stadium expansion economics: “We believe that’s going to be… a mid-teens type return on invested capital… first phase open next season; second phase the following season” .
  • CFO on losses: Equity losses “were driven by our share of Alight’s goodwill impairment and partially offset by record player trading profits at Black Knight Football” .

Q&A Highlights

  • Tax optimization: Management expects to monetize unrealized losses to utilize expiring tax attributes, targeting up to ~$55M cash tax refunds; near-term focus on less strategic assets .
  • Capital returns vs. sports deployment: Case-by-case evaluation as proceeds are realized, with sustained priority on buybacks/dividends; $25M remains to complete $300M 2025 buybacks .
  • AI risk across fintech/software holdings: No obsolescence risk seen; focus on deploying AI for efficiency, revenue, and margin improvement across portfolio companies .
  • AFC Bournemouth stadium timeline and returns: Phased expansion to ~20,000 capacity with enhanced hospitality/premium GA; mid-teens ROIC targeted, progressing through approvals and modular build-out .

Estimates Context

  • Q3 revenue slightly beat consensus: $106.9M actual vs $104.8M estimate; Q2 in-line/slight beat; Q1 small miss on revenue. EPS materially missed: $(1.06) actual vs $(0.295) estimate in Q3; Q2 and Q1 also missed, driven by equity-method impacts (Alight impairment) rather than core consolidated operations .
  • Implications: Street models likely need higher equity losses/other income assumptions and to reflect Alight’s lowered FY guidance; consolidated restaurant assumptions should reflect fewer locations but improved operating expense discipline .

Estimates marked with an asterisk (*) are Values retrieved from S&P Global.

Key Takeaways for Investors

  • EPS miss largely reflects non-cash equity-method impairment at Alight; core consolidated operations saw lower operating expenses and improved sequential operating loss despite YoY revenue decline .
  • Capital return remains a central catalyst: $25M buyback remaining to fulfill $300M 2025 plan; dividend at $0.15/share with ~$30M 2025 payout; discount to NAV has narrowed, with potential for further compression as execution continues .
  • Strategy pivot to sports assets (BKFC) is delivering tangible financial and operating results (record player trading profits, stadium ROI), positioning for multi-year value creation .
  • Alight reset guidance and took a sizable non-cash impairment, yet Adjusted EBITDA margins and FCF trend are improving; Cannae’s exposure is equity-method with cash distributions possible over time .
  • Restaurant portfolio: expect continued rationalization and cost discipline; Ninety Nine resilient vs industry, O’Charley’s remains under pressure—monitor same-store metrics and unit optimization .
  • Near-term trading setup: potential positive reaction to incremental buybacks/dividend visibility and sports asset updates vs. headwind from Alight’s impairment; watch annual meeting narrative and activism backdrop .
  • Medium-term thesis: shrinking public exposure, disciplined capital returns, and proprietary assets (JANA, BKFC) can compound NAV while reducing earnings volatility associated with marked public holdings .