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GE

Great Elm Group, Inc. (GEG)·Q2 2025 Earnings Summary

Executive Summary

  • Revenue grew 24% year over year to $3.50M, with net income from continuing operations of $1.40M and diluted EPS of $0.04; sequentially, revenue declined versus Q1 due to fewer monetizations at Monomoy BTS relative to the prior quarter’s property sale-driven contribution .
  • Fee-paying AUM/AUM reached $538M/$751M (+17%/+14% YoY), supporting higher management and incentive fees; GECC base fees rose 33% YoY to $1.20M and incentive fees were $0.50M in the quarter .
  • Strategic expansion: GEG acquired Greenfield CRE and launched Monomoy Construction Services to integrate construction management capabilities, expected to add accretive fee revenue and operating efficiencies .
  • Capital allocation: GEG repurchased ~4.1M shares for $7.4M at $1.83 average; book value per share was $2.30; cash totaled ~$44M to fund growth initiatives .
  • Potential stock reaction catalysts: Integrated real estate platform (MCS) formation, continued AUM growth and fee momentum, and GECC’s distribution increase to $0.37 plus a $0.05 special dividend that underscores credit platform strength .

What Went Well and What Went Wrong

What Went Well

  • “We delivered a solid fiscal second quarter 2025, continuing our positive momentum by expanding our assets under management, growing revenue across our credit and real estate businesses and generating strong returns on our investments.” — CEO Jason Reese .
  • Fee engine strengthening: GECC base management fee up 33% YoY to $1.20M, and ~$0.50M incentive fees accrued, reflecting higher FPAUM and portfolio performance .
  • Platform expansion: Acquisition of Greenfield CRE and formation of Monomoy Construction Services to offer full-service construction and owner-rep consulting, expected to be accretive and improve operational efficiency .

What Went Wrong

  • Sequential revenue decline: Q2 revenue of $3.50M vs. Q1 revenue of $3.99M as Q1 benefited from Monomoy BTS monetizations and incentive fee timing; Q2 lacked similar property sale scale .
  • Core operating loss persisted: Q2 operating loss was $(1.98)M, with interest expense of $(1.03)M, highlighting ongoing pressure from operating costs and capital structure despite positive investment gains .
  • Limited market interaction: No analyst Q&A on the call, and no formal guidance issued, limiting visibility into forward metrics and drivers .

Financial Results

Performance vs. Prior Periods

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$8.918 $3.992 $3.507
Net Income from Continuing Ops ($USD Millions)$(0.578) $2.974 $1.354
Diluted EPS ($USD)$(0.02) (cont. ops) $0.08 $0.04
Adjusted EBITDA ($USD Millions)$1.174 $1.330 $1.024

Margins (Calculated from reported figures)

MarginQ4 2024Q1 2025Q2 2025
Net Income Margin % (Cont. Ops)-6.5% (−0.578/8.918) 74.5% (2.974/3.992) 38.6% (1.354/3.507)
Adjusted EBITDA Margin %13.2% (1.174/8.918) 33.3% (1.330/3.992) 29.2% (1.024/3.507)

KPIs and Balance Sheet

KPIQ4 2024Q1 2025Q2 2025
Fee-Paying AUM ($USD Millions)~$546 pro forma $559 $538
AUM ($USD Millions)~$749 pro forma $782 $751
Book Value per Share ($USD)—$2.22 $2.30
Cash & Cash Equivalents ($USD Millions)~$48.1 ~$44.2 ~$44.3
Share Repurchases (Cumulative)1.2M shares, $2.1M Q4 ~2.5M shares, $4.6M thru 11/8 ~4.1M shares, $7.4M thru 2/4; avg $1.83
GECC Base Distribution——$0.37 (first quarter 2025) + $0.05 special (Jan 2025)

Segment/Source Breakdown (Disclosed items)

Segment/SourceQ2 2025 Details
GECC Management FeesBase fee $1.20M (+33% YoY)
GECC Incentive Fees~$0.50M
Monomoy BTSCompleted second build-to-suit in Mississippi; progressing third in Florida
Monomoy REITClosed three property purchases totaling ~$3.8M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company Guidance (Revenue, EPS, Margins)FY/QuarterNot issuedNot issuedMaintained: No formal guidance
GECC Base Distribution (Managed Vehicle)Q1 2025$0.35/share$0.37/share; $0.05 special in Jan 2025Raised/Declared

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Credit platform (GECC)Capital raises; notes issued; incentive fees; AUM growth Record investment income; capital structure optimized; incentive fees Base fee up 33%; incentive fees ~$0.5M; distribution increase Strengthening fee streams
Real estate (Monomoy)BTS sale drove Q4 revenue; pipeline building First BTS construction completed; pipeline strong Greenfield acquisition; MCS launch; more integrated services Platform integration and expansion
AUM/FPAUMPro forma FPAUM/AUM up Q4 FPAUM $559M; AUM $782M FPAUM $538M; AUM $751M Sustained YoY growth; sequentially normalizing
Capital allocationNote buyback gains; share repurchases Authorization increased to $20M; buybacks at discount ~4.1M shares repurchased; avg $1.83 Ongoing buybacks
LiquidityCash/marketable ~$58M ~$52M cash/marketable ~$44M cash Ample but lower vs prior periods
Technology investments—SPV reversals; portfolio highlights CoreWeave convertible preferred noted as unique investment Opportunistic investments emerging

Management Commentary

  • “Our BDC closed another successful capital raise at NAV, increased its first quarter dividend to 37 cents per share and announced a special dividend in December of 5 cents per share.” — CEO Jason Reese .
  • “We were thrilled to announce the acquisition of Greenfield CRE… launch an integrated, full-service real estate platform… expand our scope of services, and fortify our overall real estate value proposition.” — CEO Jason Reese .
  • “We continue to repurchase shares at a meaningful discount to book value… ended the quarter in a strong financial position with over $44,000,000 in cash.” — CEO Jason Reese .
  • “Revenues grew 24%… primarily driven by increased revenues from Monomoy BTS alongside a pickup in management fees from GECC… AUM and fee-paying AUM totaled approximately $751,000,000 and $538,000,000.” — CFO Keri Davis .

Q&A Highlights

  • No analyst questions were asked; the call concluded without Q&A, offering limited external probing on guidance or segment trajectory .

Estimates Context

  • S&P Global consensus estimates for Q2 2025 (EPS, revenue, EBITDA) were unavailable at the time of request due to access constraints; as such, we cannot quantify beats/misses versus Wall Street consensus for this quarter [GetEstimates error].
  • Given micro-cap coverage and timing, Street estimate visibility may be limited; we recommend monitoring updated consensus as coverage evolves.

Key Takeaways for Investors

  • Fee momentum continues: GECC base fees +33% YoY ($1.20M) and ~$0.50M incentive fees indicate strengthening recurring and performance-based revenues tied to higher FPAUM .
  • Real estate platform upgraded: MCS formation via Greenfield acquisition should add accretive consulting/management fees and enhance execution leverage across Monomoy BTS and REIT .
  • Healthy profitability despite operating loss: Net income from continuing ops $1.40M with adjusted EBITDA $1.02M; margins remain robust on investment gains, though operating costs and interest expense are ongoing drags .
  • Capital discipline: ~4.1M shares repurchased for $7.4M at $1.83 average; book value per share $2.30 provides valuation anchor for repurchases .
  • Liquidity to fund growth: ~$44M cash enables opportunistic investment and platform scaling; watch for deployment into high-ROIC opportunities (e.g., MCS, credit vehicles) .
  • Near-term trading: News flow around MCS integration and continued AUM growth, plus GECC distribution increase, are constructive catalysts; lack of formal guidance and limited Q&A may temper near-term visibility .
  • Medium-term thesis: Integrated alt-asset platform with credit and industrial real estate, scaling AUM and fee streams, disciplined buybacks, and opportunistic investments (e.g., CoreWeave) presents a multi-pronged path to value creation .