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GE

Great Elm Group, Inc. (GEG)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 revenue rose 15% YoY to $3.21M but declined 8.5% QoQ; net loss from continuing ops widened to ($4.50M) on unrealized investment marks (CoreWeave and GECC) despite stable operating trends; Adjusted EBITDA fell to $0.47M .
  • AUM and FPAUM continued to expand to ~$768M and ~$565M (+12% and +15% YoY), driven primarily by GECC growth; liquidity remained solid with ~$31.5M cash at quarter-end and buybacks totaling ~4.8M shares for $8.7M through May 6 at ~$1.84/share .
  • Managed vehicle momentum: GECC posted record TII of $12.5M in 1Q25 and launched a $100M ATM, positioning GEG for higher base/incentive fees ahead; Monomoy expanded into construction services (MCS) and added RE assets .
  • No formal guidance provided; near-term stock catalysts include potential GECC incentive fees resumption, MCS integration synergies, and reversal of unrealized marks if markets stabilize .

What Went Well and What Went Wrong

  • What Went Well

    • AUM growth persisted: FPAUM ~$565M (+15% YoY) and AUM ~$768M (+12% YoY), underpinned by GECC capital formation and fee base expansion .
    • GECC strength: record TII of $12.5M, increased quarterly base distribution to $0.37/share, and launched a $100M ATM to support further growth and fee potential for GEG .
    • Real estate platform build-out: acquisition of Greenfield CRE and formation of Monomoy Construction Services (MCS) to create a full-service construction vertical and third‑party consulting opportunity. CEO: “MCS … adds specialized construction experience … and has been well received by Monomoy’s tenants.” .

  • What Went Wrong

    • Profitability pressure: net loss from continuing ops widened to ($4.50M) vs. ($2.88M) LY and $1.35M profit in Q2; Adjusted EBITDA decreased to $0.47M from $1.23M LY and $1.02M in Q2 .
    • Investment marks: quarter’s loss primarily reflected unrealized losses on certain positions (CoreWeave, GECC shares) amid market volatility; management expects reversal if conditions stabilize .
    • QoQ revenue contraction: revenue fell to $3.21M from $3.51M in Q2 as incentive-fee tailwinds seen in prior quarters moderated; management cited growth in fee revenue from GECC and real estate, but overall topline declined sequentially .

Financial Results

MetricQ3 FY2024 (oldest)Q1 FY2025Q2 FY2025Q3 FY2025 (newest)
Revenue ($USD Millions)$2.79 $3.99 $3.51 $3.21
Net Income from Continuing Ops ($M)($2.88) $2.97 $1.35 ($4.50)
Diluted EPS ($)($0.10) $0.08 $0.04 ($0.17)
Adjusted EBITDA ($M)$1.23 $1.33 $1.02 $0.47
Adjusted EBITDA Margin %44.1% (1.23/2.79) 33.3% (1.33/3.99) 29.2% (1.02/3.51) 14.7% (0.47/3.21)
  • Estimate comparison (S&P Global): Consensus EPS and revenue estimates were not available; thus no beat/miss determination. Values retrieved from S&P Global.

KPIs and Balance Sheet

KPIQ1 FY2025Q2 FY2025Q3 FY2025
FPAUM ($M)~$559 ~$538 ~$565
AUM ($M)~$782 ~$751 ~$768
Book Value/Share ($)$2.22 $2.30 $2.14
Cash & Equivalents ($M)$44.15 $44.29 $31.53
Share Repurchases2.5M sh / $4.6M thru 11/8/24 4.1M sh / $7.4M thru 2/4/25 4.8M sh / $8.7M thru 5/6/25

Managed Vehicles Highlights (Q3 FY2025)

  • GECC: Record TII $12.5M; base distribution raised to $0.37/share; $100M ATM launched .
  • Monomoy: Closed land for third BTS property; progress on fourth; REIT acquired a ~$3.0M property .
  • GECIF: ~13.9% net return since inception through 3/31/25 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal Revenue/EPS GuidanceFY/QtrNone disclosedNone disclosedMaintained (no formal guidance)
Capital AllocationOngoing$20M buyback authorization in placeContinued execution; 4.8M sh/$8.7M repurchased thru 5/6/25Ongoing
Managed VehiclesOngoingGECC distribution at $0.37/share$100M GECC ATM launched; potential to support AUM/fee growthPositive optionality

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 FY2025)Current Period (Q3 FY2025)Trend
AUM/FPAUM GrowthQ1: FPAUM ~$559M, AUM ~$782M; strong pipeline . Q2: FPAUM ~$538M, AUM ~$751M; GECC equity raised; momentum continued .FPAUM ~$565M (+15% YoY), AUM ~$768M (+12% YoY) .Improving/Stable
GECC Performance & FeesQ1: Record TII; incentive fees $0.9M; raised capital and optimized notes . Q2: TII strong; incentive fees $0.5M; distribution raised to $0.37 .Record TII $12.5M in 1Q25; $100M ATM adds growth avenue; base fees up >40% YoY to $1.3M .Positive
Real Estate (Monomoy/MCS)Q1: BTS pipeline strong; RE monetization . Q2: Acquired Greenfield CRE; launched MCS .MCS integration progressing; third BTS land closed; REIT acquired ~$3M property .Positive
Capital ReturnsQ1: Buyback authorization to $20M; 2.5M sh/$4.6M repurchased . Q2: 4.1M sh/$7.4M repurchased .Through 5/6: 4.8M sh/$8.7M; ~15% discount to $2.14 BVPS .Ongoing
Liquidity/Balance SheetQ1: ~$52M cash & marketable secs . Q2: ~$44M cash .~$31.5M cash at 3/31/25 .Lower QoQ
Investment Marks/VolatilityQ1: Reversal of ~$3.5M prior unrealized losses (SPVs) aided results .Q2: Gains supported earnings .Q3: Unrealized losses on CoreWeave & GECC shares drove net loss; expected reversal if markets stabilize .

Management Commentary

  • CEO Jason Reese: “We achieved a solid fiscal third quarter 2025, continuing our positive momentum by expanding our assets under management and maintaining performance across our credit and real estate businesses… GECC delivered record total investment income… and is well positioned to pay meaningful incentive fees to GEG in the coming quarters.”
  • On MCS: “Our launch of Monomoy Construction Services … adds specialized construction experience… As the integration of MCS progresses, we remain focused on our robust project and property pipeline.”
  • CFO Keri Davis: “Revenues grew 15% to $3.2 million… Net loss was primarily driven by unrealized losses… Adjusted EBITDA for the quarter was $0.5 million… approximately $32 million in cash… book value per share of approximately $2.14.”

Q&A Highlights

  • No analyst questions were taken on the call; remarks concluded after prepared comments .
  • Prepared remarks clarified drivers of the loss (unrealized marks on CoreWeave and GECC shares) and reiterated expectation of reversal if market conditions stabilize .
  • Management emphasized fee momentum from GECC (base and potential incentive fees), MCS integration benefits, and sufficient liquidity for growth .

Estimates Context

  • S&P Global consensus estimates for Q3 FY2025 revenue and EPS were unavailable at the time of review; therefore, no beat/miss assessment is provided. Values retrieved from S&P Global.
  • Actuals for reference: Revenue $3.21M; Diluted EPS ($0.17). Both from company 8-K/press materials .

Key Takeaways for Investors

  • Fee engine strengthening: GECC’s record TII and $100M ATM should support higher FPAUM, recurring management fees, and potential incentive fees in coming quarters—a key driver for GEG operating leverage .
  • Near-term earnings noise from investment marks: Q3 loss was mark‑to‑market driven; a stabilization in markets could flip this to a tailwind (as seen in prior quarters) .
  • Real estate platform expansion is strategic: MCS deepens vertical integration, opens third‑party revenue opportunities, and may enhance margins as scale builds .
  • Capital deployment + returns: Continued buybacks at discounts to BVPS are accretive; ~$31.5M cash provides dry powder for opportunistic investments and platform growth .
  • Watch QoQ revenue/EBITDA trajectory: Sequential decline and margin compression warrant monitoring; a recovery in incentive fees and MCS contribution are swing factors .
  • No formal guidance: Stock will trade on execution (GECC fee flow, MCS integration wins), marks volatility, and evidence of sustained AUM-driven fee growth .

Citations

  • Q3 FY2025 8-K and press release text and financials:
  • Q3 FY2025 call transcript:
  • Q2 FY2025 8-K:
  • Q1 FY2025 8-K: