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HK

Horizon Kinetics Holding Corp (HKHC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 total revenue was $17.9M, up 37% year over year, while EPS was $0.39; advisor-only operating income rose to $5.5M (up $4.0M y/y), reflecting core fee growth amid consolidated investment product volatility .
  • Sequentially, revenue declined vs Q2 ($19.8M → $17.9M) as unrealized investment losses tied to TPL’s ~12% price decline weighed on other income lines, though operating margin improved to 16.5% from 12.7% .
  • The Board raised the quarterly dividend to $0.106 per share (49% increase vs prior quarter), with management reiterating a ~70% payout of net income as a capital return priority .
  • AUM was $10.4B at 9/30/25 (vs $10.5B at 6/30/25 and $10.8B at 3/31/25), with fee revenue supported by higher 2024 AUM levels (TPL, GBTC) and incremental net inflows; consolidated “noise” remains from investment products .
  • No formal top-line/margin guidance; near-term narrative centers on dividend cadence, advisor-only profitability, TPL/digital asset marks, and an announced plan to launch a new ETF in Q1 2026 .

What Went Well and What Went Wrong

What Went Well

  • Advisor-only operating income reached $5.5M, up $4.0M y/y, underscoring core fee-based profitability despite investment mark-to-market volatility .
  • Dividend raised to $0.106 per share, a 49% increase q/q; “we are taking 70% of our net income, and we are paying it out to shareholders” clarifies capital return policy .
  • Operating margin improved sequentially (16.5% in Q3 vs 12.7% in Q2) as fee revenue growth outpaced expense growth; management emphasized focusing on the operating company’s YTD operating income of ~$16.1M as the key metric .

What Went Wrong

  • Unrealized investment losses of $7.0M (primarily due to TPL’s ~12% decline) and equity losses of $2.0M created bottom-line volatility; net income attributable to HKHC fell y/y ($7.2M in Q3 2025 vs $19.6M in Q3 2024) .
  • Sequential total revenue declined ($17.9M vs $19.8M), as advisor-only revenues softened and investment products’ net losses reduced consolidated other income .
  • Prior quarter included a $0.9M non-cash goodwill impairment in consumer products and elevated unrealized losses (TPL down ~20%), illustrating sensitivity to investment marks and consolidated vehicles .

Financial Results

Core Income Statement and Profitability

MetricQ1 2025Q2 2025Q3 2025
Total Revenue ($USD Millions)$19.80 $19.76 $17.89
Management & Advisory Fees ($USD Millions)$18.91 $18.80 $17.76
Operating Income ($USD Millions)$1.31 $2.51 $2.95
Operating Margin (%)6.6% 12.7% 16.5%
Net Income Attributable to HKHC ($USD Millions)$22.84 $(10.49) $7.24
EPS (Basic & Diluted, $USD)$1.23 $(0.56) $0.39

Year-over-Year (Q3 2025 vs Q3 2024)

MetricQ3 2024Q3 2025YoY Delta
Total Revenue ($USD Millions)$13.06 $17.89 +$4.83M
Operating Income (Loss) ($USD Millions)$(0.92) $2.95 +$3.87M
Net Income Attributable to HKHC ($USD Millions)$19.59 $7.24 −$12.35M
EPS (Basic & Diluted, $USD)$1.05 $0.39 −$0.66

Advisor-Only (Non-GAAP) Fee Business

MetricQ1 2025Q2 2025Q3 2025
Advisor-Only Total Revenue ($USD Millions)$22.04 $21.50 $19.69
Advisor-Only Operating Income ($USD Millions)$4.60 $4.45 $5.49

Expenses (Consolidated GAAP)

MetricQ1 2025Q2 2025Q3 2025
Compensation & Related ($USD Millions)$9.57 $8.38 $7.69
Sales, Distribution & Marketing ($USD Millions)$4.46 $4.44 $3.77
General & Administrative ($USD Millions)$2.88 $2.97 $2.52
Depreciation & Amortization ($USD Millions)$0.50 $0.34 $0.20
Goodwill Impairment ($USD Millions)—$0.90 —

Other Items (Marks and Investment Products)

MetricQ1 2025Q2 2025Q3 2025
Unrealized Gain (Loss) on Investments ($USD Millions)$13.73 $(15.42) $(7.05)
Equity Earnings (Losses), Net ($USD Millions)$3.05 $(4.56) $(2.03)
Unrealized Gain (Loss) on Digital Assets ($USD Millions)$(1.78) $3.43 $1.26
Investment & Other Income (Losses) of Consolidated Investment Products, Net ($USD Millions)$70.27 $(15.53) $129.40

KPIs

KPIQ1 2025Q2 2025Q3 2025
AUM ($USD Billions, period-end)$10.8 $10.5 $10.4
Dividend per Share ($USD)$0.056 $0.071 $0.106

Guidance Changes

MetricPeriodPrevious Guidance/Run-RateCurrentChange
Dividend per ShareQ4 2025 payment (12/17/25)$0.071 (declared 8/8/25) $0.106 (declared 11/11/25) Raised (+49%)
Capital Return PolicyOngoing—~70% payout of net income (management policy) Maintained
Revenue/Margins/Tax/OpEx Guidance2025–2026Not providedNot providedNo formal guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
AI/HPC buildout & capex cycleNot discussed in Q1 PR; Q2 highlighted marks driven by TPL/digital assets Extensive view: sustained high capex or perpetual obsolescence cycles pressure FCF; hardware suppliers vs hyperscaler dynamics; 2028 power scarcity thesis Intensifying strategic focus
Product initiatives (ETFs)Q1: collected incentive fees; platform breadth noted Japan Owner-Operator ETF ~$25M AUM; Blockchain Development ETF ~$20M AUM; new ETF planned for Q1 2026 Expanding
AUM drivers & TPL exposureQ1: TPL +20% drove AUM; GBTC −10% offset ; Q2: TPL −20% drove losses Q3: TPL −12% drove $7.0M unrealized losses; TPL roughly ~41% of AUM at 12/31/24 (down since) Ongoing sensitivity
Consumer products divestitureQ2: $0.9M goodwill impairment Brands sold; consideration includes royalties ($1.5M min/$5.25M max) recognized in other assets (~$2.5M FV) Portfolio simplification
Office leases & cost efficiencyNot in Q1 PR; Q2 balance sheet lease detail New NYC office lease reduces monthly payments by ~35% and consolidates floors; additional CT/NJ/NY leases Cost optimization
Capital returnDividend $0.056 (Q1) and $0.071 (Q2) $0.106 dividend and 70% payout articulation Accretive to narrative

Management Commentary

  • “At the advisor-only level… operating income was $5.5 million for the third quarter… driven primarily by the revenue growth… overall, the company’s net income was $0.39 per share for the quarter” .
  • “We are taking 70% of our net income, and we are paying it out to shareholders” .
  • “We are going to launch another ETF… in the first quarter of 2026… the same word-of-mouth approach” .
  • On TPL: “We are not reducing it for any fundamental reasons… I couldn’t be more excited about the future prospects” .
  • On the investment cycle: “Either capex declines and hits suppliers, or capex never ends due to 24-month obsolescence… in either case, free cash flow is pressured” .
  • On power/water constraints for data centers: detailed explanation of power redundancy (PUE ~1.58) and water requirements, underpinning West Texas siting logic .

Q&A Highlights

  • Japan Owner-Operator ETF AUM around $25M; strategy emphasizes true domestic exposure vs multinational-heavy indices; Blockchain Development ETF around $20M .
  • TPL exposure management: sales only when compelled by regulation; firm view remains constructive; ~41% AUM disclosure at 12/31/24 has diluted with new assets/products .
  • Leasing strategy: new NYC lease consolidates floors, improves ambiance, and reduces monthly obligations by ~35%; additional CT/NJ/NY space planned .
  • Consumer products: divested Kids & Pets/Messy Pet brands; consideration includes long-term royalties with $1.5M minimum and $5.25M maximum; ~$2.5M FV recorded in other assets .
  • Dividend raised 49% q/q; reiterated focus on rewarding shareholders via ~70% payout .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2025 EPS and Revenue was unavailable for HKHC; no published quarterly EPS/Revenue consensus was retrieved. Where estimates are unavailable, comparisons to consensus could not be made.
  • Implication: Investors should anchor near-term expectations on advisor-only fee trends, AUM trajectory, and consolidated mark-to-market drivers until formal coverage emerges.

Key Takeaways for Investors

  • Fee engine resilient: Advisor-only operating income rose to $5.5M, up $4.0M y/y, with core fee revenue growth despite consolidated investment product volatility .
  • Sequential profitability improvement: Operating margin expanded to 16.5% (Q3) from 12.7% (Q2) and 6.6% (Q1), reflecting expense discipline and fee scale .
  • Dividend as catalyst: Quarterly dividend increased to $0.106 (+49% q/q), supported by a ~70% payout policy; this may appeal to income-focused holders and frame capital return expectations .
  • AUM drift and sensitivity: AUM moved from $10.8B (Q1) to $10.5B (Q2) to $10.4B (Q3); TPL/digital asset marks drive consolidated volatility and should be monitored for near-term trading implications .
  • Consolidation “noise”: GAAP consolidation of investment products materially affects other income lines and redeemable NCI; focus on advisor-only results to assess operating leverage .
  • Pipeline optionality: Japan Owner-Operator and Blockchain ETFs provide reputation-led distribution; a new ETF in Q1 2026 offers potential incremental high-margin revenue .
  • Macro infrastructure thesis: Management’s high-performance computing/power/water analysis suggests long-run value in real-asset exposures (e.g., West Texas siting economics), informing broader portfolio construction views .
Sources: Q3 2025 8-K press release and exhibits **[88000_0001193125-25-280089_hkhc-20251113.htm:0]**-**[88000_0001193125-25-280089_hkhc-ex99_1.htm:11]**; Q3 2025 earnings call transcript **[0000088000_2304638_0]**-**[0000088000_2304638_17]**; Q2 2025 8-K press release and exhibits **[88000_0000950170-25-107269_hkhc-20250812.htm:0]**-**[88000_0000950170-25-107269_hkhc-ex99_1.htm:11]**; Q1 2025 8-K press release and exhibits **[88000_0000950170-25-071607_hkhc-20250514.htm:0]**-**[88000_0000950170-25-071607_hkhc-ex99_1.htm:11]**.