Press release·12/16/2025 00:52:35

Overview of the Company

BRC Group Holdings, Inc. (formerly B. Riley Financial, Inc.) is a diversified portfolio of companies operating in financial services, telecom, retail, and e-commerce. The company’s core financial services platform provides customized solutions for small and middle market companies. BRC also opportunistically invests in and acquires companies or assets with attractive risk-adjusted returns.

The company operates in five reportable segments: Capital Markets, Wealth Management, Communications, Consumer Products, and E-Commerce. The Capital Markets segment provides investment banking, equity research, and institutional brokerage services. The Wealth Management segment offers retail brokerage, investment management, and financial planning services. The Communications segment includes telecom and cloud services businesses. The Consumer Products segment manufactures and sells laptop cases, backpacks, and other accessories. The E-Commerce segment operates an e-commerce platform for apparel brands and retailers.

Financial Performance

For the three months ended June 30, 2025, BRC reported total revenues of $225.3 million, up from $94.9 million in the prior year period. This 137.4% increase was primarily driven by:

• Favorable fair value adjustments on loans of $176.4 million, compared to a loss of $175.6 million in the prior year
• Increase in net trading gains of $59.0 million, compared to a loss of $31.3 million in the prior year
• Partially offset by decreases in services and fees revenue of $57.1 million, interest income from securities lending of $22.7 million, and interest income from loans of $14.7 million

Operating expenses decreased 34.5% to $214.5 million, mainly due to lower direct costs of services, cost of goods sold, and selling, general and administrative expenses across the segments.

As a result, BRC reported operating income of $10.8 million, compared to an operating loss of $232.6 million in the prior year period. The company also recognized other income of $64.0 million, including a $44.5 million gain on the senior note exchange, $25.6 million of income from equity investments, and a $11.9 million change in fair value of financial instruments.

After accounting for income taxes and discontinued operations, BRC reported net income of $141.0 million, compared to a net loss of $433.8 million in the prior year quarter.

For the six months ended June 30, 2025, total revenues increased 4.8% to $411.4 million, driven by similar factors as the quarterly results. Operating expenses decreased 27.9% to $462.0 million, leading to an operating loss of $50.7 million, an improvement from the $248.6 million operating loss in the prior year period. Net income for the six-month period was $124.4 million, compared to a net loss of $481.7 million in the prior year.

Segment Performance

Capital Markets Revenues in the Capital Markets segment decreased 22.2% to $39.1 million in Q2 2025, primarily due to declines in investment banking, commission, and interest income. Segment operating expenses decreased 11.7% to $44.6 million, driven by lower employee compensation and other costs. The segment reported operating income of $1.0 million, compared to an operating loss of $157.9 million in the prior year quarter.

For the six-month period, Capital Markets revenues declined 41.9% to $64.3 million, while operating expenses decreased 17.3% to $86.5 million, resulting in an operating loss of $24.9 million, an improvement from the $198.5 million loss in the prior year.

Wealth Management Wealth Management revenues decreased 32.6% to $33.4 million in Q2 2025, primarily due to a decline in brokerage and advisory fees driven by a reduction in assets under management (AUM). Segment expenses decreased 18.8% to $39.9 million, mainly from lower employee costs. The segment reported operating income of $3.7 million, compared to $2.1 million in the prior year quarter.

For the six months, Wealth Management revenues declined 20.5% to $80.1 million, while expenses decreased 13.9% to $85.5 million, resulting in operating income of $5.4 million, down from $9.3 million in the prior year period.

Communications Communications segment revenues decreased 21.9% to $60.7 million in Q2 2025, primarily due to a $16.7 million decline in subscription revenue, including a $10.7 million decrease from the divestiture of the Lingo wholesale carrier business. Segment expenses decreased 21.8% to $19.9 million, leading to operating income of $41.5 million, compared to $52.3 million in the prior year quarter.

For the six months, Communications revenues declined 22.0% to $123.9 million, while expenses decreased 17.8% to $40.6 million, resulting in operating income of $83.3 million, down from $109.5 million in the prior year.

Consumer Products Consumer Products segment revenues decreased 15.8% to $43.3 million in Q2 2025, primarily due to lower sales of computer and peripheral products. Segment expenses decreased 14.2% to $14.6 million. The segment reported operating income of $7.6 million, compared to an operating loss of $1.1 million in the prior year quarter.

For the six months, Consumer Products revenues declined 17.1% to $85.4 million, while expenses decreased 12.5% to $30.2 million, resulting in operating income of $13.3 million, up from $9.1 million in the prior year.

E-Commerce The E-Commerce segment, consisting of the Nogin business, was deconsolidated in Q1 2025. As a result, there were no revenues or expenses reported for this segment in Q2 2025. For the six-month period, E-Commerce revenues were $3.5 million, and expenses were $8.4 million.

Strengths and Weaknesses

Strengths:

• Diversified business model across financial services, telecom, retail, and e-commerce
• Strong performance in the Capital Markets and Wealth Management segments, despite some revenue declines
• Significant gains from fair value adjustments on loans and the portfolio of securities and other investments
• Successful execution of strategic divestitures and debt restructuring, improving liquidity and financial flexibility

Weaknesses:

• Continued declines in the Communications segment, as legacy telecom and VoIP services face competitive pressures
• Impairment charges related to the Targus tradename in the Consumer Products segment
• Reduction in assets under management and associated fees in the Wealth Management segment
• Reliance on episodic investment banking revenues and fair value adjustments to drive profitability

Outlook and Future Prospects

BRC’s diverse business model and strategic actions have positioned the company to navigate the current economic environment. The company’s focus on operational improvements, cost reductions, and strategic portfolio management should continue to enhance its financial performance.

In the Capital Markets segment, the company will need to adapt to the volatile nature of investment banking revenues. Maintaining a strong pipeline of advisory and underwriting deals will be crucial. The Wealth Management segment faces headwinds from the loss of advisors and client assets, requiring the company to invest in talent retention and new client acquisition.

The Communications segment remains challenged by the decline of legacy telecom services, necessitating a strategic shift towards higher-growth, cloud-based offerings. The Consumer Products segment will need to address the softness in computer and peripheral sales through product diversification and cost management.

Overall, BRC’s ability to leverage its financial services expertise, optimize its portfolio, and execute on strategic initiatives will be key to driving long-term shareholder value. The company’s focus on liquidity management and debt reduction should also provide a stronger financial foundation for the future.