Press release·12/16/2025 00:11:33

Overview of the Company’s Financial Performance

B. Riley Financial, Inc. (soon to be renamed BRC Group Holdings, Inc.) is a diversified portfolio of companies operating in five reportable segments: Capital Markets, Wealth Management, Communications, Consumer Products, and E-Commerce. The company reported total revenues of $411.4 million for the six months ended June 30, 2025, up 4.8% from the prior year period. This increase was primarily driven by favorable fair value adjustments on loans and gains in the company’s portfolio of securities and other investments, which offset declines in services and fees, interest income, and sale of goods.

The company generated net income of $124.4 million for the six months ended June 30, 2025, compared to a net loss of $481.7 million in the prior year period. This turnaround was largely due to the $180.5 million favorable variance in fair value adjustments on loans, as well as gains on the exchange of senior notes, sale and deconsolidation of businesses, and equity investments. However, the company continued to face headwinds, with decreases in services and fees across most segments and lower interest income from loans and securities lending.

Revenue and Profit Trends

The Capital Markets segment saw a 41.9% decline in services and fees revenue to $64.3 million, primarily due to decreases in investment banking, advisory, and commission fees. Trading gains and fair value adjustments on loans in this segment improved significantly compared to the prior year period.

The Wealth Management segment experienced a 20.5% decrease in services and fees to $80.1 million, driven by a reduction in assets under management and associated advisory fees following the Stifel transaction in April 2025. However, trading gains in this segment increased.

Revenues from services and fees in the Communications segment declined 22.0% to $123.9 million, largely due to decreases in subscription revenue across the segment’s various businesses as landline and VoIP technologies face competition from cellular services.

The Consumer Products segment saw a 17.1% decrease in sale of goods revenue to $85.4 million, reflecting lower computer and peripheral sales worldwide. The E-Commerce segment, consisting of the Nogin business, generated $3.5 million in services and fees revenue during the six months ended June 30, 2025.

Strengths and Weaknesses

One of the company’s key strengths is its diversified business model, with operations spanning capital markets, wealth management, communications, consumer products, and e-commerce. This diversification helps to mitigate risks and provides multiple avenues for revenue generation.

The company’s capital markets and wealth management businesses have historically been strong profit contributors, though they have faced headwinds more recently. The communications segment provides a stable revenue stream, though it is experiencing secular declines in certain legacy technologies.

A weakness for the company is its reliance on fair value adjustments and gains on investments to drive profitability. While these have been a significant source of income in recent periods, they are inherently volatile and unpredictable. The company’s services and fees revenue, which is more directly tied to its core business operations, has been declining across multiple segments.

Another weakness is the company’s high debt load, with $1.5 billion in borrowings outstanding as of June 30, 2025. While the company has been actively managing its debt through exchanges and refinancings, servicing this debt remains a significant ongoing obligation.

Outlook and Future Prospects

Looking ahead, the company’s future prospects will depend on its ability to stabilize and grow its core services and fees revenue, while continuing to effectively manage its investment portfolio and debt obligations.

In the Capital Markets segment, the company will need to adapt to the changing landscape for investment banking and advisory services, potentially by focusing more on areas like asset management, where it can leverage its expertise. Wealth Management will need to rebuild its assets under management and associated fee revenue, potentially through strategic acquisitions or recruiting of experienced advisors.

The Communications segment faces ongoing challenges from the decline of legacy technologies, but the company may be able to offset this through growth in newer, more competitive service offerings. The Consumer Products and E-Commerce segments will need to navigate evolving market dynamics and consumer preferences to drive sustainable revenue and profitability.

Overall, the company’s diversified business model provides a foundation for long-term success, but it will need to execute effectively on its strategic initiatives to capitalize on its strengths and address its weaknesses. Prudent management of the company’s balance sheet and investment portfolio will also be critical to its future performance.

Conclusion

B. Riley Financial, Inc. (soon to be BRC Group Holdings, Inc.) reported a mixed financial performance for the six months ended June 30, 2025. While the company benefited from favorable fair value adjustments and gains on investments, its core services and fees revenue declined across multiple segments. The company’s diversified business model remains a strength, but it will need to adapt to evolving market conditions and effectively manage its debt obligations to drive sustainable profitability and shareholder value going forward.