Abacus Global Management, Inc. Q2 FY2025 earnings call

• Jay Jackson noted the company delivered excellent quarter with record profitable growth, strong revenue and adjusted earnings growth, and raised full year 2025 adjusted net income outlook. He discussed the business model as an originator and market maker, controlling price discovery via genuine market demand, with dual approach of selling some originated assets to prevailing market prices and syndicating remaining to institutional third-party investors.
• Elena Plesco highlighted key performance indicators including portfolio turnover and velocity metrics (annualized turnover ratio 2.3x in Q2 2025), strategic portfolio aging and inventory management (sold policies averaged 243 days held in Q2 2025), health portfolio as best ideas (policies held over 365 days represent ~15% of total portfolio value), and unit economics performance (average realized gain on sale 26.3% in Q2 2025).
• Bill McCauley detailed second quarter financial performance: total revenue growth, operating expenses, adjusted net income and EBITDA growth, balance sheet metrics (adjusted return on equity 21% and adjusted return on invested capital 22% in Q2 2025), and raised full year 2025 adjusted net income outlook to $74 million to $80 million.
• Jay Jackson also mentioned launch of new corporate-focused commercial campaign on June 12, 2025, and Board of Directors authorized $20 million share repurchase program effective June 5, 2025, and completed warrant exchange.

In the second quarter of 2025, Abacus Global Management achieved significant financial results. Total revenue grew by 93% year-over-year to $56.2 million. The Life Solutions business realized a gain of $58.3 million during the quarter. The Asset Management business contributed $8.8 million in revenue in Q2 2025. Capital deployed increased 16% to $121.8 million in Q2 2025 compared to the prior year. As of June 30, 2025, the company held 600 policies with a value of $387.3 million on the balance sheet, had cash and cash equivalents of $74.8 million, and outstanding long-term debt of $357 million. Revenue contribution: Life Solutions is a key driver, and Asset Management also contributed, though to a lesser extent compared to Life Solutions.

• Abacus Global Management raised its full year 2025 outlook for adjusted net income to between $74 million and $80 million, up from the prior range of $70 million to $78 million. This implies strong year-over-year growth of 59% to 72% compared to 2024's adjusted net income of $46.5 million.
• The company expects to grow in the second half of 2025, though not necessarily dollar-for-dollar as there are still unpredictable elements in the overall economy, but feels confident in continuing growth momentum.

• Near-term macro environment remains dynamic, which could potentially affect the business. - Forward-looking statements are subject to risks and uncertainties that could materially affect results, and reference should be made to Abacus Global Management's public filings for more information on risks, uncertainties and assumptions relating to forward-looking statements.

Q: Please give more specifics around the mix of sales between Abacus' own funds and third parties and how to ensure no conflict of interest.

A: Those funds are independent with their own policy statements, asset management and investment objectives. Each fund gets a third-party actuarial market valuation of underlying assets quarterly. In Q2, related party transactions consisted of 29% of total revenue and 17% year-to-date.

Q: Am I reading right about share repurchase and warrant exchange?

A: When looking at stock pricing and warrant exchange, the buyback offset the potential dilution from warrant conversion, with more shares in buyback than warrant exchange.

Q: Share what first unrealized gains were in the quarter and if the $58 million realized gains were primarily from prior quarter unrealized gains.

A: Unrealized gain for the quarter was about $17 million. The $58 million realized gains were primarily from prior quarter unrealized gains, and Q2 average trade spread recognized was 26% higher than historical average of 22%.

Q: Expectations for the second half from an earnings perspective?

A: Expect to grow in the second half, but being thoughtful due to unpredictable elements in the overall economy, but confident in continuing growth momentum.

Q: Where would you like to keep the average turnover ratio and thoughts on number of policies held?

A: Would like to keep average turnover in the range of 1.5 to 2x. Number of policies held could fluctuate depending on investor demand and acquisition, but focus more on the 1.5 to 2x ratio.

Q: How are you thinking about G&A expenses going forward?

A: G&A expenses will grow as revenue grows, but not at the same percentage, with additional headcount and legal fees, but expected to be south of $18 million quarterly on normalization.

Q: Breakout of related party transactions percentage is on total revenue, and color on policies to third parties between insurance partners and financial investors?

A: Related party transactions percentage is on total revenue. Breaking out policies to third parties into insurance partners and financial investors is challenging due to confidentiality requests, but expanding relationships with carrier and reinsurer partners.

Q: Were you implying sequential growth for revenue and adjusted net income in the second half?

A: Expect sequential growth in the second half, with historical Q3 and Q4 being stronger quarters, and momentum continued with marketing spend and origination increasing.

Q: Is the $142 million of flows gross or net, and run rate?

A: That was gross. The net number is not much different, and capital raise has been consistent with nearly $240-plus million raised over last 4 months, and expecting demand to continue in the second half.