Abacus Global Management, Inc. Q3 FY2025 earnings call

• Record quarter: 10th consecutive quarter beating consensus projections. Total revenue up 124% YOY to $63M, adjusted net income up 60% to $23.6M, adjusted EBITDA up 127% to $37.9M. • Guidance update: Increased 2025 guidance to $80M - $84M, representing 72% - 81% YOY growth. • Dividend and share repurchase: Initiated annual dividend of $0.20 per share and $10M share repurchase program. • Securitization milestone: Successfully sold $50M of securitized life insurance assets, establishing new institutional distribution channel and validating demand for longevity-linked assets. • Acquisition: Recently acquired AccuQuote, a premier online life insurance brokerage, which adds a digital origination funnel and supports growth in policy origination and asset acquisition volumes. • Balance sheet strength: Strong free cash generation, high returns on invested capital, allowing funding of strategic initiatives and return of capital to shareholders. • Recurring revenue: Reoccurring revenues expected to approach 70% of total revenue over time, aligning with capital allocation framework.

Total revenue in the third quarter grew 124% year-over-year to $63 million. Adjusted net income rose 60% to $23.6 million and adjusted EBITDA increased 127% to $37.9 million. The Life Solutions segment had capital deployed at $102.4 million in Q3 (an increase of 10% from the prior year), and the asset management segment generated $8.6 million in revenue during Q3 with $102 million of new inflows. The Life Solutions segment benefits from an efficient origination platform and active trading division, while the asset management segment has seen growth due to strategic M&A activity. The Life Solutions segment likely contributes a significant portion to total revenue given its role in origination and realized gains, though specific revenue contribution % wasn't explicitly stated but is a key driver of overall growth.

• Increased 2025 adjusted net income guidance to a range of $80 million to $84 million, up from prior range of $74 million to $80 million. • Represents year-over-year growth of 72% to 81% compared to 2024 adjusted net income of $46.5 million. • Confident in continuing to deliver strong financial performance while returning value to shareholders through dividends and share repurchases.

• Risks related to forward-looking statements, which are subject to uncertainties that could materially affect results. • Market uncertainties, including potential impact of interest rate cycles and market sentiment on traditional investments, though longevity-based assets are uncorrelated to traditional markets. • Regulatory risks associated with the highly regulated industry in which Abacus operates. • Dependence on actuarial and demographic trends, and any material deviation from these could impact performance.

Q: First, are there any incremental economics for you other than just the gain on sale like a structuring fee or a transaction fee? Secondly, could you give us an idea of how many large institutions participated and what portion of those were new to the asset class? And then finally, is there an opportunity to package more of these into some sort of third-party asset management product that you could charge fees on?

A: Jay Jackson responded that they retain servicing fees on underlying assets, had new institutions including insurance companies and commercial banks participate, and see opportunity to package more into third-party products.

Q: On capital deployed, $102 million in the quarter, below the second quarter, but still able to put up solid life settlements revenues. Just curious on some of the puts and takes there. And forward expectations for capital deployed, is $120 million a good run rate?

A: Jay Jackson said Q3 was strategic with increased margins, expects capital deployed to continue growing as demand for uncorrelated assets increases and with new structures like securitization.

Q: On the new dividend, can you share yours and the Board's thoughts on that discussions you had versus just deploying excess capital into buying more policies or more buybacks or having a more nominal dividend?

A: Jay Jackson explained the dividend was a thoughtful move, based on conservative metrics, allowing shareholders to benefit while continuing growth, and it's an annual payment.

Q: Could we see larger securitizations going forward, maybe upwards of like $75 million? Or would we just see more securitizations at $50 million?

A: Jay Jackson stated larger securitizations are expected as the initial one validated demand and there's excess demand for the product.