Great Elm Group’s Earnings Call: Growth Amid Challenges

Great Elm Group, Inc. ((GEG)) has held its Q3 earnings call. Read on for the main highlights of the call.

Great Elm Group, Inc. recently held its earnings call, revealing a generally positive outlook despite some challenges. The company showcased significant growth in assets under management and increased revenues, driven by strategic acquisitions. However, the call also highlighted a net loss and a decrease in adjusted EBITDA due to market volatility, which the company aims to overcome as conditions stabilize.

Growth in Assets Under Management

Great Elm Group reported a 15% year-over-year increase in fee-paying assets under management (AUM), reaching approximately $565 million. This growth was primarily fueled by Great Elm Capital Corp.’s equity and debt issuances, underscoring the company’s robust asset management capabilities.

Revenue Increase

The company experienced a 15% year-over-year growth in total revenue for the fiscal third quarter, amounting to $3.2 million. This increase was largely attributed to higher revenues from real estate project management fees and rental income, reflecting the company’s expanding real estate operations.

Strategic Acquisition and Expansion

Great Elm Group enhanced its real estate platform by launching Monomoy Construction Services through the acquisition of Greenfield CRE. This strategic move is expected to create revenue and operational synergies, further strengthening the company’s market position.

Strong Cash Position

Ending the quarter with approximately $32 million in cash, Great Elm Group is well-positioned for future growth and investment opportunities. This strong cash reserve provides the company with the flexibility to capitalize on potential market opportunities.

GECC Performance

Great Elm Capital Corp. (GECC) delivered record total investment income of $12.5 million in Q1 2025. This performance was supported by strong cash flows from its CLO JV and a significant increase in base management fees, which rose by over 40% year-over-year.

Share Buyback Program

The company executed a share buyback program, repurchasing approximately 4.8 million shares for $8.7 million at an average cost of $1.84 per share. This represents a 15% discount to the quarter-end book value per share of $2.14, indicating confidence in the company’s intrinsic value.

Net Loss for the Quarter

Great Elm Group reported a net loss of $4.5 million for the quarter, primarily due to unrealized losses related to investments in CoreWeave and GECC shares. This was largely attributed to broader market volatility, which the company anticipates overcoming as market conditions improve.

Decrease in Adjusted EBITDA

The company saw a decrease in adjusted EBITDA, which fell to $0.5 million from $1.2 million in the prior year period. This decline reflects the challenges posed by current market conditions, which the company is actively addressing.

Forward-Looking Guidance

Looking ahead, Great Elm Group remains optimistic about its growth prospects. The company highlighted a 15% year-over-year increase in fee-paying AUM, driven by significant equity and debt issuances by GECC. Despite reporting a net loss, the company maintains a strong cash position and continues to execute its $20 million share buyback program, indicating a strategic focus on long-term value creation.

In summary, Great Elm Group’s earnings call presented a mixed but generally positive outlook. While the company faces challenges from market volatility, its strategic acquisitions, strong cash position, and growth in assets under management and revenues underscore its potential for future success. Investors and market watchers will be keen to see how the company navigates these challenges and capitalizes on its growth opportunities.