Beneficient Q3 Earnings Call Highlights

Key Points

• Former CEO legal exposure: Management disclosed the former CEO’s criminal trial begins April 6, 2026 and said Beneficient intends to pursue claims challenging roughly $120 million of purported debt tied to entities related to the former CEO; the company also noted that all but $3.7 million of its $100.3 million total debt is associated with that entity.
• Weak portfolio and cash position with heavy losses: Investments fell to $206 million from $291 million year-over-year and BEN Liquidity posted a $29.2 million quarterly operating loss (YTD operating loss $36.0 million), while cash was only $7.9 million$50 million in gross proceeds from asset sales/redemptions to pay down obligations, including ~$27.5 million to a Texas bank.
• Signs of operational recovery: the company regained full Nasdaq listing compliance, closed a GP Primary Commitment Financing in December signaling market interest, reduced adjusted operating expenses (down 6.5% YoY and 18% YTD excluding non-recurring items), and is building an AI-enhanced platform to support future deal flow.

Beneficient NASDAQ: BENF executives used the company’s fiscal third-quarter 2026 earnings call to outline progress on governance changes, legal matters tied to its former CEO, and efforts to stabilize operations and reduce expenses, while acknowledging that portfolio growth has been limited in recent quarters.

Leadership updates and strategic focus

Interim CEO James Silk opened the call by noting the December death of board member Tom Hicks, who had served on Beneficient’s board since 2017. Silk said Pete Cangany, a board member since 2019 and a longtime Ernst & Young partner, was appointed chairman effective Dec. 15, 2025.

Silk said management has spent several quarters addressing challenges stemming from the separation from the former CEO, which he said required significant resources and attention. He added that management believes completing that work is necessary to better position the company to execute its strategy in private assets.

Silk highlighted a “turning point” in recent months that he said allows the company to focus more fully on driving growth, including regaining full Nasdaq listing compliance and reaching a final, court-approved settlement related to GWG Holdings litigation “within the limits of our existing insurance policies.”

New financing, platform development, and expense reductions

Silk said Beneficient closed its first new GP Primary Commitment Financing since June of the prior year, with the transaction closing in December. He characterized the financing as a signal of continued market interest in the company’s products and its commitment to its strategy.

He also emphasized continued work on an “efficient technology and AI-enhanced services platform” intended to support “steady, profitable deal flow and growth.” Silk pointed to reductions in adjusted operating expenses, citing a 6.5% year-over-year decline and an 18% year-to-date decline, excluding one-time and non-occurring items.

To reduce payables and debt, management said it generated approximately $50 million in gross proceeds through asset sales and equity redemptions, which helped pay down obligations including roughly $27.5 million owed to a Texas state bank.

Legal matters and former CEO-related debt

Silk said the company has cooperated with the U.S. District Court for the Southern District of New York on matters related to the former CEO. He noted the former CEO’s criminal trial is scheduled for early April 2026, and during the Q&A he specified an April 6 start date, adding it could take “three to four weeks” to run its course.

Silk said the company is considering options including litigation against the former CEO, his entities, and other parties. He specifically said Beneficient intends to pursue claims regarding the validity of more than $100 million in debt “purportedly owed to an entity related to our former CEO,” and later described the amount as approximately $120 million.

Quarterly financial highlights and segment performance

CFO Greg Ezell said that due to circumstances surrounding the former CEO’s resignation, the company was unable to grow its investment portfolio through new financings, except for one transaction in December with approximately $3.0 million in NAV.

Ezell reported investments at fair value of $206 million as of Dec. 31, 2025, compared with $291 million at the end of the prior fiscal year. Those investments serve as collateral for BEN Liquidity’s net loan portfolio, which he said was $188 million as of Dec. 31, 2025, compared with $244 million at the end of the prior fiscal year.

He said the loan portfolio was backed by a diversified alternative asset collateral portfolio spanning approximately 150 private market funds and approximately 430 investments. Year-to-date, the company generated $50 million in gross proceeds from asset sales or equity redemptions of certain investments held by customer trusts, which were used to pay down debt and support working capital.

Ezell said GAAP revenue was $18.7 million for the quarter and $3.3 million year-to-date. He attributed the positive GAAP revenue to a $44.1 million increase in the fair value of a derivative asset tied to an “appreciation forfeiture provision” related to the conversion of preferred stock to Class A common stock by Hicks and Silk. Adjusted revenue, excluding that fair value adjustment, was negative $25.4 million for the quarter and negative $40.8 million year-to-date. He said the derivative settles in January 2028 and will be remeasured at fair value each period until settlement.

Operating expenses were approximately $15 million for the quarter, compared with approximately $14 million in the year-ago quarter, and included a $1.7 million non-cash accrual. Excluding that non-cash item, Ezell said operating expenses declined 6.5% from the prior-year period. On a year-to-date basis, he said operating expenses were approximately $44 million versus $53 million in the first three quarters of fiscal 2025, a decline of 18%, excluding certain non-cash and related items.

Ben Liquidity: Ezell said the segment recorded $8.2 million of interest income in the quarter, down 3.6% sequentially, primarily due to a higher percentage of loans on non-accrual status. Year-to-date interest income was $25.5 million, down 25.2% from the prior-year period, driven by lower loans net of allowance for credit losses due to non-accrual loans and prepayments, partially offset by new loan originations. Ben Liquidity posted an operating loss of $29.2 million for the quarter, compared with an operating loss of $0.8 million sequentially. Ezell attributed the deterioration to higher intersegment credit losses tied to NAV declines from updated information from investment managers and asset sales that transacted at lower percentages of NAV than prior quarters, resulting in lower relative loan paydowns. Year-to-date operating loss was $36.0 million versus an operating loss of $0.5 million in the prior-year period.

Ben Custody: Ezell said NAV of alternative assets and other securities held in custody was $230.2 million as of Dec. 31, 2025, down from $338.2 million as of March 31, 2025. He attributed the decline to dispositions, distributions, and unrealized losses from updated manager information or fair value adjustments for investments expected to be sold at amounts differing from NAV, partially offset by $14.8 million of new originations. Segment revenue was $2.9 million in the quarter, compared with $3.1 million in the prior quarter, reflecting lower starting NAV used for fee calculations and the full amortization of certain upfront intersegment fees in a prior period. Operating income was $2.0 million, down from $2.3 million sequentially. Year-to-date revenue was $10.2 million, down 36.9% year over year, with operating income of $7.4 million compared with $9.1 million in the prior year. Ezell said the prior-year period included non-cash items such as a $3.4 million goodwill impairment and a $1.3 million intersegment credit loss provision, neither of which occurred in the current year-to-date period.

Liquidity position and outlook commentary

As of Dec. 31, 2025, Beneficient had $7.9 million in cash and cash equivalents and total debt of $100.3 million, Ezell said. Distributions received from alternative assets and other securities held in custody totaled $11.3 million for the nine months ended Dec. 31, 2025, compared with $19.3 million in the prior-year period.

In the Q&A, management said it is targeting future growth by reengaging with its pipeline of liquidity transactions after a period in which being “out of the market with the financials” constrained activity. Silk said the near-term priority is executing on “a handful of deals” that demonstrate continued market demand and a more efficient, simplified approach to structuring transactions.

Asked about marketing to high-net-worth and smaller institutional clients, Silk said the company expects to focus on family offices and advisor networks, while continuing to use its AltQuote product to provide a preliminary indication of interest on assets.

On the balance sheet, management said that of the company’s $100.3 million in debt, all but $3.7 million relates to an entity associated with the former CEO.

About Beneficient NASDAQ: BENF

Beneficient, a technology-enabled financial services company, provides liquidity solutions and related trustee, custody and trust administrative services to participants in the alternative asset industry in the United States. It operates through Ben Liquidity, Ben Custody, and Customer ExAlt Trusts segments. The company offers Ben AltAccess platform for secure, online, and end-to-end delivery of each of the Ben business unit products and services, including upload documents, and work through tasks, and complete their transactions with standardized transaction agreements.

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