Great Elm's Q4 2025 Earnings Call: Contradictions Emerge on Revenue Growth, Investment Strategies, and Expansion Plans

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 3, 2025

Financials Results

• Revenue: $5.6M, down from $8.9M in the prior-year quarter; excluding the prior-year $6.6M BTS sale, revenue grew over 140% YOY

Guidance:

• Expect Monomoy Construction Services (MCS) to more than double revenue in fiscal 2026.
• Kennedy Lewis partnership to provide up to $150M to accelerate Monomoy REIT growth; targeting ~$1B in assets and a potential future IPO.
• GECC upsized revolver to $50M (borrowing cost reduced by 50 bps) and completed >$75M of capital raises, supporting fee-revenue growth.
• Monomoy REIT warehouse facility expanded to $50M at an improved rate to fund acquisitions.
• Entering fiscal 2026 with >$40M pro forma cash to continue scaling credit and real estate platforms.

Business Commentary:

• Record Financial Performance:
• Great Elm Group reported a record net income of $15.7 million from continuing operations in Q4 2025, marking a significant improvement over the previous year.

• This was driven by record management and incentive fees at GECC and new contributions from Monomoy Construction Services.

• Book Value and Shareholder Value:

• The company's book value per share rose approximately 24% year-over-year to $2.65 as of June 30, with a pro forma value of $2.58 per share after issuances.

• The increase in book value was supported by share repurchases, unrealized gains from investments like CoreWeave, and strategic capital raises.

• Credit Platform Expansion:

• GECC, Great Elm's credit arm, generated record management and incentive fees and achieved over 90% cash income from total investment income.

• This growth was supported by capital raises, upsizing of its revolving credit facility, and a 6% increase in its dividend.

• Real Estate Platform Integration:

• The launch of Monomoy Construction Services in February contributed nearly $1 million in revenue and increased its project pipeline by over 50%.

• The integration of MCS brought construction capabilities in-house, deepening tenant relationships and enhancing development timelines.

• Strategic Partnerships and Capital Raises:

• Great Elm formed a strategic partnership with Kennedy Lewis Investment Management, which committed up to $150 million to accelerate real estate platform growth.
• This partnership, along with capital raises and board appointments, positions Great Elm to scale both credit and real estate platforms and increase earnings trajectory.

Sentiment Analysis:

• Management highlighted record net income from continuing operations of $15.7M, book value per share up ~24% YOY to $2.65, over $100M of recent capital raises, GECC’s record investment income and dividend increase to $0.37, upsized and cheaper revolver, and the Kennedy Lewis partnership committing up to $150M to accelerate Monomoy REIT. MCS launch is expected to more than double revenue in FY26.