B. Riley Narrows Q1 Loss to $16.6M Amid Asset Sales, Revenue Dip

TL;DR

**RILY is shedding assets to stem losses, but the massive revenue drop in core businesses is a red flag for future growth.**

AI Summary

B. Riley Financial, Inc. (RILY) reported a net loss of $16.567 million for the three months ended March 31, 2025, a significant improvement from the $47.954 million net loss in the prior-year period. Total revenues decreased to $186.063 million from $297.590 million year-over-year, primarily driven by a sharp decline in interest income from securities lending to $0.840 million from $37.809 million and interest income from loans to $3.196 million from $22.135 million. The company recognized a substantial gain of $80.841 million on the sale and deconsolidation of businesses, including a $52.430 million gain from the sale of Atlantic Coast Recycling. Operating expenses also decreased to $247.540 million from $313.609 million, with direct cost of services falling to $42.700 million from $59.670 million. The company's total assets declined to $1.511 billion as of March 31, 2025, from $1.783 billion at December 31, 2024, largely due to a decrease in restricted cash and securities and other investments owned. A gain of $10.532 million was recorded on a senior note exchange, partially offset by a $10.427 million loss on extinguishment of debt.

Why It Matters

This filing reveals B. Riley Financial is actively restructuring its portfolio, divesting non-core assets like Atlantic Coast Recycling and a portion of its Wealth Management business to Stifel. While these sales generated significant gains, the substantial decline in core revenue streams, particularly interest income from securities lending and loans, signals potential challenges in its primary Capital Markets and Wealth Management segments. Investors should scrutinize whether these divestitures are strategic moves to streamline operations and improve profitability or a response to underlying business pressures. The competitive landscape in financial services and consumer products remains intense, and RILY's ability to adapt its core offerings will be crucial for long-term value creation for shareholders, employees, and customers.

Risk Assessment

Risk Level: medium — The company reported a net loss of $16.567 million for Q1 2025, following a $47.954 million loss in Q1 2024, indicating persistent unprofitability. Total revenues significantly decreased by 37.5% to $186.063 million from $297.590 million year-over-year, primarily due to a steep decline in interest income from securities lending and loans, suggesting pressure on core operations despite gains from asset sales.

Analyst Insight

Investors should exercise caution and closely monitor B. Riley's ability to generate sustainable revenue from its continuing operations. While asset sales provide short-term capital and reduce liabilities, the significant decline in core interest and services income suggests underlying business challenges. Consider holding or reducing exposure until there's clear evidence of improved profitability and revenue growth from its core Capital Markets and Wealth Management segments.

Financial Highlights

debt To Equity

N/A

revenue

$186.063M

operating Margin

N/A

total Assets

$1.511B

total Debt

$1.965B

net Income

-$16.567M

eps

N/A

gross Margin

N/A

cash Position

$138.303M

revenue Growth

-37.5%

Revenue Breakdown

Key Numbers

• $16.567M — Net Loss (Improved from $47.954M in Q1 2024)
• $186.063M — Total Revenues (Decreased from $297.590M in Q1 2024)
• $80.841M — Gain on Sale of Businesses (Key driver of reduced net loss)
• $0.840M — Interest Income - Securities Lending (Significant drop from $37.809M in Q1 2024)
• $3.196M — Interest Income - Loans (Significant drop from $22.135M in Q1 2024)
• $1.511B — Total Assets (Decreased from $1.783B at Dec 31, 2024)
• $10.532M — Gain on Senior Note Exchange (Contributed to other income)
• $10.427M — Loss on Extinguishment of Debt (Offset gain on senior note exchange)

Key Players & Entities

• B. Riley Financial, Inc. (company) — Registrant
• Stifel Financial Corp. (company) — Buyer of Wealth Management business
• Atlantic Coast Recycling, LLC (company) — Sold subsidiary
• GlassRatner Advisory & Capital Group, LLC (company) — Subsidiary to be sold
• B. Riley Farber Advisory Inc. (company) — Subsidiary to be sold
• $16.567 million (dollar_amount) — Net loss for Q1 2025
• $186.063 million (dollar_amount) — Total revenues for Q1 2025
• $80.841 million (dollar_amount) — Gain on sale and deconsolidation of businesses
• $52.430 million (dollar_amount) — Gain from the sale of Atlantic Coast Recycling
• $10.532 million (dollar_amount) — Gain on senior note exchange

FAQ

Risk Factors

• Dependence on Market Conditions [high — financial]: The company's financial performance is significantly tied to market conditions, as evidenced by the sharp decline in interest income from securities lending ($0.840M vs $37.809M) and loans ($3.196M vs $22.135M) year-over-year. Adverse market movements can negatively impact revenue and profitability.
• Debt Load and Interest Expense [high — financial]: B. Riley Financial carries substantial debt, with Senior notes payable totaling $1,370,769K as of March 31, 2025. While a gain of $10.532M was recorded on a senior note exchange, a loss of $10.427M on extinguishment of debt highlights the costs associated with managing its debt obligations.
• Business Divestitures and Restructuring [medium — operational]: The company recognized significant gains from the sale and deconsolidation of businesses ($80.841M), including the sale of Atlantic Coast Recycling ($52.430M). Such transactions can introduce operational complexities and may indicate strategic shifts that could impact future performance.
• Asset Valuation and Fair Value Adjustments [medium — financial]: The company holds significant 'Securities and other investments owned' ($231,760K) and 'Loans receivable, at fair value' ($98,596K). Fluctuations in the fair value of these assets, as well as the $10.427M loss on extinguishment of debt, can lead to volatility in earnings.
• Declining Asset Base [medium — financial]: Total assets decreased to $1,511,003K as of March 31, 2025, from $1,783,263K at December 31, 2024. This reduction, driven by decreases in restricted cash, securities, and other investments, may signal a contraction in the company's operational scale or asset management activities.
• Regulatory Compliance [medium — regulatory]: As a financial services firm, B. Riley is subject to various regulatory requirements. Changes in regulations or failure to comply could result in fines, sanctions, or reputational damage, impacting its operations and financial stability.
• Discontinued Operations [low — operational]: The company has assets ($64,874K) and liabilities ($19,113K) related to discontinued operations, and assets ($20,125K) and liabilities ($419K) held for sale. Managing these segments can divert resources and create uncertainty.

Industry Context

B. Riley Financial operates in the diversified financial services sector, encompassing investment banking, capital markets, wealth management, and financial consulting. The industry is characterized by intense competition, reliance on market sentiment, and evolving regulatory landscapes. Recent trends include increased M&A activity and a focus on specialized advisory services.

Regulatory Implications

As a financial institution, B. Riley is subject to stringent regulations from bodies like the SEC and FINRA. Compliance with capital requirements, anti-money laundering laws, and consumer protection regulations is critical. Any shifts in regulatory policy or enforcement could impact the company's operations, profitability, and market access.

What Investors Should Do

1. Monitor revenue diversification and reliance on interest income.
2. Analyze the impact of business divestitures and acquisitions.
3. Evaluate the company's debt management strategy.
4. Assess the trend in total assets and cash position.

Key Dates

• 2025-03-31: End of First Quarter 2025 — Reporting period for the unaudited condensed consolidated financial statements, showing a net loss of $16.567M and total revenues of $186.063M.
• 2024-12-31: End of Fourth Quarter 2024 — Prior period balance sheet date, with total assets of $1.783B and total liabilities of $2.239B.

Glossary

Accumulated deficit

The cumulative net losses of a company that have not been offset by net income or additional paid-in capital. (Indicates the company has historically incurred more losses than profits, with a deficit of $1,080,971K as of March 31, 2025.)

Assets held for sale

Assets that management has committed to sell, and which are expected to be sold within one year. They are reported at the lower of their carrying amount or fair value less costs to sell. (Represents $20,125K of assets designated for sale as of March 31, 2025, impacting the overall asset composition.)

Discontinued operations

A component of an entity that has been disposed of or is classified as held for sale, and that represents a separate major line of business or geographical area of operations. (The company reports $64,874K in assets and $19,113K in liabilities related to discontinued operations as of March 31, 2025.)

Deconsolidation of businesses

The process of removing a subsidiary or business unit from a parent company's consolidated financial statements, typically when control is lost. (A $80.841M gain was recognized from the sale and deconsolidation of businesses, significantly impacting the current period's net income.)

Senior notes payable

Long-term debt instruments issued by a company that have a higher claim on assets than other debt in the event of bankruptcy or liquidation. (The company has $1,370,769K in senior notes payable as of March 31, 2025, representing a significant portion of its total liabilities.)

Loss on extinguishment of debt

A loss recognized when a company repays or retires debt before its scheduled maturity date, often due to unfavorable terms or refinancing at a higher cost. (A $10.427M loss was recorded in this period, indicating costs associated with debt management activities.)

Year-Over-Year Comparison

Compared to the prior-year period, B. Riley Financial reported a significantly reduced net loss of $16.567 million versus $47.954 million, driven by an $80.841 million gain on the sale of businesses. However, total revenues declined substantially to $186.063 million from $297.590 million, primarily due to a sharp decrease in interest income from securities lending and loans. Operating expenses also decreased, contributing to the improved net loss, while total assets saw a reduction from $1.783 billion to $1.511 billion.

Key Financial Figures

• $0.0001 — ich registered Common Stock, par value $0.0001 per share RILY NASDAQ Global Market De

Filing Documents

• rily-20250331.htm (10-Q) — 2977KB
• ex101_q125xbrftelecoms-cre.htm (EX-10.1) — 1203KB
• ex103_projectbroker-amendm.htm (EX-10.3) — 1555KB
• rily-20250331xexx311.htm (EX-31.1) — 10KB
• rily-20250331xexx312.htm (EX-31.2) — 10KB
• rily-20250331xexx313.htm (EX-31.3) — 10KB
• rily-20250331xexx321.htm (EX-32.1) — 5KB
• rily-20250331xexx322.htm (EX-32.2) — 5KB
• rily-20250331xexx323.htm (EX-32.3) — 4KB
• image_0.jpg (GRAPHIC) — 286KB
• 0001464790-25-000023.txt ( ) — 23541KB
• rily-20250331.xsd (EX-101.SCH) — 114KB
• rily-20250331_cal.xml (EX-101.CAL) — 163KB
• rily-20250331_def.xml (EX-101.DEF) — 913KB
• rily-20250331_lab.xml (EX-101.LAB) — 1276KB
• rily-20250331_pre.xml (EX-101.PRE) — 1133KB
• rily-20250331_htm.xml (XML) — 3719KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1. Unaudited Condensed Consolidated Financial Statements 1 Unaudited Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024 1 Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024 3 Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2025 and 2024 5 Unaudited Condensed Consolidated Statements of Equity (Deficit) for the three months ended March 31, 2025 and 2024 6 Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024 7 Notes to Unaudited Condensed Consolidated Financial Statements 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 68 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 84 Item 4.

Controls and Procedures

Controls and Procedures 85

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 89 Item 1A.

Risk Factors

Risk Factors 90 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 92 Item 3. Defaults Upon Senior Securities 92 Item 4. Mine Safety Disclosures 92 Item 5. Other Information 92 Item 6. Exhibits 93

SIGNATURES

SIGNATURES 95 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. B. RILEY FINANCIAL, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Dollars in thousands, except par value) March 31, 2025 December 31, 2024 (Unaudited) ASSETS Assets: Cash and cash equivalents (1) $ 138,303 $ 146,852 Restricted cash 1,375 100,475 Due from clearing brokers 12,895 30,713 Securities and other investments owned (includes $ 161,543 and $ 215,225 at fair value as of March 31, 2025 and December 31, 2024, respectively) (1) 231,760 282,325 Securities borrowed 40,895 43,022 Accounts receivable, net of allowance for credit losses of $ 5,343 and $ 6,100 as of March 31, 2025 and December 31, 2024, respectively 61,597 68,653 Due from related parties 438 189 Loans receivable, at fair value (includes $ 61,316 and $ 51,902 from related parties as of March 31, 2025 and December 31, 2024, respectively ) (1) 98,596 90,103 Prepaid expenses and other assets (includes $ 796 and $ 3,449 from related parties as of March 31, 2025 and December 31, 2024, respectively) (1) 241,753 242,916 Operating lease right-of-use assets 46,807 51,509 Property and equipment, net 17,969 18,679 Goodwill 392,687 392,687 Other intangible assets, net 139,629 146,446 Deferred income taxes 1,300 13,598 Assets held for sale (Note 3) 20,125 84,723 Assets of discontinued operations (Note 3) 64,874 70,373 Total assets $ 1,511,003 $ 1,783,263 LIABILITIES AND EQUITY (DEFICIT) Liabilities: Accounts payable $ 44,210 $ 51,238 Accrued expenses and other liabilities (1) 182,161 185,745 Deferred revenue 57,254 58,148 Deferred income taxes 2,121 5,462 Due to related parties and partners 1,782 3,404 Securities sold not yet purchased 2,140 5,675 Securities loaned 22,987 27,942 Operating lease liabilities 54,143 58,499 Notes payable — 28,021 Loan participations sold 9,986 6,000 Revolving credit facility 13,800 16,329 Term loans, net 184,088 199,429 Senior notes payable, net 1,370,769 1,530,561 Liabilities held for sale (No

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