B. Riley Financial Reports $769.3 Million Net Loss and 44.7% Revenue Decline

B. Riley Financial, Inc. reported significant financial challenges in its quarterly report for the period ending September 30, 2024, revealing a net loss of $769.3 million, a stark contrast to a net loss of $15.97 million in the same period the previous year. The company's total revenues fell by 44.7% to $637.2 million, down from $1.15 billion, primarily due to substantial losses in trading income and fair value adjustments on loans. Specifically, trading losses amounted to $50.2 million, compared to a profit of $31.7 million in the prior year, while fair value adjustments on loans resulted in a loss of $259.3 million, a significant decline from a gain of $51.6 million in the previous year.

The company experienced a notable decrease in service and fee revenues, which totaled $660.9 million, a slight decline of 0.2% from $662.2 million. However, the Capital Markets segment saw a more pronounced drop, with service and fee revenues decreasing by 62.4% to $30.4 million. The Wealth Management segment reported a modest increase of 2.4% in revenues, while the Financial Consulting segment experienced a 32.6% rise, indicating some resilience in specific areas of the business.

Strategically, B. Riley has undergone significant organizational changes, including the acquisition of Nogin in May 2024 for approximately $56.4 million, which included $37.7 million in DIP financing. The acquisition is expected to enhance the company's portfolio of principal investments. Additionally, the company has initiated a strategic review of its Appraisal and Valuation Services and Retail, Wholesale & Industrial Solutions businesses, which may lead to further divestitures or restructuring.

Operationally, the company has faced challenges with its loan portfolio, particularly with related party loans to Vintage Capital Management and Conn's, Inc., both of which have filed for Chapter 11 bankruptcy. The fair value of loans receivable has significantly decreased, with the company recording substantial impairments. As of September 30, 2024, B. Riley's total assets were reported at $2.16 billion, down from $6.08 billion at the end of 2023, reflecting the impact of these operational challenges.

Looking ahead, B. Riley Financial, Inc. has expressed cautious optimism regarding its liquidity position, with $159.2 million in cash and cash equivalents as of September 30, 2024. The company anticipates that its current cash reserves, along with expected cash flows from operations, will be sufficient to meet its working capital needs for at least the next 12 months. However, the company is also considering various strategic alternatives to address its upcoming debt obligations, including the potential sale of non-core businesses and refinancing options.