Great Elm Group Reports 15% Revenue Growth in Q3 FY 2025, Operating Loss Widens

Great Elm Group, Inc. (GEG) reported its financial results for the third quarter of fiscal year 2025, revealing a revenue increase of 15% to $3.2 million compared to $2.8 million in the same period last year. For the nine months ending March 31, 2025, revenues rose by 20% to $10.7 million, up from $8.9 million in the prior year. The growth in revenue was primarily driven by increased management fees due to higher assets under management at Great Elm Capital Corp. (GECC) and the recognition of project management fees from the recently acquired construction services business.

Despite the revenue growth, GEG reported an operating loss of $2.6 million for the quarter, widening from a loss of $1.9 million in the same quarter last year. The increase in operating costs, which rose to $5.8 million from $4.7 million, was attributed to higher investment management expenses and non-cash compensation. The company also experienced a decrease in incentive fee revenue, which fell by $0.5 million due to restrictions on the underlying fund's ability to pay such fees until certain performance metrics are met.

In a strategic development, GEG completed the acquisition of Greenfield CRE, a construction management company, on February 4, 2025, for approximately $2.5 million. This acquisition is expected to enhance GEG's capabilities in real estate and construction management, as the newly formed subsidiary, Monomoy Construction Services (MCS), will serve both GEG's real estate businesses and expand its third-party consulting services. The financial results of Greenfield are included in GEG's consolidated results from the acquisition date.

Operationally, GEG's total assets under management reached approximately $768 million as of March 31, 2025. The company reported a decrease in cash and cash equivalents to $31.5 million from $48.1 million at the end of the previous fiscal year. GEG's employee headcount remained stable, and the company continues to explore additional investment management opportunities. The outlook remains cautious, with management emphasizing the need to navigate market uncertainties and the potential impact of economic conditions on future performance.

Looking ahead, GEG anticipates continued growth in its revenue streams, particularly from its investment management activities and the integration of the Greenfield acquisition. However, the company acknowledges the challenges posed by market conditions, including interest rate fluctuations and competition from larger firms. GEG's management remains focused on maintaining operational efficiency and leveraging its diversified portfolio to achieve sustainable growth.