Heritage Global Inc. Reports 11% Revenue Growth to $13.5 Million in Q1 2025

Heritage Global Inc. reported its financial results for the first quarter of 2025, revealing total revenues of $13.5 million, an increase of 11% from $12.2 million in the same period last year. The growth was driven by a significant rise in asset sales revenue, which surged by 83% to $5.8 million, compared to $3.2 million in the prior year. However, services revenue declined by 15% to $7.6 million, down from $9.0 million. The company's net income for the quarter was $1.1 million, a decrease of 41% from $1.8 million in the previous year, resulting in a net income per share of $0.03, unchanged from the prior year.

The company's operating costs and expenses increased by 16% to $12.1 million, primarily due to higher costs associated with asset sales and services. Selling, general, and administrative expenses rose slightly to $6.5 million, reflecting increased headcount and compensation costs. Operating income fell to $1.4 million, down 45% from $2.6 million in the same quarter of 2024. The decrease in profitability was attributed to the timing and magnitude of transactions, particularly in the Specialty Lending segment, which saw a lower amount of revenue recognized under the modified cost recovery method.

In terms of strategic developments, Heritage Global completed the purchase of a new corporate headquarters and warehouse for $7.4 million in February 2025, funded through a $4.1 million mortgage. The company also repurchased 490,651 shares of its common stock during the quarter as part of its ongoing share repurchase program, which has a remaining authorization of approximately $2.0 million. The total stockholders' equity increased to $65.4 million as of March 31, 2025, compared to $65.2 million at the end of 2024.

Operationally, the company reported a decrease in cash and cash equivalents to $18.8 million from $21.7 million at the end of 2024. The decrease was primarily due to cash used in investing activities, which totaled $9.5 million, compared to cash provided by investing activities of $2.1 million in the prior year. The company’s working capital also decreased to $14.7 million from $18.5 million, reflecting changes in current assets and liabilities.

Looking ahead, Heritage Global expressed optimism about its growth potential, citing favorable market conditions for asset liquidation and specialty lending. The company aims to leverage its diversified business model and strong management team to navigate economic fluctuations and capitalize on opportunities in both the auction and financial asset markets. However, the company remains cautious about the impact of its largest borrower's default status on its financial performance, as this borrower represents a significant portion of its notes receivable.