Kingsway Financial Services Reports $3.1 Million Net Loss in Q1 2025

Kingsway Financial Services Inc. reported a net loss of $3.1 million for the first quarter of 2025, compared to a loss of $2.3 million in the same period last year. The company's total revenues increased to $28.3 million, up from $26.2 million in the prior year, driven by a rise in service fee and commission revenue, which reached $28.3 million, compared to $26.2 million in the previous year. However, operating expenses also rose significantly, totaling $29.1 million, compared to $25.4 million in the first quarter of 2024, primarily due to increased general and administrative costs.

The company experienced a decline in operating income, reporting a loss of $0.7 million for the quarter, down from an income of $0.8 million in the prior year. This decline was attributed to higher claims and administrative expenses, particularly in the Extended Warranty segment, which saw a decrease in operating income to $0.5 million from $1.1 million. Conversely, the Kingsway Search Xcelerator segment reported an increase in operating income to $1.7 million, up from $1.3 million, bolstered by the inclusion of Image Solutions, which contributed $1.8 million in revenue since its acquisition in September 2024.

In terms of strategic developments, Kingsway completed the acquisition of M.L.C. Plumbing, LLC (d/b/a Bud's Plumbing) on March 14, 2025, for approximately $4.9 million. This acquisition is part of the company's ongoing strategy to expand its portfolio of businesses with recurring revenue. The newly acquired Bud's Plumbing generated $0.3 million in revenue and $0.1 million in operating income from the date of acquisition through March 31, 2025.

Operationally, Kingsway's customer base and engagement metrics showed mixed results. The company reported an increase in service fee receivables to $10.9 million, up from $9.4 million, indicating a growing customer base. However, the overall employee headcount remained stable, with no significant changes reported. The company also noted that it continues to face challenges related to market conditions, including inflation and interest rate fluctuations, which may impact future performance.

Looking ahead, Kingsway anticipates that its existing cash reserves, along with expected cash flows from operations, will be sufficient to meet its working capital and operational needs for the next twelve months. However, the company remains cautious about potential risks and uncertainties in the macroeconomic environment that could affect its financial outlook.