Abacus Global Management, Inc.

Capital Officer will highlight in her remarks. These metrics will give you deeper insight into how we're executing in our overall business initiatives and specifically on how we manage our balance sheet. Along with our strong second quarter results, we expanded our brand recognition, including the launch of a new corporate-focused commercial campaign on June 12, 2025, at our Investor Day and Longevity Summit held at NASDAQ in New York City. The event centered around Abacus's positioning as a visionary leader in longevity-based asset management. The feedback we've continued to receive on our new branding remains encouraging. As prudent stewards of capital, in early June, our board of directors authorized a new $20 million share repurchase program effective June 5th, 2025, running for up to 18 months. Additionally, in late July, we completed an exchange offer and consent solicitation related to our outstanding warrants as we continue to simplify our capital structure. We were able to tender 88% of the warrants at .23 per warrant with the remaining 12% to be converted at .207 shares per warrant on August 14th. Looking ahead, We're building on our excellent first half achievements and growing brand recognition, which is driving greater policy originations, increased interest in our asset management offerings, and our expansion into wealth management, all of which resulted in us raising our full year adjusted net income target. We remain steadfast in our mission to establish Abacus as the go-to player in alternative assets and wealth management. Our distinct market approach, paired with access to non-correlated assets, creates a powerful competitive advantage. This foundation enables us to not only to weather market uncertainty, but to capitalize on it and build an even more resilient business. With that, I'll now hand it over to our Chief Capital Officer, Elena Plesko, who joined the Abacus team a little over a year ago from KKR, where she served as co-head of specialty finance. Elena will discuss the additional KPIs that will provide further insight and increased transparency into our business performance.

Thanks, Jay. As Jay mentioned, I'd like to highlight some of our existing and new KPIs, which we believe are important to understand our balance sheet efficiency and capital deployment. First, we pay close attention to portfolio turnover and velocity metrics. In financial services, turnover ratio is a fundamental tool for measuring balance sheet velocity and capital efficiency. Specifically, how quickly we cycle invested capital and realize returns. In Q2 2025, annualized turnover ratio was 2.3 times. Due to stronger demand post-liberation day, the ratio is slightly elevated as compared to our previously stated long-term average target of 1.5 to 2.x. During Q2, we purchased 250 new policies while selling 399 policies, resulting in a sale-to-purchase ratio for 1.6 times, indicating accelerated velocity. This compares favorably to the prior quarter, where we experienced a 0.69 times sales-to-purchase ratio on the back of 171 purchases and 118 sales in the quarter. This highlights our increased selective selling activity following a period of aggregation on the balance sheet. Second, we also focus on strategic portfolio aging and inventory management. A key indicator of our balance sheet management efficiency is our ability to monetize season policies at optimal timing. In the second quarter of 2025, our sold policies averaged 243 days held, compared to 229 days for owned positions, underscoring our ability to efficiently rotate mature inventory while preserving overall portfolio quality. This 14-day delta for sold policies, while narrower than the first quarter of 2025's exceptional 82-day delta, 294 versus 212 days, continues to validate our proactive approach of realizing gains on well-seasoned positions rather than engaging in reactive selling. This metric highlights our ability to exit older policies and clearly demonstrates that we're managing the balance sheet strategically rather than simply churning newer acquisitions. Third, our health portfolio is a strong indicator of our best ideas. Our commitment to retaining our highest conviction positions is evidenced by our policies held over 365 days, which represent approximately 15% of our total portfolio value, including cash holdings. These season holdings maintain a weighted average grade reflective of their low risk, weighted average life expectancy of 50 months, and weighted average age of 85 years. underscoring the quality of our long-term hold decisions. This concentration in our best ideas reflect our disciplined approach to portfolio construction and our confidence in our underwriting capabilities. Finally, we also closely monitor our unit economics performance. Our policy level unit economics validate the effectiveness of our active management strategy and operational discipline. Realized gain on sale represents the difference between what abacus paid to originate a policy and the actual sales price received when that policy is sold to investors who use their own valuation data to assess the market value of the asset. Our average realized gain on sale is 26.3% for Q2 2025. And you can find that information in our audit of financial statements. Over the last year and a half, this number has consistently stayed above 20%, which demonstrates our capacity to generate consistent returns through strategic balance sheet management while maintaining rigorous cost discipline for our operations. We will continue to provide updates on these additional and historical KPIs in the quarters ahead. With that, I'll now hand it over to our CFO, Bill McCauley, to discuss the specifics of our second quarter results.

Thanks, Elena. And hello, everyone. As Jay mentioned, we had another excellent quarter of top line growth and profitability. Total revenue in the second quarter of 2025 grew by 93% to 56.2 million compared to 29.1 million in the prior year period. Our revenue increase was primarily driven by greater life solutions, formerly active management and origination revenues. as well as significant contributions from asset management fees. The key driver of our life solutions performance continues to be our highly efficient origination platform and our trading division. Capital deployed increased 16% to 121.8 million in Q2 2025, compared to 104.7 million in the prior year. In addition to our capital deployment, we had a very successful quarter monetizing originations. Abacus syndicated 399 policies to 15 different counterparties in Q2 2025, which represented $208.4 million in fair value and total realized gains of $58.3 million. With the growth in policy origination and capital deployment, as of June 30, 2025, Abacus holds 600 policies with a value of $387.3 million on the balance sheet. We're very excited about the contributions from the asset management business as this is the second full quarter of asset management fees from our acquisitions that closed in late 2024. Q2 2025 had $8.8 million in revenue in that business segment. Turning to expenses, total operating expenses excluding unrealized and realized gains and losses on investments and the change in fair value of debt for the second quarter of 2025 were approximately $27.4 million compared to $20.1 million in the prior year. The increase from the prior year period was primarily driven to greater depreciation and amortization, the incorporation of operating expenses of the companies that were acquired in Q4 2024, as well as increased marketing to support our growth profile. The company typically realizes the benefit of marketing spend within 90 to 120 days. On an adjusted basis, excluding non-cash stock compensation, business acquisition costs, amortization and change in fair value of warrant liability, net income for the second quarter of 2025 increased by 87% to $21.9 million compared to $11.7 million in the prior year. Adjusted EBITDA for the quarter grew to $31.5 million compared to $16.7 million in the prior year, which represents an 89% increase. adjusted EBITDA margin was 56.1% for the quarter compared to 57.5% in the prior year. Gap net income attributable to stockholders for the quarter was 17.6 million compared to 0.7 million in the prior year, primarily driven by higher revenues and the gain on the change in the fair value of warrant liability, partially offset by increased operating costs from our acquisitions. Now turning to our balance sheet metrics, For the second quarter 2025, adjusted return on equity was 21%, and adjusted return on invested capital was 22%, both reflecting our highly profitable business model. As of June 30, 2025, the company had cash and cash equivalents of 74.8 million, balance sheet policy assets of 387.3 million, and outstanding long-term debt of 357 million. As Jay mentioned in his remarks, given our strong first half and our confidence in our business momentum, we are raising our full year 2025 outlook for adjusted net income to between $74 million and $80 million, up from our prior range of $70 to $78 million. The new range implies growth of between 59% to 72% compared to the full year 2024 adjusted net income of $46.5 million. In summary, we are pleased to maintain our momentum of continued record growth on our top line, as well as significantly growing profitability. I will now turn it back to our CEO, Jay Jackson, for closing comments. Thanks, Bill.

Before we open it up for questions, we felt that it would be useful to highlight and explain two specific areas that we get asked about with some frequency. First, revenue measurement on policy sales. We've been asked about how we measure or track revenue on policy sales. Within Abacus's vertically integrated business model, value creation occurs at multiple points, including policy origination, policy servicing, and the policy sale. Rather than solely deriving value from policy maturities or marking the portfolio through forecasted discount rates using life expectancy estimates. Realized gain on sale captures the immediate economic value created when a policy transaction is completed and allows investors to track how we successfully convert the majority of our assets into cash within a year's period. This metric provides a clear picture of our operational performance because it reflects the actual market value of our origination platform creates. Unlike theoretical valuations, Realized gain on sale demonstrates the tangible premium that investors are willing to pay for our originated assets in real-time market transactions. We track gain on sale on a historical basis, which informs our view where newly originated assets could be transacted at, and as a result, marked to reflect the most up-to-date economic reality. our average realizations have historically met or exceeded the marks at which we carry assets on our balance sheet. Further, in addition to the average realized gain on sale, you will now be able to track a number of other velocity-based KPIs that Elena discussed earlier, providing you with comprehensive transparency into our business performance and market validation of our approach. Second, Abacus managed funds versus third party syndication. We get asked about what percentage of policies are sold from our balance sheet to Abacus managed funds compared to syndicating them to third parties. As I mentioned earlier, this dual method is no different than any other leading private credit asset manager, specifically We originate high-quality assets and then sell some of these assets at prevailing market prices determined by actual investor demand. A portion is originated for funds managed by Abacus and the balance is syndicated to other institutional third parties at these same market-driven prices. This direct relationship between our origination Market-making capabilities and investor demand is fundamental to our value proposition and competitive advantage. Our investors come to Abacus specifically to access our proprietary originations, policy servicing, and valuation expertise and our investment products. The amount we originate for related party funds can vary quarter to quarter based on capital availability and other investor demand. The year-to-date related party transactions are reported quarterly in the 10Q in the related party transaction section. We hope this provides additional clarity into our business. In conclusion, our record second quarter and first half performance continue to validate our resilient and differentiated business model. We're strategically positioned to thrive despite current market uncertainties. thanks to our distinctive value proposition that resonates with both policyholders and investors looking for non-correlated assets. The market opportunity ahead of us is substantial, and we're energized about leveraging our 20-year track record of consistent financial performance to drive sustainable, profitable expansion over the long term. Again, thank you all for joining us today, and we appreciate your interest in Abacus Global Management.

With that, we look forward to your questions. We will now begin the question and answer session.

To ask a question, you may press star, then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. And to withdraw a question, please press star, then 2.

At this time, we will pause just momentarily to assemble our roster. And our first question here will come from Patrick David with Autonomous Research.

Please go ahead.

Hey, good evening, everyone. I appreciate the color at the end there on how you think about originating policies for your own funds versus third parties. It makes sense. But I think given everything that happened last quarter could still raise some eyebrows. So especially could you give a little bit more specifics around the mix of sales between the 2 and 3Q? And then more broadly, how do we and skeptics, I guess, get more comfortable that those funds truly are buying the policies at the market bid that your third parties are paying? I guess, in other words, what are the kind of compliance walls and or security selection processes that ensure that there is no conflict of interest there? Thank you.

Sure. Thank you, Patrick. And I'll start with the second part of that question first. And those funds are independent in a sense. And what I mean by that is that they all have, each have their own policy statement, their own asset management, and their own objectives, investment objectives related to the duration and time period of those funds. In addition to that, each fund is required to get a third-party actuarial market valuation of the underlying assets that it purchases, again, on a quarterly basis for its own NAV. That's not something that Abacus has any control of. And in addition to that, that also validates where those policies are being priced at and where those policies are priced at specifically for that fund's objective. So, you know, in addition to that, again, we put a third party, we have a third party valuation firm come in on a quarterly basis and value the assets of those underlying funds. So to help validate and give additional comfort to those who are concerned about where the That's also something that we bring a third party in to review for each and every fund. The other part of that question is, well, what were the actual percentages? And if we break that down, and you'll find this in the upcoming queue, as a percent of total revenue in Q2, that what we would call related party transactions consisted of 29%. of the total revenue in Q2. And year-to-date, that would equate to 17%. And that would include the Carlisle funds and Luxembourg and all longevity funds that we have. So to be specific, Q2, that would be 29% of total revenue and just 17% total for the year. So I hope that offers you some additional clarity on that.

Yeah, helpful. Thanks a lot. And as a quick follow-up, it looks like you repurchased around 5 million shares, but the average share count barely budge. So I guess that came very late in the quarter. So I guess first of all, am I reading that right? And then looking forward, I guess I would suggest then you've kind of fully offset the warrant exchange as we model into 3Q. Thank you.

Yeah, that's correct, Patrick. When we looked at the pricing of the stock, we looked at it the same way you did. And when we also considered the warrant exchange, with the buyback that we had in place, including insider buying, we felt very comfortable that the additional kind of dilution that you might face with the warrant exchange Conversion was offset by all that buyback, by the buyback that took place almost. In fact, we had more shares in the buyback than the warrant exchange. So, you know, you could, I mean, I could argue it was net accretive, but I'm not going to make that argument at this point.

Thanks a lot. Thank you. And our next question will come from Kristen Love with Piper Sandler.

Please go ahead.

Thanks. Good afternoon. Jay, you commented on $58 million of realized gains in the quarter. Can you share what first unrealized gains were in the quarter and then just on the $58 million realized? I assume those were primarily converted from unrealized in the past couple of quarters. So if you're able to just share the net gain loss, if that makes sense.

Sure, I'll have Bill address the second piece, but on the $58 million, you're exactly right. We were realizing a good portion of that were realized through the unrealized gains from the prior quarter, which I think, again, speaks loudly on... you know, where our valuation had these policies at. Because remember, you know, one of the things that Elena highlighted in her comments was that in Q2, the average trade spread recognized was 26%. which was higher than our historical average of 22%. And that, I think, speaks volumes to the demand for the policies and the underlying assets that we had. I'll have Bill touch on the unrealized piece.

Yeah, the unrealized gain for the quarter was about $17 million.

Perfect. Thank you. That's helpful. And then just all the guidance, you increase it, but to oversimplify, if you just run rate the first half of the year to the second half, you get to 78 million for just illustrative purposes. Can you discuss expectations for the second half from an earnings perspective? Do you expect to grow off of the first half or are there certain puts and takes worth calling out comparing first and second half from an earnings perspective?

Sure. We expect to grow in the second half of the year. I think that when we were looking at the guidance number, we felt that it made sense to increase the number. And when we looked at, you know, but we wanted to be careful on a dollar for dollar basis, just because, you know, there are some still unpredictable things in the overall economy out there that we just wanted to be thoughtful of. And so when we looked at the guidance, we wanted to make sure we felt very comfortable with the guidance that we were putting out with the expectation that, you know, we would continue to grow in the second half, but, you know, potentially not exactly dollar for dollar as we did in the first half.

Great. Sounds good, Jay. I appreciate the comments. Makes sense. Thank you.

Great. Thank you, Crispin. And our next question will come from Andrew Kligerman with TD Cowan. Please go ahead.

Great. Good afternoon. I like the new KPIs very much. Just looking at the number of policies held, going down from 753 to 600 sequentially. And then, of course, that was a function of the annualized turnover ratio being at 2.3 times well above the 1.5 to 2 times average. So I guess what I'm thinking about is, you know, where would you like to keep that average turnover in that 1.5 to 2 times? And where would you like to keep the average number of policies or the number of policies held on a kind of a consistent basis.

Sure. Thank you for that, Andrew. And yeah, we put that range to give you some guidance on that one and a half to two. And I think that's a fair range. And it can vary quarter to quarter just dependent on you know, what is investor demand at that time period and or what is our acquisition been like? For example, if we have excess origination in that quarter, there might be, you know, some delay to the next quarter before you see then those policy sales. So, you know, you could see some fluctuation in the number of policies held, but that's your turnover ratio in any given quarter. But that's why we felt very comfortable with that 1.5 to 2. We think it makes total sense as to where we were in Q2. We had excess demand in Q2, and we were able to capitalize on that. As a trend going forward, we're confidently seeing similar types of demand and, you know, evolving Q3 and potentially through the rest of the year. But, you know, we won't really know until we get towards the end of the quarter. But we feel really well positioned where we are right now with the amount of capital that we are, excuse me, cash and cash equivalents that we have on our balance sheet to put money to work in these opportunistic times. So, You know, I don't know if there's a number that I would tell you on the number of policies because, you know, it could be one quarter where we're buying some smaller policies and another quarter where we're buying larger policies. And so I don't know if I'd focus quite as much on the number of policies as much as I would focus on the 1.5 to 2.

That makes a lot of sense. And when I think of the strong game that you posted, 26%, I just want to make sure I'm clear. Is that... purely the price you paid, the denominator with the numerator being what you received. It's not an annualized number.

That's correct. Yeah, that's what happened in Q2. So we performed above what we did initially, what our historical trade spreads had indicated at closer to 22%. And if you look at the KPIs in the new deck, you'll actually see how we track that for you where you look at that historical trade spread on a quarterly basis now.

That's pretty strong. And then just lastly on the G&A expenses at $18.9 million, how are you thinking about that going forward? Is it going to track with revenue or do you think you're going to keep it pretty steady? How are you thinking about G&A going forward?

So it will grow as revenue grows, just not at the same percentage. I mean, I think we have, you know, a couple of things going through that line item with additional headcount to support growth. And then we've had, you know, a little bit of increased legal fees over the last couple of months. But, you know, from a normalization standpoint, we expect to be south of that $18 million number on a quarterly basis.

Thanks a lot. Awesome. Thank you, Andrew. Appreciate it. And our next question will come from Randy Binner with B. Riley.

Please go ahead.

Hey, good evening. So I have a question about the breakout on related party transactions as a percentage of revenue. That's a helpful disclosure. Is that on, is it on, I assume, is it on life solution revenue or total revenue, those percentages?

Yeah, so on those percentages, that would be on total revenue. But if you really break down, you know, nearly all of our revenue is in life solutions right now. I mean, certainly there's some in asset management and some other areas, but, you know, we focused on all the revenue against it just because primarily that's been a key driver of our revenue on a percentage basis.

Yep. Got it. And then, you know, kind of similar breakout that I'd be interested in. So for the, you know, for the policies I went to third parties, can you, I think this will also be in the queue, but can you give us some color on, the breakout of kind of insurance partners versus financial investors?

Sure. And, yeah, it's a little more of a challenge to break out because what's happening, Randy, is that we're servicing a lot of those assets ultimately for them. And, you know, breaking those out is sometimes a confidentiality. request on their part. But I think in our deck, you can see that how we've increased the amount of policies that we service is pretty substantial. And we're continuing to expand the relationships with our carrier partners as well as our reinsurers. And we're working on what I think is really interesting structures so that they can participate in a more significant way.

Okay, and then just one more, if I can, on asset management. You know, it's kind of early days in that business, so maybe we were conservative, but the fees to AUM were kind of higher than we forecasted. Yeah. Is that, you know, is there anything, is this the right level? Is there anything unusual? You know, you've made about 27 basis points on AUM. Just wondering how predictive that is or if it's even going to get better from here.

Yeah, we're going to continue, I think, to see improvement over time. And we're seeing a lot of interest in the asset management piece of our business. And we're continuing to evolve that segment of our business, I think, in a very significant way. And obviously, we can't predict the future, but we feel really good about where we are, where those numbers are now, and feel good that there's a lot of room to grow.

All right, I'll leave it there.

Thanks for the responses. Appreciate it. Sure. Thank you, Randy. And again, if you have a question, please press star and one to join the queue.

Our next question will come from Mike Grondahl with Northland Securities. Please go ahead.

Hey, guys. Congratulations. Kind of following up on the question about the back half of the year, Jay, were you implying – consequential growth for revenue and adjusted net income. As you guys went through 2Q, you kind of had liberation day there early, a lot of volatility, a lot of uncertainty. There's part of me thinking that you just had pricing power at both ends. when you were sourcing policies, and then when you were selling policies. And if you lose just a little bit of that, that kind of cuts in the margin. So I guess just help us think sequentially the next couple quarters.

Sure. Part of what we can go to is that we can look back historically, too. And, you know, historically, sequentially, you know, Q3 and Q4 have always historically been stronger quarters for us in the first half of the year. And, you know, the risk that I think we step into a little bit is that you're right. We had a terrific Q2 and Q4. And what does it look like Q3 if we're sequentially higher in Q3 over, over Q2? And I'm looking at the consensus numbers and, and now that, you know, we're, we're, we're talking to all of our analysts. I mean, I would love for you not to raise consensus. But, you know, with that said, all, all, all kidding aside, you know, the momentum that we've talked about through Q2 is, you know, we, we feel good about and it's continued and, and, You know, there are investors and there is demand for this asset still meeting with the increase in origination. If you look at even our marketing spend increase, that's increased quarter over quarter and not just broadening the message across the board with Abacus, but our marketing spend even on our origination. We're signing up new national account relationships. And so as this message is becoming more validated and I would argue more normal, that's continuing to improve our origination. And then supplementing the origination, though, is our servicing book, is our asset management fees, right? All of these things are beginning to build in to smooth out my, you know, some of that disparity that you might think is going to happen. And so I think that, you know, when you start to kind of post these consistent results like we're continuing to do, I think that gives investors and certainly shareholders a lot more comfort around what's coming next.

Great. Okay. Hey, thank you. Sure. Thanks, Mike. Our next question is a follow-up from Patrick David with Autonomous Research. Please go ahead.

Hey, thanks for the follow-up. Just a quick one on the 142 million flows. Is that gross or net? And if gross, could you give the net? And it's a very similar number to 1Q. So is that like a run rate that the business is at or is there some lumpiness there as we look into second half? Thank you.

Sure. Thank you, Patrick. Yeah, that was gross. And then, you know, the net number, remember, it's not that much different, right? And the reason why is, you know, these assets come in into, you know, longer term strategies. And so if you look back, what's really interesting about the capital raise, let's kind of look at that maybe on an annualized basis. most of the capital in our kind of in within Q1 came in towards the latter part of Q1, I would say kind of the last two weeks of March. And then, you know, we started to see some kind of normalization here over the summer and with some potential expectations that could increase in the second half of the year. But if you think about it, really over the last four months, we've raised, you know, give or take approximately almost 240 plus million dollars So, you know, I don't want to forecast and say, hey, that's because these things can obviously, you know, cap rates can move. But from what I can tell, you know, and where we sit on this, we feel good that this is, that the capital raise is starting to be pretty consistent. And demand is hopefully going to continue as we get into Q3, Q4. And the last thing I would add to that, as we're adding additional products in the alt space, like we should continue to see that number increase. Oh, sorry, and one additional piece to that, Patrick, is that the only net is the ETFs, which is $11 million. Everything else is gross.

Yeah. Thank you. Sure.

And this concludes our question and answer session. I'd like to turn the call back over to Jay Jackson for any closing remarks.

Terrific. I just want to take a moment and thank everyone. We are incredibly grateful for all of our shareholders, our investors, and who have taken the time to continue to expand and continue to learn and learn our story in a more granular way. And we are committed to continue delivering that story on a much more broader scale because we believe that this story is going to continue to grow as our company continues to grow. And as you look at where our business is, it's maybe in the earlier stages of potentially one of the next really large private credit asset managers. And we are well on that path. And it's a good time to take a look at Abacus because as we look out over the next year, two years, three years, four years, five years, we are definitely meeting and exceeding the expectations that we have set out for ourselves and will continue to do. So thank you very much for all of your support. Thank you for listening in on this call. And if you ever need to reach us or speak with us, we are certainly available to you. Thank you so much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.