Beneficient Q3 FY2024 earnings call

Brad Heppner:

• Introduced Ben's unique position in alternative investment market as a new source of liquidity and capital with trustee, custody, and administration services.
• Highlighted the state-of-the-art AltAccess fintech platform and ExAlt plan as key differentiators.

Jeff Welday:

• Discussed the global alternative assets market over $12 trillion, with Ben's target market holding over $2 trillion in U.S. net asset value.
• Outlined origination channels: General Partners solutions, advisory platforms, direct to investor, and the Preferred Liquidity Provider Program (PLP) which grew from 7 funds with $300 million committed capital in Dec 2022 to 19 funds with $1.5 billion in Dec 2023.
• Mentioned marketing initiative for General Partners with initial positive response rates.

Greg Ezell:

• Presented financial results for Ben Liquidity and Ben Custody segments, including revenue, operating losses, and adjusted operating income figures. Discussed non-cash goodwill impairment charges and inter-segment credit losses.

Ben Liquidity: Recognized $11.3 million in base interest revenue in the three months ended December 31, 2023, down 13.4% from prior quarter due to lower carrying values of loans receivable. Operating loss was $606.4 million (due to non-cash charge), adjusted operating income was $2.5 million. Ben Custody: Recognized fee revenues of $5.9 million in the last quarter, down sequentially by 9.1% due to decline in assets held in custody. Operating loss was $268.0 million (due to non-cash charges), adjusted operating income was $4.8 million. Revenue contribution: Ben Liquidity's interest revenue and Ben Custody's fee revenue are the main segments generating income.

• Focus on scaling the business to achieve operating leverage.
• Belief in fulfilling the vision of being the premier fiduciary provider of liquidity, capital, and related services in a $2 trillion U.S. market.

• Further decline in market capitalization could result in additional non-cash goodwill impairments.

Q: For your fintech platform, AltAccess, is that something you could license, or sell as a standalone, or is intended only for use with the other liquidity and custody tools?

A: This AltAccess is foundational to delivering our liquidity and custodial capabilities. It can be white labeled and delivered through various API options to third-party platforms, providing an additional revenue stream. It has features like Cybersecure SOC 2 certified platform, confidential transactions, and can be a private label online experience.

Q: You referenced that providing capital customers, and generating services revenue go hand-in-hand for your business model. So, can you actually add a little bit more color, as to why that matters, and what makes it unique? As an adjunct to that, are there others in the market, even if they're not providing a complete solution?

A: We operate under a Kansas legislation creating a technology enabled fiduciary financial institution (TEFFI) charter. This requires providing financing and services in a fiduciary capacity, which goes hand-in-hand. We're the only entity with a TEFFI charter, uniquely able to conduct fiduciary financing transactions. Other commodity custodian providers are limited in scope compared to our complete solution.

Q: In your press release and in your formal comments, you talked a bit about a marketing program, GP Solutions. I was hoping you could just go into a bit more detail on that program, specifically, who are you targeting and how much could this help in scaling your asset base?

A: GP Solutions is targeted at fund General Partners and sponsors. It covers various liquidity, capital, custody, and trust administration products. Ben's current balance sheet was built through GP Solutions with over $1 billion NAV closed since 2017, and GP Solutions is a significant potential contributor to balance sheet growth