10-Q: Great Elm Group Reports Q3 2026 Financials

Great Elm Group, Inc. filed its Form 10-Q for the quarter ended March 31, 2026, detailing a net loss of $13.52 million and a decrease in assets.

Summary

• Great Elm Group, Inc. reported a net loss of $13.52 million for the three months ended March 31, 2026, compared to a net loss of $4.50 million in the same period last year.
• For the nine months ended March 31, 2026, the net loss was $37.97 million, a significant increase from $0.17 million in the prior year period.
• Total assets decreased to $111.78 million as of March 31, 2026, from $153.94 million as of June 30, 2025.
• Revenues for the three months ended March 31, 2026, were $3.42 million, a slight increase from $3.21 million in the prior year period.
• Revenues for the nine months ended March 31, 2026, were $17.22 million, a substantial increase from $10.71 million in the prior year period, driven by real estate property sales.
• Operating costs and expenses increased significantly, particularly in compensation and benefits, and selling, general, and administrative expenses.
• The company's Alternative Credit segment experienced a revenue decrease, while the Real Estate segment saw revenue growth, largely due to a property sale.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to the significant increase in net loss and the decrease in total assets, despite some revenue growth in specific segments.

Positives

• Revenues for the nine months ended March 31, 2026, increased by 61% to $17.22 million, primarily driven by real estate property sales.
• The Real Estate segment revenue increased by 30% for the three months ended March 31, 2026, and by 182% for the nine months ended March 31, 2026.
• Net cash from operating activities improved significantly, turning from a net cash used of $11.2 million in the nine months ended March 31, 2025, to net cash provided of $7.8 million in the nine months ended March 31, 2026.
• Net cash from investing activities also saw a substantial increase, moving from a net cash used of $0.8 million to net cash provided of $12.0 million for the nine-month periods.
• The company reported an unrestricted cash balance of $45.5 million as of March 31, 2026, an increase from $30.6 million as of June 30, 2025.

Negatives

• The company reported a net loss of $13.52 million for the three months ended March 31, 2026, compared to a net loss of $4.50 million in the prior year period.
• The net loss for the nine months ended March 31, 2026, was $37.97 million, a significant increase from $0.17 million in the prior year period.
• Total assets decreased by approximately $42 million to $111.78 million as of March 31, 2026, from $153.94 million as of June 30, 2025.
• Investments, at fair value, decreased significantly to $31.41 million from $60.61 million.
• The Alternative Credit segment revenue decreased by 13% for the three months ended March 31, 2026, and by 26% for the nine months ended March 31, 2026.
• Net realized and unrealized losses on investments were substantial, particularly in the 'Other income (expense), net' category, contributing to the overall net loss.

Risks

• The ability of Great Elm Capital Management, LLC (GECM) to profitably manage Great Elm Capital Corp. (GECC) and Monomoy CRE, LLC (MCRE) to manage Monomoy UpREIT.
• The dividend rate that GECC and Monomoy UpREIT will pay.
• The results of investment management activities.
• The ability to sell real estate properties developed at a profit.
• The ability to raise capital to fund the business plan.
• The ability to make acquisitions and manage acquired businesses.
• Conditions in the equity and debt capital markets, and the economy generally, including market uncertainty regarding global trade policies, changes to interest rates, and inflationary pressures.
• The ability to maintain the security of electronic and other confidential information.
• Serious disruptions and catastrophic events, including the potential impact of public health emergencies on the global economy.
• Competition, particularly from larger, well-financed organizations.
• Outcomes of litigation and proceedings, and the availability of insurance, indemnification, and other third-party coverage for losses.
• Maintaining contractual arrangements and relationships with third parties.
• The ability to attract, assimilate, develop, and retain key personnel.
• Compliance with laws, regulations, and orders.
• Changes in laws and regulations governing operations.
• Other factors described in the Annual Report on Form 10-K for the fiscal year ended June 30, 2025, under Risk Factors.

Future Outlook

The company believes it has sufficient liquidity to meet its short-term and long-term obligations. The company continues to explore other investment management opportunities and opportunities in other areas that it believes provide attractive risk-adjusted returns on invested capital. As of the date of this report, GEG had no unfunded binding commitments to make additional investments.

Management Comments

• GEG is a publicly-traded alternative asset management company focused on growing a scalable and diversified portfolio of long-duration and permanent capital vehicles across credit, real estate, specialty finance, and other alternative strategies.
• The company continues to explore other investment management opportunities, as well as opportunities in other areas that it believes provide attractive risk-adjusted returns on invested capital.
• We believe we have sufficient liquidity available to meet our short-term and long-term obligations.

Industry Context

StockSavvy.ai notes that Great Elm Group's performance in this quarter reflects broader trends in the alternative asset management sector, where companies are navigating market volatility and seeking diversified revenue streams. The significant increase in real estate revenue, driven by property sales, highlights a strategic shift or successful execution in that segment, while the decline in the Alternative Credit segment's revenue suggests challenges in income generation or fee structures within that area.

Comparison to Industry Standards

• The net loss of $13.52 million for the quarter is a significant concern when compared to industry peers in the alternative asset management space, many of whom aim for profitability or positive net income, especially those managing substantial assets under management.
• The increase in revenue for the nine-month period, driven by real estate sales, is a positive indicator, but the overall net loss suggests that the cost of revenue and operating expenses are outpacing revenue growth, a trend that needs to be monitored against industry benchmarks for operational efficiency.
• The company's debt-to-equity ratio of 0.4:1.0 as of March 31, 2026, is relatively low compared to some leveraged private equity or credit funds, which could be seen as a conservative approach but might also indicate underutilization of leverage for potential growth.
• The decrease in 'Investments, at fair value' from $60.61 million to $31.41 million warrants comparison with how similar asset managers are deploying capital in the current market environment; some may be increasing allocations to private markets or specific distressed debt opportunities.

Legal Proceedings

• The company is not a named party in any other pending or threatened litigation that is expected to have a material adverse impact on its business, results of operations, financial condition, or cash flows.

Related Party Transactions

• GECM has agreements to manage investment portfolios for GECC and other products, and provide administrative services.
• MCRE has agreements with Monomoy UpREIT for management fees, incentive fees, and administration/service fees.
• The Company owns 1,356,125 shares of GECC (approx. 9.8% ownership) as of March 31, 2026.
• Certain officers and directors of GECC are also officers and directors of GEG.
• Jason W. Reese is CEO and Chairman of GEG, and Executive Chairman of GECC's Board.
• Adam M. Kleinman is President of GEG and Chief Compliance Officer of GECC.
• Matt Kaplan is President of GECM and President/CEO of GECC.
• Keri A. Davis is CFO of GEG and CFO of GECC.
• Jason Reese was appointed CEO of GECC effective May 4, 2026.
• The Company invested in GESP, PPH, and SGP, which own GECC shares.
• GECM has shared personnel and reimbursement agreements with ICAM, where Jason W. Reese is CEO and Matt Kaplan is a Managing Director.
• Costs related to shared services with ICAM were $0.2 million and $0.5 million for the three and nine months ended March 31, 2026, respectively.
• Jason W. Reese entered into a voting waiver agreement on October 29, 2024.
• GECC and GECM entered into an equity distribution agreement with an investment bank.
• GECM contributed approximately $0.1 million to GECC's sales under the equity distribution agreement during the nine months ended March 31, 2026.
• The Company issued a promissory note to Monomoy REIT for up to $10.0 million in January 2025, which was fully paid down in July 2025.
• Subsidiaries may make payments to vendors that are related parties, totaling $0.1 million and $0.9 million for the three and nine months ended March 31, 2026, respectively.

Stakeholder Impact

• Shareholders: The significant net loss and decrease in assets may negatively impact shareholder value. Stock repurchases indicate management's belief in the company's undervaluation or a strategy to return capital.
• Employees: Increased compensation and benefits expenses suggest potential growth in headcount, possibly due to the Greenfield acquisition, which could impact morale and operational capacity.
• Creditors: The company's debt-to-equity ratio remains low, suggesting a manageable debt burden, which is positive for creditors.
• Investment Partners/Funds: Performance of managed funds, particularly the Alternative Credit segment's revenue decline, could impact investor confidence and future management fees.

Next Steps

• Continue to explore other investment management opportunities.
• Explore opportunities in other areas that provide attractive risk-adjusted returns on invested capital.
• Monitor budget-to-actual variances quarterly for internal operations, staffing, and future investments.

Key Dates

Recommendation

The company's significant net loss and decrease in assets are concerning, outweighing the revenue growth in the real estate segment and improved cash flow from operations. While the company has sufficient liquidity and a low debt-to-equity ratio, the overall financial performance indicates a need for stabilization before a more positive outlook can be formed. Therefore, a 'hold' recommendation is appropriate, pending further evidence of improved profitability and asset growth.

Keywords

Great Elm Group, GEG, SEC Filing, 10-Q, Quarterly Report, Financial Statements, Results of Operations, Alternative Credit, Real Estate, Asset Management, Net Loss, Revenue, Investments