Ben(US:BENF)2024-02-14 04:00Financial Data and Key Metrics Changes - Ben Liquidity recognized $11.3 million in base interest revenue for the quarter, down 13.4% from the prior quarter due to lower carrying values of loans receivable driven by higher allowances for credit losses [22] - Ben Custody recognized fee revenues of $5.9 million, down 9.1% sequentially, primarily due to a decline in assets held in custody, which decreased by 13.0% to $432.5 million [23] - Total segment operating loss was $894.6 million in the quarter compared to $378.1 million in the prior quarter, largely due to a non-cash goodwill impairment charge of $883 million [24] Business Line Data and Key Metrics Changes - Ben Liquidity's operating income was a loss of $606.4 million, compared to losses of $272.1 million in the prior quarter [22] - Ben Custody's operating income was a loss of $268.0 million, compared to losses of $80.8 million in the prior quarter [23] - Adjusted operating income for Ben Liquidity was $2.5 million, while Ben Custody's adjusted operating income was $4.8 million [22][23] Market Data and Key Metrics Changes - The global alternative assets market is estimated to exceed $12 trillion, growing at mid to high-teens rates for the last 15 years [12] - The U.S. market for alternative assets held by Ben's target market is over $2 trillion in net asset value [12] - The secondary market for alternative assets has grown from over $35 billion to $130 billion in annual transactions over the last decade [13] Company Strategy and Development Direction - The company aims to be the premier fiduciary provider of liquidity and capital services in a U.S. market valued at over $2 trillion [8] - The focus is on scaling the business to achieve operating leverage while providing fiduciary services and financing in a unique capacity under the TEFFI charter [32] - The company has rolled out innovative liquidity products and trustee services through its fintech platform, AltAccess, to address the underserved market [7][10] Management's Comments on Operating Environment and Future Outlook - Management highlighted the significant demand for liquidity solutions among mid to high net worth individuals and small to mid-sized institutions [7] - The company is well-positioned to capitalize on growth opportunities in the alternative asset market, despite current challenges [19] - Management indicated that further declines in market capitalization could lead to additional non-cash goodwill impairments in the future [25] Other Important Information - The company has written down over $2 billion of goodwill since its public listing, with a remaining goodwill balance of $81.7 million [24][25] - Cash and cash equivalents increased to $11.2 million from $2.4 million in the prior quarter [25] Q&A Session Summary Question: Can the AltAccess platform be licensed or sold as a standalone? - Management stated that AltAccess is foundational for delivering liquidity and custodial capabilities and can be white-labeled for third-party platforms, providing an additional revenue stream [27][28] Question: What makes the combination of capital provision and service revenue unique? - Management explained that the TEFFI charter allows the company to provide fiduciary financing and services, which is not commonly available in the market, enabling a broader range of fee opportunities [31][32] Question: Should additional goodwill write-downs be expected? - Management indicated that the majority of write-downs are likely done, with remaining goodwill at $81.7 million, but further testing for impairment will occur if market conditions do not improve [34][35] Question: Can you elaborate on the GP Solutions marketing program? - Management detailed that GP Solutions targets General Partners and sponsors, contributing significantly to the growth of the balance sheet, alongside other origination channels [39]