Good day, and welcome to the Abacus Global Management Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Rob Phillips, Abacus Global Management's Senior Vice President of Investor Relations and Corporate Affairs. Please go ahead.

Thank you, operator, and thank you, everyone, for joining Abacus Global Management's Third Quarter 2025 Earnings Call. Here with me today are Jay Jackson, Chairman and Chief Executive Officer; Elena Plesco, Chief Capital Officer; and Bill McCauley, Chief Financial Officer. This afternoon at 4:05 p.m. Eastern Time, Abacus Global Management released its third quarter 2025 results. This afternoon's call will allow participants to ask questions about our results. Before we begin, Abacus Global management refers participants on this call to the Investor web page, ir.abacusgm.com, for the press release, investor information and filings with the SEC for a discussion of the risks and uncertainties that could affect the business. Abacus Global Management specifically refers participants to the presentation furnished today on Form 8-K with the Securities and Exchange Commission and to remind listeners that some of the comments today may contain forward-looking statements and as such, will be subject to risks and uncertainties, which, if they materialize, could materially affect results. For more information on the risks, uncertainties and assumptions relating to forward-looking statements, please refer to Abacus Global Management's public filings. During the call, we will reference certain non-GAAP financial measures. Although we believe these measures provide useful supplemental information about our financial performance, they are not recognized measures and do not have standardized meanings under U.S. Generally Accepted Accounting Principles or GAAP. Please see our public filings for additional information regarding our non-GAAP financial measures, including references to comparable GAAP measures. With that, I'd now like to turn the call over to Jay Jackson, Chief Executive Officer.

Thank you, and good afternoon, everyone. I'm pleased to report that Abacus delivered another record quarter, our 10th consecutive quarter of beating consensus projections, keeping us firmly on track with our long-term growth targets. Our third quarter results were just as impressive. Total revenue increased 124% year-over-year to $63 million. Adjusted net income rose 60% to $23.6 million and adjusted EBITDA increased 127% to $37.9 million. Due to these strong Q3 results, we are once again in a position to increase our 2025 guidance to $80 million to $84 million, resulting in a year-over-year growth of 72% to 81% for 2025. I want to highlight an important inflection point for Abacus that further reinforces our commitment to long-term shareholder value creation. Earlier today, we announced the initiation of an annual dividend of $0.20 per share and a $10 million share repurchase program. These actions represent a defining moment for Abacus, underscoring both our confidence in the strategy and its validation as we continue building durable recurring earnings. Our balance sheet and cash generation are at record levels, supported by increasing capital inflows into our longevity funds, growing fee income and expanding margins. As stated in the release, we have the capital strength to fund ongoing growth through new originations, accretive acquisitions and technology investment. While also returning capital to shareholders. I'm incredibly proud of what our team has built and the position of strength their unwavering dedication has created for Abacus. The introduction of a dividend and buyback is not a shift in strategy, but a natural evolution of it. With reoccurring revenues expected to approach 70% of total revenue over time, our capital allocation framework is designed to balance growth investment with consistent shareholder returns. Importantly, these actions also further align Abacus with leading public alternative asset managers, many…

Thanks, Jay. I'd like to highlight some recent strategic milestones and then discuss our balance sheet efficiency metrics and KPIs. As Jay mentioned, we announced a significant milestone on October 22. We successfully sold $50 million of securitized life insurance assets structured as an investment-grade rated collateralized note with a mid-single-digit yield. This transaction represents a strategic break for Abacus on multiple fronts. First, it establishes a new institutional distribution channel that complements our existing monetization pathways, allowing us to access a broader universe of capital providers, including banks, insurance companies and fixed income investors who typically require rated structures. Second, it validates our underwriting and portfolio construction capabilities. Specifically, the ability to secure an investment-grade rating demonstrates that our credit and actuarial processes meet institutional standards. Third, this transaction creates a scalable template for future execution, potentially improving our overall capital efficiency as we develop a track record in the securitized products market. Finally, by demonstrating that life insurance assets can be packaged into rated instruments with mid-single-digit yields, we're effectively expanding the addressable market for these assets and reinforcing Abacus' position as a leader in bringing institutional-grade structures to the longevity space. This is not just a onetime financing event. It's a proof of concept that opens up significant optionality for how we think about asset monetization and balance sheet management going forward. Now turning to our operational metrics. Last quarter, we stated that our long-term target for portfolio turnover is 1.5x to 2x. For Q3 2025, our annualized turnover ratio was 2x, in line with expectations. Another key indicator of our balance sheet management efficiency is our ability to monetize seasoned policies at optimal timing. In the third quarter of 2025, policies we sold have been held on our balance sheet for an average of 363 days…

Thanks, Elena, and hello, everyone. As Jay mentioned, we delivered another outstanding quarter of revenue growth and profitability. Total revenue in the third quarter grew 124% to $63 million compared to $28.1 million in the prior year. This growth was driven by strong Life Solutions performance, increased asset management fees and contributions from our Technology Services business. Our Life Solutions segment continues to benefit from our highly efficient origination platform and active trading division. Capital deployed increased 10% to $102.4 million in Q3 compared to $93.2 million last year. Beyond deployment, we had another strong quarter with regards to realized gains. Realized gains for Q3 2025 were $46.4 million, which was primarily driven by the sale of 282 policies to 17 different counterparties. As of September 30, we hold 522 policies valued at $424.7 million on our balance sheet. Based on historical track record, we expect to monetize these assets within approximately 6 months with spreads averaging above 20%. We continue to be pleased with our asset management segment, which is now in its third full quarter following the Q4 2024 acquisitions. This business generated $8.6 million in revenue during Q3 and had $102 million of new inflows, demonstrating the value of our strategic M&A activity. Turning to expenses. Total operating expenses, excluding unrealized and realized gains and losses on investments and the change in fair value of debt was $32.9 million compared to $19.4 million in the prior year. This increase reflects operating expenses of our acquired companies, increased G&A, higher depreciation and amortization and strategic marketing investments to support our growth trajectory. We typically see returns on marketing spend within 90 to 120 days. On an adjusted basis, excluding noncash stock compensation, business acquisition costs, amortization and changes in warrant liability fair value, net income was $23.6 million…

Thanks, Bill. Before I turn the call back to the operator for your questions, I want to close by reinforcing what makes Abacus unique. We are executing with discipline and purpose in one of the most compelling corners of alternative asset management, longevity-based investing. Our results continue to speak for themselves, record profitability, consistent growth and expanding market recognition. At a time when investors are seeking stability and true diversification, Abacus stands apart, offering uncorrelated assets, scalable returns and a platform designed for sustained value creation. The disconnect between our fundamentals and our current valuation is clear, but it also represents one of our greatest opportunities. We're addressing that gap head on through transparent communication, active investor engagement and continued execution across every part of our business. And further to this point, our dividend and buybacks and a clear message. We have the strength, the cash flow, and the conviction to invest in growth while directly returning value to shareholders. As we look ahead, our focus remains unchanged, deliver strong financial performance, deepen institutional adoption of longevity-based assets, and create enduring value for our shareholders. I'm proud of what our team has accomplished, and I'm even more excited about where we're headed. With that, we want to thank you for joining our call today and look forward to your questions.

[Operator Instructions] The first question today comes from Patrick Davitt with Autonomous Research.

First, I have a few questions on the securitization. Firstly, are there any incremental economics for you other than just the gain on sale like a structuring fee or a transaction fee? Secondly, could you give us an idea of how many large institutions participated and what portion of those were new to the asset class? And then finally, is there an opportunity to package more of these into some sort of third-party asset management product that you could charge fees on?

Patrick, thank you. First of all, on the securitization, the first question was related to additional fees or outcomes that we may experience. And one thing to note is that we also remain the servicer of the underlying assets. So we will retain servicing fees on these assets on a go-forward basis, which ultimately produces additional fee-related earnings associated with that. And what we stated to in both the initial press release and even going forward is that we expect this particular type of structure to continue to grow and be very successful. It was very well received. We purposely chose to make it a little bit smaller offering initially with $50 million. We had excess support of that or excess demand rather, where we could have done larger product here. But when we were considering the partners that we wanted to do this with, all of the partners were new in effect of investing directly into this type of collateralized product. So we were very encouraged by that, and they consisted of both insurance companies and commercial banks. So to that end, I think that, that was a really a piece to this that was incredibly successful, right, as you have new adoption of the asset. And a lot of what they were looking for was this uncorrelated or less correlated yield in a rated structure. So we see this continuing to grow as another type of distribution that we would be able to use to sell policies into and really aggregate policies into at an incredibly, I think, competitive cost of capital, which is also very, very compelling to us. And then I think the last piece of that was we see this structure growing into other third-party funds. Certainly, taking that into consideration, there's been interest from other types of structures and vehicles who are looking for this kind of product even within their own third-party funds. So I think as we continue to move forward, what was important was that getting this first one done was incredibly valuable being that now we have the platform in place to where effectively we can rent and repeat and do it over again and even larger in scale, which we anticipate doing on a regular basis. And I would expect to see more of these more consistently than we're trying for every quarter or every 2 quarters is kind of the target there.

That's helpful. As a follow-up, the advertising blitz has broadened, it feels like in the last couple of months to the point where I feel like Jay is living in my apartment on Sundays when I'm working from home. So maybe you could update us on any KPIs you might have on that effort converting to real volumes. Like how are you measuring the success of what looks like a fairly big uptick in the marketing investment at this point?

Sure. Thank you, Patrick. And we typically will -- you'll typically see a larger advertising attempts as we get more into Q4. We've seen that to be typically a larger quarter for us in relationship to our origination. And it brings me to my point that if you look at Q3, and compare Q3 to Q3 of last year, we're actually up 10% on Q3 over Q3 of last year, and then we kind of ramp into some of that advertising coming into Q4 as that's historically been a very productive quarter for us. So while I apologize for living in your living room, I certainly don't apologize from a revenue point of view because it's working. So that's great news. And we'll try to turn them off in your ZIP code.

The next question comes from Crispin Love with Piper Sandler.

First, just on capital deployed, $102 million in the quarter, below the second quarter, but still able to put up really solid life settlements revenues. Was that driven primarily from the outsized average gains in the quarter or anything else there? Just curious on some of the puts and takes there. And then forward expectations for capital deployed, is $120 million a good run rate? Or how are you thinking about that?

Sure. And yes, you're exactly right in the Q3. If you noticed the adjusted EBITDA margin increased to the highest EBITDA margin that we've ever had over 60%. And yes, we were a little more strategic in Q3 where we saw some very interesting opportunities, put that money to work. And historically, we've seen sometimes when you look at Q3, particularly as you're coming towards the end of the summer months, you've got a little bit of a shortened period there and then teeing up for Q4. So we're actually quite pleased where Q3 ultimately came out and with the increase in margins, just made a ton of sense to us. But we're -- how we strategically deploy capital, we still want to be very thoughtful and very smart about it. And then on a go-forward run rate basis, yes, as we look at Q4 last year and compare Q4 to this year, our expectations that we'll continue to see this maintain and grow from here. Some of that is capital dependent on based upon new capital that we're obviously raising within our funds, but not just that, but also demand. And we're seeing a pretty high uptick in demand from institutional capital who want to access this asset class due to the underlying nature of the asset class being that it's an uncorrelated yield. So as more volatility in the market gives us more opportunity to not just originate policies as people are seeking liquidity, but beyond that, build larger portfolios for investment funds who are seeking to capitalize on this asset within their own funds. So we expect that to continue to grow. We are definitely out there, as Patrick had alluded to quite often increasing our ad spend, and we're able to capitalize that, I think, in a successful way. And from the one -- whether that's going to be $120 million or slightly above or below that, what we see in Q4 or even going forward, I think that, that's a fair run rate, but we are obviously driving on a consistent basis to increase it. And we're always looking to increase it. I mean if you look at this number over the last 2 years, I mean, I think we're at 2x or even more on that number. And at some point, you go 1.5x to 2x to where we are today, we're starting to see some normalization and predictability around as we predict capital. However, as more opportunities present themselves over the next, I think, 6 months to 1 year, we could see that go up.

Okay. And then just on the maintaining and growing from here, you kind of maintaining growing off of the $102 million in the third quarter. Is that fair?

Yes. I mean, I think I would look at it if you look at Q4 of last year, right? And even if you look at looking at Q2 where we were north of 120, I mean, I think that's a fair way to model as you're looking at where we think we would potentially be in Q4. I think that on top of that, though, there are some opportunities that we see in the market as we continue to utilize thought processes around new structures like securitizing or using a securitized type format in this asset, Crispin, will have, I think, a significant impact on that capital deployed number, right? I mean those 2 will ultimately go hand-in-hand as you have cheaper cost of capital or lower cost of capital, that's going to impact even how much more you can originate. And so we would expect that growth to continue.

Perfect. I appreciate all that. And then on the new dividend, can you share yours and the Board's thoughts on that discussions you had versus just deploying excess capital into buying more policies or more buybacks or having a more nominal dividend. But just curious on your view on capital allocation, dividend buyback deployed to capital.

Sure. We put a lot of thought into the dividend. And as a business, as an asset manager, it's not unusual for asset managers to pay dividends. And one of the things that you'll see is that as our recurring revenue continues to grow as a percentage of the recurring revenue, we're right in line with other asset managers and what type of dividend would be paid. And if you compare that against, for example, our adjusted net income, we're on very much the low side as conservative. I think as you would see out there in the low 20s as a percent of adjusted net income as 8% for that dividend. So we felt like from a dividend perspective, this was a way to capitalize our shareholders in a very thoughtful way and not pulling anything away from the opportunities that we had to acquire new contracts. We're targeting this year, Crispin. If you look at our new guidance, we're looking at 80% year-over-year growth and a small dividend. I think that our shareholders are getting the best of both worlds. And that's not pulling back from our growth at all. We're continuing to expand and continue to see our growth. And as we looked at our liquidity and then we looked at our reoccurring revenue, we felt as a company that is maturing over time into a larger fee-related earnings business that the logical next step for us was to pass those additional earnings on to our shareholders in the form of dividend, and we'll pay that dividend on an annual basis. And as we highlighted in the press release, it will be based upon, again, a very conservative metrics as a percent of less than 25% of our adjusted net income or 55% of our recurring revenue.

All right. Great. And sorry, just one clarification. So will it be paid quarterly or it will be an annual payments?

That's an annual payment. And you bring up a good point. We purposely chose to make it an annual dividend versus a quarterly so that we could opportunistically reinvest into some of these higher ROEs throughout the year and then ultimately pass that dividend on to our investors. So it was a way for us to maximize our growth and capital while still providing a dividend and capitalization to our shareholders.

The next question comes from Mike Grondahl with Northland Securities.

Congrats on the securitization in the quarter. You gave a lot of good insight into the securitization. Could I maybe get you guys to go one step further? And with that $50 million securitization, could you kind of talk about unit economics and revenue and adjusted EBITDA that comes from that transaction, just so as we think about 2026, whether you're going to do one every other quarter or one every quarter, we can just kind of get a sense for how it lifts the business.

Sure. Thanks for the question, Mike. And the way to think about it is that when you're looking at the unit economics on a securitization like this, I think it's fair to say that we will be able to capture servicing fees as we would normally capture in this kind of product on a go-forward basis, right? So the way that I would compare this to on a unit economics basis, you actually see this as our -- it's equally profitable as a sale. I mean it is a true sale to a securitization in the way that we've set this structure up. And so those unit economics exist. This is just another structure that we're able to utilize to capitalize on that true sale and policies. So when you look at our ROE and ROIC, those numbers would effectively be an indicator as to how we're managing the unit economics of the securitization because those policies are being sold in a true sale to that vehicle. So I hope that makes sense. But the unit economics for us are very compelling as they are for our business. What I think the securitization does really long-term is that it offers us more consistency over time when you think about when we're asked frequently about maintaining the strength of our ROEs and ROIC, this structure provides that over a very long period of time. And I think that's one of the things I'm just really excited about. And as people look at our profitability or our margins, I think that this is a great structure that will allow us to maintain that profitability and margins for years to come.

Great. And then it looks like you've made some progress from the slide deck on Abacus Wealth Advisors. A teams together and you're hiring some RIAs and have an AUM goal. Can you just talk about some of the progress you've made there?

Sure. While we have a number of opportunities in consideration that we're not able to disclose at this time, we are incredibly excited about the growth of that segment of our business. One of the things we were highlighting was that the addition of AccuQuote over time. And AccuQuote was really one of our early steps into for those individuals that we speak to and we generate thousands of inquiries per month, could we potentially meeting the life cycle of that person and potentially sell them a new insurance product versus potentially trying to buy their policy that they may not qualify for. So that was one of the first steps into really monetizing that relationship of individuals who may not qualify to sell their policy. And from the wealth advisory, I know we have what looks to be a pretty compelling 5-year target in our deck in relationship to our fee-related earnings diversification. And we still feel strongly about that. We have, like I said, a number of opportunities that we're considering right now. We have a great pipeline, and that's going to continue to build. And I'm still very confident in what we've put out as a 5-year target there in relationship to earnings. I think the biggest thing for us is that we are incredibly selective in any group that we speak with, specifically around acquisition, and you have to be, right? They have to be very disciplined, and you have to make sure it's the right fit and you've got to ensure that you're looking at the type of earnings that you want because we've got a margin here, an EBITDA margin, what, 60%. And not just us, but most businesses don't have that kind of margin. And when you look across the board, we want to be thoughtful to try to capture and not sacrifice our margin on our impact negatively any of our other portions of our business. So that's where some of the discipline falls in, and we're making sure that we're looking for the right type of advisors that would fit that.

The next question comes from Andrew Kligerman with TD Cowen.

I was struck by the 37% realized gain, which outpaced last quarter and the year-over-year quarter, which were both peaks at 26%. Could you give a little color into what drove such a large gain? And how can we think about going forward, 37% every quarter?

Andrew, come on. Thank you for asking that. That's a big number. So I think one way to think about this is that Elena touched on it during her comments. And the average days on the book of policies we had sold was a little bit longer this quarter, meaning that on average, those were around 363 days. And when you're letting those policies mature a little bit longer, inherently, your spreads are increasing. And I think it just goes to the point that there is a lot of strategy around ensuring that you're selling your contracts and monetizing those contracts at the right time, either through new underwriting, additional underwriting, that could be relationship to premiums as well as medical underwriting. But lastly, as these policies age and mature, they inherently become more valuable. And if you go back a year ago and you think about where rates were, right, or even more than that 1.5 years ago when we were really buying some of the -- about 1.5 years, but certainly over a year ago when we're buying these policies, we were buying these policies effectively at a lower price. And now that you've seen some movement in rates in a positive direction with lower cost of capital, you're able to sell that same contract for a larger spread. And that's very simply what occurred over this time period. And if we go back to when we were having conversations a year ago, we've actually kind of spoken about this opportunity where we're able to buy contracts at a very favorable pricing just due to market conditions, and we were able to capitalize on that for Q3. I think that if you're looking to kind of mark where we are historically, I think it's fair to say that where we were in Q2 and Q1, as you track these, I think we're always targeting north of 20%. And in this case, we were able to capitalize on that a little bit more. But I would look for kind of where we've been historically as our norm.

That's very helpful. And then you mentioned the 363-day holding period. And I think historically, at least on the outset, you were kind of targeting more like 6 months. But then I think last quarter, you kind of thought about maybe letting it season a little longer because of precisely what you're saying. So are you thinking, Jay, about 363 days or a year rather being...

No. I mean in the chart above, you see above the average realized gains, you'll see the holding period. And now if you look at the remaining days held of owned policies, it's at 253. So for us, this was potentially more opportunistic than it has been in other quarters. And that's as good stewards of capital, that's our job is to maximize revenue and maximize returns on contracts that we think make the most sense. I think more broadly that if we continue to utilize whether that's through funds or securitizations or as we see increased demand related from institutional investors who want to invest in this product, the holding period could actually come down just depending on from the balance sheet perspective. So I think that for our very best ideas, certainly, you might see some of those. But I think as Elena highlighted, that was less than 20% of our balance sheet, as I would say, those types of policies that were really [ let ] season, which has been in line with kind of where we've been. We haven't seen that number significantly move. And based upon these structures, you might actually see the whole period actually come down based upon the demand we have for the balance sheet contracts.

Right, so the whole period like 250-plus days or maybe even lower.

Yes.

That's helpful. I guess just lastly, Jay, AccuQuote, it's -- of course, it's life insurance, but it's different than the settlements business. Do you see any -- or maybe I missed it on the intro remarks, but are there any overlaps where AccuQuote could drive life settlements business? And secondly, I don't know if you could share any of the economics of what the price tag was or anything like that, but I'd be interested if you could.

Sure. In relationship to synergies and crossovers, they definitely exist, right? It's a very large audience who are looking at a variety of different ways to capitalize on initially a new policy or potentially as the road continues to age, maybe selling their policy. And what we have found is that there are a number of kind of cross-selling opportunities throughout both books of business but doing it in a really thoughtful way. And so we've also been utilizing their team for a variety of other things in relationship to follow-up and education of clients. So more to come there. But what we really like about that specific platform initially is to kind of keep it focused on what it does best, right, which is capitalizing on and selling new term style life insurance policies. And there's a number of businesses out there that from SelectQuote and others that are running advertisements on this and to be able to offer that same type of opportunity for our clients who are calling in, they don't qualify to sell their policy, we think just makes a ton of sense. So I think initially here, we're going to be able to use AccuQuote for what it's designed to do, but there are definitely synergies on a go-forward basis. In relationship to acquisition, currently, we haven't put out the economics in relationship to the acquisition. I can tell you that from an acquisition size, meaning the scale of the acquisition, it was reasonably small in a sense that it wasn't necessarily material to both our earnings or balance sheet. So this was not -- it wasn't large enough that we needed to report on it, if that makes sense.

The next question comes from Timothy D'Agostino with B. Riley.

Regardless of securitization coming in at $50 million, as an investor demand increases, could we see larger securitizations going forward, maybe upwards of like $75 million? Or would we just see more securitizations at $50 million?

Thanks, Timothy. Yes, the answer is you will see larger securitizations over time. I think as we highlighted before, the initial securitization was to ensure that the platform was effective, was efficient, that there was demand. There is excess demand for that current product. And so I would expect larger securitizations and more frequent ones.

Okay. Great. And then if I could ask a second question. On Slide 27 of the earnings deck, looking at the number of lives track for ABL, it seems like a lot went from in trial to paid lives. I was just kind of wondering how quickly those turn from in trial to paid? And then kind of what's the growth looking like going forward? Because obviously, that number in trial has now decreased as they've been turned on.

Great question. Thank you, Timothy. Yes, that can turn pretty quickly. I mean, typically, you'll see that turn within the quarter. So somebody will stay in trial for 30 to 60 days. And then as that happens, you'll turn over renew. And the actual underlying pipeline for number of lives that we actually have is pretty significant. I mean, we're on track for north of 3 million lives by end of Q4. So just because they're not in trial, it also means that they could just be in the pipeline, and they don't need a trial. right? We just wanted to show what's beyond, I think, impressive to me when you're looking at that chart is look at where that business was a year ago. I mean you're talking about nearly a 20x, 30x multiple over where they were in relationship to the number of lives. So the business is growing exponentially. It's growing very quickly. The demand is off the charts. And these are, again, 3- and 5-year long-term SaaS-related contracts, and there were some of the largest pension funds in the country. And that I don't want to underscore this, but that gives us opportunity for financial products to represent into those same institutions, where now as an approved provider, we can show them additional opportunities to work with Abacus. And so even from a lead gen point of view at the very top level, it's been incredibly valuable.

This concludes our question-and-answer session. I would like to turn the conference back over to Jay Jackson for any closing remarks.

Thank you so much, everyone. Our business is built around the people. And every single person who works here at Abacus, every employee, keep in mind that nearly 80% of our employees own this stock alongside with you. And there's no greater moment than when we're able to deliver these kind of results, but we're able to deliver them because each and every person treats this business like an owner. And because of that, I think that's why we have the results that we have. And we look forward to talking to you in future calls. If you want to reach out to us, please don't hesitate to reach out to our Investor Relations team. One of the things we pride ourselves on is our accessibility and we look forward to speaking to you again soon.

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