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REFI Nasdaq· Chicago Atlantic Real Estate Finance Inc
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REFI Nasdaq· Chicago Atlantic Real Estate Finance Inc
Earnings report Q3 2023

REFI Reports Strong Revenue Growth in Latest Quarter

Segments of revenue

REFI's revenue for the three months ended September 30, 2023, was $15.18 million, representing a 10% increase compared to the same period in 2022. This growth was primarily driven by an increase in interest income, which rose by approximately $1.39 million or 10%. The surge in interest income was mainly attributed to the rise in the Prime Rate from 6.25% to 8.50% during the period, impacting around 81.1% of the company's loans. Additionally, REFI recognized approximately $288 thousand of income from fees during the quarter, compared to $196 thousand in the same period last year.

Strengths

REFI demonstrated strong revenue growth in the latest quarter, primarily due to the increase in interest income. The company benefited from the higher Prime Rate, which positively impacted the majority of its loans. The rise in interest income, coupled with increased fee income, contributed to the overall revenue growth. Management's comments suggest that the improvement in valuation multiples of publicly traded companies in the industry also played a role in the revenue increase.

Challenges

While REFI experienced revenue growth, it also faced challenges in managing expenses. Total expenses for the quarter amounted to $3.84 million, representing a 21% increase compared to the same period last year. The significant rise in expenses was primarily driven by higher stock-based compensation, which increased by $455 thousand or 537%. This increase in stock-based compensation contributed to the overall increase in total expenses.

Noteworthy

It is worth noting that REFI reported a reversal of $41 thousand for current expected credit losses in the three months ended September 30, 2023. This reversal indicates an improvement in risk ratings and overall macroeconomic conditions affecting the company's borrowers and the industry. Additionally, the company observed improved valuation multiples of publicly traded companies in the industry, which can be attributed to positive macroeconomic factors.

Summary

REFI delivered strong revenue growth in the latest quarter, driven by an increase in interest income and fee income. The rise in the Prime Rate positively impacted the majority of the company's loans, leading to higher interest income. However, REFI also faced challenges in managing expenses, primarily due to a significant increase in stock-based compensation. The reversal of current expected credit losses and the improved valuation multiples in the industry are noteworthy factors that contributed to the company's performance. Overall, REFI's revenue growth reflects its ability to capitalize on favorable market conditions and effectively manage its loan portfolio.

Source documents

Form 10-Q  filed on Nov 08, 2023
6 pages scanned

Reference data

Company financials Q3 revenue 13.8M
Analyst estimates Q3 EPS missed by NaN%
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