Earnings call transcript: Reliance Global sees Q2 2025 net loss widen

Reliance Global Group Inc. reported a challenging second quarter of 2025, with a net loss of $2.7 million, widening from $1.5 million in the same period last year. According to InvestingPro data, the company’s overall financial health score stands at a concerning 1.43 (labeled as "WEAK"), with particularly low scores in profitability and cash flow metrics. The company continues to focus on strategic initiatives, including debt reduction and product innovation, but faces increased expenses and competitive pressures.

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Key Takeaways

• Net loss increased to $2.7 million in Q2 2025 from $1.5 million in 2024.
• Launched new Relay Auto Leasing service to expand revenue streams.
• Achieved a 61% reduction in annual debt service through strategic debt repayment.
• Property and Casualty revenue grew by 8%, driven by commercial insurance.

Company Performance

Reliance Global Group’s performance in the second quarter of 2025 was marked by a significant increase in net loss, primarily due to rising commission expenses and salaries. Despite these challenges, the company made strategic moves to streamline operations, including the sale of Fortman Insurance Services and the launch of Relay Auto Leasing, aimed at diversifying revenue streams. The company’s focus on expanding its commercial insurance platform also contributed to an 8% increase in Property and Casualty revenue.

Financial Highlights

• Commission Income: $3.1 million, down from $3.2 million in Q2 2024.
• Commission Expense: $989,000, up from $886,000.
• Salaries and Wages: $2.6 million, increased from $2 million.
• Adjusted EBITDA Loss: $382,000, compared to $178,000 in the previous year.

Market Reaction

Reliance Global’s stock saw a minor uptick in aftermarket trading, with a 0.76% increase to $1.33, following a 3.03% decline during regular trading hours. The stock remains below its 52-week high of $5.11, reflecting ongoing investor caution amid the company’s financial challenges and broader market trends. Notably, the stock’s beta of -0.32 indicates it often moves contrary to market direction, while showing significant volatility with a -63.33% return over the past year.

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Outlook & Guidance

Looking forward, Reliance Global is committed to exploring strategic expansion opportunities and maintaining disciplined financial management. The company has projected a revenue forecast of $14.34 million for FY 2025 and $14.62 million for FY 2026, indicating a modest growth trajectory. Ongoing discussions with Spentner Associates also suggest potential for future partnerships or acquisitions.

Executive Commentary

"We’ve simplified our portfolio, dramatically improved our balance sheet, introduced a new revenue stream for our agency partners, and remain focused on smart strategic expansion," said Ezra Bayman, CEO. Ted Avis, Investor Relations, emphasized the company’s robust commercial InsurTech platform, stating it supports multiple lines of business from various carriers.

Risks and Challenges

• Rising operational costs, particularly in salaries and commissions, could pressure margins.
• Competitive pressures in the commercial insurance sector may impact market share.
• Economic uncertainties and regulatory changes could affect growth prospects.
• The success of new initiatives, like Relay Auto Leasing, is uncertain and critical for revenue diversification.

Q&A

During the earnings call, analysts raised questions about the sale of Fortman Insurance Services and the status of negotiations with Spentner Associates. Management reiterated their interest in a potential deal with Spentner, highlighting the strategic importance of expanding their commercial insurance business.

Full transcript - Reliance Global Group Inc (RELI) Q2 2025:

Conference Operator: Greetings. Welcome to the Reliance Global Group Second Quarter Business Update Conference Call. At this time, participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded.

I will now turn the conference over to your host, Ted Avis, Investor Relations. Ted, you may begin.

Ted Avis, Investor Relations, Reliance Global Group: Thanks, Paul. Good afternoon, and thank you for joining Reliance Global Group’s twenty twenty five second quarter financial results and business update conference call. On the call with us today are Ezra Bayman, Chairman and Chief Executive Officer of Reliance Global Group and Joel Markowitz, Chief Financial Officer of Reliance. Earlier today, the company announced its operating results for the quarter ended 06/30/2025, and a press release is posted on the company’s website, www.relianceglobalgroup.com. Addition, the company will be filing its quarterly report on Form 10 Q with the US Securities and Exchange Commission today, which will also be accessible on the company’s website as well as the SEC’s website at www.sec.gov.

If you have any questions after the call or would like any additional information about the company, please contact Crexendo Communications at (212) 671-1020. Before Mr. Bayman reviews the company’s operating results for the quarter ended 06/30/2025, we would like to remind everyone that this conference call may contain forward looking statements. All statements other than statements of historical facts contained in this conference call, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations are forward looking statements. The words anticipate, estimate, expect, project, plan, seek, intend, believe, may, might, will, should, could, likely, continue, design, and the negative of such terms and other words in terms of similar expressions are intended to identify forward looking statements.

These forward looking statements are based largely on the company’s current expectations and projections about future events and trends that it believes may affect its financial condition, results of operations, strategy, short term and long term business operations and objectives and financial needs. These forward looking statements are subject to several risks, uncertainties and assumptions as described in the company’s Form 10 ks filed with the US Securities and Exchange Commission. Because of these risks, uncertainties and assumptions, the forward looking events and circumstances discussed in this conference call may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward looking statements. You should not rely upon forward looking statements as predictions of future events. Although the company believes that the expectations reflected in the forward looking statements are reasonable, it cannot guarantee future results, level of activity, performance, or achievements.

In addition, neither the company nor any other person assumes responsibility for the accuracy and completeness of any of these forward looking statements. The company disclaims any duty to update any of these forward looking statements. All forward looking statements attributable to the company are expressly qualified in their entirety by these cautionary statements as well as others made on this conference call. You should evaluate all forward looking statements made by the company in the context of these risks and uncertainties. Having said that, I would now like to turn the call over to Ezra Bayman, Chairman and Chief Executive Officer of Reliance Global Group.

Ezra?

Ezra Bayman, Chairman and Chief Executive Officer, Reliance Global Group: Thanks, Ted. Good afternoon, and thank you to everyone for joining us today. We had a strong second quarter marked by a solid execution on several initiatives aligned with our long term goals. Although revenue saw a slight decline compared to the same period last year, mainly due to shifts within our medical and health client base, This was partially offset by an 8% increase in property and casualty revenue. Overall, the fundamentals of our business remain solid.

Our core operations held steady and the improvements we’ve implemented across the organization are paving the way for greater efficiency, stronger margins, and scalable growth. Building on that momentum, in July we took a significant step to strengthen our financial position by repaying approximately $5,600,000 about half of our long term debt. This move reduced our annual debt service by more than $1,800,000 and meaningfully enhanced both our cash flow and financial flexibility. One of the cornerstones of our ongoing transformation is our One Firm strategy, which brings all of our agency operations together under a single unified model. It’s helping us work more efficiently, collaborate more smoothly across teams, and provide a better overall experience to both clients and agents.

Just as importantly, it’s setting us up to scale more effectively and grow our margins as we continue to expand. As part of this strategy, selling Fortman Insurance Services was an important step in streamlining our portfolio. By monetizing this asset, we strengthened our balance sheet and sharpened our focus on the tech enabled high growth areas that are central to our long term vision for sustainable innovation driven growth. We moved quickly to put that capital to work. Soon after the sale, we used the proceeds along with some of our least restricted cash to pay down over half of our long term debt.

On top of that, we expect to record a gain on the sale of approximately 3,000,000 from the Fortman sale in Q3 twenty twenty five. Altogether, these steps have significantly reduced our leverage and lowered our annual debt service by 61%, resulting in a meaningful boost to our cash flow and giving us greater financial flexibility moving forward. Our outlook remains strong as we stay focused on disciplined financial management while also making steady progress in driving innovation and expanding our presence in the market. On the innovation front, we’re really excited about the launch of Relay Auto Leasing. This new service empowers our Relay Exchange agency partners to connect their clients with great auto leasing options, with delivery available anywhere in the country.

Even better, agents can earn commissions on both the lease and the accompanying insurance without needing to become experts in auto finance. The entire process is integrated into their existing dashboard, so it’s seamless, efficient, and a great value add for clients. We’ve already heard strong feedback from the field, and we think this offering further sets Relay Exchange apart in the marketplace. I also want to touch on the Spentner Associates. As many of you know, we had previously entered into a stock exchange agreement with Spentner as part of a potential acquisition.

Last week, both parties agreed to formally terminate that agreement. There were no penalties or disputes, just a mutual decision to revisit the structure of the deal. We have previously issued about 297,000 shares of the nonrefundable consideration, which we’ve since expensed in our current second quarter financial statements. To be clear, our interest in Spetner has not changed. There is still that great strategic fit with complementary strengths that would enhance our platform.

What changes that we now have the opportunity to explore a different structure, one that could make more financial sense for us and ultimately create more value for our shareholders. We’re still in active discussions with the Spetner team, and we’re optimistic about finding the right path forward. To sum it up, we’ve simplified our portfolio, dramatically improved our balance sheet, introduced a new revenue stream for our agency partners, and remain focused on smart strategic expansion. These aren’t just tactical wins. They’re foundational steps that position Reliance for long term success.

I would now like to turn the call over to Joe Mokulis, Chief Financial Officer of Reliance Global, to review the financial results for the quarter ended 06/30/2025.

Joe Mokulis, Chief Financial Officer, Reliance Global Group: Joe? Thank you very much, Ezra, and good afternoon. It’s my pleasure to share with you some key financial highlights for the quarter ended 06/30/2025. All figures presented are approximates. Commission income came in at $3,100,000 in the quarter versus $3,200,000 in 2024.

A slight swing was primarily due to a shift in our medical health client base, but offset by an 8% increase in our property and casualty P and C revenue stream. Commission expense came in at $989,000 versus $886,000 in the prior year. Slight increase is primarily due to the 8% growth in the P and C revenues. Salaries and wages were $2,600,000 for the quarter versus $2,000,000 in 2024, with the increase being primarily driven due to non cash share based compensation, offset by one firm efficiencies and overall leaner operations. General and administrative expenses came in at $1,500,000 for the quarter versus $1,000,000 in 2024, with a change being driven by acquisition related cash and non cash costs offset by one firm efficiencies and overall leaner operations.

Net loss for the quarter was $2,700,000 compared to $1,500,000 in 2024, primarily reflecting the changes in the accounts we just discussed. Adjusted EBITDA, our non GAAP metric, was a loss of $382,000 for the quarter versus $178,000 in 2024. The change is primarily driven by fluctuations affecting the commission income and commission expense accounts, offset by improvements in the general expense accounts pursuant to one time efficiencies and overall leaner operations. In summary, as mentioned by Ezra, we’ve made some good progress here in the 2025, with amongst other things, stabilized and growing corporations, improved financial flexibility 50 by percent reduction in our long term debt and a decreased annual debt service cost, which improved by more than 60%. That’s it from me for now.

We’ll turn the call back over to the operator to open the lines for questions, comments and feedback. Operator?

Conference Operator: Thank you. At this time, we’ll be conducting a question and answer session. First question today is coming from Nick Pincus from Fourth Capital. Nick, your line is live.

Nick Pincus, Analyst, Fourth Capital: Thank you. First and foremost, congrats on the sale of Fortman, the improvement in the balance sheet and the continued progress of the business. Thank you also for the additional clarity in your prepared remarks on the Spetner transaction. It seems like the deal is not dead, but rather you’re evaluating different options. I’m just wondering if there’s anything else you could share on the overall strategy as it relates to Spetner.

Ezra Bayman, Chairman and Chief Executive Officer, Reliance Global Group: Yes. Spetner is still a good deal. We are looking at it. But we certainly did not want to hurt company doing a transaction or financing for the transaction that would hurt it. We have to look at the big picture.

We are still we’re in good terms actually with the Spentner team, and we are in touch with them. And we’re working on a structure and financing that would be beneficial for us and the company. And if we can accomplish that, it’ll be a win win without the pain. So we look forward to that, certainly to that potential, which is certainly a potential then. Of course, looking at other transactions as well.

Nick Pincus, Analyst, Fourth Capital: Well, I appreciate that and that you’re looking out for the best interests of the shareholders. As a follow-up, can you also just provide some more color on the commercial insurance business?

Ezra Bayman, Chairman and Chief Executive Officer, Reliance Global Group: I’m going to give a little bit of that. I mean, that’s Moshe Fishman then to chime in. In the big picture, the average commercial premium is probably could be three, four, five, ten times a personal line with the same work, basically, pretty much. So we look forward to the potential for much bigger revenue. It also enhances our arrangement with our agents in the Reliance Exchange program that they now have a much we can entice them to come and join us because we have a much more attractive platform now with commercial as well.

And Miles Fishman?

Ted Avis, Investor Relations, Reliance Global Group: Good afternoon. Thank you. The commercial InsurTech platform is built out and currently supports multiple lines of business from multiple carriers. And our agency partners, hundreds of agency partners, can go in and actually buying commercial business in real time. Additional lines of business are being added.

Additional carriers that support that commercial business are being added as well. I know another carrier just was turned live today. And we anticipate that growth of that business, as Mr. Bayman mentioned, the premiums of commercial business make up close to 90% of P and C business in the industry. So we’re really looking to take advantage of that and have our agency partners write more and more commercial business alongside the current personal lines that they do phenomenally well today.

Nick Pincus, Analyst, Fourth Capital: Thank you for the extra feedback, and keep up the good work, guys.

Ezra Bayman, Chairman and Chief Executive Officer, Reliance Global Group: Thank you.

Conference Operator: Thank you. There were no other questions from the lines at this time. I would now like to turn the call back to management for closing remarks.

Joe Mokulis, Chief Financial Officer, Reliance Global Group: Thank you very much. On behalf of Ezra and the entire Reliance team, we appreciate you joining us today for this business update. We’re excited about the road ahead and truly value the continued support and partnership with our shareholders as we move forward together. Thank you, and we wish you all the very best.

Conference Operator: Thank you. This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.

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