Advanced Flower Capital Inc. (NASDAQ:AFCG) Reports Mixed Q2 2025 Results Amid Strategic Shift to BDC

Advanced Flower Capital Inc. (NASDAQ:AFCG) reported its second-quarter 2025 financial results, revealing a mixed performance relative to analyst expectations. The company posted a GAAP net loss of $13.2 million, or $(0.60) per share, but reported Distributable Earnings—a non-GAAP metric—of $3.4 million, or $0.15 per share. This figure fell short of the consensus EPS estimate of $0.24, marking a significant miss. Revenue for the quarter came in at $6.2 million, below the expected $8.7 million, reflecting ongoing challenges in the cannabis lending market.

Key Financial Highlights

• Revenue Miss: Reported revenue of $6.2 million was 29% below analyst estimates of $8.7 million.
• EPS Shortfall: Distributable Earnings per share of $0.15 missed expectations by $0.09, a 37% shortfall.
• GAAP Loss: The company recorded a GAAP net loss of $13.2 million, driven by provisions for credit losses and unrealized losses.
• Dividend Maintained: Despite the loss, AFCG paid a quarterly dividend of $0.15 per share, consistent with its previous payout.

Market Reaction

The stock showed modest pre-market gains of 1.3%, suggesting a muted but slightly positive reaction to the earnings release. Over the past month, shares have been nearly flat (+0.4%), indicating investor caution ahead of the report. The lack of a sharp decline post-earnings may reflect relief that the dividend was maintained, despite the earnings miss.

Strategic Shift: REIT to BDC

A significant development in the earnings release was AFCG’s announcement of its intention to convert from a mortgage REIT to a business development company (BDC). This shift would allow the company to expand its lending beyond real estate-backed cannabis loans to include non-real estate middle-market companies. CEO Dan Neville cited limited lending opportunities in the cannabis sector due to operators’ reluctance to own real estate as a key reason for the transition.

Outlook and Analyst Estimates

While AFCG did not provide explicit forward guidance, analysts currently estimate Q3 2025 revenue at $9.4 million and EPS at $0.26. For the full year, revenue is projected at $38 million, with EPS of $0.98. The company’s ability to execute its BDC transition and diversify its loan portfolio will be critical in meeting these expectations.

Press Release Summary

• Financial Performance: GAAP net loss of $13.2 million, Distributable Earnings of $3.4 million.
• Strategic Pivot: Plans to convert to a BDC to broaden investment opportunities.
• Dividend Stability: Maintained $0.15 per share dividend despite earnings volatility.
• Credit Challenges: Elevated provisions for credit losses ($14.1 million) weighed on results.

For a deeper dive into AFCG’s earnings and future estimates, visit Advanced Flower Capital’s earnings page.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research before making any financial decisions.