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On Thursday, Burford Capital Ltd (LSE:BUR) released its earnings report for the second quarter, showing a recovery. The litigation finance firm, with offices in London, New York, and other locations, reported revenue of USD 159.7 million for the quarter ending June 30, a significant increase from USD 44.6 million in the same period last year. Net income for the second quarter improved to USD 53.7 million, reversing a loss of USD 21.5 million reported a year earlier.
First-Quarter Impact
Despite the improvement in the second quarter, Burford Capital faced challenges from a substantial revenue decline in the first quarter. Revenue for the three months ending March dropped 88% to USD 44.3 million from USD 380.9 million in the prior year. This sharp decline was attributed by Chief Executive Officer Christopher Bogart to the "variable timing of recognition" in the company’s business model.
First-Half Performance
The gains in the second quarter did not fully offset the weak start to the year. For the first half of 2024, Burford reported total revenue of USD 169 million, which is half of the USD 382 million reported during the same period in the previous year. Net income for the first half of the year was USD 23.8 million, a decrease of 90% from USD 237.9 million reported in the first half of 2023.
Key Factors Behind the Second-Quarter Increase
The company noted that the increase in second-quarter revenue was not due to any single asset but was driven by a "significantly higher capital provision income" of USD 119 million. This amount was more than three times the USD 35 million reported in the previous year.
CEO's Commentary
CEO Christopher Bogart highlighted that the firm’s performance reflects an ongoing trend of cash flow independence from market or economic conditions, supported by recent case wins. The company's total portfolio, valued at USD 7.4 billion, continues to progress. Burford also experienced increased new business commitments, exceeding its recent quarterly average.
Bogart acknowledged that while year-to-date results cannot match the previous year’s figures, especially due to unrealized gains from the 2023 YPF case, net realized gains on the core portfolio had risen by 36%. He expressed satisfaction with the business's performance in the second quarter and the first half of 2024.
Previous Unrealized Gains
In 2023, Burford Capital had reported USD 543 million in unrealized gains related to its litigation rights in a USD 16.1 billion case concerning Argentina’s 2012 nationalization of the oil company YPF.
