Ellington Financial Inc posted a robust QQ1 2025 performance, with revenue of $140.7 million and net income of $38.68 million, translating to basic earnings per share of $0.35. The quarter showcased a meaningful YoY revenue uplift of 101.5% and a QoQ increase of 112.9%, driven by an expanded asset deployment and favorable operating leverage within Ellington’s diversified mortgage-related asset mix. Gross margin reached 86.0% and operating margin was 37.1%, underscoring a high-margin core earnings profile supported by $103.58 million in EBITDA. Net income margin stood at 27.5%, reflecting disciplined expense management alongside meaningful interest expense of $72.66 million.
However, the period also highlights structural leverage characteristics that remain central to Ellington’s risk/return profile. Total debt stood at $14.57 billion with net debt of $14.37 billion, while cash and cash equivalents totaled $203.3 million at quarter-end. Equity amounted to $1.61 billion, yielding a price-to-book of 0.75 and a dividend yield of 3.53%. Free cash flow was negative at $-126.4 million, with financing activity contributing $768.5 million to liquidity while operating cash flow remained negative ($-126.4 million). The payout ratio is reported at 1.11x, indicating distributions are substantially funded from financing and earnings but may constrain balance sheet flexibility in tighter rate environments.
In the context of the Mortgage-REIT space, Ellington’s QQ1 2025 results reflect a constructive earnings pulse amid a high-leverage framework. The company’s ability to sustain earnings amidst elevated interest expense and asset acquisition activity will be a key determinant of the sustainable dividend trajectory and ROTCE over the near-to-medium term. Absent explicit forward guidance in the dataset, investors should monitor debt maturities, hedging effectiveness, and portfolio mix shifts as primary determinants of risk-adjusted returns going forward.
Key Performance Indicators
Revenue
140.70M
QoQ: 112.91% | YoY:101.54%
Gross Profit
120.98M
85.98% margin
QoQ: 83.07% | YoY:73.30%
Operating Income
52.26M
QoQ: 159.22% | YoY:63.89%
Net Income
38.68M
QoQ: 28.47% | YoY:15.24%
EPS
0.35
QoQ: 2.94% | YoY:9.37%
Revenue Trend
Margin Analysis
Key Insights
Gross Profit Margin: 86.0% (stable given asset mix and hedges)
Operating Margin: 37.1%
Net Margin: 27.5%
EBITDA: $103.58M; EBITDARatio: 0.736
Cash and cash equivalents: $203.3M; Cash at end of period: $217.3M
Margins and profitability:
- Gross Profit Margin: 86.0% (stable given asset mix and hedges)
- Operating Margin: 37.1%
- Net Margin: 27.5%
- EBITDA: $103.58M; EBITDARatio: 0.736
Liquidity and leverage:
- Cash and cash equivalents: $203.3M; Cash at end of period: $217.3M
- Total assets: $16.64B; Total liabilities: $15.01B; Shareholders’ equity: $1.61B
- Total debt: $14.57B; Net debt: $14.37B; Debt/Equity implied leverage approximately 9.0x
- Free Cash Flow: $(126.4)M; Operating cash flow: $(126.4)M; Financing activities: +$768.5M; Investing activities: $(633.8)M
Valuation and efficiency:
- P/B: 0.752; P/E: 7.85; Dividend Yield: 3.53%
- Asset Turnover: 0.0043; Return on Equity (ROE): 2.40%; Return on Assets (ROA): 0.23%
- Interest Coverage: 0.43x; Cash Flow to Debt and related coverage ratios indicate sensitivity to rate moves
Portfolio and earnings quality:
- The quarter benefits from elevated deployment into mortgage-related assets and derivatives, contributing to above-trend revenue and earnings despite meaningful interest expense. The company continues to operate with a diversified asset base including RMBS, CMBS, and related hedges, which supports earnings stability amid rate volatility.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
140.70M
101.54%
112.91%
Gross Profit
120.98M
73.30%
83.07%
Operating Income
52.26M
63.89%
159.22%
Net Income
38.68M
15.24%
28.47%
EPS
0.35
9.37%
2.94%
Key Financial Ratios
grossProfitMargin
100%
operatingProfitMargin
42.8%
netProfitMargin
53.5%
returnOnAssets
0.23%
returnOnEquity
2.4%
operatingCashFlowPerShare
$-1.38
freeCashFlowPerShare
$-1.38
dividendPayoutRatio
110.8%
priceToBookRatio
0.75
priceEarningsRatio
7.85
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript data provided in the dataset. Consequently, management quotes and thematic highlights from the QQ1 2025 earnings call could not be synthesized. If transcript data is supplied, I can generate a thematically grouped highlight reel (strategy, operations, market conditions) with context and significance for investors.
N/A
— N/A
N/A
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Forward Guidance
No explicit forward guidance is contained in the provided QQ1 2025 data. In a Mortgage REIT context, key drivers of forward performance typically include: interest-rate path and funding costs, asset yields and prepayment behavior, hedging effectiveness, and ability to deploy capital into higher-quality assets while managing duration risk. Investors should monitor (i) debt maturities and refinancing risk given the high absolute debt load, (ii) sensitivity to rate moves as indicated by the relatively low interest-coverage ratio, (iii) changes in dividend policy and payout sustainability, and (iv) shifts in asset mix toward higher-margin, liquid securities. If management issues targets in subsequent releases, those should be tested against the current leverage profile (net debt of ~$14.37B) and liquidity metrics to assess achievability in a volatile rate environment.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0A26.L Focus
85.98%
42.80%
2.40%
7.85%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Longer-term, Ellington Financial’s QQ1 2025 results illustrate a resilient earnings platform under a high-leverage construct typical of mortgage REITs. The quarter’s revenue and margin strength is encouraging, but the sustainability of earnings and the dividend hinges on capital deployment discipline, hedging effectiveness, and the company’s ability to manage financing costs amid interest-rate cycles. With a P/B of 0.75 and a dividend yield of 3.53%, the stock trades at a valuation discount relative to some peers, reflecting leverage and execution risk. Investors should monitor debt maturities, net debt evolution, and the company’s cash flow normalization path. In a constructive rate scenario with stable asset yields, Ellington could generate value through disciplined asset selection and hedging, though the near-to-medium term remains sensitive to financing conditions and macro rate movements.
Key Investment Factors
Growth Potential
Diversified mortgage-asset mix (RMBS, CMBS, and other assets) supports earnings resilience; potential growth from selective asset deployment and structured investments; liquidity from financing activity can enable accretive acquisitions and hedging strategies.
Profitability Risk
High leverage (Debt/Equity ~9x) and relatively low interest coverage (~0.43x) raise sensitivity to rate movements and hedging effectiveness; negative free cash flow signals funding reliance on financing activities; dividend payout could become unsustainable if earnings or asset quality deteriorates.
Financial Position
Large asset base (~$16.64B) with substantial long-term debt (~$12.10B to ~$14.57B) and modest cash holdings (~$203M); equity base (~$1.61B) yields a P/B of 0.75, implying a potential discount to assets; liquidity supported by financing inflows but cash flow from operations remains negative in QQ1 2025.
SWOT Analysis
Strengths
Large, diversified asset base across mortgage-backed and related assets
Positive quarterly earnings contributions with EBITDA of $103.58M and net income of $38.68M
Dividend yield of 3.53% and a low P/B of 0.752 implying potential value苟