Rise Companies Corp.

11/07/2025 | Press release | Distributed by Public on 11/07/2025 15:11

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Quarterly Report. The following discussion contains forward-looking statements. See "Statements Regarding Forward-Looking Information" within this Quarterly Report.
Business
Rise Companies is a Delaware corporation that was formed on March 10, 2014. Our office is located at 11 Dupont Circle NW, 9th Floor, Washington, D.C. 20036. Our telephone number is (202) 584-0550. Information regarding the Company is also available on our web site at www.fundrise.com. The Company, together with its subsidiaries and affiliate organizations ("Fundrise"), combines modern financial technology and investment management to build the next generation of alternative asset management. Refer to Note 1, Formation and Organizationin the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report for a description of our corporate structure and affiliated entities.
The Fundrise Platform has allowed us to build a differentiated business with what we believe is a significant competitive advantage and a robust, proprietary software infrastructure. We generate revenue from investment management and platform advisory fees, real estate management fees, and real estate operating platform fees which are detailed in Note 4, Revenue in the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report.
We own and operate the Fundrise Platform, a leading web-based and mobile alternative asset investment platform. We use industry-specific expertise to evaluate, originate, service and manage investment opportunities through our fund management. We seek to develop alternative investment vehicles for external investors, for which we provide asset management services, typically under long-term management arrangements either through a contract with, or as the manager or general partner of, our Investment Products.
We limit our investment vehicle development and management services to asset classes where we have specific expertise. We believe this strategy enhances the return on investment we can achieve for our investment vehicles.
As of September 30, 2025, the Investment Products have total assets under management ("AUM") of $3.02 billion with over 405,000 active investor accounts and 2,538,000 active users on the Fundrise Platform.
Results of the Business
We are encouraged by both the performance of the alternative investments held by our Investment Products and by our own ability to navigate the evolving economic landscape. Despite ongoing challenges and macroeconomic headwinds such as persistent inflation, elevated interest rates, tariffs and volatility in real estate markets, our investments continue to demonstrate resilience.
As of September 30, 2025 and December 31, 2024, there was approximately $3.02 billion and $2.94 billion in equity AUM, respectively, on the Fundrise Platform. With interest rates stabilizing in the first half of the year, interest rate cuts restarting in the third quarter of 2025, and consistent property fundamentals, namely investing in the right locations and the right asset types, our Investment Products generated largely positive returns during the first nine months of 2025 despite the ongoing headwinds created by a weakening economy.
As of September 30, 2025, we have yet to generate any profits from our operations and are incurring net losses while we invest in the development and expansion of our business. For the nine months ended September 30, 2025 and the year ended December 31, 2024, we continued to focus on increasing efficiency as part of our drive towards future profitability.
Refer to Note 17, Subsequent Events in the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report for more details on recent developments.
Results of Operations
Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024
For the three months ended September 30, 2025 and 2024, our results of operations are as follows:
Results
Three Months Ended
September 30, 2025
(in thousands)
Three Months Ended
September 30, 2024
(in thousands)
% Change
(from 2024)
Explanation
Revenue
Investment management and platform advisory, net $ 8,364 $ 7,726 8 %
Investment management and platform advisory income, net increased due to an increase in fees earned from the Innovation Fund, which saw average assets increase as a result of higher valuations and increased fundraising period over period.
Real estate operating platform 4,628 4,563 1 %
Real estate operating platform income remained consistent due to relatively consistent underlying asset values period-over-period.
Real estate management
1,337 2,549 -48 %
The decrease in real estate management revenues period-over-period is driven by development projects reaching completion and being placed into service as well as a decrease in lease-related activity period-over-period, resulting in lower associated fees.
Total operating revenue
$ 14,329 $ 14,838 -3 %
Results
Three Months Ended
September 30, 2025
(in thousands)
Three Months Ended
September 30, 2024
(in thousands)
% Change
(from 2024)
Explanation
Costs and Expenses
Cost of revenue, exclusive of depreciation and amortization shown separately below
Cost of revenue, exclusive of depreciation and amortization (which are shown separately below), consists primarily of: (i) allocated salaries and benefits for employees responsible for investor relations and service; (ii) salaries and benefits of personnel associated with real estate services such as closing of real estate investments and real estate asset management; and (iii) costs associated with maintaining the Fundrise Platform including cloud infrastructure costs, third-party expenses, and salaries and benefits of personnel responsible for the ongoing operations and delivery of our platform.
$ 2,095 $ 2,111 -1 %
Cost of revenue expenses remained consistent period-over-period.
Results
Three Months Ended
September 30, 2025
(in thousands)
Three Months Ended
September 30, 2024
(in thousands)
% Change
(from 2024)
Explanation
Technology and product development
Technology and product development expenses consist primarily of salaries and benefits for teams responsible for software engineering, product development, technology activities, as well as costs for third-party software. Technology and product development costs exclude capitalized internal-use software development costs, as they are capitalized as a component of property, software and equipment, net, and amortized through depreciation and amortization over the terms of their respective useful lives. All other Technology and product development expenses are expensed as incurred.
$ 4,763 $ 3,496 36 % Technology and product development expenses increased period-over-period due to fewer salaries and benefits being capitalized to internal-use software.
Marketing
Marketing expenses consist primarily of the costs associated with engaging and enrolling investors in the Investment Products, including costs attributable to marketing our products. This primarily includes costs of building general brand awareness, and salaries and benefits expenses related to our marketing and design teams.
$ 1,829 $ 2,661 -31 %
Marketing expense decreased period-over-period due to a decrease in spend related to certain product marketing initiatives compared to the third quarter of 2024.
General, administrative and other
General, administrative and other expenses consist primarily of salaries and benefits for our corporate functions (including finance, legal, human resources, and IT operations), as well as other software and office expenses, and professional fees.
Software and other office expenses $ 693 $ 671 3 %
Software and other office expenses remained consistent period-over-period and are mainly comprised of software subscription expenses supporting corporate functions and corporate office lease expense.
Professional fees 1,016 538 89 %
Professional fees increased period-over-period due to an increase in legal fees for certain advisory projects.
Other general and administrative 4,143 4,850 -15 %
Other general and administrative expenses are comprised mainly of salaries and benefits of personnel responsible for our corporate functions, which decreased period-over-period due to a decrease in headcount.
Depreciation and amortization
Depreciation and amortization expense consists of depreciation expense for our fixed assets and amortization expense for certain software development costs.
$ 3,019 $ 2,454 23 %
Depreciation and amortization expense increased period-over-period due to an increase in amortization of internal use software as more projects were in service in the third quarter of 2025 compared to the third quarter of 2024.
Total operating expenses
$ 17,558 $ 16,781 5 %
Results
Three Months Ended
September 30, 2025
(in thousands)
Three Months Ended
September 30, 2024
(in thousands)
% Change
(from 2024)
Explanation
Other Income
Gain on disposition of investments - 18 -100 %
Fundrise LP, an affiliate of Rise, redeemed its investment in certain of the Investment Products over the course of 2024, resulting in a gain on disposition. Refer to Note 15, Related Party Transactions in the Notes to the Condensed Consolidated Financial Statements for more details.
Dividend and interest income
287 473 -39 %
Dividend and interest income decreased period-over-period largely due to a decrease in sweep dividends earned, due to a lower average daily cash balance and lower interest rates.
Equity in earnings (losses)
26 (4) 750 %
Equity in earnings earned from Rise and its subsidiaries' investments in the Investment Products increased period-over-period due to the Investment Products' increased net earnings period-over-period.
Total other income
$ 313 $ 487 (36) %
Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024
For the nine months ended September 30, 2025 and 2024, our results of operations are as follows:
Results
Nine Months Ended
September 30, 2025
(in thousands)
Nine Months Ended
September 30, 2024
(in thousands)
% Change
(from 2024)
Explanation
Revenue
Investment management and platform advisory, net $ 24,190 $ 23,136 5 %
Investment management and platform advisory income, net remained consistent due to relatively consistent average AUM period-over-period.
Real estate operating platform 13,905 13,398 4 % Real estate operating platform income remained consistent due to relatively consistent underlying asset values period-over-period.
Real estate management
5,717 6,842 -16 %
Real estate management income decreased period-over-period largely due to development projects reaching completion and assets being placed in-service, resulting in a decrease in associated fees.
Total operating revenue
$ 43,812 $ 43,376 1 %
Results
Nine Months Ended
September 30, 2025
(in thousands)
Nine Months Ended
September 30, 2024
(in thousands)
% Change
(from 2024)
Explanation
Costs and Expenses
Cost of revenue, exclusive of depreciation and amortization shown separately below
Cost of revenue, exclusive of depreciation and amortization shown separately below, consists primarily of: (i) allocated salaries and benefits for employees responsible for investor relations and service; (ii) salaries and benefits of personnel associated with real estate services such as closing of real estate investments and real estate asset management; and (iii) costs associated with maintaining the Fundrise Platform including cloud infrastructure costs, third-party expenses, and salaries and benefits of personnel responsible for the ongoing operations and delivery of our platform.
$ 6,561 $ 6,746 -3 %
Cost of revenue expenses remained consistent period-over-period.
Technology and product development
Technology and product development expenses consist primarily of salaries and benefits for teams responsible for software engineering, product development, technology activities, as well as costs for third-party software. Technology and product development costs exclude capitalized internal-use software development costs, as they are capitalized as a component of property, software and equipment, net, and amortized through Depreciation and amortization over the term of their useful life. All other Technology and product development expenses are expensed as incurred.
$ 15,058 $ 11,162 35 %
Technology and product development expenses increased period-over-period due to fewer salaries and benefits being capitalized to internal-use software.
Marketing
Marketing expenses consist primarily of the costs associated with engaging and enrolling investors in the Investment Products, including costs attributable to marketing our products. This primarily includes costs of building general brand awareness, and salaries and benefits expenses related to our marketing and design teams.
$ 7,496 $ 6,888 9 %
The increase in marketing expense period-over-period was due to increased marketing spend to support certain product marketing initiatives in the first half of 2025.
General, administrative and other
General, administrative and other expenses consist primarily of salaries and benefits for our corporate functions (including finance, legal, human resources, and IT operations), as well as other software and office expenses, and professional fees.
Software and other office expenses $ 2,030 $ 2,042 -1 %
Software and other office expenses remained consistent period-over-period and are mainly comprised of software subscription expenses supporting corporate functions and corporate office lease expense.
Professional fees 2,365 1,205 96 %
Professional fees increased period-over-period due to an increase in legal fees for certain advisory projects.
Other general and administrative 13,379 14,844 -10 %
Other general and administrative expenses are comprised mainly of salaries and benefits of personnel responsible for our corporate functions, which decreased slightly period-over-period due to a decrease in headcount.
Depreciation and amortization
Depreciation and amortization expense consists of depreciation expense for our fixed assets and amortization expense for certain software development costs.
$ 9,085 $ 7,128 27 %
Depreciation and amortization expense increased period-over-period due to an increase in amortization of internal use software as more projects were in service in the first nine months of 2025 compared to first nine months of 2024.
Total operating expenses
$ 55,974 $ 50,015 12 %
Results
Nine Months Ended
September 30, 2025
(in thousands)
Nine Months Ended
September 30, 2024
(in thousands)
% Change
(from 2024)
Explanation
Other Income
Gain on extinguishment of debt
$ 2,391 $ - 100 %
In January 2025, the Company was notified that its Paycheck Protection Program (the "PPP loan") loan in the principal amount of $2,793,800 was partially forgiven by the U.S. Small Business Administration (the "SBA") and the Company recorded a corresponding gain. Refer to Note 8, Loan Payable in the Notes to the Condensed Consolidated Financial Statements for more details.
Gain on disposition of investments - 605 (100) %
Fundrise LP, an affiliate of Rise, redeemed its investment in certain of the Investment Products over the course of 2024, resulting in a gain on disposition. Refer to Note 15, Related Party Transactions in the Notes to the Condensed Consolidated Financial Statements for more details.
Dividend and interest income
868 1,533 (43) %
Dividend and interest income decreased period-over-period largely due to a decrease in sweep dividends earned, due to a lower average daily cash balance and lower interest rates.
Equity in earnings
74 21 252 %
Equity in earnings earned from Rise and its subsidiaries' investments in the Investment Products increased period-over-period due to the Investment Products' increase in net earnings period-over-period.
Total other income
$ 3,333 $ 2,159 54 %
Key Factors Impacting Our Current Year Performance
Our historical growth rates of the Fundrise Platform reflect a deliberate strategy that has allowed us to build and develop the various enterprise functions needed to meet the changing demands of our customers and to support our scale, including operations, risk controls, customer support, compliance and technology. The Investment Products have seen general reductions in AUM in recent years due to multi-decade lows experienced in real estate prices. However, falling interest rates in 2024 and strong investment operating fundamentals drove growth in 2024 despite ongoing headwinds as a result of sustained higher borrowing costs. In the first nine months of 2025, our Investment Products have generally continued to see positive returns, despite various challenges, primarily in the real estate market. We believe that these returns stemmed primarily from the strength of the portfolio's underlying
fundamentals combined with a high level of operational discipline. Additionally, strong performance within the venture portfolio of the Innovation Fund, driven primarily by investments in leading AI-focused technology companies, resulted in higher returns during 2025, particularly during the third quarter. Demand from investors and the modern financial industry will continue to inform our business and Investment Product decisions. Given this approach and the dynamic path of our experienced and expected future growth, we have focused in 2025 on a number of important developments within our business that we believe reflect the key factors impacting our performance in 2025. Refer to the "Key Factors We Expect to Impact Our Future Performance" section below for a description of these key factors.
Key Factors We Expect to Impact Our Future Performance
Investment in Long-Term Growth
The core elements of our growth strategy include enhancing our technology infrastructure, expanding our product and feature offerings, enrolling new investors in our Investment Products, broadening our investment acquisition capabilities, and extending customer lifetime value. We plan to continue to invest resources needed to accomplish these goals, and we anticipate that certain operating expenses will increase in the future as a result. These investments are intended to contribute to our long-term growth, but they may continue to affect our near-term profitability.
Sources of Operating Revenues and Cash Flows
We generate revenues from investment management and platform advisory fees, real estate management fees, and real estate operating platform fees, which are detailed in Note 4, Revenue in the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report.
Interest Rates
During its September 2025 and October 2025 meetings, the Federal Reserve voted to cut its benchmark interest rate by 25 basis points each time, which were the first such cuts since late 2024 and the beginning of what most expect to be a series of cuts well into next year. Real estate markets have faced persistent challenges following the Federal Reserve's interest rate increases beginning in late 2022. A decline in rates and improvement in market balance may positively impact real estate values in future periods, creating higher returns for our Investment Products.
Liquidity and Capital Resources
We have incurred operating losses since our inception and have an accumulated deficit of $179.2 million as of September 30, 2025. We have financed our operations primarily through our operating revenues as well as the issuance of equity securities. Our ability to achieve profitability depends on our ability to generate revenue growth in existing product lines, successfully launch new product lines, and manage costs. We may continue to incur substantial operating losses while we continue to build the business and invest in new innovation.
As of September 30, 2025 and December 31, 2024, we had $10.9 million and $21.1 million in cash and cash equivalents, respectively. The decrease in our cash and cash equivalents between those periods is primarily due to an increase in certain discretionary cash outflows, including employee bonuses and other technology and product development expenses; all of which were within the discretion of the Company. We anticipate that our cash and cash equivalents as of September 30, 2025, and forecasted revenue, will provide sufficient liquidity for more than a twelve-month period from the date of filing this Quarterly Report. The actual amount of cash that we will need to operate is subject to many factors, including, but not limited to our product development and engineering efforts. We are dependent upon significant future financing, including through our Offering described below under "Other Details-Offering Results" to provide the cash necessary to execute our future operations, including the continued development of our products.
As of September 30, 2025, our material commitments for capital expenditures consisted of an operating lease, as discussed in Note 6, Leasesin the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report.
Corporate Debt
As of September 30, 2025, we had no corporate debt. As of December 31, 2024, we had corporate debt payable of approximately $2.69 million. On April 20, 2020, the Company received the PPP Loan offered by the SBA in the principal amount of $2,793,800 pursuant to Title 1 of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act").
As explained more fully in Note 8, Loan Payable-PPP Loan Payablein the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report, according to the terms of the CARES Act and subsequent regulations, all or a portion of loans under the program may be forgiven if certain conditions are met. In July 2021 we applied for such forgiveness. In January 2025, the Company was notified that the PPP loan was forgiven up to the determined eligible amount of $2,315,905. On March 19, 2025, the Company repaid the remaining $0.4 million of outstanding principal.
Other Details
Offering Results
As of September 30, 2025, we are offering up to 4,283,275 shares of our Class B Common Stock (the "Offering"), which represents the shares available to be offered out of the rolling twelve-month maximum offering amount of $75.0 million under Regulation A ("Regulation A") of the Securities Act. The Offering is being conducted as a continuous offering pursuant to Rule 251(d)(3) of Regulation A, meaning that while the offering of securities is continuous, active sales of securities may occur sporadically over the term of the Offering. As of September 30, 2025, we had raised total gross offering proceeds of approximately $211.5 million from settled subscriptions.
As of September 30, 2025, we have sold 21,335,432 shares of our Class B Common Stock. This does not include 635,555 shares of Class B Common Stock that were sold in private placements pursuant to Rule 506(c) of Regulation D of the Securities Act ("Regulation D").
Shares are currently offered and are sold on a continuous basis only to existing investors in the Investment Products. The funds received from the issuance of our Class B Common Stock are a source of capital for our operating expenditures.
Off-Balance Sheet Arrangements
As of September 30, 2025 and December 31, 2024, we had no off-balance sheet arrangements.
Related Party Arrangements
For further information regarding "Related Party Arrangements," please see Note 15, Related Party Transactions, in the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report.
Critical Accounting Estimates
Management's Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report is based on our Condensed Consolidated Financial Statements, which are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. By their nature, these estimates and assumptions are subject to an inherent degree of uncertainty and actual results could differ significantly from the estimates made by management. To the extent that there are differences between our
estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. For a complete description of our accounting policies, see Note 2, Summary of Significant Accounting Policiesin our annual consolidated financial statements included in the Form 10.
The Company's critical accounting estimates are disclosed in the Form 10. There have been no material changes to these estimates during the three and nine months ended September 30, 2025, and no significant updates were made to the underlying methodologies or assumptions since the date of the Form 10.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has released several Accounting Standards Updates ("ASUs") that may have an impact on our financial statements. See Note 2, Summary of Significant Accounting Policies-Recent Accounting Pronouncementsin the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report for discussion of the relevant ASUs. We are currently evaluating the impact of the ASUs not yet adopted on our financial statements and determining our plan for adoption.
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