STLY · HG Holdings, Inc.

HG Holdings, Inc. (NYSE American: STLY) reported strong Q1 FY2026 results ending March 31, 2026, reflecting a profitable turnaround in a seasonally weak period. Revenue grew 40.2% year-over-year to $3.8 million from $2.7 million, primarily driven by management fees from the Services Agreement with HP Risk and higher volume of affiliated title business written compared to the prior year. This top-line acceleration underscores the company's strategic expansion in key revenue streams, positioning it to capitalize on improving real estate transaction activity.

Gross profit mirrored this momentum, increasing 40.2% to $3.7 million from $2.6 million, which translated to an exceptional 96.3% gross margin. The minimal increase in cost of revenues was attributable to a loss adjustment expenses reserve established for a title insurance claim, demonstrating effective cost discipline amid volume growth. Management's commentary highlights that the increase in net title premium written stemmed from higher affiliated title business and expanded market share in Florida, a critical growth market. These dynamics explain the margin resilience, as affiliated business efficiencies offset typical variable costs associated with title operations.

Net income swung dramatically to a $531 thousand profit from a $257 thousand loss in Q1 FY2025, delivering diluted EPS of $0.10 versus -$0.09 and representing a 306.6% and 211.1% year-over-year improvement, respectively. This profitability flip reflects the leverage from revenue growth and controlled expenses, transforming prior-year losses into sustainable earnings power during the seasonally soft first quarter, when residential transactions are typically lower ahead of spring and summer peaks.

Overall, these results validate the efficacy of the HP Risk partnership and Florida expansion, setting a foundation for accelerated growth as seasonal strengths emerge.