Rise Companies Corp.

05/08/2026 | Press release | Distributed by Public on 05/08/2026 10:33

Quarterly Report for Quarter Ending March 31, 2026 (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 Condensed Consolidated 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 website 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 Organization in 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 operating platform fees, and real estate management 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 March 31, 2026, the Investment Products have total assets under management ("AUM") of $3.4 billion. As of March 31, 2026, the Fundrise Platform has over 402,000 active investor accounts and 2,411,000 active users.
Recent Developments
RealAI
In September 2025, we launched RealAI, a platform intended to provide AI-enabled insights related to real estate investing across the broader real estate market. RealAI is in the early stages of commercialization and did not generate material revenue for the year ended December 31, 2025 or the three months ended March 31, 2026. In early 2026, we publicly announced the platform and began making the product available to the general public. We expect to continue investing in the product's development and commercialization, and our results of operations could be impacted by the pace of user adoption and our ability to monetize the platform over time.
Innovation Fund Listing
On March 19, 2026, the Innovation Fund was listed on the New York Stock Exchange under the ticker "VCX" and converted from a closed-end tender offer fund into a listed closed-end fund. Following the listing and conversion, revenue will continue to be based on the Innovation Fund's net asset value, which is subject to the Fund's underlying portfolio and investment performance.
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 March 31, 2026 and December 31, 2025, there was approximately $3.4 billion and $3.1 billion in equity AUM, respectively, across our Investment Products. The increase in equity AUM during the three months ended March 31, 2026 was driven primarily by growth and performance in the Fundrise Investment Products, including the Innovation Fund and the Flagship Fund. During the quarter, the Flagship Fund delivered a net return of approximately 10% for the quarter, driven in part by strategic investments in AI infrastructure and data centers. Current quarter performance occurred against a backdrop of heightened macroeconomic uncertainty stemming from the conflict in Iran, which contributed to rising interest rates and compressed real estate valuations across portions of our portfolio.
As of March 31, 2026, we have yet to generate any profits from our operations and are incurring net losses while we continue to invest in development and other initiatives to support the expansion of our business. Our results of operations in the beginning of 2026 reflect increased revenues as a result of increased AUM held by the Investment Products and increased real estate transaction activity. These gains were partially offset by (i) increased research and development expense driven by a reduction in engineering salaries being capitalized as certain development efforts did not qualify for capitalization, (ii) increased marketing expenses to support the VCX listing and other initiatives, and (iii) increased spending on third-party software and tools to support the launch of RealAI.
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
Revision of Prior Period Financial Statements
As discussed in Note 2, Summary of Significant Accounting Policies, the Company identified an immaterial classification error related to reimbursements of certain operating expenses of Sponsored Programs, primarily arising from an expense limitation agreement. These reimbursements were previously presented within operating expenses in the condensed consolidated statements of operations. The Company concluded that these reimbursements represent consideration payable to a customer under ASC 606 and should therefore be presented as a reduction of revenue. Management determined the error was not material to any previously issued financial statements and corrected the error by retrospectively revising the quarterly Condensed Consolidated Financial Statements for the three months ended March 31, 2025.
The revision reflects a reclassification within the condensed consolidated statements of operations from operating expenses to a reduction of revenue, resulting in a net presentation of previously reported gross amounts, and has no impact on operating income, net income, earnings per share, assets, liabilities, equity, or cash flows.
Three Months Ended March 31, 2026 compared to the Three Months Ended March 31, 2025
For the three months ended March 31, 2026 and 2025, our results of operations are as follows:
Results
Three Months Ended
March 31, 2026
(in thousands)
Three Months Ended
March 31, 2025
(in thousands)
% Change
(from 2025)
Explanation
Revenue
Investment management and platform advisory, net $ 9,632 $ 6,363 51 %
Investment management and platform advisory income, net increased period over period due to (i) higher asset management fees of approximately $1.7 million earned from increases in AUM, primarily driven by the Innovation Fund, and (ii) a net $1.9 million period-over-period impact related to operating expense reimbursements to the Innovation Fund ($1.5 million paid in Q1 2025 versus $0.4 million recouped in Q1 2026).
Real estate operating platform 4,502 4,644 -3 % Real estate operating platform income remained consistent due to relatively consistent underlying asset values period-over-period.
Real estate management
3,395 948 258 %
Real estate management income increased period-over-period due to an increase in origination and disposition fees as a result of rising transaction activity.
Total revenue
$ 17,529 $ 11,955 47 %
Results
Three Months Ended
March 31, 2026
(in thousands)
Three Months Ended
March 31, 2025
(in thousands)
% Change
(from 2025)
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.
$ 2,581 $ 2,218 16 %
Cost of revenue expenses increased slightly period-over-period as a result of costs associated with operating RealAI.
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.
$ 6,129 $ 5,560 10 %
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.
$ 2,749 $ 2,216 24 % The increase in marketing expense period-over-period was due to increased marketing spend to support certain product marketing initiatives during the first quarter of 2026.
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 $ 713 $ 650 10 %
Software and other office expenses remained relatively consistent period-over-period and are mainly comprised of software subscription expenses supporting corporate functions and corporate office lease expense.
Professional fees 607 565 7 %
Professional fees remained relatively consistent period-over-period and are mainly comprised of legal fees for certain advisory projects.
Other general and administrative 4,525 4,688 -3 %
Other general and administrative expenses remained consistent period-over-period and are mainly comprised of salaries and benefits of personnel responsible for our corporate functions.
Depreciation and amortization
Depreciation and amortization expense consists of depreciation expense for our fixed assets and amortization expense for certain software development costs.
$ 4,474 $ 3,036 47 %
Depreciation and amortization expense increased period-over-period due to (i) a $0.7 million increase in amortization of internal use software as more projects were in service in the current period, and (ii) an additional $0.7 million in accelerated amortization due to a change in useful life of an AI-related internal use software module. Refer to Note 7, Property, Software and Equipment, net in the Notes to the Condensed Consolidated Financial Statements for more information.
Total costs and expenses
$ 21,778 $ 18,933 15 %
Results
Three Months Ended
March 31, 2026
(in thousands)
Three Months Ended
March 31, 2025
(in thousands)
% Change
(from 2025)
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 $2.8 million 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.
Dividend and interest income
272 328 (17) %
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
22 18 22 %
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
$ 294 $ 2,737 (89) %
Key Factors Impacting Our Current Year Performance
Our historical growth rates of the Fundrise Investment Products 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 real estate-focused Investment Products have seen general reductions in AUM in recent years due in part to declines in certain real estate valuations and reduced transaction activity following the increase in interest rates during the early part of the decade. Through 2025 and early 2026, total AUM growth was driven by strong performance in select funds, primarily within the venture portfolio of the Innovation Fund, where investments in leading AI-focused technology companies generated higher returns. Demand from investors and broader trends in 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 on a number of important developments within our
business that we believe reflect the key factors impacting our performance in 2026. 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 operating platform fees, and real estate management 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, October, and December 2025 meetings, the Federal Reserve (the "Fed") voted to cut its benchmark interest rate by 25 basis points each time, which was the first rate decrease since late 2024. Rates remained unchanged in the first quarter of 2026, and as of the date of this filing, the Fed has expressed uncertainty about whether rate cuts will continue. Real estate markets have faced persistent challenges following the Fed'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 $187.7 million as of March 31, 2026. 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 March 31, 2026 and December 31, 2025, we had $7.1 million and $9.2 million in cash and cash equivalents, respectively. We anticipate that our cash and cash equivalents as of March 31, 2026, 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. While we believe our existing cash resources are sufficient to fund our current operations, we may seek additional financing, including through our Offering described below under "Other Details-Offering Results" to support future growth initiatives, including the continued development and expansion of our Investment Products.
As of March 31, 2026, our material commitments for capital expenditures consisted of an operating lease, as discussed in Note 6, Leases in the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report.
Corporate Debt
As of March 31, 2026 and December 31, 2025, we had no corporate debt. On April 20, 2020, the Company received the PPP Loan offered by the SBA in the principal amount of $2.8 million pursuant to Title 1 of the CARES Act. As explained more fully in Note 8, Loan Payable-PPP Loan Payable of our 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 $2.3 million. On March 19, 2025, the Company repaid the remaining $0.4 million of outstanding principal.
Other Details
Offering Results
As of March 31, 2026, we are offering up to 4,046,949 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 March 31, 2026, we had raised total gross offering proceeds of approximately $215.2 million from settled subscriptions.
As of March 31, 2026, we have sold 21,571,758 shares of our Class B Common Stock pursuant to the Offering and our prior Regulation A offerings.
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 March 31, 2026 and December 31, 2025, 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 our 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 Notes to the Condensed Consolidated Financial Statements, which are prepared in accordance with U.S. GAAP. 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 Policies in our Notes to the Consolidated Financial Statements included in the Form 10-K.
The Company's critical accounting estimates are disclosed in the Form 10-K. There have been no material changes to these estimates during the three months ended March 31, 2026, and no significant updates were made to the underlying methodologies or assumptions since the date of the Form 10-K other than as noted below.
Estimated Useful Life of Internal-Use Software
The Company amortizes capitalized internal-use software on a straight-line basis over the estimated useful life of each module, which requires management judgment regarding the expected period of economic benefit, anticipated future development activity, and the potential for technological change to render existing functionality obsolete.
During the three months ended March 31, 2026, the Company revised the estimated useful life of an AI-related internal-use software module from four years to one year, increasing amortization expense by approximately $0.7 million for the three months ended March 31, 2026. The remaining carrying value of approximately $1.8 million will be amortized through September 2026. Changes in the anticipated timing or scope of future development activity could require further revision of this estimate or other internal use software module estimates, which may have a material effect on amortization expense in future periods.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has released several Accounting Standards Updates ("ASUs") that may have an impact on our Condensed Consolidated Financial Statements. See Note 2, Summary of Significant Accounting Policies-Recent Accounting Pronouncements in 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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