HNNA 10-Q
Hennessy Advisors Inc (HNNA)
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
For the transition period from _____ to _____
Commission File Number
HENNESSY ADVISORS, INC.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange |
| | | The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | |||
| Smaller reporting company | Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
As of August 3, 2026, there were
HENNESSY ADVISORS, INC.
| PART I |
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| Item 1 |
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| Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 23 |
| Item 4 |
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| PART II |
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| Item 5 | Other Information | 23 |
| Item 6 |
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Item 1: Unaudited Condensed Financial Statements
(In thousands, except share and per share amounts)
(Unaudited)
| June 30, | September 30, | |||||||
| 2026 | 2025 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Investments in marketable securities, at fair value | ||||||||
| Investment fee income receivable | ||||||||
| Interest income receivable | ||||||||
| Prepaid expenses | ||||||||
| Other accounts receivable | ||||||||
| Total current assets | ||||||||
| Property and equipment, net of accumulated depreciation of $ and $, respectively | ||||||||
| Operating lease right-of-use asset | ||||||||
| Management contracts | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | ||||||||
| Accrued liabilities and accounts payable | $ | $ | ||||||
| Accrued payment related to management contract | ||||||||
| Operating lease liability | ||||||||
| Income taxes payable | ||||||||
| Total current liabilities | ||||||||
| Notes payable, net of issuance costs | ||||||||
| Long-term operating lease liability | ||||||||
| Net deferred income tax liability | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 10) | ||||||||
| Stockholders' equity | ||||||||
| Common stock, par value, shares authorized; shares issued and outstanding as of June 30, 2026, and as of September 30, 2025 | $ | $ | ||||||
| Retained earnings | ||||||||
| Total stockholders' equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
See Notes to Unaudited Condensed Financial Statements
(In thousands, except share and per share amounts)
(Unaudited)
| Three Months Ended June 30, |
Nine Months Ended June 30, |
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| 2026 |
2025 |
2026 |
2025 |
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| Revenue |
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| Investment advisory fees |
$ | $ | $ | $ | ||||||||||||
| Shareholder service fees |
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| Total revenue |
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| Operating expenses |
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| Compensation and benefits |
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| General and administrative |
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| Fund distribution and other |
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| Sub-advisory fees |
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| Depreciation |
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| Total operating expenses |
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| Net operating income |
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| Interest income |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Interest expense |
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| Income before income tax expense |
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| Income tax expense |
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| Net income |
$ | $ | $ | $ | ||||||||||||
| Earnings per share |
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| Basic |
$ | $ | $ | $ | ||||||||||||
| Diluted |
$ | $ | $ | $ | ||||||||||||
| Weighted average shares outstanding |
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| Basic |
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| Diluted |
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| Cash dividends declared per share |
$ | $ | $ | $ | ||||||||||||
See Notes to Unaudited Condensed Financial Statements
Statements of Changes in Stockholders' Equity
(In thousands, except share data)
(Unaudited)
| Nine Months Ended June 30, 2026 |
||||||||||||||||
| Total |
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| Common Stock |
Retained |
Stockholders' |
||||||||||||||
| Shares |
Amount |
Earnings |
Equity |
|||||||||||||
| Balance at September 30, 2025 |
$ | $ | $ | |||||||||||||
| Net income |
- | |||||||||||||||
| Dividends paid |
- | ( |
) | ( |
) | |||||||||||
| Shares issued for auto-investments pursuant to the 2024 Dividend Reinvestment and Stock Purchase Plan |
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| Shares issued for dividend reinvestment pursuant to the 2024 Dividend Reinvestment and Stock Purchase Plan |
||||||||||||||||
| Stock-based compensation |
- | |||||||||||||||
| Balance at December 31, 2025 |
$ | $ | $ | |||||||||||||
| Net income |
- | |||||||||||||||
| Dividends paid |
- | ( |
) | ( |
) | |||||||||||
| Employee and director restricted stock vested |
||||||||||||||||
| Shares issued for auto-investments pursuant to the 2024 Dividend Reinvestment and Stock Purchase Plan |
||||||||||||||||
| Shares issued for dividend reinvestment pursuant to the 2024 Dividend Reinvestment and Stock Purchase Plan |
||||||||||||||||
| Stock-based compensation |
- | |||||||||||||||
| Balance at March 31, 2026 |
$ | $ | $ | |||||||||||||
| Net income |
- | |||||||||||||||
| Dividends paid |
- | ( |
) | ( |
) | |||||||||||
| Shares issued for auto-investments pursuant to the 2024 Dividend Reinvestment and Stock Purchase Plan |
||||||||||||||||
| Shares issued for dividend reinvestment pursuant to the 2024 Dividend Reinvestment and Stock Purchase Plan |
||||||||||||||||
| Stock-based compensation |
- | |||||||||||||||
| Balance at June 30, 2026 |
$ | $ | $ | |||||||||||||
Statements of Changes in Stockholders' Equity
(In thousands, except share data)
(Unaudited)
| Nine Months Ended June 30, 2025 |
||||||||||||||||
| Total |
||||||||||||||||
| Common Stock |
Retained |
Stockholders' |
||||||||||||||
| Shares |
Amount |
Earnings |
Equity |
|||||||||||||
| Balance at September 30, 2024 |
$ | $ | $ | |||||||||||||
| Net income |
- | |||||||||||||||
| Dividends paid |
- | ( |
) | ( |
) | |||||||||||
| Employee and director restricted stock vested |
||||||||||||||||
| Repurchase of vested employee restricted stock for tax withholding |
( |
) | ||||||||||||||
| Shares issued for auto-investments pursuant to the 2024 Dividend Reinvestment and Stock Purchase Plan |
||||||||||||||||
| Shares issued for dividend reinvestment pursuant to the 2024 Dividend Reinvestment and Stock Purchase Plan |
||||||||||||||||
| Stock-based compensation |
- | |||||||||||||||
| Balance at December 31, 2024 |
||||||||||||||||
| Net income |
- | $ | $ | $ | ||||||||||||
| Dividends paid |
- | ( |
) | ( |
) | |||||||||||
| Shares issued for auto-investments pursuant to the 2024 Dividend Reinvestment and Stock Purchase Plan |
||||||||||||||||
| Shares issued for dividend reinvestment pursuant to the 2024 Dividend Reinvestment and Stock Purchase Plan |
||||||||||||||||
| Stock-based compensation |
- | |||||||||||||||
| Balance at March 31, 2025 |
$ | $ | $ | |||||||||||||
| Net income |
- | |||||||||||||||
| Dividends paid |
- | ( |
) | ( |
) | |||||||||||
| Shares issued for auto-investments pursuant to the 2024 Dividend Reinvestment and Stock Purchase Plan |
||||||||||||||||
| Shares issued for dividend reinvestment pursuant to the 2024 Dividend Reinvestment and Stock Purchase Plan |
||||||||||||||||
| Stock-based compensation |
- | |||||||||||||||
| Balance at June 30, 2025 |
||||||||||||||||
See Notes to Unaudited Condensed Financial Statements
(In thousands)
(Unaudited)
| Nine Months Ended June 30, | ||||||||
| 2026 |
2025 |
|||||||
| Cash flows from operating activities |
||||||||
| Net income |
$ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities |
||||||||
| Depreciation |
||||||||
| Unrealized gain on marketable securities |
( |
) | ||||||
| Change in right-of-use asset and operating lease liability |
( |
) | ||||||
| Amortization of note issuance costs |
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| Deferred income taxes |
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| Stock-based compensation |
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| Expense related to previously capitalized management contract costs |
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| Change in operating assets and liabilities |
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| Investment fee income receivable |
( |
) | ||||||
| Interest income receivable |
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| Prepaid expenses |
||||||||
| Other accounts receivable |
( |
) | ( |
) | ||||
| Other assets |
||||||||
| Accrued liabilities and accounts payable |
( |
) | ( |
) | ||||
| Income taxes payable |
( |
) | ||||||
| Net cash provided by operating activities |
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| Cash flows from investing activities |
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| Purchases of property and equipment |
( |
) | ( |
) | ||||
| Payments related to management contracts |
( |
) | ||||||
| Net cash used in investing activities |
( |
) | ( |
) | ||||
| Cash flows from financing activities |
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| Principal payments on short-term debt |
( |
) | ||||||
| Proceeds from shares issued pursuant to the 2024 Dividend Reinvestment and Stock Purchase Plan |
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| Dividend payments |
( |
) | ( |
) | ||||
| Net cash used in financing activities |
( |
) | ( |
) | ||||
| Net (decrease) increase in cash and cash equivalents |
( |
) | ||||||
| Cash and cash equivalents at the beginning of the period |
||||||||
| Cash and cash equivalents at the end of the period |
$ | $ | ||||||
| Supplemental disclosures of cash flow information |
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| Cash paid for income taxes |
$ | $ | ||||||
| Cash paid for interest |
$ | $ | ||||||
| Dividend reinvestment issued in shares |
$ | $ | ||||||
See Notes to Unaudited Condensed Financial Statements
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
| (1) | Basis of Financial Statement Presentation |
The accompanying unaudited condensed balance sheet as of September 30, 2025, which has been derived from audited financial statements, and the unaudited interim condensed financial statements as of and for the three and nine months ended June 30, 2026, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and comprise the accounts of Hennessy Advisors, Inc. (the “Company,” “we,” “us,” or “our”). Certain information and footnote disclosures in these unaudited interim condensed financial statements, that may be otherwise included in financial statements presented in our Annual Reports on Form 10-K, have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission for Quarterly Reports on Form 10-Q. In the opinion of management, the unaudited interim condensed financial statements reflect all adjustments necessary for a fair statement of the Company’s financial position at June 30, 2026, the Company’s operating results for the three and nine months ended June 30, 2026 and 2025, and the Company’s cash flows for the nine months ended June 30, 2026 and 2025. These unaudited interim condensed financial statements and notes should be read in conjunction with the Company’s audited financial statements and notes thereto for fiscal year 2025, which are included in the Company’s Annual Report on Form 10‑K for the fiscal year ended September 30, 2025.
The preparation of financial statements requires management to make estimates and assumptions. Making estimates requires management to exercise significant judgment. Accordingly, the actual results could differ substantially from those estimates.
The Company’s operating activities consist primarily of providing investment advisory services to
The Company’s operating revenues consist of contractual investment advisory and shareholder service fees paid to it by the Hennessy Funds. The Company earns investment advisory fees from each Hennessy Fund by, among other things:
| ● | acting as portfolio manager for the fund or overseeing the sub‑advisor acting as portfolio manager for the fund, which includes managing the composition of the fund’s portfolio (including the purchase, retention, and disposition of portfolio securities in accordance with the fund’s investment objectives, policies, and restrictions), seeking best execution for the fund’s portfolio, managing the use of soft dollars for the fund, and managing proxy voting for the fund; |
| ● | performing a daily reconciliation of portfolio positions and cash for the fund; |
| ● | monitoring the liquidity of the fund; |
| ● | monitoring the fund’s compliance with its investment objectives and restrictions and federal securities laws; |
| ● | maintaining a compliance program (including a code of ethics), conducting ongoing reviews of the compliance programs of the fund’s service providers (including any sub‑advisor), including their codes of ethics, as appropriate, conducting onsite visits to the fund’s service providers (including any sub-advisor) as feasible, monitoring incidents of abusive trading practices, reviewing fund expense accruals, payments, and fixed expense ratios, evaluating insurance providers for fidelity bond, directors and officers and errors and omissions insurance, and cybersecurity insurance coverage, managing regulatory examination compliance and responses, conducting employee compliance training, reviewing reports provided by service providers, and maintaining books and records; |
| ● | if applicable, overseeing the selection and continued employment of the fund’s sub‑advisor, reviewing the fund’s investment performance, and monitoring the sub‑advisor’s adherence to the fund’s investment objectives, policies, and restrictions; |
| ● | overseeing service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and legal services to the fund; |
| ● | maintaining in‑house marketing and distribution departments on behalf of the fund; |
| ● | preparing or directing the preparation of all regulatory filings for the fund, including writing and annually updating the fund’s prospectus and related documents; |
| ● | for each annual report of the fund, preparing or reviewing a written summary of the fund’s performance during the most recent 12‑month period; |
| ● | monitoring and overseeing the accessibility of the fund on financial institution platforms; |
| ● | paying the incentive compensation of the fund’s compliance officer and employing other staff such as legal, marketing, national accounts, distribution, sales, administrative, and trading oversight personnel, as well as management executives; |
| ● | providing a quarterly compliance certification to the Board of Trustees of Hennessy Funds Trust (the “Funds’ Board of Trustees”); and |
| ● | preparing or reviewing materials for the Funds’ Board of Trustees, presenting to or leading discussions with the Funds’ Board of Trustees, preparing or reviewing all meeting minutes, and arranging for training and education of the Funds’ Board of Trustees. |
The Company earns shareholder service fees from Investor Class shares of the Hennessy Mutual Funds by, among other things, maintaining a toll-free number that the current investors in the Hennessy Funds may call to ask questions about their accounts and actively participating as a liaison between investors in the Hennessy Funds and U.S. Bank Global Fund Services.
Investment advisory and shareholder service fee revenues are earned and calculated daily by the Hennessy Funds’ accountants at U.S. Bank Global Fund Services and are subsequently reviewed by management.
The Company recognizes revenues when its obligations related to the investment advisory and shareholder services are satisfied, and it is probable that a significant reversal of the revenue amount would not occur in future periods. Management judgment is required in assessing the probability of significant revenue reversal and in identification of distinct services. Investment advisory and shareholder services are performed over time because investors in the Hennessy Funds are receiving and consuming the benefits as they are provided by the Company. Fees are based on contractual percentages of net asset values of each Hennessy Fund and recognized for services provided during the period, which are distinct from services provided in other periods. Such fees are affected by changes in such net asset values, including market appreciation or depreciation, foreign exchange translation as applicable, and net inflows or outflows of shareholders in each Hennessy Fund. Assets under management represent the broad range of financial assets the Company manages for the Hennessy Funds on a discretionary basis pursuant to investment management and shareholder servicing agreements that are expected to continue for at least 12 months. In general, reported assets under management reflect the valuation methodology that corresponds to the basis used for determining revenue. The fees are computed and billed monthly, at which time they are recognized in accordance with Accounting Standards Codification 606 — Revenue from Contracts with Customers.
The Company’s contractual agreements for investment advisory and shareholder services prove that a contract exists with fixed and determinable fees, and the services are rendered daily. The collectability is deemed probable because the fees are received from the Hennessy Funds in the month subsequent to the month in which the services are provided.
| (2) | Segment Reporting |
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker (“CODM”) uses reported segment profit or loss information in assessing segment performance and allocating resources. The Company adopted this standard in its 10-K filing for fiscal year 2025.
As of June 30, 2026, the Company operates in
| (3) | Management Contracts Purchased |
Throughout its history, the Company has completed
Under Accounting Standards Codification 350 — Intangibles - Goodwill and Other, intangible assets that have indefinite useful lives are not amortized but are tested at least annually for impairment. The Company considered various factors, such as likelihood of continued renewal, whether there are foreseeable limits on net cash flows, and whether the Company is dependent on a limited number of investors, in determining the useful life of the management contracts. Based on its analysis, the Company considers the management contract asset to be an intangible asset with an indefinite useful life and no impairment as of the end of the current period.
On March 14, 2025, the Company signed a definitive agreement with STF Management, LP to purchase the assets related to the management of two ETFs. On January 1, 2026, the agreement was terminated. As a result, for the nine months ended June 30, 2026, the Company expensed $
| (4) | Investment Advisory Agreements |
The Company has investment advisory agreements with Hennessy Funds Trust under which it provides investment advisory services to all classes of the
The investment advisory agreements must be renewed annually (except in limited circumstances) by (i) the Funds’ Board of Trustees or the vote of a majority of the outstanding shares of the applicable Hennessy Fund and (ii) the vote of a majority of the trustees of Hennessy Funds Trust who are not interested persons of the Hennessy Funds. If an investment advisory agreement is not renewed, it terminates automatically. There are two additional circumstances in which an investment advisory agreement terminates. First, an investment advisory agreement automatically terminates if the Company assigns it to another advisor (assignment includes “indirect assignment,” which is the direct or indirect transfer of the Company’s common stock in sufficient quantities deemed to constitute a controlling block). Second, an investment advisory agreement may be terminated prior to its expiration upon
As provided in each investment advisory agreement, the Company receives investment advisory fees monthly based on a percentage of the applicable fund’s average daily net asset value.
The Company has entered into sub-advisory agreements for the Hennessy Focus Fund, the Hennessy Equity and Income Fund, the Hennessy Japan Fund, the Hennessy Japan Small Cap Fund, and the Hennessy Sustainable ETF. Under each of these sub-advisory agreements, the sub‑advisor is responsible for the investment and reinvestments of the assets of the applicable Hennessy Fund in accordance with the terms of such agreement and the applicable Hennessy Fund’s Prospectus and Statement of Additional Information. The sub‑advisors are subject to the direction, supervision, and control of the Company and the Funds’ Board of Trustees. The sub‑advisory agreements must be renewed annually (except in limited circumstances) in the same manner as, and are subject to the same termination provisions as, the investment advisory agreements.
In exchange for sub-advisory services, the Company (not the Hennessy Funds) pays sub-advisory fees to the sub-advisors out of its own assets. Sub‑advisory fees are calculated as a percentage of the applicable fund’s average daily net asset value.
| (5) | Fair Value Measurements |
The Company applies Accounting Standards Codification 820 — Fair Value Measurement for all financial assets and liabilities, which establishes a framework for measuring fair value and expands disclosures about fair value measurements. The standard defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” It also establishes a fair value hierarchy consisting of the following three levels that prioritize the inputs to the valuation techniques used to measure fair value:
| ● | Level 1 – Unadjusted, quoted prices in active markets for identical assets or liabilities that an entity has the ability to access at the measurement date; |
| ● | Level 2 – Other significant observable inputs other than quoted prices included in Level 1 (including, but not limited to, quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, and model‑derived valuations in which all significant inputs and significant value drivers are observable in active markets); and |
| ● | Level 3 – Significant unobservable inputs (including the entity’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when observable inputs are not available. |
Based on the definitions, the following tables represent the Company’s assets categorized in the Level 1 to Level 3 hierarchies:
| June 30, 2026 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| (In thousands) | ||||||||||||||||
| Money market fund deposits | $ | $ | $ | $ | ||||||||||||
| Mutual fund investments | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Amounts included in: | ||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| Investments in marketable securities | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| September 30, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| (In thousands) | ||||||||||||||||
| Money market fund deposits | $ | $ | $ | $ | ||||||||||||
| Mutual fund investments | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Amounts included in: | ||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| Investments in marketable securities | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
There were no transfers between levels during the nine months ended June 30, 2026, or the year ended September 30, 2025.
The fair values of receivables, payables, and accrued liabilities approximate their book values given the short-term nature of those instruments.
| (6) | Leases |
The Company determines if an arrangement is an operating lease at inception. Operating leases are included in operating lease right‑of‑use assets and current and long‑term operating lease liabilities on the Company’s balance sheet. During the fiscal year ended September 30, 2024, the Company renewed the lease for its office in Novato, California for an additional years. The renewed lease will expire on . The renewal created a long‑term operating lease asset recorded during the fiscal year ended September 30, 2024. There were
Upon renewal of the lease for its office in Novato, California, the Company recorded a right‑of‑use asset of $
The Company’s most significant leases are real estate leases of office facilities. The Company leases office space under non-cancelable operating leases. Its principal executive office is located in Novato, California, and it has additional offices in Dallas, Texas, Boston, Massachusetts, and Chapel Hill, North Carolina. Only the office lease in Novato, California has been capitalized because the other operating leases have terms of 12 months or less, including leases that are month‑to‑month in nature. The classification of the Company’s operating lease right-of-use assets and operating lease liabilities and other supplemental information related to the Company’s operating leases are as follows:
| June 30, 2026 | September 30, 2025 | |||||||
| Weighted average remaining lease term |
|
| ||||||
| Weighted average discount rate | % | % | ||||||
The undiscounted cash flows for future maturities of the Company’s operating lease liabilities and the reconciliation to the balance of operating lease liabilities reflected on the Company’s balance sheet are as follows:
| June 30, 2026 | ||||
| (In thousands) | ||||
| Remainder of fiscal year 2026 | $ | |||
| Fiscal year 2027 | ||||
| Total undiscounted cash flows | ||||
| Present value discount | ( | ) | ||
| Total operating lease liabilities | $ | |||
| (7) | Accrued Liabilities and Accounts Payable |
Details relating to accrued liabilities and accounts payable reflected on the Company’s balance sheet are as follows:
| June 30, 2026 | September 30, 2025 | |||||||
| (In thousands) | ||||||||
| Accrued bonus liabilities | $ | $ | ||||||
| Accrued sub-advisor fees | ||||||||
| Other accrued expenses | ||||||||
| Total accrued liabilities and accounts payable | $ | $ | ||||||
| (8) | Debt |
On October 20, 2021, the Company completed a public offering of
On May 28, 2026, the Company delivered a notice of full redemption to the trustee of the 2026 Notes, pursuant to the indenture governing the terms of the 2026 Notes.
On June 30, 2026, the aggregate outstanding principal amount of the 2026 Notes of $
| (9) | Income Taxes |
The Company’s effective income tax rates for the nine months ended June 30, 2026 and 2025, were
The Company is subject to income tax in the U.S. federal jurisdiction and various state jurisdictions.
| (10) | Commitments and Contingencies |
In addition to the operating leases discussed in Note 6, the Company has contractual expense ratio limitations in place with respect to the Hennessy Midstream Fund, the Hennessy Technology Fund, and the Hennessy Sustainable ETF. Such contractual expense ratio limitations will expire February 28, 2027, unless extended. Total fees waived during the nine months ended June 30, 2026 and 2025, were $
The Company has no other commitments and
| (11) | Equity |
2024 Omnibus Incentive Plan
Effective as of February 8, 2024, the Company adopted, and the Company’s shareholders approved, the 2024 Omnibus Incentive Plan (the “Omnibus Plan”). The Omnibus Plan replaced the Amended and Restated 2013 Omnibus Incentive Plan. Under the Omnibus Plan, participants may be granted restricted stock units (“RSUs”), each of which represents an unfunded, unsecured right to receive a share of the Company’s common stock on the date specified in the recipient’s award. The Company issues new shares of its common stock when it is required to deliver shares to an RSU recipient. The RSUs granted under the Omnibus Plan vest over years at a rate of
A summary of RSU activity is as follows:
| Nine Months Ended June 30, 2026 | ||||||||
| Shares | Weighted Average Grant Date Fair Value per Share | |||||||
| Non-vested balance at beginning of period | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ( | ) | ||||
| Forfeited | ||||||||
| Non-vested balance at end of period | $ | |||||||
Additional information related to RSUs is as follows:
| June 30, 2026 | ||||
| (In thousands, except years) | ||||
| Unrecognized compensation expense related to RSUs | $ | |||
| Weighted average remaining years to expense for RSUs | ||||
Dividend Reinvestment and Stock Purchase Plan
In January 2024, the Company adopted a Dividend Reinvestment and Stock Purchase Plan (the “DRSPP”), replacing the previous Dividend Reinvestment and Stock Purchase Plan that had been in place since 2021. The DRSPP provides shareholders and new investors with a convenient and economical means of purchasing shares of the Company’s common stock and reinvesting cash dividends paid on the Company’s common stock. Under the DRSPP and its predecessor plan, the Company issued
Stock Buyback Program
In August 2010, the Company’s Board of Directors adopted a stock buyback program pursuant to which the Company was authorized to repurchase up to
| (12) | Earnings per Share and Dividends per Share |
The weighted average common shares outstanding used in the calculation of basic earnings per share and weighted average common shares outstanding, adjusted for common stock equivalents, used in the computation of diluted earnings per share were as follows:
| Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Weighted average common stock outstanding, basic | ||||||||
| Dilutive impact of RSUs | ||||||||
| Weighted average common stock outstanding, diluted | ||||||||
| Nine Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Weighted average common stock outstanding, basic | ||||||||
| Dilutive impact of RSUs | ||||||||
| Weighted average common stock outstanding, diluted | ||||||||
For the three and nine months ended June 30, 2026 and 2025, the Company included all common stock equivalents in the diluted earnings per share calculations as all common stock equivalents were dilutive.
The Company paid a quarterly cash dividend of $
| (13) | Recently Issued and Adopted Accounting Standards |
The Company has reviewed accounting pronouncements issued between the filing date of its most recent Form 10-K, which was December 3, 2025, and the filing date of this Form 10-Q and has determined that no accounting pronouncements issued would have a material impact on the Company’s financial position, results of operations, or disclosures, except as disclosed below.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires more detailed income tax disclosures. The guidance requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is required to adopt this standard prospectively in fiscal year 2026. The Company is currently in the process of evaluating the impact of adoption on its financial statements.
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” as amended by ASU 2025-01, which requires public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. In particular, this amendment requires public business entities to disclose detailed information about specific costs that are presented in commonly referred to expense captions, such as general and administrative expenses. The guidance is effective for financial statements issued for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently in the process of evaluating the impact of the adoption on its financial statements.
| (14) | Subsequent Events |
The Company has evaluated subsequent events through the date these financial statements were issued and has concluded that no material events occurred during this period that require recognition or disclosure.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward‑Looking Statements
This report contains “forward-looking statements” within the meaning of the securities laws, for which we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. In some cases, forward‑looking statements can be identified by terminology such as “expect,” “anticipate,” “intend,” “may,” “plan,” “will,” “should,” “could,” “would,” “assume,” “believe,” “estimate,” “predict,” “potential,” “project,” “continue,” “seek,” and similar expressions, as well as statements in the future tense. We have based these forward-looking statements on our current expectations and projections about future events, based on information currently available to us. Forward‑looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at which, or means by which, such performance or results will be achieved.
Forward-looking statements are subject to risks, uncertainties, and assumptions, including those described in our Annual Report on Form 10‑K for the fiscal year ended September 30, 2025, including under the section entitled “Risk Factors” in such report. Unforeseen developments could cause actual performance or results to differ substantially from those expressed in or suggested by the forward-looking statements. Management does not assume responsibility for the accuracy or completeness of these forward-looking statements. There is no regulation requiring an update of any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations.
Our business activities are affected by many factors, including, without limitation, redemptions by investors in the Hennessy Funds, taxes, general economic and business conditions, interest rate movements, inflation, the personal savings rate, competitive conditions, industry regulation, and fluctuations in the stock market, many of which are beyond the control of our management. Further, the business and regulatory environments in which we operate remain complex, uncertain, and subject to change. We expect that regulatory requirements and developments will cause us to incur additional administrative and compliance costs. Notwithstanding the variability in our economic and regulatory environments, we remain focused on the investment performance of the Hennessy Funds and on providing high‑quality customer service to investors.
Our business strategy centers on (i) the identification, completion, and integration of future acquisitions and (ii) organic growth, through both the retention of the fund assets we currently manage and the generation of inflows into the funds we manage. The success of our business strategy may be influenced by the factors discussed in the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025. All statements regarding our business strategy, as well as statements regarding market trends and risks and assumptions about changes in the marketplace, are forward-looking by their nature.
Overview
Our primary business activity is providing investment advisory services to a family of 16 open-end mutual funds and one ETF branded as the Hennessy Funds. We manage 12 of the 17 Hennessy Funds internally. For the remaining five funds, we have delegated the day‐to‑day portfolio management responsibilities to sub‑advisors, subject to our oversight. We oversee the selection and continued employment of each sub‑advisor, review each fund’s investment performance, and monitor each sub‑advisor’s adherence to each applicable fund’s investment objectives, policies, and restrictions. In addition, we conduct ongoing reviews of the compliance programs of sub‑advisors and make onsite visits to sub‑advisors, as feasible. Our secondary business activity is providing shareholder services to investors in the Hennessy Mutual Funds.
We derive our operating revenues from investment advisory fees paid to us by the Hennessy Funds and shareholder service fees paid to us by the Hennessy Mutual Funds. These fees are calculated as a percentage of the average daily net assets of each Hennessy Fund. The percentage amount of the investment advisory fees varies by fund. The percentage amount of the shareholder service fees is consistent across all Hennessy Mutual Funds, but shareholder service fees are charged on Investor Class shares only. The dollar amount of the fees we receive fluctuates with changes in the average net asset value of each Hennessy Fund, which is affected by each fund’s investment performance, purchases and redemptions of shares, general market conditions, and the success of our marketing, sales, and public relations efforts.
On a total return basis, the Dow Jones Industrial Average was up 14.18% for the nine months ended June 30, 2026. During the most recent quarter, equity prices advanced despite heightened geopolitical risks, predominantly in the Middle East. Strong corporate earnings reports from the first quarter have reassured investors that the fundamental backdrop for equities is sound. While investors continue to closely monitor peace talks between the United States, Israel and Iran, the increased adoption of and interest in artificial intelligence has been a boon for the stock market. Employment and wage growth also remain on firm footing. The Bureau of Labor Statistics, for June, reported that unemployment stands at 4.2% with year-over-year average hourly earnings increasing 3.5%. These reports run counter to skeptics pointing out that the adoption of artificial intelligence could wreak havoc on employment trends.
Long-term U.S. bond yields rose during the three months ended June 30, 2026. With the unrest in the Middle East and the uncertainty in the Strait of Hormuz, energy prices remain elevated, despite coming down in recent months. These disruptions have given rise to inflation concerns. According to data compiled by Bloomberg, Federal Funds futures no longer price in the chance for a rate cut in 2026. Rather, there is a reasonable chance, based on this data, that the Federal Reserve will raise its benchmark interest rate before the end of the year. This contrasts sharply with data from early January that indicated the market was pricing in roughly two interest rate cuts by the end of 2026.
The Japanese equity market was up 17.24% in U.S. dollar terms over the nine months ended June 30, 2026, as measured by the Tokyo Stock Price Index. During the period, Japanese equities traded higher as the boom in artificial intelligence and semiconductor demand coupled with an accommodative political agenda seemed to have given hope to investors for sustained economic growth.
For the one‑, three‑, five-, and ten-year periods ending June 30, 2026, all 17 Hennessy Funds posted positive total returns (except that the Hennessy Sustainable ETF does not have ten years of performance history).
As always, we are committed to providing superior service to investors and employing a consistent and disciplined approach to investing based on a buy‑and‑hold philosophy that rejects the idea of market timing. Our goal is to provide products that investors can have confidence in, knowing their money is invested as promised and with their best interests in mind. Accordingly, we continually seek new and improved ways to support investors in the Hennessy Funds, including by providing market insights, sector highlights, and other resources to help them manage their fund investments with confidence. We operate a robust and leading‑edge marketing automation and customer relationship management (CRM) system, with a database of over 100,000 financial advisors, in addition to retail investors. We utilize this technology both to help retain assets and to drive new purchases into the Hennessy Funds. We employ a comprehensive marketing and sales program consisting of content, digital, social media, and traditional marketing initiatives and proactive meetings. In addition, our consistent annual public relations campaigns have resulted in the Hennessy brand name appearing on TV, radio, print, or online media on average once every four days.
We provide service to nearly 170,000 fund accounts nationwide, including accounts held by investors who employ financial advisors to assist them with investing as well as accounts held by retail investors who invest directly with us. We serve approximately 10,200 financial advisors who utilize the Hennessy Funds on behalf of their clients, including roughly 150 who purchased one of our Funds for the first time during the most recent quarter. Approximately 17% of such advisors own two or more Hennessy Funds, and approximately 700 advisors hold a position of over $500,000. While numbers have declined in recent years, we continue to focus significant efforts on building and maintaining brand loyalty among our top tier of advisors.
Total assets under management as of June 30, 2026, was $4.4 billion, an increase of $0.1 billion, or 2.6%, compared to June 30, 2025. The increase in total assets was attributable to market appreciation, substantially offset by net outflows from the Hennessy Funds.
The following table illustrates the quarter‑by‑quarter changes in our assets under management since the quarter ended June 30, 2025:
| Fiscal Quarter Ended |
||||||||||||||||||||
| June 30, 2026 | March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 | ||||||||||||||||
| (In thousands) |
||||||||||||||||||||
| Beginning assets under management |
$ | 3,925,200 | $ | 4,094,155 | $ | 4,244,768 | $ | 4,280,005 | $ | 4,255,690 | ||||||||||
| Acquisition inflows |
- | - | - | - | - | |||||||||||||||
| Organic inflows |
121,939 | 151,133 | 129,602 | 168,609 | 230,592 | |||||||||||||||
| Redemptions |
(223,377 | ) | (329,410 | ) | (386,594 | ) | (377,338 | ) | (451,681 | ) | ||||||||||
| Market appreciation (depreciation) |
566,863 | 9,322 | 106,379 | 173,492 | 245,404 | |||||||||||||||
| Ending assets under management |
$ | 4,390,625 | $ | 3,925,200 | $ | 4,094,155 | $ | 4,244,768 | $ | 4,280,005 | ||||||||||
As stated above, the fees we receive for providing investment advisory and shareholder services are based on average assets under management. The following table shows average assets under management for each quarter since the quarter ended June 30, 2025:
| Fiscal Quarter Ended |
||||||||||||||||||||
| June 30, 2026 | March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 | ||||||||||||||||
| (In thousands) |
||||||||||||||||||||
| Hennessy Mutual Funds |
||||||||||||||||||||
| Investor Class |
$ | 2,259,402 | $ | 2,235,630 | $ | 2,220,417 | $ | 2,253,847 | $ | 2,192,046 | ||||||||||
| Institutional Class |
1,907,971 | 1,840,965 | 1,855,458 | 1,913,241 | 1,818,345 | |||||||||||||||
| Hennessy ETFs |
93,655 | 92,986 | 94,885 | 94,128 | 88,393 | |||||||||||||||
| Average assets under management |
$ | 4,261,028 | $ | 4,169,581 | $ | 4,170,760 | $ | 4,261,216 | $ | 4,098,784 | ||||||||||
The principal asset on our balance sheet, the management contract asset, represents the capitalized costs incurred in connection with the purchase of the assets related to the management of investment funds. As of June 30, 2026, this asset had a net balance of $82.3 million, compared to $82.6 million as of September 30, 2025. This decrease is related to a current period expense of previously capitalized costs as a result of the termination on January 1, 2026 of the definitive agreement signed with STF Management, LP in March 2025.
Following the redemption of the 2026 Notes, as discussed in Note 8, the principal liability on our balance sheet is the net deferred tax liability of $17.4 million arising from the continued write-off of our management contracts asset for tax purposes, which creates a book-to-tax difference.
Liquidity and Capital Resources
We continually review our capital requirements to ensure that we have funding available to support our business model. Management anticipates that cash and other liquid assets on hand as of June 30, 2026, will be sufficient to meet our capital requirements for one year from the issuance date of this report, as well as our longer-term capital requirements for periods beyond one year from the issuance date of this report. To the extent that liquid resources and cash provided by operations are not adequate to meet long-term capital requirements, management plans to raise additional capital by either, or both, seeking bank financing or accessing the capital markets. There can be no assurance that we will be able to raise additional capital.
As discussed above, on October 20, 2021, we completed a public offering of our 2026 Notes in the aggregate principal amount of $40.25 million. The 2026 Notes were redeemed in whole on June 30, 2026.
Our total assets under management as of June 30, 2026, was $4.4 billion, an increase of $0.1 billion, or 2.6%, compared to June 30, 2025. The primary sources of our revenue, liquidity, and cash flow are our investment advisory fees and shareholder service fees, which are based on and generated by our average assets under management. Our average assets under management for the nine months ended June 30, 2026, was $4.2 billion, a decrease of $0.4 billion, or 7.8%, compared to the nine months ended June 30, 2025. As of June 30, 2026, we had cash and cash equivalents of $35.4 million and no debt.
The following table summarizes key financial data relating to our liquidity and use of cash:
| For the Nine Months |
||||||||
| Ended June 30, |
||||||||
| 2026 |
2025 |
|||||||
| (In thousands) |
||||||||
| Net cash provided by operating activities |
$ | 6,712 | $ | 9,995 | ||||
| Net cash used in investing activities |
(156 | ) | (451 | ) | ||||
| Net cash used in financing activities |
(43,636 | ) | (3,147 | ) | ||||
| Net (decrease) increase in cash and cash equivalents |
$ | (37,080 | ) | $ | 6,397 | |||
The decrease in cash provided by operating activities of $3.3 million was primarily due to decreased net income and decreased accrued liabilities and accounts payable in the current period.
The decrease in cash used in investing activities of $0.3 million was due to capitalized costs associated with a former asset purchase agreement in the previous period.
The increase in cash used in financing activities of $40.5 million was due to the redemption of the 2026 Notes on June 30, 2026.
Results of Operations
The following table sets forth items in the statements of income as dollar amounts and as percentages of total revenue:
| Three Months Ended June 30, |
||||||||||||||||
| 2026 |
2025 |
|||||||||||||||
| Amount |
Percent of Total Revenue |
Amount |
Percent of Total Revenue |
|||||||||||||
| (In thousands, except percentages) |
||||||||||||||||
| Revenue |
||||||||||||||||
| Investment advisory fees |
$ | 7,827 | 93.3 | % | $ | 7,508 | 93.2 | % | ||||||||
| Shareholder service fees |
563 | 6.7 | 546 | 6.8 | ||||||||||||
| Total revenue |
8,390 | 100.0 | 8,054 | 100.0 | ||||||||||||
| Operating expenses |
||||||||||||||||
| Compensation and benefits |
2,553 | 30.4 | 2,505 | 31.1 | ||||||||||||
| General and administrative |
1,581 | 18.9 | 1,433 | 17.8 | ||||||||||||
| Fund distribution and other |
243 | 2.9 | 252 | 3.1 | ||||||||||||
| Sub-advisory fees |
1,023 | 12.2 | 941 | 11.7 | ||||||||||||
| Depreciation |
77 | 0.9 | 74 | 0.9 | ||||||||||||
| Total operating expenses |
5,477 | 65.3 | 5,205 | 64.6 | ||||||||||||
| Net operating income |
2,913 | 34.7 | 2,849 | 35.4 | ||||||||||||
| Interest income |
(622 | ) | (7.4 | ) | (686 | ) | (8.5 | ) | ||||||||
| Interest expense |
760 | 9.1 | 574 | 7.1 | ||||||||||||
| Income before income tax expense |
2,775 | 33.0 | 2,961 | 36.8 | ||||||||||||
| Income tax expense |
776 | 9.2 | 840 | 10.5 | ||||||||||||
| Net income |
$ | 1,999 | 23.8 | % | $ | 2,121 | 26.3 | % | ||||||||
| Nine Months Ended June 30, |
||||||||||||||||
| 2026 |
2025 |
|||||||||||||||
| Amount |
Percent of Total Revenue |
Amount |
Percent of Total Revenue |
|||||||||||||
| (In thousands, except percentages) |
||||||||||||||||
| Revenue |
||||||||||||||||
| Investment advisory fees |
$ | 23,169 | 93.3 | % | $ | 25,242 | 93.4 | % | ||||||||
| Shareholder service fees |
1,674 | 6.7 | 1,796 | 6.6 | ||||||||||||
| Total revenue |
24,843 | 100.0 | 27,038 | 100.0 | ||||||||||||
| Operating expenses |
||||||||||||||||
| Compensation and benefits |
7,591 | 30.6 | 7,945 | 29.4 | ||||||||||||
| General and administrative |
5,132 | 20.6 | 4,885 | 18.1 | ||||||||||||
| Fund distribution and other |
693 | 2.8 | 768 | 2.8 | ||||||||||||
| Sub-advisory fees |
3,071 | 12.4 | 3,106 | 11.4 | ||||||||||||
| Depreciation |
229 | 0.9 | 204 | 0.8 | ||||||||||||
| Total operating expenses |
16,716 | 67.3 | 16,908 | 62.5 | ||||||||||||
| Net operating income |
8,127 | 32.7 | 10,130 | 37.5 | ||||||||||||
| Interest income |
(1,887 | ) | (7.6 | ) | (2,072 | ) | (7.7 | ) | ||||||||
| Interest expense |
1,914 | 7.7 | 1,718 | 6.4 | ||||||||||||
| Income before income tax expense |
8,100 | 32.6 | 10,484 | 38.8 | ||||||||||||
| Income tax expense |
2,261 | 9.1 | 2,946 | 10.9 | ||||||||||||
| Net income |
$ | 5,839 | 23.5 | % | $ | 7,538 | 27.9 | % | ||||||||
Revenue – Investment Advisory Fees and Shareholder Service Fees
Total revenue comprises investment advisory fees and shareholder service fees. Comparing the three months ended June 30, 2025, to the three months ended June 30, 2026, total revenue increased by 4.2%, from $8.1 million to $8.4 million, investment advisory fees increased by 4.2%, from $7.5 million to $7.8 million, and shareholder service fees increased by 3.1%, from $0.5 million to $0.6 million. In the three-month period, the increase in investment advisory fees was due mainly to increased average daily net assets of the Hennessy Funds in the current period, and the increase in shareholder service fees was due to an increase in the average daily net assets held in Investor Class shares of the Hennessy Mutual Funds in the current period. Assets held in Investor Class shares of the Hennessy Mutual Funds are subject to a shareholder service fee, whereas assets held in Institutional Class shares of the Hennessy Mutual Funds are not subject to a shareholder service fee.
Comparing the nine months ended June 30, 2025, to the nine months ended June 30, 2026, total revenue decreased by 8.1%, from $27.0 million to $24.8 million, investment advisory fees decreased by 8.2%, from $25.2 million to $23.2 million, and shareholder service fees decreased by 6.8%, from $1.8 million to $1.7 million. In the nine-month period, the decrease in investment advisory fees was due mainly to decreased average daily net assets of the Hennessy Funds in the current period, and the decrease in shareholder service fees was due to a decrease in the average daily net assets held in Investor Class shares of the Hennessy Mutual Funds in the current period. Assets held in Investor Class shares of the Hennessy Mutual Funds are subject to a shareholder service fee, whereas assets held in Institutional Class shares of the Hennessy Mutual Funds are not subject to a shareholder service fee.
We collect investment advisory fees from each of the Hennessy Funds at differing annual rates. These annual rates range between 0.40% and 1.25% of average daily net assets. Average daily net assets of the Hennessy Funds for the three months ended June 30, 2026, was $4.3 billion, which represents an increase of $0.2 billion, or 4.0%, compared to the three months ended June 30, 2025, and average daily net assets of the Hennessy Funds for the nine months ended June 30, 2026, was $4.2 billion, which represents a decrease of $0.4 billion, or 7.8%, compared to the nine months ended June 30, 2025. The Hennessy Fund with the largest average daily net assets for the three and nine months ended June 30, 2026, was the Hennessy Cornerstone Mid Cap 30 Fund, with $1.3 billion and $1.2 billion, respectively. We collect an investment advisory fee from the Hennessy Cornerstone Mid Cap 30 Fund at an annual rate of 0.74% of average daily net assets. The Hennessy Fund with the second largest average daily assets for the three months ended June 30, 2026, was the Hennessy Gas Utility Fund, with $0.5 billion. We collect an investment advisory fee from the Hennessy Gas Utility Fund at an annual rate of 0.40% of average daily net assets. The Hennessy Fund with the second largest average daily assets for the nine months ended June 30, 2026 was the Hennessy Focus Fund, with $0.5 billion. We collect an investment advisory fee from the Hennessy Focus Fund at an annual rate of 0.90% of average daily net assets. However, we pay a sub‑advisory fee at an annual rate of 0.29% to the fund’s sub-advisor, which reduces the net operating profit contribution of the fund to our financial operations.
Total assets under management as of June 30, 2026, was $4.4 billion, an increase of $0.1 billion, or 2.6%, compared to June 30, 2025. The increase in total assets was attributable to market appreciation, substantially offset by net outflows from the Hennessy Funds.
The only Hennessy Fund with net inflows was as follows:
| Three Months Ended June 30, 2026 |
|||||
| Fund Name |
Amount |
||||
| Hennessy Japan Small Cap Fund |
$ | 2 | million |
||
None of the Hennessy Funds had net inflows during the nine months ended June 30, 2026.
The Hennessy Funds with the three largest amounts of net outflows were as follows:
| Three Months Ended June 30, 2026 |
Nine Months Ended June 30, 2026 |
|||||||||||
| Fund Name |
Amount |
Fund Name |
Amount |
|||||||||
| Hennessy Cornerstone Growth Fund |
$ | (24 | ) | million |
Hennessy Cornerstone Mid Cap 30 Fund |
$ | (195 | ) | million |
|||
| Hennessy Focus Fund |
(24 | ) | million |
Hennessy Focus Fund |
(103 | ) | million |
|||||
| Hennessy Cornerstone Mid Cap 30 Fund |
(17 | ) | million |
Hennessy Cornerstone Growth Fund |
(57 | ) | million |
|||||
Redemptions as a percentage of assets under management decreased from an average of 3.6% per month during the three months ended June 30, 2025, to an average of 1.8% per month during the three months ended June 30, 2026. Redemptions as a percentage of assets under management decreased from an average of 3.9% per month during the nine months ended June 30, 2025 to an average of 2.5% per month during the nine months ended June 30, 2026.
Operating Expenses
Comparing the three months ended June 30, 2025, to the three months ended June 30, 2026, total operating expenses increased by 5.2% from $5.2 million to $5.5 million. As a percentage of total revenue, total operating expenses increased 0.7 percentage points to 65.3%. The increase in operating expenses was due to increases in the compensation and benefits, general and administrative, sub-advisory fees, and depreciation categories, partly offset by a decrease in fund distribution and other expense.
Comparing the nine months ended June 30, 2025, to the nine months ended June 30, 2026, total operating expenses decreased by 1.1% from $16.9 million to $16.7 million. As a percentage of total revenue, total operating expenses increased 4.8 percentage points to 67.3%. The dollar value decrease in operating expenses was due to decreases in the compensation and benefits, fund distribution and other, and sub-advisory fees categories, partly offset by increases in general and administrative and depreciation expense categories.
Compensation and Benefits Expense: Comparing the three months ended June 30, 2025, to the three months ended June 30, 2026, compensation and benefits expense increased by 1.9%, from $2.5 million to $2.6 million. As a percentage of total revenue, compensation and benefits expense decreased 0.7 percentage points to 30.4%. The dollar value increase in compensation and benefits expense was due to an increase in salaries due to higher headcount, partially offset by a decrease in incentive-based compensation, in the current period.
Comparing the nine months ended June 30, 2025, to the nine months ended June 30, 2026, compensation and benefits expense decreased by 4.5%, from $7.9 million to $7.6 million. As a percentage of total revenue, compensation and benefits expense increased 1.2 percentage points to 30.6%. The dollar value decrease in compensation and benefits expense was due to a decrease in incentive-based compensation in the current period.
General and Administrative Expense: Comparing the three months ended June 30, 2025, to the three months ended June 30, 2026, general and administrative expense increased by 10.3%, from $1.4 million to $1.6 million. As a percentage of total revenue, general and administrative expense increased 1.1 percentage points to 18.9%. The increase in general and administrative expense was primarily due to increased business development expense in the current period.
Comparing the nine months ended June 30, 2025, to the nine months ended June 30, 2026, general and administrative expense increased by 5.1%, from $4.9 million to $5.1 million. As a percentage of total revenue, general and administrative expense increased 2.5 percentage points to 20.6%. The increase in general and administrative expense was primarily due to the termination on January 1, 2026, of the definitive agreement signed with STF Management, LP in March 2025 and the related expense of previously capitalized costs in the current period.
Fund Distribution and Other Expense: Fund distribution and other expense consists primarily of financial institution fees incurred by us for distribution of the Hennessy Funds and also for the operations of the Hennessy Sustainable ETF. Fund distribution and other expense does not include sub‑advisory fees, which are shown separately.
The distribution component of fund distribution and other expense consists of fees paid to various financial institutions that offer the Hennessy Funds as potential investments to their clients. When the Hennessy Funds are purchased through one of these financial institutions, the institution typically charges an asset‑based fee, which is recorded as a fund distribution expense on our statement of operations to the extent paid by us. The Hennessy Mutual Funds, but not the Hennessy Sustainable ETF, may be purchased directly and when purchased directly, we do not incur any such expense. These fees generally increase or decrease in line with the net assets of the Hennessy Funds held through these financial institutions, which are affected by inflows, outflows, and fund performance. In addition, some financial institutions charge a minimum fee if the average daily net assets of a Hennessy Fund held by such an institution are less than a threshold amount. In such cases, we pay the minimum fee.
The distribution component of fund distribution and other expenses is affected by many factors, including the following:
| ● |
average daily net assets held by financial institutions; |
| ● |
the split of average daily net assets held by financial institutions in Institutional Class shares of the Hennessy Mutual Funds versus Investor Class shares of the Hennessy Mutual Funds; and |
| ● |
fee minimums at various financial institutions. |
The other component of fund distribution and other expense consists of fees incurred by us for the operations of the Hennessy Sustainable ETF. We receive a unitary investment advisory fee from the Hennessy Sustainable ETF and then pay all of its operating expenses (with limited exceptions), including fund administration, fund accounting, transfer agency, custody, licensing, audit, and tax services.
Comparing the three months ended June 30, 2025, to the three months ended June 30, 2026, fund distribution and other expense decreased by 3.6%, from $0.3 million to $0.2 million. As a percentage of total revenue, fund distribution and other expense decreased 0.2 percentage points to 2.9%.
Comparing the nine months ended June 30, 2025, to the nine months ended June 30, 2026, fund distribution and other expense decreased by 9.8%, from $0.77 million to $0.69 million. As a percentage of total revenue, fund distribution and other expense remained the same at 2.8%.
In both periods, the dollar value decrease in fund distribution and other expense was primarily due to decreased operating expenses relating to the Hennessy Sustainable ETF in the current period.
Sub-Advisory Fees Expense: Comparing the three months ended June 30, 2025, to the three months ended June 30, 2026, sub-advisory fees expense increased by 8.7%, from $0.94 million to $1.02 million. As a percentage of total revenue, sub-advisory fees expense increased 0.5 percentage points to 12.2%. The increase in sub-advisory fees expense was due to increased average daily net assets of the sub‑advised Hennessy Funds in the current period.
Comparing the nine months ended June 30, 2025, to the nine months ended June 30, 2026, sub-advisory fees expense remained the same at $3.1 million. As a percentage of total revenue, sub-advisory fees expense increased 1.0 percentage points to 12.4%.
Depreciation Expense: Comparing the three months ended June 30, 2025, to the three months ended June 30, 2026, depreciation expense increased by 4.1% from $0.07 million to $0.08 million. As a percentage of total revenue, depreciation expense remained the same at 0.9%.
Comparing the nine months ended June 30, 2025, to the nine months ended June 30, 2026, depreciation expense increased by 12.3% from $0.20 million to $0.23 million. As a percentage of total revenue, depreciation expense increased 0.1 percentage points to 0.9%.
In each period, the increase in depreciation expense resulted from more fixed asset purchases in the current period.
Interest Income
Interest income consists of interest earned on cash and cash equivalents.
Comparing the three months ended June 30, 2025, to the three months ended June 30, 2026, interest income decreased from $0.7 million to $0.6 million. Comparing the nine months ended June 30, 2025, to the nine months ended June 30, 2026, interest income decreased from $2.1 million to $1.9 million. In each period, the decrease in interest income resulted from decreased interest rates in the current period.
Interest Expense
Comparing the three months ended June 30, 2025, to the three months ended June 30, 2026, interest expense increased from $0.57 million to $0.76 million. Comparing the nine months ended June 30, 2025, to the nine months ended June 30, 2026, interest expense increased from $1.72 million to $1.91 million. In each period, the increase in interest expense was primarily due to the redemption of the 2026 Notes on June 30, 2026, and the related expense of unamortized issuance costs in the current period.
Income Tax Expense
Comparing the three months ended June 30, 2025, to the three months ended June 30, 2026, income tax expense remained the same at $0.8 million.
Comparing the nine months ended June 30, 2025, to the nine months ended June 30, 2026, income tax expense decreased by 23.3%, from $2.9 million to $2.3 million. The decrease in income tax expense was due to decreased net operating income in the current period.
Net Income
Comparing the three months ended June 30, 2025, to the three months ended June 30, 2026, net income decreased by 5.8%, from $2.1 million to $2.0 million. The decrease in net income was primarily due to the redemption of the 2026 Notes on June 30, 2026, and the related expense of unamortized issuance costs in the current period.
Comparing the nine months ended June 30, 2025, to the nine months ended June 30, 2026, net income decreased by 22.5%, from $7.5 million to $5.8 million. The decrease in net income was primarily due to decreased revenue in the current period.
Critical Accounting Policies and Estimates
Our financial statements and accompanying notes are prepared in accordance with U.S. GAAP, which require the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. These accounting policies, methods, and estimates are an integral part of the financial statements prepared by management and are based upon management’s current judgments. Those judgments are normally based on knowledge and experience with regard to past and current events and assumptions about future events. Certain accounting policies, methods, and estimates are particularly sensitive because of their significance to the financial statements and because future events affecting them may differ markedly from management’s current judgment. For a discussion of the accounting policies and estimates that we believe are most critical to understanding our results of operations and financial position, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10‑K for the fiscal year ended September 30, 2025. There has been no material change to our critical accounting estimates disclosed in such Annual Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Management performed an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based on such evaluation, management, including the Company’s principal executive officer and principal financial officer, concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act that occurred during the fiscal quarter ended June 30, 2026, and that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
(c) Rule 10b5-1 Trading Plans
During the three months ended June 30, 2026, director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement,” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Set forth below is a list of all exhibits to this Quarterly Report on Form 10-Q.
| 31.1 |
Rule 13a-14a Certification of the Principal Executive Officer. |
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| 31.2 |
Rule 13a-14a Certification of the Principal Financial Officer. |
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| 32.1 |
Written Statement of the Principal Executive Officer, Pursuant to 18 U.S.C. § 1350. |
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| 32.2 |
Written Statement of the Principal Financial Officer, Pursuant to 18 U.S.C. § 1350. |
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| 101 |
Financial statements from the Quarterly Report on Form 10‑Q of Hennessy Advisors, Inc. for the quarter ended June 30, 2026, filed on August 5, 2026, formatted in Inline XBRL: (i) the Condensed Balance Sheets; (ii) the Condensed Statements of Income; (iii) the Condensed Statements of Changes in Stockholders’ Equity; (iv) the Condensed Statements of Cash Flows; (v) the Notes to Unaudited Condensed Financial Statements; and (vi) the information included in Part II, Item 5(c). |
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| 104 |
The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized:
| HENNESSY ADVISORS, INC. | ||
| Date: August 5, 2026 | By: | /s/ Teresa M. Nilsen |
| Teresa M. Nilsen | ||
| President, Chief Operating Officer, and Secretary (As a duly authorized officer on behalf of the registrant and as Principal Executive Officer) | ||