Core Insights - Fidus Investment (FDUS) has been identified as a top business development company (BDC) pick, indicating strong potential for investment opportunities in this sector [1] Group 1: Company Overview - Fidus Investment has been closely monitored since a bullish article was published in March 2024, suggesting ongoing interest and analysis of its performance [1] Group 2: Analyst Background - Roberts Berzins, with over a decade of experience in financial management, has contributed to shaping financial strategies for top-tier corporates and has worked on institutionalizing REIT frameworks in Latvia [1] - His efforts include developing national SOE financing guidelines and frameworks to channel private capital into affordable housing, highlighting a focus on enhancing market liquidity [1]

Core Insights - Fidus Investment reported a 5.1% year-over-year increase in adjusted net investment income (NII) to $19.4 million, driven by higher average income-producing assets and a 60% rise in fee income compared to Q4 2024 [1][6] - The company achieved its highest quarterly originations to date in Q4, totaling $213.7 million, attributed to a stronger M&A environment and pent-up demand following previous market stagnation [6][18] - Fidus maintained a robust dividend policy, with total dividends of $0.50 per share in Q4, exceeding the base distribution of $0.43 per share [6][7] Financial Performance - Adjusted NII per share was $0.52, slightly down from $0.54 in the prior-year quarter [1] - Total investment income for the quarter was $42.2 million, an increase of $4.9 million from the previous quarter, primarily due to higher interest income and fee income [13] - Net investment income per share for the quarter was $0.53, up from $0.49 in Q3 [15] Portfolio Overview - Fidus reported a portfolio valued at $1.3 billion at fair value, representing 102% of cost, with first lien investments making up 86% of the debt portfolio [2][5] - The equity portfolio was valued at $142.3 million, accounting for 10.7% of the total portfolio [2] - The company engaged in $84.7 million of repayments and realizations during the quarter, reflecting a mix of M&A and refinancing activities [3] Investment Activity - In 2025, Fidus invested $498.2 million in new and existing portfolio companies, resulting in net originations of $210.2 million [5] - The company invested $206.5 million, or 97% of originations, in first lien securities during Q4 [4] - Fidus completed numerous small add-on investments and realized a $3.4 million gain from exiting equity investments in CIH Intermediate, LLC [3] Credit Quality and Sector Exposure - Non-accruals were less than 1% of the total portfolio at fair value, indicating strong credit quality [9] - The software and tech-enabled services portfolio totaled $464 million, with 92% in first lien debt [9] - ARR loans represented about 22% of the software portfolio, indicating a shift towards EBITDA-based loans [12] Balance Sheet and Liquidity - Total debt outstanding was $658.3 million, with a net debt-to-equity ratio of 0.8x [16] - The company reported total liquidity of approximately $304.8 million, including $79.6 million in cash and $141.2 million of revolver availability [17] Future Outlook - Fidus anticipates a modest start to 2026, with expectations for increased deal flow as private equity owners bring more portfolio companies to market [18] - The company expects potential opportunities from market dislocations in the software sector, although such dislocations have not yet significantly impacted its focus [19]

Financial Data and Key Metrics Changes - In Q4 2025, total investment income was $42.2 million, an increase of $4.9 million from Q3 2025, driven by higher interest income and fee income [16][17] - Adjusted net investment income (NII) grew 5.1% to $19.4 million, with adjusted NII per share at $0.52, compared to $0.50 in Q3 2025 [7][18] - Net asset value increased by 13.2% to $741.9 million at quarter end, with a per-share value of $19.55 [9] Business Line Data and Key Metrics Changes - Originations in Q4 2025 reached $213.7 million, the highest quarterly amount, with total investments for 2025 at $498.2 million [4][5] - The debt portfolio performed well, with first lien investments comprising 86% of the total debt portfolio [11] - The software and tech-enabled services portfolio was valued at $464 million, with 92% in first lien debt [12][13] Market Data and Key Metrics Changes - The company noted a strong M&A environment contributing to increased deal flow, with expectations for continued activity in 2026 [4][15] - The weighted average interest rate on outstanding debt was 5.2% as of December 31, 2025 [19] Company Strategy and Development Direction - The company aims to generate attractive, risk-adjusted returns for shareholders while growing net asset value over time [15] - Focus on investing in niche market leaders with proven business models that generate recurring revenue and cash flow [7][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the deal flow for 2026, although Q1 is expected to be more modest compared to Q4 2025 [15][28] - The company is confident in the health of its portfolio, with non-accruals accounting for less than 1% of the total portfolio [13] Other Important Information - The company declared a total dividend of $0.52 per share for Q1 2026, consisting of a base dividend and a supplemental dividend [8] - Total liquidity as of December 31, 2025, was approximately $304.8 million, including cash and available credit [21] Q&A Session Summary Question: Is there any spillover of deals from Q4 into Q1? - Management indicated that Q1 2026 deal flow is expected to be more modest, with some growth anticipated as the year progresses [28] Question: Can you elaborate on the software portfolio and AI risks? - Management emphasized the importance of evaluating the durability and value proposition of software companies, noting that nearly all portfolio companies are adding AI features [32][34] Question: What is the focus on ARR loans? - Approximately 22% of the software portfolio consists of ARR loans, with a focus on growth through covenants [40] Question: How comfortable is the company with its largest investment in Fan Steel? - Management expressed strong confidence in the long-term outlook for Fan Steel, viewing it as a leader in its space [42] Question: What is the average floor in the floating rate debt portfolio? - Most recent floors are in the 2% range, which is a market convention for the company [44] Question: How does the company view recovery rates in the lower middle market? - Management indicated that recovery rates for first lien loans typically range from 60% to 85%, and they do not foresee drastic changes in values [67][68]

Financial Data and Key Metrics Changes - In Q4 2025, total investment income was $42.2 million, an increase of $4.9 million from Q3 2025, driven by higher interest income and fee income [16][17] - Adjusted net investment income (NII) grew 5.1% to $19.4 million, with adjusted NII per share at $0.52, compared to $0.50 in Q3 2025 [7][18] - Net asset value increased by 13.2% to $741.9 million at quarter end, with a per-share value of $19.55 [9] Business Line Data and Key Metrics Changes - Originations in Q4 2025 reached $213.7 million, the highest quarterly amount, with total investments for 2025 at $498.2 million [4][5] - The debt portfolio performed well, with first lien investments comprising 86% of the total debt portfolio [11] - The software and tech-enabled services portfolio was valued at $464 million, with 92% in first lien debt [12][13] Market Data and Key Metrics Changes - The company noted a strong M&A environment contributing to increased deal flow, with expectations for continued activity in 2026 [4][15] - The weighted average interest rate on outstanding debt was 5.2% as of December 31, 2025 [19] Company Strategy and Development Direction - The company aims to generate attractive, risk-adjusted returns for shareholders while growing net asset value over time [15] - Focus remains on investing in niche market leaders with proven business models that generate recurring revenue [7][15] Management's Comments on Operating Environment and Future Outlook - Management indicated that Q1 2026 deal flow is expected to be more modest compared to Q4 2025, influenced by seasonal patterns [27][28] - The company remains optimistic about the long-term health of its portfolio, with non-accruals accounting for less than 1% of the total portfolio [13] Other Important Information - The company declared a total dividend of $0.52 per share for Q1 2026, consisting of a base dividend and a supplemental dividend [8] - Total liquidity as of December 31, 2025, was approximately $304.8 million, including cash and available credit [21] Q&A Session Summary Question: Is there any spillover of deals from Q4 into Q1? - Management indicated that while Q4 was strong, Q1 is expected to have more modest deal flow due to seasonal patterns [27][28] Question: Can you elaborate on the software companies in your portfolio? - Management emphasized the importance of long-term barriers to entry and the quality of management in evaluating software investments [32][34] Question: What is the focus on ARR loans in your portfolio? - Approximately 22% of the software portfolio consists of ARR loans, with a focus on growth through covenants [40] Question: How comfortable is the company with its largest investment in Fansteel? - Management expressed strong confidence in the long-term outlook for Fansteel, viewing it as a leader in its space [42] Question: What are the average floors in your floating rate debt portfolio? - Most floating rate debt originated in recent years has floors in the 2% range [44]

Financial Data and Key Metrics Changes - In Q4 2025, total investment income was $42.2 million, an increase of $4.9 million from Q3 2025, driven by higher interest income and fee income [15][16] - Adjusted net investment income (NII) grew 5.1% to $19.4 million, with adjusted NII per share at $0.52, compared to $0.50 in Q3 2025 [6][18] - Net asset value increased by 13.2% to $741.9 million at quarter end, with a per-share value of $19.55 [9] Business Line Data and Key Metrics Changes - Originations in Q4 2025 reached $213.7 million, the highest quarterly amount, contributing to total investments of $498.2 million for the year [4][5] - The debt portfolio performed well, with first lien investments comprising 86% of the total debt portfolio [11] - The software and tech-enabled services portfolio was valued at $464 million, with 92% in first lien debt [12][13] Market Data and Key Metrics Changes - The company noted a strong M&A environment in Q4 2025, which contributed to increased deal flow and investment activity [4][5] - The weighted average interest rate on outstanding debt was 5.2% as of December 31, 2025 [19] Company Strategy and Development Direction - The company aims to generate attractive, risk-adjusted returns for shareholders while growing net asset value over time [14] - Fidus continues to focus on niche market leaders in the lower middle market, applying strict underwriting standards [6][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about deal flow in 2026, expecting an increase in activity levels as private equity owners may need to bring portfolio companies to market [14][28] - The company is confident in the health of its portfolio, with non-accruals accounting for less than 1% of the total portfolio on a fair value basis [13] Other Important Information - The company declared a total dividend of $0.52 per share for Q1 2026, consisting of a base dividend of $0.43 and a supplemental dividend of $0.09 [8] - Total liquidity as of December 31, 2025, was approximately $304.8 million, including cash and available credit [21] Q&A Session Summary Question: Is there any spillover of deals from Q4 into Q1? - Management indicated that Q1 2026 deal flow is expected to be more modest compared to Q4, influenced by seasonal patterns, but they anticipate an increase in activity throughout the year [24][28] Question: Can you elaborate on the types of software businesses in the portfolio? - Management highlighted the focus on companies with long-term barriers to entry, such as data moats and deep industry expertise, and noted that nearly all portfolio companies are adding AI features [30][32] Question: What is the focus on ARR loans in the portfolio? - Approximately 22% of the software portfolio consists of ARR loans, with covenants in place to ensure growth and transition to cash flow [39] Question: How comfortable is the company with its largest investment in Fan Steel? - Management expressed strong confidence in the long-term outlook for Fan Steel, viewing it as a leader in its space with a growing product portfolio [40][41] Question: What are the average floors in the floating rate debt portfolio? - Most recent floors on floating rate debt are in the 2% range, and management expects some decline in total yields if SOFR decreases [43][46] Question: What are the recovery rates for first lien loans in the lower middle market? - Management indicated that recovery rates for first lien loans typically range from 60% to 85%, and they do not foresee drastic changes in values of businesses in their portfolio [64][66]

Group 1 - Trinity Capital Inc. (TRIN) is highlighted as one of the top three Business Development Companies (BDCs) alongside Kayne Anderson BDC, Inc. (KBDC) and Fidus Investment (FDUS) [1] Group 2 - Roberts Berzins has over a decade of experience in financial management, focusing on helping top-tier corporates with financial strategies and large-scale financings [2] - He has contributed to institutionalizing the REIT framework in Latvia to enhance the liquidity of pan-Baltic capital markets [2] - His policy-level work includes developing national SOE financing guidelines and frameworks for channeling private capital into affordable housing [2]

Investor Presentation Disclosure Fidus Investment Corporation ("Fidus") cautions that statements in this presentation that are forward- looking, and provide other than historical information, involve risks and uncertainties that may impact our future results of operations. The forward-looking statements in this presentation are based on current conditions and include statements regarding our goals, beliefs, strategies and future operating results and cash flows, including but not limited to the equivalent a ...

分组1 - Fidus Investment (FDUS) reported quarterly earnings of $0.52 per share, exceeding the Zacks Consensus Estimate of $0.48 per share, but down from $0.54 per share a year ago, representing an earnings surprise of +7.59% [1] - The company posted revenues of $42.15 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 5.86%, compared to year-ago revenues of $37.46 million [2] - Fidus Investment has surpassed consensus EPS estimates three times over the last four quarters and topped consensus revenue estimates four times during the same period [2] 分组2 - The stock has underperformed the market, losing about 4% since the beginning of the year, while the S&P 500 has gained 1.5% [3] - The current consensus EPS estimate for the coming quarter is $0.48 on revenues of $38.92 million, and for the current fiscal year, it is $1.92 on revenues of $160.16 million [7] - The Zacks Industry Rank for Financial - SBIC & Commercial Industry is currently in the bottom 41% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Financial Metrics - The net asset value per share is determined quarterly, calculated as total assets minus liabilities and preferred stock, divided by total shares outstanding[76]. - The base management fee is set at an annual rate of 1.75% based on the average value of total assets, excluding cash equivalents, and is payable quarterly[83]. - The incentive fee consists of two parts: a pre-incentive fee based on net investment income and a capital gains incentive fee of 20% on net capital gains at the end of the fiscal year[84][90]. - Pre-incentive fee net investment income is compared to a hurdle rate of 2.0% per quarter, with no incentive fee payable if the income does not exceed this rate[87]. Investment Strategy - The company invests primarily in illiquid securities issued by private companies, which may have restrictions on resale and no established trading market[76]. - The company’s investment strategy focuses on lower middle-market companies, leveraging the expertise of its investment advisor to assess risks and pricing[79]. - The company may invest up to 100% of its assets in privately negotiated transactions, subject to regulatory limits[114]. - Managerial assistance is provided to portfolio companies, with fees reimbursed to the investment advisor for such services[116]. Capital Gains and Losses - Investment A was sold for $12.5 million in Year 2, resulting in a realized capital gain of $8.5 million[98]. - The fair market value (FMV) of Investment B was determined to be $6.25 million in Year 2 and increased to $8.75 million by Year 4[98]. - Cumulative realized capital gains amounted to $9.75 million by Year 3, with net realized capital losses of $2.5 million[98]. - The capital gains incentive fee for Year 2 was $1.45 million, calculated as 20.0% of the cumulative realized capital gains less unrealized capital depreciation[98]. - The capital gains incentive fee for Year 3 was $0.35 million, after accounting for the previous year's fee[98]. Regulatory Compliance - The company is required to distribute at least 90% of its investment company taxable income to maintain its RIC tax treatment[144]. - The company must maintain its status as a RIC and satisfy the Annual Distribution Requirement to avoid U.S. federal income tax on distributed investment company taxable income and net capital gain[145]. - A nondeductible 4% U.S. federal excise tax applies to certain undistributed income unless the company distributes at least 98% of its net ordinary income and 98.2% of capital gains exceeding capital losses for the calendar year[146]. - To qualify as a RIC, the company must derive at least 90% of its gross income from specific sources, including dividends and interest[148]. - At the end of each quarter, at least 50% of the company's assets must consist of cash, U.S. Government securities, and other qualifying securities[149]. - The company may face challenges in meeting the Annual Distribution Requirement due to the need to recognize taxable income without corresponding cash receipts, such as OID or PIK interest[151]. - If the company fails to meet the Annual Distribution Requirement, it may have to sell investments at unfavorable prices or raise additional capital[152]. Tax Implications - The company can retain long-term capital gains and designate them as "deemed distributions," which will be taxed on behalf of stockholders[162]. - Non-U.S. stockholders may not be entitled to claim a credit for U.S. taxes paid on deemed distributions, depending on their country's tax rules[163]. Market Conditions and Risks - The company faces competition from larger public and private funds, BDCs, and banks, which may have access to funding sources not available to the company[77]. - The Federal Reserve reduced interest rates by 0.25% in September, October, and December of 2025, resulting in cumulative cuts of 75 basis points during the year, with the benchmark rate now between 3.50% and 3.75%[441]. - A hypothetical 200 basis point increase in interest rates could lead to a net decrease of $13.9 million in net investment income, while a 200 basis point decrease could result in a net increase of $16.1 million[444]. - The company’s risk management systems are designed to monitor financial market risks, including interest rate changes, which can significantly impact both funding costs and investment portfolio valuations[440]. - The company’s investment income is sensitive to changes in interest rates, particularly for debt investments with floating rates tied to SOFR and prime rates[441]. - As of December 31, 2025, the company’s variable rate debt investments include a SOFR or prime interest rate floor, mitigating the impact of decreases in interest rates[445]. - The company’s net investment income is dependent on the spread between borrowing rates and investment rates, indicating potential vulnerability to market interest rate fluctuations[443]. Agreements and Licenses - The Investment Advisory Agreement was approved for continuation until June 20, 2026, with automatic annual renewals unless terminated[102]. - The Administration Agreement was also approved for continuation until June 20, 2026, with similar renewal terms[109]. - The company received SBIC licenses for Fund III and Fund IV on March 21, 2019, and September 30, 2024, respectively, allowing it to issue SBA debentures for additional investments[132]. - Eligible small businesses for SBIC investments must have a tangible net worth not exceeding $24 million and average annual net income not exceeding $8 million[134]. - The company is permitted to issue multiple classes of indebtedness if its asset coverage is at least 150% immediately after issuance[119]. Asset Composition - 70% of the company's assets are invested in qualifying assets or temporary investments, including cash, U.S. government securities, and high-quality debt investments maturing in one year or less[118].

Investment Income - Total investment income for Q4 2025 was $42.2 million, a 12.5% increase from Q4 2024[5] - Net investment income for Q4 2025 was $19.6 million, or $0.53 per share, reflecting a 5.3% increase year-over-year[9] - Full year 2025 total investment income reached $155.9 million, up 6.6% from 2024[11] - Total investment income for the three months ended December 31, 2025, was $42,153,000, an increase of 12.8% from $37,457,000 in the same period of 2024[33] - Net investment income for the year ended December 31, 2025, was $73,850,000, compared to $74,636,000 in 2024, reflecting a decrease of 1.1%[37] - Adjusted net investment income for the three months ended December 31, 2025, was $19,370,000, up from $18,437,000 in 2024, representing a growth of 5.1%[37] Asset and Investment Portfolio - Net asset value (NAV) as of December 31, 2025, was $741.9 million, or $19.55 per share[5] - The fair value of the investment portfolio was $1.3 billion as of December 31, 2025, consisting of 97 active portfolio companies[15] - Total investments at fair value increased to $1,324.8 million as of December 31, 2025, compared to $1,090.5 million as of December 31, 2024, reflecting a growth of approximately 21.4%[31] - The weighted average yield on debt investments was 12.6% as of December 31, 2025[16] Cash and Liabilities - The company had $70.0 million in cash and cash equivalents as of December 31, 2025[17] - Cash and cash equivalents rose to $70.0 million from $57.2 million year-over-year, an increase of about 22.5%[31] - Total liabilities increased to $684.6 million as of December 31, 2025, compared to $508.4 million as of December 31, 2024, representing a rise of approximately 34.6%[31] Expenses - Total expenses for Q4 2025 were $22.5 million, a 19.7% increase from Q4 2024[8] - Total expenses for the three months ended December 31, 2025, were $79,775,000, compared to $69,078,000 in the same period of 2024, indicating an increase of 15.5%[33] Dividends - The company declared a total dividend of $0.52 per share for the first quarter of 2026, consisting of a base dividend of $0.43 and a supplemental dividend of $0.09[22] - Dividends declared per share for the year ended December 31, 2025, were $2.15, compared to $2.42 in 2024, reflecting a decrease of 11.2%[37] - Fidus has adopted a dividend reinvestment plan (DRIP) allowing stockholders to reinvest dividends in additional shares unless they opt for cash[24] Investment Activities - The company invested $213.7 million in debt and equity securities during Q4 2025, including eight new portfolio companies[5] - Fidus Investment Corporation invested $6.0 million in first lien debt and $1.0 million in preferred equity of Gap Intelligence Acquisition, LLC[18] - A realized gain of approximately $3.4 million was achieved from exiting preferred and common equity investments in CIH Intermediate, LLC[19] - The company has committed up to an additional $3.5 million in first lien debt for Waterworks Solutions Acquisition, Inc.[20] Performance Metrics - Net realized gains on investments for the three months ended December 31, 2025, were $3,374,000, compared to a loss of $1,458,000 in the same period of 2024[33] - The net change in unrealized appreciation on investments for the three months ended December 31, 2025, was $10,110,000, compared to a depreciation of $522,000 in 2024[33] - Net increase in net assets resulting from operations for the three months ended December 31, 2025, was $82,402,000, compared to $78,292,000 in 2024, an increase of 5.4%[33] - Net investment income per share for the year ended December 31, 2025, was $2.08, down from $2.29 in 2024, a decrease of 9.2%[37] - Weighted average number of shares outstanding for the three months ended December 31, 2025, was 35,489,578, compared to 36,967,982 in 2024, a decrease of 4.0%[37]