Hercules Capital(US:HTGC)2025-10-30 20:17Investment Portfolio Performance - As of September 30, 2025, the total fair value of the investment portfolio increased to $4,306.2 million from $3,660.0 million as of December 31, 2024, representing a growth of approximately 17.6%[302] - The fair value of the investment portfolio increased to $4.31 billion as of September 30, 2025, from $3.66 billion as of December 31, 2024[327] - The total fair value of debt investments was $4,095,558,000, an increase from $3,494,601,000 as of December 31, 2024[333] - The ten largest portfolio companies represented approximately 28.9% of the total fair value of investments as of September 30, 2025, down from 31.6% in 2024[329] Investment Commitments and Fundings - The net total investment commitments originated by Hercules Capital and the Adviser Funds reached $2,205.1 million, up from $1,651.1 million in the same period last year, indicating a year-over-year increase of about 33.5%[304] - Gross debt fundings for new portfolio companies amounted to $1,057.4 million, compared to $992.0 million in the previous year, reflecting a growth of approximately 6.6%[304] - The company has originated over $24.0 billion in commitments across more than 700 companies since inception[299] Income and Yield - The total investment income for the three months ended September 30, 2025, was $138.1 million, compared to $125.2 million for the same period in 2024[323] - The core investment income from the debt portfolio for the three months ended September 30, 2025, was $124.7 million, compared to $113.3 million in 2024[323] - The weighted average effective yield on debt investments decreased to 13.5% as of September 30, 2025, down from 14.4% a year earlier[310] - As of September 30, 2025, the total yield was 13.0%, down from 13.8% in the same period of 2024, while the effective yield decreased from 14.4% to 13.5%[322] Portfolio Management and Debt - The company actively manages approximately $5.5 billion of assets as of September 30, 2025[299] - The number of portfolio companies with debt outstanding increased to 122 as of September 30, 2025, compared to 118 as of December 31, 2024[310] - Approximately 97.8% of the debt investment portfolio was priced at floating interest rates with a floor as of September 30, 2025[330] - The percentage of debt bearing a floating rate was 97.8% as of September 30, 2025, slightly up from 97.4% at the end of 2024[310] Operating Expenses and Income - Operating expenses for the three months ended September 30, 2025, totaled approximately $49.5 million, an increase from $42.1 million in the same period of 2024[342] - Employee compensation and benefits totaled approximately $16.5 million for the three months ended September 30, 2025, compared to $12.1 million in 2024, and $47.1 million for the nine months ended September 30, 2025, compared to $42.9 million in 2024[347] - The net increase in net assets resulting from operations for the three months ended September 30, 2025, was $119.7 million, compared to $68.7 million for the same period in 2024[336] Unrealized Gains and Losses - The net change in unrealized appreciation on investments was approximately $33.0 million for the three months ended September 30, 2025, compared to a net unrealized depreciation of $13.9 million in 2024[355] - The gross unrealized appreciation on portfolio investments was $55.7 million for the three months ended September 30, 2025, compared to $28.8 million in 2024[354] - The company recorded a net change in unrealized appreciation of $51.0 million for the nine months ended September 30, 2025, compared to a net unrealized depreciation of $52.1 million in 2024[355] Cash Flow and Liquidity - Operating activities used $370.2 million in cash during the nine months ended September 30, 2025, compared to $88.8 million in the same period of 2024, primarily due to a $283.1 million increase in net purchases of investments[365] - Financing activities provided $304.3 million of cash during the nine months ended September 30, 2025, a significant increase from $17.5 million in the same period of 2024, driven by a $122.6 million increase in equity issued[367] - Available liquidity as of September 30, 2025, was $655.0 million, including $29.4 million in cash and cash equivalents[369] Debt and Interest Rate Sensitivity - The company had $2,180.0 million of debt outstanding as of September 30, 2025, with $425.0 million due within the next year[378] - A hypothetical 200 basis point increase in interest rates could result in a decrease of $26,147,000 in income and an EPS decline of $0.12[388] - The net investment income is dependent on the difference between borrowing rates and investment rates, with rising interest rates potentially increasing costs and reducing income[390] - The majority of debt borrowings under Credit Facilities bear interest at a floating rate, while other outstanding debt is at a fixed rate[387] Adviser Subsidiary and Management Services - The Adviser Subsidiary provides investment advisory and management services to the Adviser Funds in exchange for an asset-based fee[359] - The Adviser Funds invest in debt and equity investments in technology-related and life sciences companies[360] - For the three months ended September 30, 2025, dividend income from the Adviser Subsidiary was $2.1 million, up from $1.8 million in the same period of 2024, while interest income decreased to $0 from $0.2 million[362]