Barings BDC (NYSE:BBDC) Q4 2025 Earnings call February 20, 2026 09:00 AM ET Company ParticipantsCasey Alexander - Managing DirectorElizabeth Murray - CFOFinian O'Shea - DirectorJoe Mazzoli - Head of Investor RelationsMatt Freund - PresidentRobert Dodd - DirectorTom McDonnell - CEOOperatorAt this time, I'd like to welcome everyone to the Barings BDC, Inc. conference call for the quarter and year ended December 31st, 2025. All participants are in listen-only mode. A question and answer session will follow the ...

Financial Data and Key Metrics Changes - Net asset value (NAV) per share was $11.09, essentially unchanged from the prior quarter at $11.10, reflecting a less than 0.1% decrease quarter over quarter [21] - Net investment income (NII) for the quarter was $0.27 per share, down from $0.32 per share in the prior quarter and $0.28 per share for the fourth quarter of 2024 [25] - The annualized dividend was declared at $0.26 per share, consistent with the prior quarter, equating to a 9.4% yield on NAV [10][28] Business Line Data and Key Metrics Changes - Barings originated positions now constitute 96% of the BBDC portfolio at fair value, up from 76% at the beginning of 2022 [9] - The weighted average yield at fair value was 9.6%, reflecting a slight reduction from the prior quarter due to a decrease in base rates [9] - The net leverage ratio was 1.15x at quarter end, down from 1.26x as of September 30, remaining within the long-term leverage target of 0.9x-1.25x [26] Market Data and Key Metrics Changes - The portfolio remains highly diversified, with 75% consisting of secured investments and approximately 70% of investments being first lien securities [18] - Interest coverage within the portfolio was strong, with a weighted average interest coverage of 2.4 times, above industry averages [18] - Non-accruals accounted for 0.2% of assets on a fair value basis, down from 0.4% in the previous quarter [20] Company Strategy and Development Direction - The company aims to enhance existing initiatives and implement new ones focused on improving return on equity (ROE) [5] - The strategy emphasizes a core focus on the middle market, which is viewed as the most compelling segment for risk-adjusted returns [6] - The company is exploring opportunities in asset-based lending and tactical investments in the broader private credit space [67] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength and durability of the investment process, highlighting a benign credit environment [4] - The outlook for 2026 is cautiously optimistic, with expectations for a banner year for M&A opportunities [17] - Management noted that while declining base rates may put downward pressure on NII, the diversified portfolio and strong capital structure will support earnings [28] Other Important Information - The company reported a net realized loss primarily due to exits and restructures of certain investments, but overall credit quality remains stable [23] - The Sierra portfolio was significantly reduced, with a 75% year-over-year decrease, indicating a strategic focus on income-producing assets [24] - Share repurchase activity contributed $0.02 per share to NAV, with over 450,000 shares repurchased in the fourth quarter [30] Q&A Session Summary Question: What initiatives are being worked on to improve ROE? - Management is focused on accelerating exits from legacy assets and winding down problematic joint ventures to redeploy capital into interest-earning assets [33][34] Question: How will the company address the concerns in the non-traded BDC market? - Management acknowledged the challenges posed by negative headlines but emphasized that flows have remained stable and they are actively engaging with investors to alleviate concerns [42][44] Question: What is the company's exposure to software businesses facing AI disruption? - Management confirmed that they do not have exposure to highly leveraged software businesses vulnerable to AI disruption, maintaining a focus on well-managed companies [71] Question: Will the company consider shifting to GICS for industry classification? - Management is discussing the potential shift to GICS, especially for better comparability with peers [72]

Core Insights - The WisdomTree U.S. SmallCap Dividend Fund (DES) has shown strong performance, up nearly 12% year-to-date, outperforming both the Russell 2000 and Russell 2000 Value indexes [1] - DES has been recognized as one of the best high-dividend ETFs by Morningstar, highlighting its appeal to investors seeking value and dividends outside the large-cap space [1] Performance and Strategy - DES follows the WisdomTree U.S. SmallCap Dividend Index, which weights components by expected dividends, favoring larger companies and rewarding those with quality and momentum traits [1] - The fund's methodology allows it to consistently outperform the Russell 2000 in terms of profitability, avoiding companies that do not generate profits [1] - DES employs a contrarian approach by restoring stocks' dividend weights at each annual rebalance, effectively doubling down on underperforming stocks while trimming exposure to top performers [1] Value Proposition - The fund's strategy emphasizes unloved stocks, creating a deeper-value portfolio compared to the Russell 2000 Value, which can lead to underperformance during value slumps [1] - Despite potential drawbacks, the integration of quality and momentum into its weighting has benefited DES during growth-friendly environments, allowing it to outperform over half of small-value funds in 2023 and 2024 [1]

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We recently published 10 Firms Outperform Wall Street With Surprising Gains. Medical Properties Trust Inc. (NYSE:MPT) was one of the best performers on Thursday. Medical Properties snapped a four-day losing streak on Thursday, soaring 12.10 percent to finish at $6.02 apiece after narrowing its losses by 88 percent last year. In an updated report, Medical Properties Trust Inc. (NYSE:MPT) said net loss attributable to shareholders shrank to $277 million from $2.4 billion in 2024, despite total revenues di ...

The stock market can’t make up its mind.On one hand, it is fretting over the hundreds of billions of dollars being spent on artificial intelligence (AI) infrastructure. Tech giants such as Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOGL), Meta Platforms (NASDAQ: META), and Microsoft (NASDAQ: MSFT) have collectively earmarked over US$600 billion in capital expenditure for 2026 alone, a figure that comfortably surpasses Singapore’s entire GDP.Investors are asking: will all this spending ever pay off?On the oth ...

​VICI Properties Inc. (NYSE:VICI) is among the Best Affordable Stocks Under $40 to Buy. Wall Street has a positive outlook on VICI as the company gets close to releasing its fiscal Q4 2025 earnings on February 25. Analysts’ 12-month price target reflects more than 19.45% upside from the current level, with 76% of the 25 analysts covering the stock having a Buy rating. ​However, recently, on February 2, Greg McGinniss from Scotiabank downgraded VICI Properties Inc. (NYSE:VICI) from Buy to Hold and also lo ...

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Core Viewpoint - Recent declines in commercial real estate investment trusts (REITs) highlight their perceived vulnerability, but this apprehension may present a buying opportunity for investors, particularly in ETFs like the NEOS Real Estate High Income ETF (IYRI) [1] Group 1: REIT Market Dynamics - REITs have recently been affected by concerns over artificial intelligence's impact on the real estate sector, yet some experts maintain a positive outlook due to a resilient economic environment [1] - Bank of America Research indicates that 2026 may represent a favorable setup for REITs as post-pandemic weaknesses transition into strengths, alongside compelling yields from high-quality REITs [1] - Currently, 42% of listed REITs offer yields exceeding those of 10-year Treasuries, marking the highest yield among the 11 global industry classification standard (GICS) sectors [1] Group 2: Investment Opportunities in IYRI - The NEOS Real Estate High Income ETF (IYRI) features a distribution rate of nearly 11% and a 30-day SEC yield of 3.15%, indicating strong income generation potential [1] - The real estate sector has seen a 5.4% increase in net flows over the past year, suggesting growing interest despite being overlooked by long-only managers and hedge funds [1] - REITs are currently trading 15-20% below net asset value (NAV) for the first time since the 2008 financial crisis, presenting attractive valuation opportunities [1]

Financial Data and Key Metrics Changes - In Q4 2025, total revenue reached $239 million, a 20% increase year-over-year, exceeding guidance by $3 million [28] - Subscription revenue for Q4 was $219 million, up 21% year-over-year [29] - For the full year 2025, total revenue was $885 million, also a 20% increase compared to the previous year [32] - Non-GAAP operating margin for Q4 was 19.1%, beating guidance by 160 basis points [30] - Full-year non-GAAP operating margin was 9.9%, exceeding guidance by 50 basis points [34] Business Line Data and Key Metrics Changes - Professional services revenue in Q4 was $20 million, slightly up from the previous year [30] - The number of customers increased to 6,624, with a gross retention rate of 97% and a net retention rate of 113% for Q4 [31] - 74% of subscription revenue came from customers using multiple solutions, up from 70% in Q4 2024 [31] Market Data and Key Metrics Changes - Total revenue outside the U.S. was 27%, an increase of 300 basis points compared to the prior year [33] - The company added new customers and account expansions, with new customers accounting for approximately 40% of the increase in Q4 subscription revenue [30] Company Strategy and Development Direction - The company aims to leverage AI to enhance its platform, focusing on trust and data integrity in an AI-driven world [6][9] - Workiva is positioned as a trusted platform for CFOs, emphasizing the importance of data accuracy and traceability [7][9] - The company is expanding its leadership team to strengthen its go-to-market strategy and operational efficiency [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand for sustainability reporting and the strategic value of this market [17] - The company anticipates growth in IPO activity in 2026, despite a moderation in Q4 2025 [20][66] - Management highlighted the importance of operational rigor and productivity improvements to achieve long-term financial targets [39] Other Important Information - The company repurchased 131,000 shares for $12 million in Q4, with a total of $72 million repurchased in 2025 [35] - A new pricing model was introduced, focusing on value and consumption rather than a seat-based licensing model [21][75] Q&A Session Summary Question: Role of AI in New Wins - AI is a significant topic in customer discussions, contributing to buying decisions, with increasing adoption in a secure environment [41][42] Question: Operational Rigor and Margin Opportunities - Opportunities for operational efficiency exist across the business, particularly in sales and marketing [45][46] Question: Insights from New CRO Michael Pinto - Michael Pinto is focusing on building a strong global team, refining sales strategies, and enhancing the partner ecosystem [49][50] Question: NRR Direction for 2026 - The company is modeling a gross retention rate of 96% and a net retention rate of 110% for 2026 [52] Question: Capital Markets Environment - Management is optimistic about IPO activity in 2026, incorporating growth into guidance while acknowledging macroeconomic factors [66][68]