Financial Data and Key Metrics Changes - Runway Growth Finance reported total investment income of $35.4 million and net investment income of $15.6 million for Q1 2025, compared to $33.8 million and $14.6 million in Q4 2024, respectively [5][18] - The net asset value (NAV) per share decreased by 2.2% to $13.48 from $13.79 at the end of Q4 2024 [17] - The total investment portfolio's fair value decreased by 6.7% from $1.08 billion in Q4 2024 to $1 billion in Q1 2025 [17] Business Line Data and Key Metrics Changes - The weighted average portfolio risk rating remained stable at 2.33, indicating consistent credit quality [16] - The loan portfolio is primarily composed of first lien senior secured loans, with 97% of assets being floating rate [17][18] - The dollar weighted loan to value ratio increased from 28% to 29.1% [17] Market Data and Key Metrics Changes - The venture capital landscape has shifted, with a slowdown in fundraising and a focus on profitability over growth, impacting deal activity [11][12] - The company noted that healthcare lending has been softer, reflecting broader market caution [26][28] Company Strategy and Development Direction - The company aims to optimize its portfolio and expand origination channels following its merger with BC Partners [6][9] - A strategic focus on credit-first underwriting practices is intended to ensure long-term shareholder value [8] - The company is positioned to benefit from a diversified portfolio that mitigates risk [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate ongoing market volatility and emphasized a focus on sustainable growth [12][61] - The sentiment in the venture ecosystem is shifting, with companies needing to demonstrate growth to attract investment [12][13] Other Important Information - The company has a new stock repurchase program approved for $25 million, reflecting management's belief in the stock's undervaluation [22] - A regular distribution of $0.33 per share and a supplemental dividend of $0.02 per share were declared for Q2 2025 [22] Q&A Session Summary Question: Comments on healthcare lending and its slowdown - Management noted that healthcare remains a core focus, but the current quarter has shown a softer lending environment [26][28] Question: Update on the investment pipeline - The pipeline is currently seeing a high percentage of refinances, with ongoing cautiousness in credit approaches [29][32] Question: Context on NII trends and dividend declaration - The supplemental dividend is lower due to a strategic decision to build NAV rather than payout excess earnings [35][37] Question: Trends in private credit market - There is an improvement in the structure of the pipeline, with better terms and lower leverage asks [42][44] Question: Highlights of realized gains and unrealized depreciation - Realized gains were driven by the sale of Gynasonics, while depreciation was influenced by performance and market multiples [50][52]

Financial Data and Key Metrics Changes - Total investment income for Q1 2025 was $35.4 million, an increase from $33.8 million in Q4 2024, while net investment income rose to $15.6 million from $14.6 million in the previous quarter [5][18] - The fair value of the total investment portfolio decreased to $1 billion, down 6.7% from $1.08 billion in Q4 2024 and down 1.2% from $1.02 billion in the same period last year [17] - Net assets decreased to $503.3 million from $514.9 million at the end of Q4 2024, with NAV per share falling to $13.48, a decrease of 2.2% [17] Business Line Data and Key Metrics Changes - The loan portfolio primarily consists of first lien senior secured loans, with 97% of assets being floating rate [17] - The dollar weighted loan to value ratio increased from 28% to 29.1% [17] - The debt portfolio generated a dollar weighted average annualized yield of 15.4% for Q1 2025, compared to 14.7% in Q4 2024 [18] Market Data and Key Metrics Changes - The first quarter of 2025 was characterized by a cautious market environment, with a noted slowdown in healthcare lending and overall deal activity [12][29] - The company executed three investments in existing portfolio companies totaling $50.7 million in funded loans during Q1 2025 [6][16] Company Strategy and Development Direction - The company aims to optimize its portfolio and enhance origination channels following the merger with BC Partners Credit, focusing on credit-first underwriting practices [6][9] - The strategic focus is on diversifying the portfolio and mitigating risks, with a target loan size range of $30 million to $150 million [6][9] - The company is positioned to benefit from a strategic focus on sustainable growth and a strong track record of low loss rates compared to peers [9][10] Management's Comments on Operating Environment and Future Outlook - Management noted a shift in the venture ecosystem, with companies now prioritizing sustainable growth over top-line growth due to market conditions [12][13] - The sentiment in the market is expected to shift, with companies needing to demonstrate growth to attract investment [14] - Management expressed confidence in the company's ability to cover dividends and build NAV per share, despite a cautious approach to credit [37][38] Other Important Information - The company has a total available liquidity of $315.4 million, including unrestricted cash and cash equivalents, and a borrowing capacity of $297 million [20] - A new stock repurchase program of $25 million was approved, reflecting management's confidence in the stock's valuation [22] - A regular distribution of $0.33 per share and a supplemental dividend of $0.02 per share were declared for Q2 2025 [23] Q&A Session Summary Question: Comments on healthcare lending and its slowdown - Management indicated that healthcare remains a core vertical but noted a softer quarter in lending, influenced by broader market conditions [28][29] Question: Update on the investment pipeline - The pipeline is currently seeing a mix of refinances and new opportunities, with a cautious approach to credit impacting activity levels [30][33] Question: Trends in net investment income and dividend declaration - The supplemental dividend for Q2 is lower due to a strategic decision to build NAV rather than focus solely on dividend payouts [36][38] Question: Impact of private credit market conditions - Management noted improvements in the structure of the pipeline, with lower leverage asks and maintained quality of covenants [44][45] Question: Insights on AI investment opportunities - The company is focused on mature businesses in the AI space, avoiding early-stage companies due to their high burn rates [46][48] Question: Factors driving realized gains and unrealized depreciation - Realized gains were driven by the sale of Gynasonics, while unrealized depreciation was influenced by performance and market multiples [51][53]