Summary of Fidus Investment Corporation Q4 2025 Earnings Call

1Key Financial Results and Metrics

Total Investment Income: $42.2 million for Q4, up $4.9 million from Q3, driven by increased interest and fee income.

Net Investment Income (NII): $19.4 million in Q4, adjusted NII of $0.52 per share (compared to $0.54 in Q4 2024).

Dividends: Total dividends declared for Q4 were $0.52 per share, including a base dividend of $0.43 and a supplemental dividend of $0.09.

Net Asset Value (NAV): Increased 13.2% to $741.9 million, with NAV per share at $19.55.

Portfolio Growth: Total portfolio reached $1.3 billion, with 86% in first lien securities.

Debt Outstanding: $658.3 million with a net debt-to-equity ratio of 0.8x.

2Strategic Updates and Business Highlights

Strong Deal Flow: Q4 saw $213.7 million in originations, the highest quarterly investment amount, attributed to a recovering M&A environment.

Portfolio Composition: Continued focus on niche market leaders in the lower middle market, with a diversified portfolio across various industries.

Software and Tech Investments: Portfolio in software and tech-enabled services valued at $464 million, with 92% in first lien debt.

Credit Quality: Nonaccruals accounted for less than 1% of the total portfolio, indicating strong credit performance.

3Forward Guidance and Outlook

2026 Expectations: Anticipated modest deal flow in Q1 2026, with expectations for increased activity throughout the year as private equity firms seek exits.

Investment Strategy: Focus on generating attractive risk-adjusted returns and growing NAV, with ongoing scrutiny of potential investments, particularly in the software sector.

4Bad News, Challenges, or Points of Concern

Seasonal Deal Flow: Q1 2026 expected to be less active than Q4 2025 due to seasonal patterns.

Market Risks: Concerns about the impact of AI and technology risks on software investments, though management remains confident in their portfolio's resilience.

Interest Rate Exposure: Approximately 25% of debt investments are fixed-rate, which may limit responsiveness to declining rates.

5Notable Q&A Insights

Deal Flow Dynamics: Management noted that the strong Q4 was largely due to pent-up demand, with expectations for a more modest Q1.

Software Portfolio Risks: Management emphasized the importance of qualitative factors in software investments, including management quality and market position.

ARR Loans: Approximately 22% of the software portfolio consists of ARR loans, indicating a focus on recurring revenue models.

Fansteel Investment: Management expressed confidence in their largest single investment, indicating a strong long-term outlook despite its size in the portfolio. This summary encapsulates the key financial metrics, strategic initiatives, outlook, and concerns discussed during the earnings call, providing a balanced view of Fidus Investment Corporation's performance and future direction.