RWAYL — Runway Growth Finance Corp. - 7

Summary of Runway Growth Finance Corp. Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Total Investment Income: $30 million, down from $36.7 million in Q4 2024.
• Net Investment Income (NII): $11.6 million, compared to $15.7 million in Q4 2024.
• NII per Share: $0.32, with a base dividend of $0.33 per share.
• Portfolio Fair Value: $927.4 million, a decrease of 2% from $946 million in Q4 2024.
• Weighted Average Portfolio Risk Rating: Increased to 2.45 from 2.42.
• Net Assets: $484.9 million, down from $489.5 million at the end of Q4 2024.
• NAV per Share: $13.42, a decrease of 1% from $13.55.
• Debt Portfolio Yield: 14.2%, down from 16.8% quarter-over-quarter.
• Total Operating Expenses: $18.4 million, reduced from $21 million in Q4 2024.

2. Strategic Updates and Business Highlights

• Completed seven investments totaling $42.9 million in Q4, focusing on technology, healthcare, and consumer sectors.
• Announced the pending acquisition of SWK Holdings, expected to close in early April 2026, which aims to diversify the portfolio and enhance capabilities in healthcare and life sciences.
• Emphasized a disciplined investment approach with a focus on first-lien senior secured loans and risk mitigation.
• Notable investments included $20 million in a mobility company and $10 million in a consumer products special purpose vehicle.

3. Forward Guidance and Outlook

• The company expressed optimism for Q1 2026, citing a stronger pipeline compared to the previous year, despite it being a seasonally slow quarter.
• Anticipated benefits from the SWK acquisition include increased earnings power, optimized portfolio composition, and improved access to new debt financing markets.
• Plans to maintain a leverage ratio between 1.2x and 1.3x, with an expectation of slight softness in Q1 earnings due to the timing of the SWK deal.

4. Bad News, Challenges, or Points of Concern

• Decline in both total investment income and net investment income year-over-year.
• Prepayment fee income returned to more normalized levels, contributing to the decrease in NII.
• The portfolio experienced a modest increase in risk rating, indicating potential concerns about credit quality.
• The company faced challenges in deploying capital efficiently due to competitive pressures in the market, particularly in the software and consumer sectors.

5. Notable Q&A Insights

• Management highlighted that the pipeline is stronger than the previous year, driven by opportunities from BC Partners and the upcoming SWK acquisition.
• Concerns about the competitive landscape were raised, with management noting that while attractive opportunities exist, aggressive terms from other investors can complicate deal-making.
• Updates on the CADMA joint venture indicated ongoing efforts to build the portfolio, with expectations for the first distribution in Q2 2026.
• The management team addressed questions regarding the SWK acquisition's impact on NII per share, confirming that while there may be some dilution, the overall financial impact remains manageable.

Overall, while Runway Growth Finance Corp. faced some declines in key financial metrics and ongoing market challenges, the strategic acquisition of SWK Holdings and a robust investment pipeline provide a cautiously optimistic outlook for the future.