Blue Owl Technology’s Earnings Call Contradictions: Muted Software Volumes and AI’s Uncertain Role

Date of Call: Aug 6, 2026

Financials Results

• EPS: Adjusted net investment income of $0.30 per share

Guidance:

• Expect to cover the base dividend of $0.35 per share by the middle of next year.
• Anticipate continued deployment toward the midpoint of the target leverage range (0.9 to 1.25x) to increase earnings power.
• Expect to benefit from wider spreads, stronger documentation, and higher base rates in a more attractive deployment environment.
• Plan to continue rotating non-income-producing equity investments into income-generating assets.
• See multiple avenues for deployment that can be accretive as market conditions improve.

Business Commentary:

Strong Performance and Credit Quality:

• Blue Owl Technology Finance Corp reported adjusted net investment income per share of $0.30 and a net asset value per share of $16.48 for Q2 2026.
• The company maintained stable net asset value, continued earnings growth, and excellent credit quality, with non-accrual rates among the lowest in the industry.
• This performance was attributed to the strength and resiliency of borrowers' underlying fundamentals, with steady organic growth in revenues and EBITDA across the portfolio.

Improved Investment Environment:

• The investment environment has improved meaningfully, allowing Blue Owl to become more selective, leading to significantly wider spreads and stronger protections.
• Forward rate expectations have moved higher since the beginning of the year, providing a tailwind for the portfolio of predominantly floating rate loans.
• Reduced capital availability has allowed lenders to be more selective, contributing to the improved investment environment.

Progress in Diverse Technology Sectors:

• Blue Owl made approximately $850 million of new commitments and funded $550 million in Q2 2026, with a focus on areas like life sciences and digital infrastructure.
• The company led a $700 million platform-wide loan for Karis, a commercial stage company in next-generation cancer diagnostics, highlighting opportunities in life sciences.
• Growth in these sectors is supported by Blue Owl's deep expertise and strong platform connectivity, particularly in digital infrastructure and life sciences.

Capital Structure and Liquidity:

• Blue Owl ended the quarter with over $2 billion of total cash and available capacity across its credit facilities, despite a challenging market for technology-oriented companies.
• The company issued a $500 million unsecured bond, added $150 million in secured financing, and extended the maturity of its revolving credit facility.
• These actions strengthened the capital structure and provided substantial liquidity and flexibility for future portfolio growth.

Share Repurchase Activity:

• Blue Owl repurchased over $55 million of stock in Q2 2026, bringing total repurchases over the past three quarters to roughly $170 million.
• The repurchases reflect conviction in the portfolio's quality and the attractiveness of shares at current levels, while preserving capital for deployment in improved market conditions.
• Approximately $195 million remains available under the $300 million share repurchase program authorized by the Board.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 'strong quarter', 'stable net asset value', 'continued earnings growth', and 'excellent credit quality'. They noted the 'investing environment is more attractive for technology', 'have a clear path towards dividend coverage by the middle of next year', and expressed confidence in the portfolio's performance and positioning, stating 'we believe OTF enters the second half of the year from a position of strength'.

Q&A:

• Question from Finian O'Shea (Wells Fargo): For one, if you could hit on any potential guide you can give on monetizing the equity gains from this quarter, And then also the life sciences program or JV. I think this came up on last call. It was described as partially one time. But anyway, any guide on how we can think of the growth and how to think about the returns of that?
  Response: Management outlined four primary drivers to reach the $0.35 dividend target: leverage growth, improved deployment economics, repricing of existing assets, and rotation of non-income equity into income assets. They also stated the life sciences JV produces stable dividends and expects continued strong performance.

• Question from Finian O'Shea (Wells Fargo): Regarding leverage, does this change the way you think about your ramp and your funding mix?
  Response: Management will continue to use unsecured financing as part of incremental capital, aiming to optimize the cost structure while maintaining a significant unsecured cushion, and will focus on taking advantage of attractive spread opportunities.

• Question from Kenneth Lee (RBC Capital Markets): Could you share more color on some of the deal activity you're seeing within the software space currently? What are your thoughts on the outlook?
  Response: Deal volumes in software remain muted, but the market is attractive due to wider spreads (150-200 bps wider in some cases) and less competition. Management sees a favorable opportunity set for high-quality assets given their capital and expertise, and also highlighted attractive opportunities in life sciences and digital infrastructure.

• Question from Kenneth Lee (RBC Capital Markets): In terms of share repurchases, how active can OTF be given the context of leverage and investment opportunities?
  Response: Management expects to continue share repurchases alongside investing, as the board has re-upped the program to $300 million with about $200 million remaining, viewing current share levels as attractive while maintaining capital for deployment.

• Question from Aaron Siganovich (Truist Securities): Once fully ramped, what is the expectation for ROE?
  Response: Management stated the $0.35 run rate is historically bolstered by capital gains and can grow in the current widening spread environment. They emphasized that at today's stock discount, reaching that yield represents a substantial return, and earnings coverage is achievable.

• Question from Jason Stewart (Compass Point): How have you shifted positioning in the market given the improved environment?
  Response: There is no material change in underwriting criteria; the focus remains on mission-critical and best-in-class assets. The shift is in capturing better spreads and structuring tighter documentation due to less capital and competition.

• Question from Jason Stewart (Compass Point): Is there anything technical limiting private debt from participating as public equity prices rebound?
  Response: Management attributed the lag in private debt markets to a fundamental, ongoing wrestle with software credit outlook, not technical factors. They noted a lingering angst about private credit is a disconnect from public market strength, but expect eventual catch-up.

• Question from Chris Muller (Citizens Capital Marketers): Does the current AI fear present an opportunity for attractive investments?
  Response: Yes, AI concerns create significant opportunities as spreads have widened and lenders can demand better terms. Management sees a return to mean for software spreads and expects to benefit from refinancing existing portfolio positions at more attractive spreads.

Contradiction Point 1

Life Sciences JV's Nature and Performance

Contradiction on whether the joint venture is a one-time event or a sustained income generator.

Finian O'Shea (Wells Fargo) - Finian O'Shea (Wells Fargo)

2026Q2: The **Life Sciences JV is not a one-time event**. It produces stable, consistent dividends. - [Jonathan Lamb](CFO)

Given that the life sciences program/JV was previously described as partially one-time, can you provide guidance on its future growth and returns? - Finian O’Shea (Wells Fargo)

2026Q2: The JV produces stable, consistent dividends. Recent repayments and call pro are part of normal course operations. - [Erik Bissonnette](President)

Contradiction Point 2

Software Deal Market Environment and Activity

Contradiction on the level of software deal market activity and competitiveness.

What are your thoughts on the company's recent financial performance? - Kenneth Lee (RBC Capital Markets)

2026Q2: Deal volumes **remain muted** across software and technology. However, the current market is attractive from a risk-adjusted return perspective due to **less competition and less capital**. - [Eric Bissonette](President)

Can you provide more details on current software deal activity and the outlook for the next few quarters? - Kenneth Lee (RBC Capital Markets)

2026Q2: Software deal volumes **remain muted**, consistent with broader market trends. However, the current market is attractive from a risk-adjusted return perspective due to **less competition and less capital availability**. - [Erik Bissonnette](President)

Contradiction Point 3

Outlook on Software Deal Activity and Market Conditions

Contradiction on whether software deal volumes are currently active or muted.

Kenneth Lee (RBC Capital Markets) - Kenneth Lee (RBC Capital Markets)

2026Q2: Deal volumes remain muted across software and technology. - [Eric Bissonette](President)

What is the current state of deal activity in the software space and the outlook for the next few quarters? - Brian McKenna (Citizens JMP Securities, LLC)

2026Q1: Activity is currently muted with a market pause, but sentence is shifting. Recent partnerships... signal a more balanced conversation, which may unlock deal activity in the latter half of the year. - [Erik Bissonnette](President)

Contradiction Point 4

Perception and Performance of Private Credit Markets

Contradiction on whether private loan markets are stable or experiencing a lag.

Jason Stewart (Compass Point) - Jason Stewart (Compass Point)

2026Q2: Spreads in private loan markets have been stable, not tightening. The lag in private credit perception versus public markets is a disconnect, not a technical limitation. - [Eric Bissonette](President)

"Are technical factors in the private debt market (e.g., CLOs) limiting participation as public software/tech equity prices rebound?" - Finian O'Shea (Wells Fargo Securities, LLC)

2026Q1: AI is a significant issue with peak uncertainty; lenders will look to reduce exposure within reasonable bounds. - [Craig Packer](CEO)

Contradiction Point 5

Positioning on AI-Related Investment Opportunities

Contradiction on whether AI disruption is a concern or a clear opportunity for new investments.

Chris Muller (Citizens Capital Marketers) - Chris Muller (Citizens Capital Marketers)

2026Q2: Yes, AI-related concerns are creating a significant opportunity. Wider spreads and the purchasing power of a major technology investor lead to more attractive terms... - [Eric Bissonette](President)

Does AI disruption offer investment opportunities that would otherwise be competed away, given your solid credit quality despite market fears? - Finian O'Shea (Wells Fargo Securities, LLC)

2026Q1: AI is a significant issue with peak uncertainty; OTF's bar for new software investments will be very high. - [Craig Packer](CEO)