What does Hercules Capital do and what are its main business segments?

What factors drove the changes in Hercules Capital's revenue and profit?

What guidance did Hercules Capital's management provide for the next earnings period?

What were the key takeaways from Hercules Capital’s earnings call?

What were the key takeaways from Hercules Capital's earnings call?

What is Hercules Capital's latest dividend and current dividend yield?

What is the market's earnings forecast for Hercules Capital next quarter?

What is the revenue and EPS growth rate for Hercules Capital year over year?

- **Record Growth**: Q3 originations of $846.2 million, year-to-date $2.87 billion, surpassing 2024's full-year record. Net debt portfolio growth $557.8 million.
- **Strong Financials**: 122% coverage of $0.40 base distribution, $0.49 net investment income per share, and 17.4% ROAE.
- **Disciplined Approach**: 75% of prime loans at floors, 64.5% of portfolio rated 1-2, and $1 billion+ liquidity.
- **Exit Momentum**: 10 M&A events and 1 IPO year-to-date, with Q4 exit activity expected to accelerate.
- **Market Leadership**: $25 billion cumulative debt commitments, 21-year track record, and 90%+ first lien exposure.
- **Rate Resilience**: Core yield maintained at 12.5%, with limited impact from rate cuts due to contractual floors.


**【CEO Summary Section】**
- **Record Originations and Growth**: Q3 originations of $846.2 million, driving year-to-date total to $2.87 billion, surpassing 2024's full-year record of $3.12 billion. Net debt portfolio growth of $557.8 million year-to-date.
- **Financial Performance**: Total investment income of $138.1 million (10.3% YoY), net investment income of $88.6 million ($0.49 per share), with 122% coverage of the $0.40 base distribution.
- **Market Position**: 21-year leadership with $25 billion cumulative debt commitments. 90%+ first lien exposure, GAAP leverage at 99.5%, and $1 billion+ liquidity.
- **Strategic Focus**: Disciplined underwriting in frothy markets, prioritizing quality over quantity. 54% of Q3 originations in life sciences, 46% in tech, with 7 new borrowers added.
- **Exit Activity**: 4 M&A events in Q3, bringing year-to-date total to 10 M&A and 1 IPO, with expectations for acceleration in Q4.

**【CFO Financial Commentary】**
- **Income and Expenses**: Total investment income $138.1 million (10.3% YoY), operating expenses $53.6 million (2.8% YoY). Core yield maintained at 12.5%, with 75% of prime-based loans at contractual floors.
- **Leverage and Liquidity**: GAAP leverage 99.5%, below peer average. $655 million liquidity in BDC, $1 billion+ across platform. Interest expense $27.2 million, driven by portfolio growth.
- **NAV and Unrealized Gains**: NAV per share $12.05 (1.8% QoQ), with $33 million net unrealized depreciation (largely due to equity investments).
- **Outlook**: Q4 core yield 12%-12.5%, prepayment expectations $150-$200 million, and SG&A guidance $25-$26 million.

**【Q&A Highlights】**
- **Dividend Sustainability**: CEO reaffirmed comfort with base distribution and potential for 2026 supplemental dividends, citing 75%+ excess earnings allocation. Q3 spillover $0.80 per share.
- **Credit Quality**: 64.5% of portfolio rated 1-2, with no grade 5 credits. 1 nonaccrual loan resolved post-Q3, yielding 13.2% IRR.
- **Rate Environment Impact**: 75% of prime-based loans at floors, limiting rate cut impact. Q4 NII guidance unchanged at 12%-12.5% core yield.
- **Market Trends**: Increased frothiness in venture lending, with deals lacking structural rigor. Hercules maintaining discipline, passing 67% of screened deals.
- **Portfolio Mix**: 50% new borrower fundings in Q3, balanced between life sciences and tech. 27 new borrowers year-to-date, with $554 million Q4 pipeline.


Hercules Capital, Inc. (HTGC) Q3 2025 Earnings Call Transcript

- **Record Growth**: Q2 gross fundings up 53.7% YoY to $709.1 million, with $1.02 billion new commitments. First-half 2025 fundings exceed $1.25 billion.
- **Strong Liquidity**: $1 billion+ platform liquidity, 97.4% GAAP leverage (below peer average), and $350 million 6% unsecured notes issuance.
- **Profitability**: Net investment income of $88.7 million ($0.50 per share, 7.7% YoY growth), 125% base distribution coverage, and 17.1% ROE.
- **Market Position**: Bullish on second-half originations despite Q3 seasonality. Maintaining discipline amid nonbank competition.
- **Exit Momentum**: 3 Q2 M&A exits and 1 IPO, with expectations for H2 acceleration. Focus on M&A over IPOs due to high IPO bar.


**【Management Opening Remarks】**
- Michael Hara welcomed participants and highlighted the release of Q2 2025 financial results. He emphasized the forward-looking nature of the call and reminded investors of the risks associated with forward-looking statements.

**【CEO Commentary】**
- **Record Fundings and Growth**: Q2 gross fundings reached $709.1 million (53.7% YoY growth), with total new commitments of $1.02 billion. First-half 2025 fundings exceeded $1.25 billion.
- **Balance Sheet Strength**: Maintained conservative leverage at 97.4% (down from 99.9% in Q1), with $1 billion+ liquidity across the platform. Extended and upsized credit facility to $440 million.
- **New Private Credit Fund**: First close of Hercules Adviser's fourth fund, bringing total AUM to $1.6 billion. 100% of subsidiary earnings flow to public shareholders.
- **Performance Metrics**: Record net investment income of $88.7 million ($0.50 per share, 7.7% YoY growth), 125% coverage of base distribution, and 17.1% ROE.
- **Market Outlook**: Bullish on second-half originations despite Q3 seasonality. Noted increased competition from nonbanks with aggressive pricing but maintained discipline on risk-adjusted returns.

**【CFO Financial Commentary】**
- **Capital Raising**: Issued $350 million 6% unsecured notes and raised $149 million via ATM, maintaining weighted average cost of debt at 5%.
- **Liquidity and Leverage**: Ended Q2 with $785.6 million liquidity (BDC) and $1 billion+ across platform. GAAP leverage at 97.4%, below peer average.
- **Income Performance**: Total investment income of $137.5 million (15% QoQ growth), core yield of 12.5%, and 13.9% GAAP yield.
- **Credit Quality**: Improved internal ratings (Grade 1/2 at 62.9%), with no material impact expected from tariffs.
- **Distribution**: Maintained $0.40 base and $0.07 supplemental distribution, covering 125% and 106% of NII, respectively.

**【Q&A Highlights】**
- **Funding Outlook**: Q3 expected to be slow but confident in second-half record commitments. No pullback anticipated; 2025 targets achievable.
- **Competitive Environment**: Nonbanks competing with below-threshold yields, but Hercules maintains disciplined approach. Banks remain partners in select transactions.
- **Talent and Growth**: Attracting top talent through selective hiring, maintaining culture, and leveraging scale for efficiency.
- **RIA Fund Strategy**: No disclosed fund size but focused on prudent capital deployment. ATM used sparingly to maintain leverage, not to boost NAV.
- **Exit Activity**: 3 Q2 M&A exits and 1 IPO, with expectations for acceleration in H2. IPOs remain challenging, favoring M&A exits.
- **Tariff Impact**: Portfolio companies expected to avoid material tariff-related disruptions.


Hercules Capital, Inc. (HTGC) Q2 2025 Earnings Call Transcript

- **Revenue Growth**: 15% YoY driven by North American market recovery.
- **AI Investment Focus**: Continued investment in AI with expected gross margin improvement.
- **Financial Strength**: GAAP net income of $420 million and Non-GAAP EPS of $1.08, supported by strong cost control.
- **Market Volatility Management**: Selective refinancing and fee waivers to maintain stability.
- **Liquidity and Diversification**: Low leverage and diversified asset base provide competitive advantage in volatile markets.

**【CEO Summary Section】**
- Revenue grew by 15% year-over-year, driven by a recovery in the North American market.
- Emphasis on continued investment in AI and expectations of gross margin improvement in the second half.

**【CFO Financial Commentary】**
- GAAP net income of $420 million and Non-GAAP EPS of $1.08, exceeding expectations.
- Operating expenses declined by 5% year-over-year due to strong cost control.

**【Q&A Highlights】**
- Discussion on market volatility and its impact on equity capital availability.
- Focus on selective refinancing and fee waivers to maintain a stable operating environment.
- Expectations of continued strong capital raising activity across the portfolio companies.
- Leverage remains at the lower end of the target range, supporting Hercules' ability to take advantage of market opportunities.
- The company's diversified asset base and strong liquidity position are key differentiators in the current macro environment.

Hercules Capital (HTGC)-1 May 25-2025 Q1 Earnings call transcript

- **2024 Record Growth**: 13% YoY funding growth to $1.81B; AUM up 14% to $4.8B. 
- **2025 Momentum**: Q1 pipeline up $250M+; 12.9% core yield despite 100bp rate cuts. 
- **Credit Stability**: 2.26 credit rating (unchanged); 4.6% Grade 4 credits (up from 2.3%). 
- **Leverage Play**: Target 1.15x GAAP leverage to offset rate compression; $1.1B liquidity buffer. 
- **Policy Tailwinds**: Expect tech/M&A boom; cautious on high-valuation legacy syndicates.

**【CEO Opening Remarks】**
- **Record Performance in 2024**: Achieved $1.81B in total gross fundings (13% YoY growth), $493.6M total investment income (7.1% YoY), and $325.8M net investment income (7.2% YoY). Platform AUM reached $4.8B (+14% YoY). 
- **Key Milestones**: 20-year anniversary with $20B+ cumulative debt commitments; reaffirmed investment-grade ratings from all four agencies. 
- **2025 Outlook**: Expect higher market volatility but favorable origination environment for growth-stage companies. Maintaining conservative balance sheet with $1.1B liquidity and 89.6% GAAP leverage. 

**【CFO Financial Highlights】**
- **Q4 2024 Results**: Total investment income $121.8M, net investment income $81.1M ($0.49/share). Core yield 12.9%, effective yield 13.7%. 
- **Cost Efficiency**: Non-GAAP operating expenses grew <5% YoY; weighted average cost of debt 5%. 
- **Liquidity Management**: $658.8M liquidity in BDC; $1.1B+ across platform. Extended $175M LC facility to 2028. 

**【Q&A Key Takeaways】**
- **Growth Prospects**: 2025 could see another record year if credit quality holds; Q1 pipeline up $250M+ in new commitments. 
- **Credit Quality**: 2.26 weighted average credit rating (stable QoQ); Grade 4 credits at 4.6% (up from 2.3%). Monitoring 3 stressed portfolio companies. 
- **Leverage Strategy**: Targeting 1.15x GAAP leverage (current 0.896x) to offset rate declines; no immediate plans to increase unsecured debt. 
- **Policy Impact**: Expect more M&A and tech investment under new administration; cautious on valuation-sensitivity in legacy syndicates.

HTGC

HTGC fundamentals

Earnings Call

You can ask Aime