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

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

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

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

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

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?

- **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

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