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- **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

Revenue

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HTGC

HTGC fundamentals

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