RWAY — Runway Growth Finance Corp.

Summary of Runway Growth Finance Corp. Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Total Investment Income: $29.5 million, down from $30 million in Q1 2025.
• Net Investment Income (NII): $10.6 million, a decrease from $11.6 million year-over-year.
• NAV per Share: $12.13, down 9.6% from $13.42 at the end of 2025.
• Total Investment Portfolio Fair Value: $886.3 million, a decline of 4.4% from $927.4 million in 2025.
• Weighted Average Portfolio Risk Rating: Increased to 2.67 from 2.45, primarily due to two loans moving to nonaccrual status.
• Dividend: Base dividend maintained at $0.33 per share; spillover income of approximately $0.65 per share reported.

2. Strategic Updates and Business Highlights:

• SWK Acquisition: Completed in April 2026, enhancing the firm's position in health care and diversifying the portfolio. Health care now represents 32% of the portfolio.
• Leadership Changes: JD Thomas appointed as managing director of health care and life sciences; Avisha Kubani promoted to chief credit officer; Thomas B. Raterman transitioning to vice chairman.
• Investment Activity: Four investments totaling $17.6 million made during the quarter, with an additional debt commitment of $46.3 million planned for 2026.
• Portfolio Diversification: Post-SWK acquisition, top 10 investments now account for 43% of the portfolio, down from 54%.

3. Forward Guidance and Outlook:

• NII Expectations: Anticipated contributions from the SWK portfolio expected to add approximately $0.03 per share in Q2, although offset by the impact of nonaccrual loans.
• Accretive Earnings: SWK expected to be partially accretive to EPS in Q2 and fully accretive by Q3 2026.
• Investment Strategy: Focus on high-quality investments in technology, health care, and consumer sectors, with a robust pipeline of opportunities.

4. Bad News, Challenges, or Points of Concern:

• Nonaccrual Loans: Marley Spoon and BlueShift moved to nonaccrual status, expected to impact NII by $0.06 per share in Q2.
• Declining NAV: Significant drop in NAV per share and total fair value of the investment portfolio raises concerns about asset performance.
• Market Dynamics: Increased scrutiny in private credit due to software and AI disruptions, alongside elevated redemptions in evergreen funds, may pose challenges.

5. Notable Q&A Insights:

• One-Time Expenses: Clarification on one-time expenses related to early redemption of baby bonds, with no direct SWK acquisition costs impacting the quarter.
• Capital Allocation: Balancing act between investing in new portfolio companies and share repurchases highlighted, with a $15 million share repurchase program announced.
• Unrealized Depreciation: Majority of unrealized depreciation attributed to market multiples decline and specific watch list names, with ongoing management strategies in place for recovery.

Overall, while Runway Growth Finance Corp. faces challenges with declining metrics and nonaccrual loans, the strategic acquisition of SWK and leadership changes position the company for potential long-term growth.