Runway Growth Finance Q1 2025 Earnings Report

Runway Growth Finance EPS Results

• Actual EPS: $0.42
• Consensus EPS: $0.36
• Beat/Miss: Beat by +$0.06
• One Year Ago EPS: N/A

Runway Growth Finance Revenue Results

• Actual Revenue: $35.40 million
• Expected Revenue: $33.83 million
• Beat/Miss: Beat by +$1.57 million
• YoY Revenue Growth: N/A

Runway Growth Finance Announcement Details

• Quarter: Q1 2025
• Date: 5/12/2025
• Time: After Market Closes
• Conference Call Date: Monday, May 12, 2025
• Conference Call Time: 5:00PM ET

Runway Growth Finance (NASDAQ:RWAY) is a business development company specializing investments in senior-secured loans to late stage and growth companies. It prefers to make investments in companies engaged in the technology, life sciences, healthcare and information services, business services and select consumer services and products sectors. It prefers to investments in companies engaged in electronic equipment and instruments, systems software, hardware, storage and peripherals and specialized consumer services, application software, healthcare technology, internet software and services, data processing and outsourced services, internet retail, human resources and employment services, biotechnology, healthcare equipment and education services. It invests in senior secured loans between $10 million and $75 million.

Runway Growth Finance Q1 2025 Earnings Call Transcript

Key Takeaways

• Runway reported first quarter total investment income of $35.4 million and net investment income of $15.6 million, with a dollar-weighted average portfolio yield rising to 15.4% and NAV per share of $13.48 (down 2.2% Q/Q).
• The team executed $50.7 million in new loans across three existing portfolio companies, maintaining a credit-first underwriting approach and targeting deal sizes of $30–150 million to diversify risk.
• Integration with BC Partners Credit expands origination channels and access to non-sponsored deals, positioning Runway for opportunistic growth without sacrificing underwriting discipline.
• As of 03/31/25, Runway held $315.4 million of available liquidity, borrowing capacity of $297 million, and a leverage ratio of 0.99x, underpinning selective portfolio expansion and capital returns.
• The board approved a $25 million share repurchase program and declared a second-quarter dividend of $0.33 per share plus a $0.02 supplemental payout, reflecting management’s confidence and a bias toward building NAV.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by and welcome to the Runway Growth Finance First Quarter twenty twenty five Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Quinlan Abel, Assistant Vice President, Investor Relations. Please go ahead.

[Quinlan Abel, Assistant Vice President of Investor Relations at Runway Growth Finance]

Thank you, operator. Good evening, everyone, and welcome to the Runway Growth Finance conference call for the first quarter ended 03/31/2025. Joining us on the call today from Runway Growth Finance are David Spring, Chief Executive Officer Greg Greifeld, Chief Investment Officer of Runway Growth Capital LLC, our investment advisor and Tom Ratterman, Chief Financial Officer and Chief Operating Officer. Runway Growth Finance's first quarter twenty twenty five financial results were released just after today's market close and can be accessed from Runway Growth Finance's Investor Relations website at investors.runwaygrowth.com. We have arranged for a replay of the call to be available on the Runway Growth Finance webpage.

[Quinlan Abel, Assistant Vice President of Investor Relations at Runway Growth Finance]

During this call, I want to remind you that we may make forward looking statements based on current expectations. The statements on this call that are not purely historical are forward looking statements. These forward looking statements are not a guarantee of future performance and are subject uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward looking statements, including, without limitation, market conditions caused by uncertainties surrounding interest rates, changing economic conditions, and other factors we identify in our filings with the SEC. Although we believe that the assumptions on which these forward looking statements are based are reasonable, any of those assumptions can prove to be inaccurate. And as a result, the forward looking statements based on those assumptions can be incorrect.

[Quinlan Abel, Assistant Vice President of Investor Relations at Runway Growth Finance]

You should not place undue reliance on these forward looking statements. The forward looking statements contained on this call are made as of the date hereof, and Runway Growth Finance assumes no obligation to update the forward looking statements or subsequent events. To obtain copies of SEC related filings, please visit our website. With that, I will turn the call over to David.

[David Spreng, CEO at Runway Growth Finance]

Thank you, Quinlan, and thanks everyone for joining us this evening to discuss our first quarter twenty twenty five financial results. Today, I'll start by discussing first quarter highlights and how we are optimizing our portfolio in the current environment. Then Greg will shed light on the evolving venture landscape. And to conclude, Tom will provide a deeper dive on our financial performance. For the first quarter, Runway delivered total investment income of $35,400,000 and net investment income of $15,600,000 We touched on this during our fourth quarter earnings call at the March, but it's worth reiterating that given the current volatility in the market, our team has been focused on the health of our portfolio, enhancing our origination channels given our recently completed merger with BC Partners Credit, and continuing to apply discipline to our underwriting practices.

[David Spreng, CEO at Runway Growth Finance]

To that end, in the first quarter, we executed on three investments in existing portfolio companies, representing $50,700,000 in funded loans. The first quarter tends to be a seasonally slower period, but we've also been selective in our evaluation practices. This selectivity has been informed by the knowledge that our platform and opportunity set would be expanding in short order with the completion of our merger with BC Partners. As we've said since we announced the BC Partners transaction, we don't anticipate this expansion to result in portfolio growth overnight, but we believe we have ample liquidity and are positioned to move opportunistically when the right investments arise. As we look to the balance of the year, Runway Growth Capital is seeking originations in the total loan size of 30,000,000 to 150,000,000 with the ideal allocation to the BDC remaining between 20,000,000 and $45,000,000 We believe this range will further diversify our BDC's portfolio over time as we look for new opportunities that meet our high credit standards.

[David Spreng, CEO at Runway Growth Finance]

Our investors in turn are positioned to benefit from a strategic focus that will further diversify our portfolio and mitigate risk. Before I turn the call over to Greg, I want to highlight the current inflection point for the Runway Growth story. We are excited about the opportunities we have in front of us in this next phase at Runway Growth. To both our existing and potential investors, I want you to walk away from our call knowing the following three things. First, we believe Runway is well positioned to optimize our portfolio in the quarters ahead.

[David Spreng, CEO at Runway Growth Finance]

We have expanded origination channels to ensure that our investment mix is built for the quarters and years to come. Second, we intend to remain credit first in our underwriting practices. This may mean more episodic portfolio expansion over a longer time horizon, but we believe this is how we're going to deliver for our shareholder base over the long term. Finally, we have a strong decade long track record, and we have low loss rates compared to our peers and the BDC sector overall. We are seasoned credit professionals who know how to build our portfolio for any economic cycle.

[David Spreng, CEO at Runway Growth Finance]

Today, we believe runway growth represents an attractive entry point for investors who are looking for a prudent portfolio manager, exposure to the venture ecosystem, and clear upside opportunity. We are confident in the path ahead and thrilled to officially be a part of the broader BC Partners Credit platform. With that, I'll turn it over to Greg.

[Greg Greifeld, Chief Investment Officer at Runway Growth Finance]

Thanks, David, and good evening, everyone. As David mentioned, I'd like to take a step back and speak to the dynamics we see shaping the venture ecosystem and how we are positioned today as a result. In 2021, we saw VC funds raise capital at unprecedented levels. At the time, the only hurdle for them to raise the next vintage of a fund was deploying the funds that they had. With that backdrop, we saw investors make a high volume of investments, often at progressively larger sizes, which was additive for many firms in their pursuit to raise their next fund.

[Greg Greifeld, Chief Investment Officer at Runway Growth Finance]

As a result, we saw venture backed companies operate at higher burn levels and deliver, in our view, artificially enhanced growth rates. In effect, many companies were able to buy revenue that wasn't necessarily the highest quality or beneficial to the long term health of the business. Then in 2023 through 2024, venture capital and growth equity firms experienced slower fundraising environments, and this delayed some fund launches. Instead of the next vintage being launched in six to twelve months, we saw firms seeking to return to a state of normalcy with deployment taking place over the course of three to four years. As that played out, venture backed companies had to reckon with the new landscape.

[Greg Greifeld, Chief Investment Officer at Runway Growth Finance]

They had to either raise dilutive equity at a lower valuation than previous rounds or seek nondilutive financing solutions. Additionally, this pushed companies to place a renewed focus on profitability over top line growth and reduce cash burn, which involved cutting product expansions. As a result, we saw companies avoid the addition of more capital to the balance sheet via larger loans or equity raises. Today, we believe that the sentiment has begun to shift again, and many companies have reached a point where they must begin demonstrating growth again to attract investment or achieve a successful exit. The management teams we are seeking with now have charted paths for more reasonable growth moving forward, and we believe companies are now prioritizing sustainable growth over the next few years.

[Greg Greifeld, Chief Investment Officer at Runway Growth Finance]

While we expect muted deal activity in 2025 as companies delay or cancel deals in response to the broader market uncertainty, we believe companies will require nondilutive growth capital to become attractive targets for potential m and a or IPO in the years to come. To that end, we recently completed a new $40,000,000 investment to Autobooks, an accounting and bookkeeping solution funding $27,000,000 in close. In line with my earlier commentary, this was a transaction that was scheduled to close in the first quarter and due to various market conditions was slightly delayed. We are thrilled to kick off this partnership, and our flexibility around timing demonstrates our belief in this investment. In our view, Runway is attractively positioned to further optimize our portfolio for a few reasons.

[Greg Greifeld, Chief Investment Officer at Runway Growth Finance]

Our ability to source non sponsored deals, which often face less competition and allow us to originate loans at more favorable terms, sets us apart from peers while adding an additional point of differentiation to our portfolio. We are now part of an expanded platform following the completion of our combination with BC Partners, which will offer a larger funnel of investment opportunities to evaluate and a more comprehensive suite of solutions to offer borrowers. We look forward to updating you all on how we're executing against our ability to maximize our portfolio in the coming quarters and demonstrate the core earnings power of this next chapter for the BDC. Now I want to turn the call over to Tom to discuss our financial results.

[Thomas Raterman, CFO & COO at Runway Growth Finance]

Thank you, Greg, and good evening, everyone. During the first quarter of twenty twenty five, Runway completed three investments in existing companies representing $50,700,000 in funded loans. Our weighted average portfolio risk rating remained at 2.33 in the first quarter of twenty twenty five, consistent with 2.33 in the fourth quarter of twenty twenty four. Our rating system is based on a scale of one to five, where one represents the most favorable credit rating. As with previous quarters, we calculated the loan to value for loans that were in our portfolio at the end of the fourth quarter and at the end of the first quarter.

[Thomas Raterman, CFO & COO at Runway Growth Finance]

In comparing this consistent grouping of loans, we found that our dollar weighted loan to value ratio increased from 28 to 29.1%. Our total investment portfolio had a fair value of $1,000,000,000 a decrease of 6.7% from $1,080,000,000 in the fourth quarter of twenty twenty four, and a decrease of 1.2% from $1,020,000,000 for the comparable prior year period. Our loan portfolio continues to be comprised almost exclusively of first lien senior secured loans. As of 03/31/2025, Runway had net assets of 503,300,000.0 decreasing from $514,900,000 at the end of the fourth quarter of twenty twenty four. NAV per share was $13.48 at the end of the first quarter, a decrease of 2.2% compared to $13.79 at the end of the fourth quarter of twenty twenty four.

[Thomas Raterman, CFO & COO at Runway Growth Finance]

Our loan portfolio is comprised of 97% floating rate assets. All loans are currently earning interest at or above agreed upon interest rate floors, which generally reflect the base rate plus the credit spread set at the time of closing or signing of the term sheet. During the first quarter, we experienced three prepayments totaling $71,900,000 and scheduled amortization of $3,700,000 We generated total investment income of $35,400,000 and net investment income of 15,600,000.0 in the first quarter of twenty twenty five, compared to 33,800,000.0 and 14,600,000.0 in the fourth quarter of twenty twenty four. Our debt portfolio generated a dollar weighted average annualized yield of 15.4% for the first quarter of twenty twenty five, as compared to 14.7% for the fourth quarter of twenty twenty four and seventeen point four percent for the comparable period last year. Moving to our expenses.

[Thomas Raterman, CFO & COO at Runway Growth Finance]

Total operating expenses were $19,800,000 for the first quarter of twenty twenty five, an increase from $19,200,000 for the fourth quarter of twenty twenty four. We recorded a net gain on investments of $6,100,000 in the first quarter of twenty twenty five, compared to a net realized loss on investments of 2,900,000 in the fourth quarter of twenty twenty four. At 03/31/2025, we continued to have two loans on nonaccrual status, Mingle Healthcare and Snagajob. Our loan to Mingle Healthcare has a cost basis of 4,900,000.0 and fair market value of 2,400,000 or 49% of cost. Our loan to Snagajob has a cost basis of 3,800,000.0 and fair market value of 2,600,000.0 or 68% of cost.

[Thomas Raterman, CFO & COO at Runway Growth Finance]

Together, these loans represent only 0.5% of the total investment portfolio at fair value as of 03/31/2025. At the end of first quarter twenty twenty five, our leverage ratio and asset coverage were zero point nine nine and two point zero one times respectively, compared to one point zero eight and one point nine two times at the end of the fourth quarter of twenty twenty four. As of 03/31/2025, our total available liquidity was $315,400,000 including unrestricted cash and cash equivalents, and we had borrowing capacity of $297,000,000 As discussed during our fourth quarter twenty twenty four earnings call, during the first quarter, we extended our credit facility with KeyBank by three years subject to the terms and conditions as reflected in the amended credit facility agreement. Subsequent to quarter end, we restructured our privately placed senior unsecured notes as a result of the triggering of the change of control provision applicable to the company's external adviser. This provision required us to make an offer to repurchase our senior unsecured notes resulting in a prepayment of the August 2027 notes and an exchange and upside of our December 2026 notes.

[Thomas Raterman, CFO & COO at Runway Growth Finance]

Total unsecured notes, inclusive of our baby bonds, increased to 264,300,000.0 from 247,300,000.0. As of 03/31/2025, we had a total of 162,200,000.0 in unfunded commitments, which was comprised of a hundred and 30 2 point 8 million to provide debt financing to our portfolio companies and 29,400,000.0 to provide equity financing to our JV with CADMA. Approximately 25,000,000 of our unfunded debt commitments are eligible to be drawn based on achieved milestones. Most of our unfunded commitments are subject to specific performance milestones. Looking ahead, we believe we have sufficient liquidity to fund existing unfunded commitments, selective portfolio growth, and potential share repurchases.

[Thomas Raterman, CFO & COO at Runway Growth Finance]

On 05/07/2025, our board of directors approved a new stock repurchase program of 25 man, which will expire on 05/07/2026, or earlier if we repurchase the total amount of stock authorized for the repurchase under the program. We believe the program reflects our view that Runway Growth stock is significantly undervalued and presents an attractive entry point, as well as management's confidence in our 2025 performance. Finally, on 05/07/2025, our board declared a regular distribution for the second quarter of $0.33 per share, as well as a supplemental dividend of $02 per share payable with the regular dividend. With that, operator, please open the line for questions.

[Operator]

Thank The first question comes from Eric Schwick with Lucid Capital Markets. Your line is open.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets LLC]

Hi, good afternoon guys.

[Mickey Schleien, MD - Equity Research at Ladenburg Thalmann]

Good afternoon.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets LLC]

Wanted to start with a question. Just, one of the comments on slide seven, indicates that the median and late stage deal sizes are down and that health care lending And I guess maybe on the second part of that statement, just curious if you could maybe add a little commentary there in terms of if this is a new term development where healthcare lending has slowed or if there's something larger at play and maybe kind of why you'd elected to include that statement in there.

[Thomas Raterman, CFO & COO at Runway Growth Finance]

Yeah, Eric, those are the numbers

[Thomas Raterman, CFO & COO at Runway Growth Finance]

from across the industry wide as reported in the PitchBook Venture Monitor. I think that Greg can comment more specifically on health care, but I just know listening you know, the feedback from our folks and from the peers that it's just been a little bit of a softer, slower, more cautious quarter, and I think that's what's driving those results.

[Greg Greifeld, Chief Investment Officer at Runway Growth Finance]

Got it. Regarding healthcare, I would say that remains one of the three core pillars of verticals we look at, between technology broadly, healthcare, as well as a very selective amount of research. I would say looking across our pipeline, we've seen some more interesting things come on the technology side recently. And given the announcement today about potential impact to, drug prices, coming out of a potential executive order, that's gonna be something that we will be very focused on seeing those details as they come out.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets LLC]

Thanks. I appreciate the additional comments there. And maybe just a follow-up on the pipeline. I noticed Q1 activity was almost 70% refinances. As you look at the pipeline today, curious how it looks in terms of add on refinance and new opportunities.

[Greg Greifeld, Chief Investment Officer at Runway Growth Finance]

Yeah. And to echo my comments about, the deal we closed, Autobooks, that is a term sheet that we had signed and anticipated to, occur in q one. Ultimately, the use of proceeds there was to help Autobooks fund an m and a deal, which given the turbulence, I think, that we all experienced in q one, the negotiations of the final point of that acquisition itself took longer than I think either buyer or seller expected, which caused it to push into q two. I think those are the types of dynamics that we are seeing in, this rapidly evolving, market where, you know, there is desire to do deals, but, folks are trying to make sure that they have the appropriate structure and pricing.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets LLC]

Okay. And, could you provide an update on, the JV? There's been any recent investment activity there?

[Thomas Raterman, CFO & COO at Runway Growth Finance]

I would say that the JV investment activity continues to be somewhat muted as the overall environment and our approach for credit, as Greg mentioned, has been cautious. The JV is experiencing that same level of speed, if you will, and ramp or lack thereof, just the general cautiousness of the approach to credit today.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets LLC]

Thank you for taking my questions today.

[Operator]

The next question comes from Melissa Whittle with JPMorgan. Your line is open.

[Melissa Wedel, Vice President, U.S. Equities Research at JP Morgan]

Good afternoon. Thanks for taking my question. I wanted to start first with NII trends. I mean, obviously, there was a pickup quarter over quarter. But despite that increase, I noted that your declared dividend or the supplemental dividend declared for 2Q is actually a little bit lower than what you paid in the first quarter.

[Melissa Wedel, Vice President, U.S. Equities Research at JP Morgan]

Just curious if you can contextualize that and help us frame how you're thinking about the earnings power of the portfolio.

[Thomas Raterman, CFO & COO at Runway Growth Finance]

Thanks, Melissa. Thanks for joining the call today and for the question. Just to step back to reiterate the dividend policy, so in March, we announced the revised dividend policy of rebasing to $0.33 a share, and then a supplemental dividend of up to 50% of NII. We clearly today have a bias toward building NAI I'm sorry, building NAV per share as opposed to building the dividend because we don't seem to be getting credit for the dividend in the market. So we're confident in the core earnings power of the portfolio and the ability to cover the dividend, certainly the base dividend, and we set that base dividend modeling, a number of different portfolio outcomes with respect to looking at potential for declining rates, throughout the balance of the year, a variety of scenarios with respect, to non accruals.

[Thomas Raterman, CFO & COO at Runway Growth Finance]

And so we're confident in portfolio's ability to cover that dividend going forward. And the supplemental dividend will continue to look for that target of up to 50%, but not necessarily saying it will be 50% every quarter.

[Melissa Wedel, Vice President, U.S. Equities Research at JP Morgan]

Okay. I appreciate that. So just putting a finer point on sort of earnings power of the portfolio, I'm hearing that I'm hearing you say that the supplemental dividend declared for second quarter isn't reflective necessarily of your expectations of the earnings power, but more of a function of a decision to build NAV versus payout up to half of the excess earnings above the base dividend?

[Thomas Raterman, CFO & COO at Runway Growth Finance]

That's

[Melissa Wedel, Vice President, U.S. Equities Research at JP Morgan]

So that being the case, assuming stable base rates, do you feel like the earnings the NII per share of $0.42 that you saw in the first quarter is fully reflective of the ongoing dynamics, again, given stability in the base rates? Or were there some special onetime things we should be thinking about?

[Thomas Raterman, CFO & COO at Runway Growth Finance]

No. Again, I think we feel good about the earnings power of the portfolio, the ability to cover the base dividend. And the NII will vary quarter to quarter based on the growth of the portfolio or, on the, acceleration of income related to prepayments.

[Melissa Wedel, Vice President, U.S. Equities Research at JP Morgan]

Thank you.

[Operator]

And the next question will come from Mickey Schleien with Ladenburg. Your line is open.

[Mickey Schleien, MD - Equity Research at Ladenburg Thalmann]

Yes, good afternoon everyone. I wanted to start by asking about the terms. Clearly in the conventional private credit arena, it's been very borrower friendly and spreads have generally been tight with the market imbalance. But as you mentioned in your prepared remarks, the demand for private debt capital is better. And I'm curious how that's impacting the trends that you're seeing in your pipeline versus perhaps a year ago.

[Greg Greifeld, Chief Investment Officer at Runway Growth Finance]

Yes, I'll take a first crack at that. This is Greg. I do think that we are seeing an improvement in terms of the structure of the pipeline and the opportunities that we're seeing. You know, there's the things that get reported in the schedule of investments, as you said, in terms of spread, floor rate, and other things like that. But I would say most encouraging encouragingly as well, we're seeing lower asks in terms of leverage from a loan to value perspective.

[Greg Greifeld, Chief Investment Officer at Runway Growth Finance]

We're seeing maintenance of amount of and quality of covenants. So I think we feel that we're in a good place in terms of the economics, but as importantly, if not more importantly, also the structural protections of the underlying documents.

[Mickey Schleien, MD - Equity Research at Ladenburg Thalmann]

That's really good to hear. Within the pipeline or just thinking broadly, what kind of companies within the AI landscape are you attracted to for investment, if any?

[Greg Greifeld, Chief Investment Officer at Runway Growth Finance]

Yeah. So what I would say in general is, as I'm sure many folks in the market have seen, there's a large race for everyone to try to find a way to reinvent themselves as an AI company. In general, where we play in the market, you know, we're looking for more mature, larger businesses that are generating a meaningful amount of, you know, revenue without too high of a burn amount. So a lot of the really early stage, companies, you know, are still too nascent and, immature for us to make loans to, but it is something that we do look for larger businesses. You know, example in our portfolio is a company interactions, which has been in for a few years, but, you know, we're we're definitely folk interested on in AI.

[Greg Greifeld, Chief Investment Officer at Runway Growth Finance]

But, again, you know, we're not necessarily willing to go, earlier stage than we typically look across the portfolio.

[Mickey Schleien, MD - Equity Research at Ladenburg Thalmann]

I imagine for those larger, you know, more mature AI companies you're referencing, must be enormous demand to get those deals. Are the terms and are the risk adjusted returns you can get in that space interesting at all?

[Greg Greifeld, Chief Investment Officer at Runway Growth Finance]

I would say that, you know, as with everything, there's a need to be opportunistic. But that being said, you're completely right that anytime there's a really hot sector out there, you're gonna see folks, you know, chase those deals in terms of either economics or structure. And, you know, that's why, as we look to stick to our knittings, you don't necessarily see the most current hot sector come into the portfolio.

[Mickey Schleien, MD - Equity Research at Ladenburg Thalmann]

Yeah. Makes sense. Just following up on the health care question. It is, if I'm not mistaken, your second largest allocation. To what extent are the cuts at the NIH and the FDA impacting the sentiment and the deal flow that underlies the sort of slow pace that you referenced before?

[Greg Greifeld, Chief Investment Officer at Runway Growth Finance]

Yeah. I would say that by nature it is an industry with a tremendous amount of regulatory risk, not only in terms of achieving or not achieving approval, but also in terms of, you know, how long things might take. As a result, if you look at the majority of our healthcare book, and we've had a good amount of success, particularly a number of the names in the portfolio today, is post approval businesses that are generating more meaningful types of revenue which don't necessarily have that same regulatory, slowdown risk than you might see for, in early stage preapproval biotech or something like that.

[Mickey Schleien, MD - Equity Research at Ladenburg Thalmann]

Okay. That's interesting. Lastly, just sort of a housekeeping question maybe for Tom. If you could give us some highlights of what drove this quarter's realized gain and the unrealized portfolio depreciation.

[Thomas Raterman, CFO & COO at Runway Growth Finance]

Sure. Two parts. Really drove the realized gain was the previous announced closing of the sale of Gynasonics. And if you recall, in Gynasonics, we had two pieces, we had our loan. So there was the acceleration of some income associated with the loan.

[Thomas Raterman, CFO & COO at Runway Growth Finance]

But the gain was really driven by the sale of the preferred stock interest. In terms of the depreciation in the balance of the portfolio, that's a function of the ongoing valuation process. And I would say as you look at that, about 50 of that is influenced by performance and 50% is influenced by market multiples. So I think there were a couple of big movers that accounted for the majority of that change.

[Mickey Schleien, MD - Equity Research at Ladenburg Thalmann]

And Tom, did you just say some of the Gisonix proceeds were recognized or accrued into income as a Well, there is fee?

[Thomas Raterman, CFO & COO at Runway Growth Finance]

Yes.

[Thomas Raterman, CFO & COO at Runway Growth Finance]

But the the gain on the the sale of the equity is what what drove that almost $7,000,000 gain.

[Mickey Schleien, MD - Equity Research at Ladenburg Thalmann]

I understand. Okay. Thanks for your time this afternoon. Those are all my questions.

[Operator]

The next question will come from Doug Harter with UBS. Your line is open.

[Doug Harter, Equity Research Analyst at UBS Group]

Your loan yield has had kind of quite a variance over the past couple quarters. Can you just talk about how you're thinking about what is a normalized level that you would think you would kind of achieve as you kind of spread out some of prepayment activity and as you think about that over kind of the next several quarters?

[Thomas Raterman, CFO & COO at Runway Growth Finance]

Sure. I think if you look at the variability in yields, there's been spikes at times when we have accelerated or above normal kind of level of prepayments. Going forward, we see fewer prepayments, the transactions are staying in portfolio longer, which mitigates that spike, if you will, but it also reduces the amount of acceleration from accreted income, whether it's the end of term payment or the OID. So you have a little bit of less of an impact from that perspective. So if you normalize that yield, I think you're in the right neighborhood in terms of what we would expect.

[Thomas Raterman, CFO & COO at Runway Growth Finance]

Our our SOFR spreads and our our prime spreads are are pretty stable, and then you you throw on the end of term payments and OID, and that generates the core yield.

[Doug Harter, Equity Research Analyst at UBS Group]

Okay. I appreciate it. Thank you.

[Operator]

I show no further questions at this time. I would now like to turn the call back over to David Spring, CEO for closing remarks. I am showing no further questions in the queue at this time. I would now like to turn the call back over to David Spring, CEO, for closing remarks.

[David Spreng, CEO at Runway Growth Finance]

Great. Thank you, operator. And thank you everybody for joining today. In conclusion, we believe that our high quality portfolio is positioned to perform amidst ongoing market volatility, and we look forward to updating you on our progress during our second quarter earnings call in August.

[Operator]

This does conclude today's conference call. Thank you for participating and you may now disconnect.

Participants

Executives

• Quinlan Abel, Assistant Vice President of Investor Relations
• David Spreng, CEO
• Greg Greifeld, Chief Investment Officer
• Thomas Raterman, CFO & COO

Analysts

• Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets LLC
• Mickey Schleien, MD - Equity Research at Ladenburg Thalmann
• Melissa Wedel, Vice President, U.S. Equities Research at JP Morgan
• Doug Harter, Equity Research Analyst at UBS Group