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), Inc. is a publicly traded business development company that provides customized debt and equity financing solutions to high‐growth, venture‐backed companies. The firm specializes in structuring senior secured loans, unitranche facilities, second‐lien financings, convertible notes and equity co‐investments designed to extend the cash runway for late‐stage companies. Runway’s flexible capital offerings are aimed at supporting technology, life sciences and other innovation‐driven sectors as they pursue growth initiatives and prepare for liquidity events.

Originally launched in 2017 under the name Saratoga Investment Corp., the company rebranded as Runway Growth Finance in 2020 following the acquisition of an established middle‐market credit manager. Runway’s management team combines private credit, venture and growth investing expertise, leveraging deep relationships within the venture ecosystem to source and underwrite financing opportunities. Their investment approach emphasizes rigorous due diligence, active portfolio monitoring and collaboration with existing shareholders to drive value for portfolio companies.

Headquartered in the United States, Runway Growth Finance primarily serves companies based in North America while selectively considering opportunities in Western Europe. The firm targets businesses approaching significant milestones such as initial public offerings or strategic mergers and acquisitions, offering financing structures that help founders and investors preserve equity ownership and maintain strategic flexibility. Runway’s sector‐focused teams deliver tailored financing solutions designed to bridge the gap between late‐stage venture capital and public market access.

Runway Growth Finance Q1 2025 Earnings Call Transcript

Key Takeaways

• Liquidity including $315.4 m available cash and $297 m borrowing capacity plus a new $25 m stock repurchase program underscore financial flexibility.
• Portfolio yield rose to 15.4% in Q1 from 14.7% in Q4, driving net investment income up to $15.6 m.
• NAV per share fell 2.2% to $13.48 and total portfolio fair value decreased 6.7% QoQ to $1 bn, reflecting market volatility.
• Runway funded $50.7 m across three selective deals in Q1 and is positioned to expand opportunistically following the BC Partners Credit merger.
• Management maintains a credit-first underwriting approach and highlights the BC Partners merger’s expanded origination channels as catalysts for future growth.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to the Runway Growth Finance First Quarter 2025 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 VP of Investor Relations at Runway Growth Capital]

Thank you, Operator. Good evening, everyone, and welcome to the Runway Growth Finance conference call for the first quarter ended March 31, 2025. Joining us on the call today from Runway Growth Finance are David Spreng, Chief Executive Officer; Greg Greifeld, Chief Investment Officer of Runway Growth Capital LLC, our Investment Advisor; and Tom Raterman, Chief Financial Officer and Chief Operating Officer. Runway Growth Finance's first quarter 2025 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. 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.

[Quinlan Abel, Assistant VP of Investor Relations at Runway Growth Capital]

These forward-looking statements are not a guarantee of future performance and are subject to 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 uncertainty 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. 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.

[Quinlan Abel, Assistant VP of Investor Relations at Runway Growth Capital]

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 2025 financial results. Today, I'll start by discussing first quarter highlights and how we are optimizing our portfolio in the current environment. 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 $35.4 million and net investment income of $15.6 million. We touched on this during our fourth quarter earnings call at the end of 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 $50.7 million 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 to $150 million, with the ideal allocation to the BDC remaining between $20 to $45 million.

[David Spreng, CEO at Runway Growth Finance]

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. 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. We have expanded origination channels to ensure that our investment mix is built for the quarters and years to come.

[David Spreng, CEO at Runway Growth Finance]

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. 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, CIO of Runway Growth Capital LLC 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 fund 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. 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.

[Greg Greifeld, CIO of Runway Growth Capital LLC at Runway Growth Finance]

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 6-12 months, we saw firms seeking to return to a state of normalcy, with deployment taking place over the course of 3-4 years. As that played out, venture-backed companies had to reckon with a new landscape. They had to either raise dilutive equity at a lower valuation than previous rounds or seek non-dilutive financing solutions. Additionally, this pushed companies to place a renewed focus on profitability over top-line growth and reduced 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.

[Greg Greifeld, CIO of Runway Growth Capital LLC at Runway Growth Finance]

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 speaking 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. 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 non-dilutive growth capital to become attractive targets for potential M&A or IPO in the years to come. To that end, we recently completed a new $40 million investment to Autobooks, an accounting and bookkeeping solution, funding $27 million in close.

[Greg Greifeld, CIO of Runway Growth Capital LLC at Runway Growth Finance]

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. 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.

[Greg Greifeld, CIO of Runway Growth Capital LLC at Runway Growth Finance]

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.

[Tom Raterman, CFO and COO at Runway Growth Finance]

Thank you, Greg, and good evening, everyone. During the first quarter of 2025, Runway completed three investments in existing companies representing $50.7 million in funded loans. Our weighted average portfolio risk rating remained at 2.33 in the first quarter of 2025, consistent with 2.33 in the fourth quarter of 2024. 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.

[Tom Raterman, CFO and 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 billion, a decrease of 6.7% from $1.08 billion in the fourth quarter of 2024, and a decrease of 1.2% from $1.02 billion for the comparable prior year period. Our loan portfolio continues to be comprised almost exclusively of first lien senior secured loans. As of March 31, 2025, Runway had net assets of $503.3 million, decreasing from $514.9 million at the end of the fourth quarter of 2024. 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 2024. Our loan portfolio is comprised of 97% floating-rate assets.

[Tom Raterman, CFO and COO at Runway Growth Finance]

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 $71.9 million and scheduled amortization of $3.7 million. We generated total investment income of $35.4 million and net investment income of $15.6 million in the first quarter of 2025, compared to $33.8 million and $14.6 million in the fourth quarter of 2024. Our debt portfolio generated a dollar-weighted average annualized yield of 15.4% for the first quarter of 2025, as compared to 14.7% for the fourth quarter of 2024 and 17.4% for the comparable period last year. Moving to our expenses, total operating expenses were $19.8 million for the first quarter of 2025 and increased from $19.2 million for the fourth quarter of 2024.

[Tom Raterman, CFO and COO at Runway Growth Finance]

We recorded a net gain on investments of $6.1 million in the first quarter of 2025, compared to a net realized loss on investments of $2.9 million in the fourth quarter of 2024. At March 31, 2025, we continued to have two loans on non-accrual status: Mingle Healthcare and Snagajob. Our loan to Mingle Healthcare has a cost basis of $4.9 million and fair market value of $2.4 million, or 49% of cost. Our loan to Snagajob has a cost basis of $3.8 million and fair market value of $2.6 million, or 68% of cost. Together, these loans represent only 0.5% of the total investment portfolio at fair value as of March 31, 2025.

[Tom Raterman, CFO and COO at Runway Growth Finance]

At the end of first quarter 2025, our leverage ratio and asset coverage were 0.99 and 2.01 times, respectively, compared to 1.08 and 1.92 times at the end of the fourth quarter of 2024. As of March 31, 2025, our total available liquidity was $315.4 million, including unrestricted cash and cash equivalents, and we had borrowing capacity of $297 million. As discussed during our fourth quarter 2024 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 advisor.

[Tom Raterman, CFO and COO at Runway Growth Finance]

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. Total unsecured notes, inclusive of our baby bonds, increased to $264.3 million from $247.3 million. As of March 31, 2025, we had a total of $162.2 million in unfunded commitments, which was comprised of $132.8 million to provide debt financing to our portfolio companies and $29.4 million to provide equity financing to our JV with Cadma. Approximately $25 million 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.

[Greg Greifeld, CIO of Runway Growth Capital LLC at Runway Growth Finance]

On May 7, 2025, our board of directors approved a new stock repurchase program of $25 million, which will expire on May 7, 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 Finance stock is significantly undervalued and presents an attractive entry point, as well as management's confidence in our 2025 performance. Finally, on May 7, 2025, our board declared a regular distribution for the second quarter of $0.33 per share, as well as a supplemental dividend of $0.02 per share payable with the regular dividend. With that, Operator, please open the line for questions.

[Operator]

Thank you. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. The first question comes from Erik Zwick with Lucid Capital Markets. Your line is open.

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

Hi, good afternoon, guys.

[Tom Raterman, CFO and COO at Runway Growth Finance]

Good afternoon.

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

I wanted to start with a question. Just one of the comments on slide 7 indicates that median and late-stage deal sizes are down and that healthcare lending is low. 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 is something larger at play and maybe kind of why you elected to include that statement in there.

[Tom Raterman, CFO and COO at Runway Growth Finance]

Yeah, Eric, those are the numbers from across the industry wide as reported in the PitchBook Venture Monitor. I think that Greg can comment more specifically on healthcare, but I just know listening to 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.

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

Got it.

[Greg Greifeld, CIO of Runway Growth Capital LLC at Runway Growth Finance]

Yeah, and regarding healthcare, I would say, sorry, I would say that 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. I would say looking across our pipeline, we've seen some more interesting things come on the technology side recently. Given the announcement today about potential impact to drug prices coming out of a potential executive order, that's going to be something that we will be very focused on seeing those details as they come out.

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

Thanks. I appreciate the additional comments there. Maybe just to 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, CIO of Runway Growth Capital LLC at Runway Growth Finance]

Yeah, and to echo my comment about the deal we closed, AutoBooks, that is a term sheet that we had signed and anticipated to occur in Q1. Ultimately, the use of proceeds there was to help AutoBooks fund an M&A deal, which, given the turbulence, I think, that we all experienced in Q1, the negotiations at the finer point of that acquisition itself took longer than I think either buyer or seller expected, which caused it to push into Q2. I think those are the types of dynamics that we are seeing in this rapidly evolving market where 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 of Equity Research at Lucid Capital Markets]

Okay. Could you provide an update on the JV? Has there been any recent investment activity there?

[Tom Raterman, CFO and COO at Runway Growth Finance]

Yeah, I would say that the JV investment activity continues to be somewhat muted as the overall environment and our approach toward 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 of Equity Research at Lucid Capital Markets]

Thank you for taking my question today.

[Operator]

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

[Melissa Wedel, Vice President of U.S. Equities Research at JPMorgan]

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. Despite that increase, I noted that your declared dividend or the supplemental dividend declared for Q2 was actually a little bit lower than what you paid in the first quarter. Just curious if you can contextualize that and help us frame how you're thinking about the earnings power of the portfolio.

[Tom Raterman, CFO and 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. In March, we announced the revised dividend policy or 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 NAA and, 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. We are confident in the core earnings power of the portfolio and the ability to cover the dividend, certainly the base dividend. We have 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.

[Tom Raterman, CFO and COO at Runway Growth Finance]

We're confident in the portfolio's ability to cover that dividend going forward. 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 of U.S. Equities Research at JPMorgan]

Okay. I appreciate that. Just putting a finer point on sort of earnings power of the portfolio, I'm hearing you say that the supplemental dividend declared for the 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 pay out up to half of the excess earnings above the base dividend.

[Tom Raterman, CFO and COO at Runway Growth Finance]

That's correct.

[Melissa Wedel, Vice President of U.S. Equities Research at JPMorgan]

Okay. So that being the case, assuming stable base rates, do you feel like 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 one-time things we should be thinking about?

[Tom Raterman, CFO and 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. 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 of U.S. Equities Research at JPMorgan]

Thank you.

[Operator]

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

[Mickey Schleien, Managing Director of Equity Research at Ladenburg]

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

[Greg Greifeld, CIO of Runway Growth Capital LLC 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. 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. I would say most encouragingly as well, we're seeing lower asks in terms of leverage from a loan-to-value perspective. We're seeing a maintenance of amount of and quality of covenants. 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, Managing Director of Equity Research at Ladenburg]

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, CIO of Runway Growth Capital LLC 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, we're looking for more mature, larger businesses that are generating a meaningful amount of revenue without too high of a burn amount. A lot of the really early-stage companies are still too nascent and immature for us to make loans to. It is something that we do look for larger businesses. An example in our portfolio is a company, Interactions, which has been in for a few years, but we're definitely interested in AI. Again, we're not necessarily willing to go earlier stage than we typically look across the portfolio.

[Mickey Schleien, Managing Director of Equity Research at Ladenburg]

I imagine for those larger, more mature AI companies you're referencing, there 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, CIO of Runway Growth Capital LLC at Runway Growth Finance]

I would say that, as with everything, there's a need to be opportunistic. That being said, you're completely right that anytime there's a really hot sector out there, you're going to see folks chase those deals in terms of either economics or structure. 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, Managing Director of Equity Research at Ladenburg]

Yeah, makes sense. Just following up on the healthcare 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, CIO of Runway Growth Capital LLC 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 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, it's 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 an early-stage pre-approval biotech or something like that.

[Mickey Schleien, Managing Director of Equity Research at Ladenburg]

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.

[Tom Raterman, CFO and COO at Runway Growth Finance]

Sure. Two parts. What really drove the realized gain was the previous announced closing of the sale of Gynesonics. If you'll recall, in Gynesonics, we had two pieces. We had our loan, so there was the acceleration of some income associated with the loan. 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. I would say, as you look at that, about 50% of that is influenced by performance, and 50% is influenced by market multiples. I think there were a couple of big movers that accounted for the majority of that change.

[Mickey Schleien, Managing Director of Equity Research at Ladenburg]

Tom, did you just say some of the Gynesonics proceeds were recognized or accrued into income as a fee?

[Tom Raterman, CFO and COO at Runway Growth Finance]

Yes, but the gain on the sale of the equity is what drove that almost $7 million gain.

[Mickey Schleien, Managing Director of Equity Research at Ladenburg]

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

[Operator]

As a reminder to ask a question, please press star one one on your telephone. The next question will come from Doug Harter with UBS. Your line is open.

[Doug Harter, Equity Research Analyst at UBS]

Thanks. Your loan yield has had kind of quite a variance over the past couple of 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?

[Tom Raterman, CFO and 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 the 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. You have a little bit of a less of an impact from that perspective. If you normalize that yield, I think you're in the right neighborhood in terms of what we would expect. Our SOFR spreads and our prime spreads are pretty stable. You throw on the end-of-term payments and OID, and that generates the core yield.

[Doug Harter, Equity Research Analyst at UBS]

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 Spreng, CEO, for closing remarks.

[David Spreng, CEO at Runway Growth Finance]

Thank you, operator. 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

• Greg Greifeld, CIO of Runway Growth Capital LLC
• Tom Raterman, CFO and COO
• David Spreng, CEO

Analysts

• Quinlan Abel, Assistant VP of Investor Relations at Runway Growth Capital
• Mickey Schleien, Managing Director of Equity Research at Ladenburg
• Erik Zwick, Managing Director of Equity Research at Lucid Capital Markets
• Melissa Wedel, Vice President of U.S. Equities Research at JPMorgan
• Doug Harter, Equity Research Analyst at UBS