Runway Growth Finance (NASDAQ:RWAY) Posts Earnings Results

Key Points

• Runway Growth Finance reported quarterly EPS of $0.29, missing the $0.31 consensus estimate, while revenue of $29.45 million was essentially in line with expectations.
• The company completed its SWK acquisition, expanding its pro forma portfolio to about $1.1 billion and reducing top-10 concentration, with management saying the deal should be accretive to earnings later in the year.
• Q1 results were pressured by credit deterioration in two investments that moved to non-accrual, and NAV per share fell to $12.13 from the prior quarter, contributing to weaker outlook for near-term earnings.

Runway Growth Finance (NASDAQ:RWAY - Get Free Report) posted its quarterly earnings data on Thursday. The company reported $0.29 EPS for the quarter, missing the consensus estimate of $0.31 by ($0.02), Zacks reports. Runway Growth Finance had a positive return on equity of 10.57% and a negative net margin of 2.00%.The company had revenue of $29.45 million for the quarter, compared to analyst estimates of $29.47 million.

Here are the key takeaways from Runway Growth Finance's conference call:

• Closed the SWK acquisition (closed April 6), creating a pro forma portfolio of ~$1.1B, increasing healthcare to ~32% of the portfolio, reducing top‑10 concentration from 54% to 43%, and management expects the deal to be accretive to EPS (partially in Q2, fully in Q3).
• Senior leadership moves — JD Tamas hired for healthcare, Avisha Khubani promoted to Chief Credit Officer, Tom Raterman shifting to Vice Chairman, and Carmela Thomson named CFO — intended to strengthen origination, credit discipline, and financial operations.
• Q1 results showed total investment income of $29.5M and NII of $10.6M while NAV per share declined to $12.13 (down 9.6% q/q) and pro forma NAV after SWK was $11.93, reflecting about $7.7M of transaction costs and a decline in net assets to $438.2M.
• Credit deterioration in two positions — Marley Spoon and Blueshift moved to non‑accrual, lifting the weighted average risk rating to 2.67 and expected to reduce Q2 earnings by roughly $0.06 per share, though management emphasizes overall credit metrics remain stable.
• Board declared a $0.33/qtr distribution and launched a $15M share repurchase program, while liquidity stands at $372.3M with $370M borrowing capacity, though pro forma leverage rose to ~1.2 and available liquidity fell to ~$231.8M after the SWK close.

Runway Growth Finance Price Performance

Shares of RWAY stock traded down $0.29 on Friday, reaching $6.54. 1,622,667 shares of the company were exchanged, compared to its average volume of 703,403. The company has a debt-to-equity ratio of 0.93, a quick ratio of 1.05 and a current ratio of 1.05. Runway Growth Finance has a 1 year low of $6.36 and a 1 year high of $11.40. The company has a market cap of $277.75 million, a price-to-earnings ratio of -72.67 and a beta of 0.64. The business has a 50-day moving average price of $7.00 and a 200 day moving average price of $8.43.

Runway Growth Finance Dividend Announcement

The business also recently announced a quarterly dividend, which will be paid on Tuesday, June 2nd. Stockholders of record on Monday, May 18th will be given a $0.33 dividend. The ex-dividend date is Monday, May 18th. This represents a $1.32 annualized dividend and a dividend yield of 20.2%. Runway Growth Finance's dividend payout ratio (DPR) is 143.48%.

Analyst Ratings Changes

RWAY has been the topic of several research analyst reports. B. Riley Financial dropped their price target on Runway Growth Finance from $12.00 to $10.00 and set a "buy" rating on the stock in a research note on Tuesday, March 17th. JPMorgan Chase & Co. reduced their price objective on Runway Growth Finance from $9.50 to $7.00 and set a "neutral" rating for the company in a research note on Friday, March 13th. Weiss Ratings reiterated a "hold (c-)" rating on shares of Runway Growth Finance in a research report on Friday, March 27th. Zacks Research downgraded shares of Runway Growth Finance from a "hold" rating to a "strong sell" rating in a report on Tuesday, March 17th. Finally, Wells Fargo & Company reduced their price target on shares of Runway Growth Finance from $10.00 to $7.00 and set an "equal weight" rating for the company in a research report on Monday, March 16th. Two research analysts have rated the stock with a Buy rating, four have issued a Hold rating and one has given a Sell rating to the company. Based on data from MarketBeat.com, the company has a consensus rating of "Hold" and a consensus price target of $9.00.

Institutional Inflows and Outflows

Hedge funds have recently added to or reduced their stakes in the company. Invesco Ltd. grew its position in shares of Runway Growth Finance by 4.6% in the second quarter. Invesco Ltd. now owns 22,034 shares of the company's stock valued at $236,000 after purchasing an additional 969 shares in the last quarter. Tidal Investments LLC grew its stake in shares of Runway Growth Finance by 2.2% in the second quarter. Tidal Investments LLC now owns 46,333 shares of the company's stock valued at $497,000 after buying an additional 1,018 shares in the last quarter. Envestnet Asset Management Inc. grew its position in Runway Growth Finance by 5.6% in the 3rd quarter. Envestnet Asset Management Inc. now owns 21,021 shares of the company's stock valued at $214,000 after acquiring an additional 1,120 shares in the last quarter. State of Wyoming increased its stake in Runway Growth Finance by 18.2% during the 2nd quarter. State of Wyoming now owns 11,252 shares of the company's stock worth $121,000 after buying an additional 1,732 shares during the period. Finally, PharVision Advisers LLC increased its holdings in Runway Growth Finance by 9.3% during the 3rd quarter. PharVision Advisers LLC now owns 22,929 shares of the company's stock worth $233,000 after purchasing an additional 1,955 shares during the period. 64.61% of the stock is owned by institutional investors and hedge funds.

About Runway Growth Finance

Runway Growth Finance, 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.

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