Horizon Technology Finance (HRZN) Financials

Horizon Technology Finance (NASDAQ: HRZN) has shown significant fluctuations in its financial performance over the past four years through Q1 2025. Below is an analysis of key financial trends observed from their income statements and cash flow statements.

• Net Interest Income has remained consistently positive through several quarters, with Q1 2025 reporting $16.1 million, slightly higher than Q4 2024's $15.3 million, indicating strong core lending and investment income generation.
• The company consistently pays quarterly dividends, with amounts around $0.33 to $0.38 per common share, suggesting a commitment to returning cash to shareholders.
• Issuance of common equity has been a regular source of financing, with notable equity raises such as $36 million in Q1 2025 and significant issuances in prior quarters, which supports capital adequacy and growth potential.
• Net Cash From Continuing Financing Activities was positive in many quarters, indicating access to external financing through equity or debt issuances to fund operations and investments. For example, Q4 2024 saw $40.3 million net inflow from financing activities.
• Operating cash flow has generally been positive or improving in earlier years, e.g., $54.3 million in Q2 2024, helping to support liquidity.

• The company’s weighted average shares outstanding have been steadily increasing from approximately 28 million in early 2023 to over 40 million by Q1 2025, reflecting dilution due to equity issuances.
• The level of Long-Term Debt Interest Expense fluctuated but generally rose over the years, peaking at $8.7 million in Q1 2025, which aligns with increased debt financing.
• Cash Interest Paid has risen moderately from about $5 million in Q3 2022 to near $8 million by Q1 2025, consistent with growing debt levels.

• Net Realized & Unrealized Capital Gains on Investments have been a significant drag, producing large negative amounts in recent quarters: -$32.2 million in Q1 2025 and -$25.7 million in Q4 2023. These losses heavily impacted total revenue and contributed to negative overall pre-tax income in recent periods.
• The company reported negative net income attributable to common shareholders in recent quarters, including -$21.4 million in Q1 2025 and -$12.4 million in Q4 2024, indicating recent operational struggles mainly due to investment losses.
• Net Cash From Continuing Operating Activities turned negative in Q1 2025 (-$13.2 million) and Q4 2024 (-$26.1 million), suggesting cash generation challenges from core operations recently, reflecting payment of expenses and investment-related impacts despite positive net interest income.
• Total Non-Interest Expense remains significant, around $4.7 million in Q1 2025, mostly from other operating expenses, pressuring profitability.

Summary: Horizon Technology Finance has showed stable core interest income but continues to face challenges from investment losses causing negative non-interest income and net losses in recent quarters. The company relies on equity issuance and debt financing to maintain liquidity and fund operations. While it supports shareholder dividends, persistent unrealized investment losses and negative operating cash flows represent headwinds. Investors should watch for recovery in investment income and improved operational cash flows to gauge long-term profitability stability.