Horizon Technology Finance (HRZN) Financials

Horizon Technology Finance (NASDAQ:HRZN) has experienced significant volatility in its financial performance over the last four years, with notable fluctuations in net income, cash flows, and equity issuance.

Positive Trends:

• Strong and relatively stable net interest income, consistently around $15M to $22M per quarter over recent periods, indicating steady income from loans and investments.
• Periodic positive net income quarters, particularly in early 2023 and mid-2023, showing the company can be profitable in favorable conditions.
• Ongoing issuance of common equity across many quarters, notably raising capital via equity issuance which may support growth and balance sheet strength.
• Regular payment of dividends per share, mostly stable around $0.30-$0.38, suggesting consistency in returning capital to shareholders when earnings allow.

Neutral Observations:

• Cash interest paid is fairly consistent, fluctuating between roughly $5M and $8M quarterly, reflecting stable debt servicing costs.
• Depreciation and amortization expenses vary quarter to quarter but generally remain substantial, often exceeding $6M for depreciation alone, which impacts operating cash flow.
• Fluctuations in the number of shares outstanding indicate occasional dilution, which may affect per-share earnings but also relates to capital raising activities.
• Non-interest operating expenses hover between $3.8M and $5.6M per quarter, a moderate range indicating relatively steady operational costs excluding interest.

Negative Trends:

• Significant and recurring large net realized & unrealized capital losses on investments (ranging from approximately -$5M to -$32M quarterly) have driven many quarters into negative total revenue and net losses.
• Substantial net losses in recent quarters, especially Q1 2025 with a net loss exceeding $21M, reflect ongoing challenges in investment performance despite interest income.
• Operating cash flows have shown negative signs often, with multiple quarters of negative net cash from continuing operating activities, which can strain liquidity.
• Sharp swings in cash flows from financing activities, with both large debt issuances and repayments indicating volatility in the company's leverage and capital structure.

Overall, while Horizon Technology Finance demonstrates stable core interest income and regular equity raises, significant investment losses and negative operating cash flows in several quarters highlight risks. Investors should monitor the company's ability to manage investment portfolio volatility and stabilize earnings going forward.