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Blue Owl Technology Finance Corp. (OTF)
NYSE:OTF
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Blue Owl Technology Finance Corp.
(NYSE:OTF)
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Rating:65Neutral
Price Target:
$12.00
▲(4.44% Upside)
Action:ReiteratedDate:02/25/26
The score is driven by attractive valuation (low P/E and high yield) and a generally positive earnings-call outlook (liquidity, funding cost improvements, deployment backlog, buybacks/dividends). These strengths are offset by weak technical momentum and, most importantly, concerns around earnings quality given volatile/negative operating cash flow and inconsistencies in reported 2025 line items.
Positive Factors
Large, high-quality loan portfolio
Scale and portfolio quality are durable advantages: a $14B+ portfolio across ~200 companies with low nonaccruals and modest historical net gains reduces idiosyncratic risk, supports steady interest income, and provides ample deal flow for reinvestment and diversification over the next several quarters.
Improving funding mix and refinancing actions
Active refinancing (CLOs, credit facility amendments, $400M notes) lengthens maturities and lowers funding costs, enhancing durable net interest margin and capacity to scale leverage within target ranges. This structural funding improvement supports sustainable earnings and dividend coverage over 2–6 months.
Active deployment, backlog and shareholder returns
Strong origination momentum and a large funding backlog provide predictable near-term earning power as leverage ramps. Combined with sizable buybacks and declared dividends, management demonstrates durable capital allocation discipline that can accrete NAV and support shareholder returns over multiple quarters.
Negative Factors
Volatile, often-negative operating cash flow
Material disconnect between GAAP net income and operating cash flow impairs earnings quality and raises questions about cash conversion. Persistent negative or lumpy OCf can constrain dividend sustainability, limit organic deleveraging, and reduce flexibility when funding markets tighten over the next several months.
High sector concentration in software (~70%)
Heavy concentration in software increases exposure to sector cyclicality, valuation re-rating and AI-driven disruption. Slowing NRR (from ~115% to ~108%) amplifies payback risk and could compress recoveries or increase loss severity, pressuring portfolio income and exit values over a multi-month horizon.
Reporting and balance-sheet discontinuities
Material reporting changes and classification shifts in 2025 obscure true leverage and liquidity trends. Lack of consistent debt presentation reduces transparency, complicates risk assessment and may mask funding or covenant pressures, limiting investor confidence and complicating capital planning over coming quarters.
Blue Owl Technology Finance Corp. (OTF) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.37B
Dividend Yield5.3%
Average Volume (3M)2.07M
Price to Earnings (P/E)6.6
Beta (1Y)0.61
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
EmployeesN/A
SectorTechnology
Sector Strength88
IndustryAsset Management
Share Statistics
EPS (TTM)0.30
Shares Outstanding465,330,000
10 Day Avg. Volume2,251,903
30 Day Avg. Volume2,065,704
Financial Highlights & Ratios
PEG Ratio0.52
Price to Book (P/B)0.74
Price to Sales (P/S)4.96
P/FCF Ratio-6.50
Enterprise Value/Market Cap2.18
Enterprise Value/Revenue10.23
Enterprise Value/Gross Profit12.70
Enterprise Value/Ebitda11.20
Forecast
1Y Price Target
$14.67Price Target Upside27.68% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
EPS Forecast (FY)1.3
Revenue Forecast (FY)$1.44B
Blue Owl Technology Finance Corp. Business Overview & Revenue Model
Company DescriptionBlue Owl Technology Finance Corp. is a business development company specializes in upper middle-market, making debt and equity investments such as senior secured or unsecured loans, subordinated loans or mezzanine loans and equity-related securities including common equity, warrants, preferred stock and similar forms of senior equity. The firm prefers to invest in technology-related and software companies. It primarily makes investments in the United States. Blue Owl Technology Finance Corp. is founded in 2018 and is based in New York, New York.
How the Company Makes Money
Blue Owl Technology Finance Corp. Earnings Call Summary
Earnings Call Date:Feb 18, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Aug 12, 2026
Earnings Call Sentiment Positive
The call emphasized strong underlying portfolio quality, continued deployment momentum, capital flexibility and improving funding costs, with tangible near-term actions (repurchases, CLO/SPV, bond issuance) and attractive metrics (NAV growth, ~11% adjusted ROE, low nonaccruals). Headwinds include AI-driven public market volatility, a material market discount to NAV, some slowdown in software growth metrics (NRR), and timing-related pressure on near-term income. On balance, positives around fundamentals, liquidity, disciplined deployment and accretive buybacks materially outweigh the challenges called out.Q4-2025 Updates
Positive Updates
Successful Public Listing and Distribution Policy
OTF completed its NYSE listing in June 2025 and became the largest publicly traded technology-focused BDC by total assets; Board declared a $0.35 regular quarterly dividend and five special dividends of $0.05 per share (paid quarterly through Sept 2026), supported by $0.40 of pre-listing spillover income.
Strong Quarterly Financial Performance
Q4 adjusted net investment income of $0.30 per share and adjusted net income of $0.47 per share, delivering a 10.9% adjusted net income ROE (nearly 11%); GAAP included $0.03 per share of accrued capital gains incentive fees; NAV per share $17.33, up $0.06 QoQ and NAV up ~16% since inception with NAV increasing 35 basis points in the quarter.
Large, High-Quality Portfolio
Total portfolio investments exceeded $14 billion with outstanding debt of $6 billion and total net assets of $8 billion; portfolio characterized by low nonaccruals and average annual net gains of 23 basis points since inception; management reports software borrowers delivering low- to mid-teens revenue and EBITDA growth on average.
Active Deployment and Backlog
Converted strong pipeline in Q4: $2.3 billion of new investment commitments (including $2.0 billion of new fundings) and $881 million of repayments; maintains a meaningful ~$900 million backlog expected to fund next quarter, supporting continued deployment and leverage growth.
Improved Funding Mix and Cost Savings
Added lower-cost secured capacity (CLO/SPV), exited higher-cost legacy financings and issued $400 million unsecured bond in January; pro forma expected annual run-rate interest savings of approximately $10 million; ended quarter with nearly $2.3 billion of cash and capacity.
Share Repurchases and Capital Return Activity
Opportunistically repurchased $65 million of OTF shares in Q4 at an average price-to-book of 0.82x, which added $0.03 per share to NAV; Board authorized an expanded $300 million repurchase program (replacing prior $200 million plan); roughly 50% of shares currently released from lockups, increasing float and repurchase optionality.
Notable Equity Markups
Recorded write-ups on certain equity positions (including SpaceX and Revolut); original $27 million SpaceX equity (2021) has been written up over 7x as of Dec 31 and was marked near ~$720B after a tender discount (management expects further upticks following a subsequent $1.25T merger announcement).
Dedicated Technology Investing Platform
Dedicated technology investing capabilities with over 40 tech investment professionals as part of a >120 person direct lending team; portfolio tech split noted as ~70% software (applications ~50%, systems/infrastructure ~20%, fintech/payments ~5%), supporting deep domain coverage and active AI risk/ opportunity reassessments.
Negative Updates
Market Volatility and AI-Related Sell-Off
Broad sell-off in tech and SaaS amid AI disruption concerns pressured equity markets and BDCs, contributing to OTF trading at a material discount (management cited stock prices in the '70s range, implying roughly a ~30% discount to NAV as referenced in Q&A).
Timing and One-Time Items Depressed Near-Term Earnings
Adjusted net investment income was offset by one-time expenses and originations weighted to quarter end, limiting current quarter earnings impact; average leverage for the quarter was 0.66x (end leverage 0.75x), so the full earnings benefit of Q4 deployments is expected in future periods.
Slowing Underlying Growth Metrics
Management disclosed net revenue retention across many software names has declined from ~115% to ~108%, reflecting slower organic growth, and ARR exposure in the portfolio has fallen to the low teens (the lowest level since inception), which can pressure terminal valuations.
Tighter Spreads and Higher Underwriting Bar for New Deals
Recent deals were negotiated in a period of persistently tight spreads; management expects spreads to widen going forward and notes the bar for new investments is higher, with some previously investable sub-sectors now being passed on.
Concentration and Sector Risk
Software comprises ~70% of the portfolio (applications ~50%), introducing sector concentration risk in an environment of rapid technological change and AI-driven disruption, requiring more selective underwriting and potentially limiting deal flow.
Limited Free Float and Technical Pressure on Stock
Only ~50% of shares were released from lockups at quarter-end (additional releases scheduled), which has created technical selling pressure and constrained repurchase program activity despite management's willingness to buy shares when appropriate.
Small Number of Realized Credit Issues
Platform has experienced one notable software default among 300+ names (company taken over and still owned), showing low default incidence but confirming there is non-zero credit risk in the portfolio.
Valuation and Mark-to-Market Risk
Management acknowledged a disconnect between public market valuations and private control transaction values; modeled sensitivity noted that a 50% reduction in enterprise values would increase portfolio LTVs by roughly 16–17%, illustrating a downside valuation sensitivity despite reported low-30s attachment LTVs today.
Company Guidance
The call guided that OTF is well positioned to ramp earnings as leverage increases, highlighting a portfolio of >$14 billion in investments, $6 billion of outstanding debt and $8 billion of total net assets with NAV per share $17.33 (up $0.06 q/q; NAV +35 bps q/q; +~16% since inception); Q4 adjusted net investment income was $0.30/share and adjusted net income $0.47/share (10.9% adjusted net income ROE, “nearly 11%”), net leverage finished the quarter at 0.75x (average 0.66x) with a target leverage range of 0.9–1.25x, and the firm deployed $2.3 billion of new commitments ($2.0 billion funded) with $881 million of repayments and a ~$900 million funding backlog; portfolio composition is ~70% software (apps ~50%, systems & infrastructure ~20%, fintech/payments ~5%), loans sit at low-30s LTVs with average durations of 3–5 years, the team includes >40 technology pros (120+ direct lending pros overall) and ~200 portfolio companies, liquidity/capacity totaled nearly $2.3 billion, the company repurchased $65 million of stock at 0.82x TBV (adding $0.03/share to NAV) and upsized a buyback program to $300 million, announced 5 special $0.05/share dividends (through Sep 2026) in addition to a $0.35/share base dividend (base dividend ≈ 11% yield at current market value), and expects pro forma funding actions (including a $400M unsecured bond) to yield ~ $10 million of annual interest savings.Blue Owl Technology Finance Corp. Financial Statement Overview
Summary
Reported profitability is strong (historically very high net margins and solid net income; 2025 revenue surged), but earnings quality is a major concern due to highly volatile/often negative operating cash flow (including 2025) and notable 2025 reporting discontinuities (operating profit fields at zero; debt shown as zero vs. prior years).Income Statement
Profitability is strong across the historical annual periods, with very high net margins (about 59–79% from 2020–2024) and solid net income generation. Revenue momentum improved sharply in 2025 (annual revenue up ~21% to ~$1.10B vs. ~$0.54B in 2024), but the revenue path has been uneven (declines in 2022 and 2024). 2025 profitability still looks healthy at ~47% net margin, though several operating profit fields are reported as zero in 2025, which reduces confidence in the operating earnings picture for that year.78
Positive
Balance Sheet
The balance sheet shows meaningful scale-up in 2025, with assets rising to ~$14.7B and equity to ~$8.0B. Leverage appears to improve materially in 2025 (debt shown as $0 and debt-to-equity at 0.0), but that is a major discontinuity versus 2020–2024 when debt-to-equity generally ran ~0.75–1.08, suggesting either a large deleveraging event or reporting classification differences. Returns on equity have been decent in most years (roughly 6–12% in 2020–2025, excluding a very weak 2022), but the variability points to a less stable earnings-to-capital profile.74
Positive
Cash Flow
Cash generation is the key weak spot: operating cash flow is volatile and frequently negative (notably 2021 at about -$2.62B, 2022 at about -$0.30B, and 2025 at about -$0.92B), despite positive net income in each of those years. While 2023 and 2024 show positive operating/free cash flow (~$0.71B and ~$0.22B, respectively), the swings and the 2025 step-down raise questions around working capital/portfolio cash timing and the durability of cash conversion.38
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.20B | 536.94M | 587.43M | 176.15M | 537.05M |
| Gross Profit | 919.34M | 353.46M | 401.24M | 49.98M | 452.55M |
| EBITDA | 1.04B | 514.17M | 564.46M | 153.04M | 514.23M |
| Net Income | 720.37M | 319.23M | 369.14M | 19.00M | 424.81M |
Balance Sheet | |||||
| Total Assets | 14.72B | 6.72B | 6.65B | 6.66B | 6.29B |
| Cash, Cash Equivalents and Short-Term Investments | 667.00K | 257.00M | 469.02M | 203.29M | 107.03M |
| Total Debt | 6.29B | 2.91B | 2.95B | 3.16B | 2.64B |
| Total Liabilities | 6.67B | 3.10B | 3.12B | 3.28B | 2.76B |
| Stockholders Equity | 8.04B | 3.63B | 3.53B | 3.39B | 3.53B |
Cash Flow | |||||
| Free Cash Flow | -915.95M | 221.80M | 708.36M | -295.28M | -2.62B |
| Operating Cash Flow | -915.95M | 221.80M | 708.36M | -295.28M | -2.62B |
| Investing Cash Flow | -3.76B | -157.65M | 0.00 | 0.00 | 0.00 |
| Financing Cash Flow | 941.88M | -276.17M | -442.63M | 391.55M | 2.64B |
Blue Owl Technology Finance Corp. Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
65 Neutral | $5.37B | 6.55 | 12.35% | 5.30% | ― | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
48 Neutral | $47.39M | -1.66 | -241.51% | ― | 36.85% | 98.78% | |
45 Neutral | $43.55M | -0.25 | -110.92% | ― | -6.34% | 98.60% | |
44 Neutral | $18.30M | -0.38 | -313.72% | ― | -39.75% | -89.61% | |
43 Neutral | $34.52M | -3.04 | -18.69% | ― | ― | ― |
* Technology Sector Average
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Blue Owl Technology Finance Corp. Corporate Events
Business Operations and StrategyPrivate Placements and FinancingRegulatory Filings and Compliance
Blue Owl Technology Finance Announces $400 Million Notes Issuance
Positive
Jan 23, 2026
On January 23, 2026, Blue Owl Technology Finance Corp. entered into a supplemental indenture with Deutsche Bank Trust Company Americas covering a new $400 million issuance of 6.125% unsecured notes due January 23, 2031, which pay interest semiannually starting July 23, 2026 and feature make-whole and par-call redemption options, as well as change-of-control repurchase protections tied to credit ratings. The transaction, which closed on January 23, 2026 following an underwriting agreement signed on January 20, 2026, is expected to be used primarily to pay down existing debt, including borrowings under the company’s senior secured revolving credit facility maturing in 2029, effectively refinancing a portion of its balance sheet while operating under indenture covenants linked to investment company leverage limits and ongoing financial disclosure obligations.
The most recent analyst rating on (OTF) stock is a Buy with a $17.00 price target. To see the full list of analyst forecasts on Blue Owl Technology Finance Corp. stock, see the OTF Stock Forecast page.
Business Operations and StrategyPrivate Placements and Financing
Blue Owl Technology Finance Completes Major CLO Refinancing
Positive
Dec 22, 2025
On December 16, 2025, Blue Owl Technology Finance Corp., through its consolidated subsidiary Athena CLO II, LLC, completed a $615.1 million term debt securitization refinancing via a collateralized loan obligation backed by middle market loans and related participation interests, with the new secured debt maturing on January 18, 2039. As part of the refinancing, the issuer placed multiple classes of floating-rate secured notes, borrowed $250 million under new Class A-LR loans, issued approximately $52.8 million of additional subordinated preferred shares all purchased by the company, and expanded the pool of collateral by selling and contributing about $217.963 million in additional middle market loans under an amended loan sale agreement, thereby reinforcing regulatory risk-retention requirements and providing long-dated, secured financing capacity for general corporate purposes while maintaining the adviser’s role as collateral manager under updated fee arrangements.
The most recent analyst rating on (OTF) stock is a Hold with a $15.00 price target. To see the full list of analyst forecasts on Blue Owl Technology Finance Corp. stock, see the OTF Stock Forecast page.
Business Operations and StrategyPrivate Placements and Financing
Blue Owl Technology Finance Amends and Extends Credit Facility
Positive
Dec 22, 2025
On December 17, 2025, Blue Owl Technology Finance Corp.’s subsidiary ORTF Funding I LLC amended its existing secured credit facility with Goldman Sachs Bank USA and other parties, extending the reinvestment period to November 16, 2028 and the scheduled maturity date to November 16, 2030, while also reducing the interest spread from 2.400% to 2.00%. These changes are expected to enhance the subsidiary’s funding flexibility and lower its borrowing costs, potentially improving the company’s competitive position in technology-focused lending and benefiting stakeholders through more efficient capital deployment over a longer horizon.
The most recent analyst rating on (OTF) stock is a Hold with a $15.00 price target. To see the full list of analyst forecasts on Blue Owl Technology Finance Corp. stock, see the OTF Stock Forecast page.
Private Placements and Financing
Blue Owl Technology Finance Expands Credit Agreement
Positive
Dec 16, 2025
On December 11, 2025, Athena Funding I LLC executed the Sixth Amendment to its Credit Agreement, originally dated July 15, 2022. This amendment increases the total commitment from $925 million to $1.1 billion, reduces the interest spread from 2.50% to 2.05%, and extends both the Reinvestment Period and the Stated Maturity by several years, potentially enhancing Athena Funding I’s financial flexibility and operational capacity.
The most recent analyst rating on (OTF) stock is a Buy with a $15.00 price target. To see the full list of analyst forecasts on Blue Owl Technology Finance Corp. stock, see the OTF Stock Forecast page.
Stock Buyback
Blue Owl Technology Sees Significant Insider Stock Purchases
Positive
Dec 2, 2025
In November, Blue Owl Technology Finance Corp. saw over $15 million in its common stock purchased by executives and employees of Blue Owl Capital Inc. or through its existing share repurchase program. This activity is part of OTF’s authorized plan to repurchase up to $200 million of its common stock, indicating strong internal confidence in the company’s value and potential positive implications for its market positioning.
The most recent analyst rating on (OTF) stock is a Hold with a $14.00 price target. To see the full list of analyst forecasts on Blue Owl Technology Finance Corp. stock, see the OTF Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.