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Runway Growth Finance Corp (RWAY)
NASDAQ:RWAY
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Runway Growth Finance Corp
(NASDAQ:RWAY)
65Neutral
Positive Factors
Corporate Actions
Gynesonics was marked up additionally on its pending acquisition, while Snagajob improved on its reorganization after it was acquired.
Earnings
CareCloud trading up meaningfully on the back of earnings and resumption of pref dividends.
Negative Factors
Dividends
The base dividend was lowered to $0.33 in accord with a new 'capital preservation' policy.
Financial Performance
RWAY reported NOI of $0.41 per share, below our $0.44 estimate, as the fee / interest haul from CloudPay's prepay were offset by lower avg. leverage and no other repays of significance.
Risk Profile
RWAY is viewed as having a higher risk NOI / NAV profile, owed to large individual credit exposures.
Runway Growth Finance Corp (RWAY) vs. S&P 500 (SPY)
Market Cap
$388.04M
Dividend Yield16.17%
Average Volume (3M)362.59K
Price to Earnings (P/E)5.5
Beta (1Y)0.56
Revenue Growth-2.83%
EPS Growth75.00%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength84
IndustryFinancial - Credit Services
Share Statistics
EPS (TTM)1.92
Shares Outstanding37,347,427
10 Day Avg. Volume568,598
30 Day Avg. Volume362,589
Financial Highlights & Ratios
PEG Ratio0.07
Price to Book (P/B)N/A
Price to Sales (P/S)2.64
Price to Cash Flow (P/CF)3.80
P/FCF Ratio2.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$11.63Price Target Upside11.93% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Runway Growth Finance Corp Business Overview & Revenue Model
Company DescriptionRunway Growth Finance Corp. is a business development company specializing investments in senior-secured loans to late stage and growth companies. It prefers to make investments in companies engaged in the technology, life sciences, healthcare and information services, business services and select consumer services and products sectors. It prefers to investments in companies engaged in electronic equipment and instruments, systems software, hardware, storage and peripherals and specialized consumer services, application software, healthcare technology, internet software and services, data processing and outsourced services, internet retail, human resources and employment services, biotechnology, healthcare equipment and education services. It invests in senior secured loans between $10 million and $75 million.
How the Company Makes MoneyRunway Growth Finance Corp generates revenue primarily through the interest income earned on its portfolio of senior secured loans. The company extends these loans to high-growth companies, typically with venture capital backing, across various sectors such as technology and life sciences. Interest payments on the principal amount of the loans represent the main source of revenue. Additionally, Runway Growth Finance may earn fees on the origination of loans and other related financial services. The company's earnings are influenced by the quality of its loan portfolio, interest rate environments, and its ability to identify and partner with suitable high-growth companies. Strong relationships with venture capital firms and other financial institutions also play a critical role in identifying potential lending opportunities, thereby contributing to the company's revenue streams.
Runway Growth Finance Corp Financial Statement Overview
Summary
Runway Growth Finance Corp is facing profitability and cash flow challenges, with declining revenue and negative net income impacting financial performance. Despite a strong balance sheet with no debt, the company must focus on enhancing revenue streams and profitability to improve overall financial health.Income Statement
The company has shown a decline in revenue from $145.8M to $144.6M, indicating a slight negative revenue growth. However, the gross profit margin has improved from 75.5% to 100% due to the entire revenue being recognized as gross profit, which might be due to accounting classifications. EBIT margin decreased from 60% to 44.1%, and net income turned negative, impacting net profit margin adversely. The overall profitability trajectory is concerning due to declining EBIT and negative net income.65
Positive
Balance Sheet
Runway Growth Finance showcases a strong equity position with an equity ratio of 47.2%. The debt-to-equity ratio improved significantly with no debt in the latest year, reducing financial risk. However, the return on equity dropped to zero due to the lack of net income, highlighting challenges in generating returns for shareholders.70
Positive
Cash Flow
Operating cash flow decreased from $112.4M to $69.8M, which is a significant drop, indicating reduced cash generation capability. Free cash flow is positive but has decreased from the prior year. The operating cash flow to net income ratio is undefined due to zero net income, and reliance on operating cash flow is evident to maintain free cash flow.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 144.63M | 145.82M | 42.19M | 51.71M | 51.38M | Gross Profit |
| 144.63M | 110.06M | 16.46M | 31.90M | 36.77M | EBIT |
| 63.75M | 87.48M | 73.55M | 45.62M | 46.98M | EBITDA |
| 0.00 | -33.93M | 0.00 | 0.00 | 0.00 | Net Income Common Stockholders |
| 73.61M | 44.34M | 4.70M | 45.62M | 46.98M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 5.75M | 44.97M | 1.12B | 4.70M | 14.89M | Total Assets |
| 1.09B | 1.08B | 1.14B | 738.35M | 639.89M | Total Debt |
| 0.00 | 510.08M | 548.96M | 79.49M | 97.42M | Net Debt |
| -5.75M | 507.11M | 543.20M | 74.79M | 82.53M | Total Liabilities |
| 576.49M | 532.08M | 565.71M | 132.15M | 173.65M | Stockholders Equity |
| 514.87M | 547.07M | 576.05M | 606.19M | 466.24M |
| Cash Flow | Free Cash Flow | |||
| 69.76M | 112.44M | -359.85M | -61.25M | -106.09M | Operating Cash Flow |
| 69.76M | 112.44M | -359.85M | -61.25M | -106.09M | Investing Cash Flow |
| 0.00 | 0.00 | -453.82M | -120.84M | 168.61M | Financing Cash Flow |
| -66.98M | -115.23M | 360.91M | 51.06M | 75.18M |
Runway Growth Finance Corp Technical Analysis
Negative
10.39
Price Trends
10.82
Negative
10.55
Negative
10.24
Positive
Market Momentum
-0.13
Negative
49.66
Neutral
37.52
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RWAY, the sentiment is Negative. The current price of 10.39 is below the 20-day moving average (MA) of 10.47, below the 50-day MA of 10.82, and above the 200-day MA of 10.24, indicating a neutral trend. The MACD of -0.13 indicates Negative momentum. The RSI at 49.66 is Neutral, neither overbought nor oversold. The STOCH value of 37.52 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RWAY.
Runway Growth Finance Corp Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $2.05B | 10.78 | 12.02% | 8.42% | 8.07% | -22.25% | |
72 Outperform | $1.34B | 20.80 | 3.96% | 14.65% | -28.04% | -69.52% | |
67 Neutral | $3.31B | 11.86 | 13.71% | 8.68% | -1.49% | -29.48% | |
65 Neutral | $388.04M | 5.48 | 13.86% | 16.17% | -2.83% | 75.00% | |
63 Neutral | $14.39B | 9.81 | 8.95% | 4.37% | 16.38% | -11.64% | |
60 Neutral | $280.96M | 8.54 | 9.26% | 19.26% | 22.53% | ― | |
58 Neutral | $667.01M | ― | -8.57% | 16.20% | 8.24% | -207.60% |
* Financial Sector Average
Performance Comparison
RWAY
Runway Growth Finance Corp
10.39
-0.15
-1.42%
HTGC
Hercules Capital
18.43
1.73
10.36%
TCPC
BlackRock TCP Capital
7.84
-0.84
-9.68%
TPVG
TriplePoint Venture Growth
6.75
-1.11
-14.12%
TSLX
Sixth Street Specialty Lending
21.85
2.82
14.82%
GSBD
Goldman Sachs BDC
11.40
-1.53
-11.83%
Runway Growth Finance Corp Earnings Call Summary
Earnings Call Date: Mar 20, 2025 | % Change Since: 0.48% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted successful strategic acquisitions and new investments, but was tempered by decreases in net investment income and yield. Despite strong portfolio management and increased net assets, challenges included realized losses and loans on non-accrual status.Highlights
Total Investment Income for Q4 2024
Runway Growth Finance delivered total investment income of $33.8 million for the fourth quarter of 2024.
Successful Acquisition and Strategic Investment
Runway Growth Capital, the investment adviser, was acquired by BC Partners Credit, enhancing its origination channels and expanding its product set.
New Investments and Loan Growth
Runway Growth Finance executed two new investments and five investments with existing portfolio companies, representing $154 million in funded loans.
Increased Net Assets
Net assets increased to $514.9 million by the end of Q4 2024, up from $507.4 million in the previous quarter.
NAV Per Share Increase
Net Asset Value (NAV) per share increased by 3% to $13.79 at the end of Q4 2024.
Strong Portfolio Management
The weighted average portfolio risk rating decreased to 2.33 in Q4 2024 from 2.48 in Q3 2024.
Lowlights
Decrease in Investment Income
Net investment income decreased to $14.6 million in Q4 2024 from $15.9 million in Q3 2024.
Realized Loss on Investments
A net realized loss of $2.9 million was recorded in Q4 2024.
Loans on Non-Accrual Status
Two loans, Mingle Healthcare and Snagajob, remained on non-accrual status, with combined loans representing 0.5% of the total investment portfolio at fair value.
Decrease in Dollar-Weighted Average Yield
Dollar-weighted average annualized yield of the debt portfolio decreased to 14.7% in Q4 2024 from 15.9% in Q3 2024.
Company Guidance
During the fourth quarter of 2024, Runway Growth Finance reported total investment income of $33.8 million and net investment income of $14.6 million. The firm completed $154 million in funded loans, which included two new investments and five existing portfolio company investments. Their loan portfolio had a fair value of approximately $1.08 billion, with a net asset value per share increasing to $13.79. Runway's debt portfolio yielded a dollar-weighted average annualized yield of 14.7%, with operating expenses totaling $19.2 million. The company recorded a net realized loss on investments of $2.9 million. Runway had two loans on non-accrual status, representing only 0.5% of the total investment portfolio at fair value. The leverage ratio stood at 1.08 times, with total liquidity of $244.8 million. The firm announced aggregate distributions of $0.36 per share for the first quarter of 2025, reflecting a $0.33 per share base dividend and a $0.03 per share supplemental dividend.Runway Growth Finance Corp Corporate Events
Executive/Board Changes
Runway Growth Finance Expands Board with New Directors
Neutral
Mar 17, 2025
Runway Growth Finance Corp., a Maryland corporation, announced changes to its Board of Directors on March 13, 2025. John Engel resigned as a director, effective March 21, 2025, with no disagreements with the company. Jennifer Kwon Chou was elected as an independent director, along with Robert Warshauer, Alexander Duka, and Ted Goldthorpe, who will also serve as the chair of the Board. These appointments, effective March 21, 2025, are part of the Board’s expansion from five to eight directors, enhancing the company’s strategic and governance capabilities.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.