tiprankstipranks
Trending News
More News >
Runway Growth Finance Corp (RWAY)
NASDAQ:RWAY
US Market

Runway Growth Finance Corp (RWAY) AI Stock Analysis

Compare
302 Followers

Top Page

RW

Runway Growth Finance Corp

(NASDAQ:RWAY)

Rating:63Neutral
Price Target:
Runway Growth Finance Corp faces significant financial performance challenges with declining revenue and negative net income, which are partially offset by a strong balance sheet with no debt. Technical indicators suggest bearish momentum, though the valuation is attractive with a low P/E ratio and high dividend yield. The earnings call provided a mixed outlook with strategic positives but financial concerns, leading to an overall score of 63.
Positive Factors
Acquisitions and Reorganizations
Gynesonics was marked up additionally on its pending acquisition, while Snagajob improved on its reorganization after it was acquired.
Business Sale
FiscalNote agreed to sell a business for $40 million in cash.
Net Asset Value
NAV improved 3% sequentially and 4.9% from two quarters ago.
Negative Factors
Dividend Policy
The base dividend was lowered to $0.33 in accord with a new 'capital preservation' policy.
Portfolio Diversity
Portfolio diversity (only 31 unique debt names) remains a headwind to valuation.
Top Line Yields
Top line yields dropped on base rates and non-recurring income.

Runway Growth Finance Corp (RWAY) vs. SPDR S&P 500 ETF (SPY)

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 Earnings Call Summary

Earnings Call Date:May 12, 2025
(Q1-2025)
|
% Change Since: 18.57%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. On one hand, there was growth in total and net investment income, and a new strategic partnership with Autobooks. On the other hand, net assets and NAV per share declined, and there were challenges with loans on nonaccrual status. The call highlighted a cautious yet optimistic approach towards future growth and portfolio optimization.
Q1-2025 Updates
Positive Updates
Total Investment Income Increase
Runway delivered total investment income of $35.4 million, up from $33.8 million in the previous quarter.
Net Investment Income Growth
Net investment income rose to $15.6 million from $14.6 million in the fourth quarter of 2024.
Strong Credit Quality
The weighted average portfolio risk rating remained stable at 2.33, indicating solid credit quality.
New Partnership with Autobooks
Completed a new $40 million investment with Autobooks, demonstrating strategic growth and flexibility.
Supplemental Dividend Declared
Declared a supplemental dividend of $0.02 per share in addition to a regular dividend.
Negative Updates
Decrease in Net Assets
Net assets decreased from $514.9 million at the end of the fourth quarter of 2024 to $503.3 million.
NAV per Share Decline
NAV per share decreased by 2.2% to $13.48 at the end of the first quarter.
Portfolio Fair Value Decline
Total investment portfolio fair value decreased by 6.7% from the fourth quarter of 2024.
Loans on Nonaccrual Status
Two loans, Mingle Healthcare and Snagajob, remain on nonaccrual status, representing 0.5% of the total investment portfolio.
Company Guidance
During the Runway Growth Finance first quarter 2025 earnings call, the company reported total investment income of $35.4 million and net investment income of $15.6 million. The firm executed three investments in existing portfolio companies, totaling $50.7 million in funded loans, and highlighted a $40 million investment in Autobooks, funding $27 million in loans. The loan portfolio had a fair value of $1 billion, a 6.7% decrease from the previous quarter. The net asset value (NAV) per share was $13.48, a decrease from $13.79 in the fourth quarter of 2024. The debt portfolio generated a weighted average annualized yield of 15.4%, up from 14.7% in the previous quarter. Operating expenses were $19.8 million, and the company recorded a net gain on investments of $6.1 million. The leverage ratio was 0.99x, with total available liquidity of $315.4 million. The board approved a new $25 million stock repurchase program and declared a regular distribution of $0.33 per share, as well as a supplemental dividend of $0.02 per share for the second quarter.

Runway Growth Finance Corp Financial Statement Overview

Summary
Runway Growth Finance Corp is encountering 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
65
Positive
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.
Balance Sheet
70
Positive
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.
Cash Flow
60
Neutral
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue147.40M144.63M145.82M42.19M51.71M51.38M
Gross Profit106.08M85.89M110.06M16.46M31.90M36.77M
EBITDA56.13M73.61M-33.93M0.000.000.00
Net Income77.16M73.61M44.34M4.70M45.62M46.98M
Balance Sheet
Total Assets1.03B1.09B1.08B1.14B738.35M639.89M
Cash, Cash Equivalents and Short-Term Investments18.36M5.75M44.97M1.12B4.70M14.89M
Total Debt0.00552.33M510.08M548.96M79.49M97.42M
Total Liabilities529.61M576.49M532.08M565.71M132.15M173.65M
Stockholders Equity503.29M514.87M547.07M576.05M606.19M466.24M
Cash Flow
Free Cash Flow123.46M69.76M112.44M-359.85M-61.25M-106.09M
Operating Cash Flow119.23M69.76M112.44M-359.85M-61.25M-106.09M
Investing Cash Flow-25.17M0.000.00-453.82M-120.84M168.61M
Financing Cash Flow-63.28M-66.98M-115.23M360.91M51.06M75.18M

Runway Growth Finance Corp Technical Analysis

Technical Analysis Sentiment
Positive
Last Price10.79
Price Trends
50DMA
9.69
Positive
100DMA
9.84
Positive
200DMA
9.80
Positive
Market Momentum
MACD
0.28
Negative
RSI
70.27
Negative
STOCH
89.22
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RWAY, the sentiment is Positive. The current price of 10.79 is above the 20-day moving average (MA) of 10.26, above the 50-day MA of 9.69, and above the 200-day MA of 9.80, indicating a bullish trend. The MACD of 0.28 indicates Negative momentum. The RSI at 70.27 is Negative, neither overbought nor oversold. The STOCH value of 89.22 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RWAY.

Runway Growth Finance Corp Peers Comparison

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
84
Outperform
$2.34B6.7217.91%3.00%5.13%25.93%
AGAGM
79
Outperform
$2.08B12.0913.51%3.07%25.81%-1.60%
YRYRD
73
Outperform
$521.03M2.8314.69%3.65%12.45%-36.64%
70
Outperform
$965.22M9.798.24%13.52%3.82%-12.74%
OMOMF
68
Neutral
$6.93B12.3217.46%7.14%9.07%
67
Neutral
¥713.20B10.867.42%3.37%7.74%16.12%
63
Neutral
$398.12M6.3912.28%15.01%-2.83%75.00%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
RWAY
Runway Growth Finance Corp
10.79
0.73
7.26%
AGM
Federal Agricultural
199.89
23.74
13.48%
BBDC
Barings BDC
9.23
0.35
3.94%
OMF
OneMain Holdings
59.25
15.62
35.80%
YRD
Yiren Digital
6.15
1.88
44.03%
FINV
FinVolution Group
9.51
4.81
102.34%

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
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.Date of analysis: Apr 22, 2025