Runway Growth Finance Corp. Reports Third Quarter 2022 Financial Results

Delivered Record Total and Net Investment Income of $27.3 and $14.5 Million, Respectively
Increased Core Leverage Ratio of Portfolio to 60%
Grew Investment Portfolio to Record $910.2 Million
Conference Call Today, Thursday, November 3 at 6:00 p.m. ET

WOODSIDE, Calif., Nov. 03, 2022 (GLOBE NEWSWIRE) -- Runway Growth Finance Corp. (Nasdaq: RWAY) (“Runway Growth” or the “Company”), a leading provider of flexible capital solutions to late- and growth-stage companies seeking an alternative to raising equity, today announced its financial results for the third quarter ended September 30, 2022.

Third Quarter 2022 Highlights

• Total investment income of $27.3 million
• Net investment income of $14.5 million, or $0.36 per share
• Total investment portfolio of $910.2 million at fair value
• Net asset value of $14.12 per share
• Dollar-weighted annualized yield on debt investments of 14.4% for the quarter
• Nine investments completed in new and existing portfolio companies totaling $216.0 million in new commitments including $161.0 million in funded loans
• Aggregate proceeds of $55.0 million received from principal repayments
• Declared fourth quarter dividend of $0.36 per share, up 9% quarter over quarter

“Runway Growth delivered its third consecutive record quarter, driven by our team’s disciplined execution against our strategic initiatives,” said David Spreng, Founder and CEO of Runway Growth. “Our success speaks to the value of our credit-driven investment process, which provides the downside protection of debt with the potential for the upside of equity.”

Spreng continued, “Runway Growth’s weatherproof platform is well positioned with the strongest pipeline we have seen to date. We will continue to serve companies that are embracing venture debt as a vehicle for growth. As we approach year end, the Runway team remains focused on generating prudent portfolio growth through deploying leverage to enhance long-term shareholder value.”

Third Quarter 2022 Operating Results

Total investment income for the quarter ended September 30, 2022 was $27.3 million, compared to $18.6 million for the quarter ended September 30, 2021. This year-over-year growth demonstrates the demand for the company’s creative financing solutions.

Net investment income for the quarter ended September 30, 2022 was $14.5 million, or $0.36 per share, compared to $10.7 million, or $0.32 per share, for the quarter ended September 30, 2021.

The Company's dollar-weighted annualized yield on average debt investments for the quarter ended September 30, 2022 was 14.4%. The Company calculates the yield on dollar-weighted debt investments for any period measured as (1) total investment-related income during the period divided by (2) the daily average of the fair value of debt investments outstanding during the period.

Total operating expenses for the quarter ended September 30, 2022 were $12.8 million, compared to $7.9 million for the quarter ended September 30, 2021. The increase was driven by growing management fees, incentive fees, interest expenses as well as expenses related to being a public company.

Net realized gain on investments for the quarter ended September 30, 2022 was $0.4 million, compared to a net realized gain of $0.7 million for the quarter ended September 30, 2021.

For the quarter ended September 30, 2022, net change in unrealized depreciation on investments was $3.2 million, compared to a net change in unrealized depreciation on investments of $1.2 million for the comparable prior year period, due to the decline in fair value of the company’s loan to Pivot3 and public equity holding in FiscalNote.

Portfolio and Investment Activity

As of September 30, 2022, Runway Growth’s investment portfolio had an aggregate fair value of approximately $910.2 million and was comprised of approximately $875.9 million in term loans, 98% of which are senior secured loans, and $34.2 million in warrants and equity-related investments in 43 portfolio companies.

During the third quarter of 2022, Runway Growth originated nine investments totaling $216.0 million in commitments, including $161.0 million in funded loans, as well as two investments in new portfolio companies and seven new investments in existing portfolio companies.

Total portfolio investment activity for the three and nine months ended September 30, 2022, and 2021 was as follows:

		Three Months Ended September 30,									Nine Months Ended September 30,
		2022				2021					2022				2021
		(unaudited)				(unaudited)					(unaudited)				(unaudited)
Beginning Investment Portfolio		$	807,728,604			$	617,617,043				$	729,516,274			$	621,826,650
Purchases of Investments(1)			160,562,001				103,788,323					399,164,647				239,458,881
Purchases of U.S. Treasury Bills			—				60,000,660					—				115,000,509
Amortization of Fixed Income Premiums or Accretion of Discounts			1,004,909				1,879,221					4,575,984				5,539,659
Sales or Repayments of Investments			(56,351,393	)			(102,817,182	)				(143,144,652	)			(197,534,296	)
Scheduled Principal Payments of Investments			—				(3,605,000	)				(7,265,675	)			(5,671,437	)
Sales and Maturities of U.S. Treasury Bills			—				(29,999,956	)				(44,999,747	)			(124,999,118	)
Realized Gain (Loss) on Investments			406,917				718,310					939,377				(4,094,970	)
Net Change in Unrealized Appreciation (Depreciation) on Investments			(3,182,093	)			(1,228,382	)				(28,617,263	)			(3,172,841	)
Ending Investment Portfolio		$	910,168,945			$	646,353,037				$	910,168,945			$	646,353,037
1. Includes PIK interest.

Net Asset Value

As of September 30, 2022, net asset value (“NAV’”) per share was $14.12, compared to $14.14 as of June 30, 2022. Total net assets at the end of the third quarter of 2022 were $573.7 million, up 14% from $504.2 million in the prior year period.

For the quarter ended September 30, 2022, net increase in net assets resulting from operations was $11.7 million, or $0.29 per share, compared to a net increase of $10.2 million, or $0.31 per share, for the quarter ended September 30, 2021.

Liquidity and Capital Resources

As of September 30, 2022, the Company had approximately $255.8 million in available liquidity, including unrestricted cash and cash equivalents, and $250 million in available borrowing capacity under the Company’s credit facility, subject to existing terms, advance rates and regulatory and covenant requirements.

The Company ended the quarter with a core leverage ratio of approximately 60.0, compared to 40.2% for the quarter ended June 30, 2022.

Distributions

On October 27, 2022, the Company’s board of directors declared a regular quarterly distribution of $0.36 per share for the fourth quarter of 2022, payable on November 22, 2022, to stockholders of record as of November 8, 2022. This dividend represents an increase of 9% over the dividend declared in the prior quarter.

Conference Call
Runway Growth will hold a conference call to discuss its third quarter 2022 financial results at 3:00 p.m. PT (6:00 p.m. ET) on Thursday, November 3, 2022. To participate in the conference call or webcast, participants should register online at the Runway Investor Relations website. The earnings call can also be accessed through the following links:

• Conference Call
• Webcast

A live webcast will be available in the investor section of the Company’s website, and will be archived for 90 days following the call.

About Runway Growth Finance Corp.
Runway Growth is a growing specialty finance company focused on providing flexible capital solutions to late- and growth-stage companies seeking an alternative to raising equity. Runway Growth is a closed-end investment fund that has elected to be regulated as a business development company under the Investment Company Act of 1940. Runway Growth is externally managed by Runway Growth Capital LLC, an established registered investment advisor that was formed in 2015 and led by industry veteran David Spreng. For more information, please visit www.runwaygrowth.com.

Forward-Looking Statements
Statements included herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance, condition or results and involve a number of risks and uncertainties, including the impact of COVID-19 and related changes in base interest rates and significant market volatility on our business, our portfolio companies, our industry and the global economy. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in Runway Growth’s filings with the Securities and Exchange Commission. Runway Growth undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

IR Contacts:
Stefan Norbom, Prosek Partners, snorbom@prosek.com
Thomas B. Raterman, Chief Financial Officer and Chief Operating Officer, tr@runwaygrowth.com

Runway Growth Finance Corp.
Statements of Assets and Liabilities
		September 30, 2022				December 31, 2021
			(unaudited)
Assets
Investments at fair value:
Non-control/non-affiliate investments at fair value (cost of $910,870,337 and $647,448,895, respectively)		$	903,521,674			$	655,384,403
Affiliate investments at fair value (cost of $4,551,235 and $0, respectively)			2,180,230				—
Control investments at fair value (cost of $21,172,353 and $34,873,846, respectively)			4,467,041				29,130,371
Investment in U.S. Treasury Bills at fair value (cost of $0 and $45,001,250, respectively)			—				45,001,500
Total investments at fair value (cost of $936,593,925 and $727,323,991, respectively)			910,168,945				729,516,274
Cash and cash equivalents			5,774,074				4,696,693
Accrued interest receivable			4,402,598				2,368,680
Other accounts receivable			1,823,611				816,065
Prepaid expenses			99,507				949,768
Total assets			922,268,735				738,347,480
Liabilities
Debt:
Credit facilities, net			170,009,357				59,864,489
2026 Notes, net			69,130,314				19,623,971
2027 Notes, net			97,405,095				—
Total debt, less unamortized deferred debt costs			336,544,766				79,488,460
Reverse repurchase agreement			—				44,774,963
Accrued incentive fees			7,188,966				6,010,250
Due to affiliate			261,180				221,243
Interest payable			3,195,407				249,247
Accrued expenses and other liabilities			1,418,045				1,408,826
Total liabilities			348,608,364				132,152,989
Net assets
Common stock, par value			413,806				413,806
Additional paid-in capital			606,063,671				606,047,671
Distributable (losses)			(23,515,173	)			(266,986	)
Treasury stock			(9,301,933	)			—
Total net assets		$	573,660,371			$	606,194,491
Shares of common stock outstanding ($0.01 par value, 100,000,000 shares authorized)			40,635,858				41,380,614
Net asset value per share		$	14.12			$	14.65

Runway Growth Finance Corp.
Statements of Operations
(Unaudited)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2022				2021				2022				2021
Investment income
From non-control/non-affiliate investments:
Interest income		$	25,365,328.00			$	16,732,069.00			$	61,749,677.00			$	47,542,136.00
Payment in-kind interest income			1,199,498.00				434,464.00				3,248,563.00				2,424,022.00
Dividend income			317,674.00				343,755.00				1,020,766.00				1,031,265.00
Fee income			445,399.00				982,190.00				1,519,292.00				2,663,160.00
From affiliate investments:
Interest income			—				—				4,654				—
Payment in-kind interest income			—				—				96,291				—
Fee income			—				—				8,311				—
From control investments:
Interest income			—				113,554				1,112,421				113,554
Payment in-kind interest income			—				3,786				2,984,450				3,786
Other income			805				248				1,268				517
Total investment income			27,328,704				18,610,066				71,745,693				53,778,440
Operating expenses
Management fees			3,065,581				2,301,656				8,487,820				6,647,207
Incentive fees			3,625,686				2,686,475				8,590,821				6,498,482
Interest expense			3,588,289				812,852				6,070,906				2,302,582
Professional fees			720,115				612,854				1,968,036				1,433,360
Overhead allocation expense			258,191				249,141				713,457				655,260
Insurance expense			268,806				23,087				806,042				69,638
Administration fee			161,245				179,500				497,896				420,360
Debt financing fees			794,124				738,087				2,226,658				1,447,288
Directors’ fees			90,727				67,750				261,727				201,750
Tax expense			—				—				1,073				41
Other expenses			258,991				197,540				685,841				539,142
Total operating expenses			12,831,755				7,868,942				30,310,277				20,215,110
Net investment income			14,496,949				10,741,124				41,435,416				33,563,330
Realized and unrealized gain (loss) on investments
Realized gain (loss) on non control/non-affiliate investments, including U.S. Treasury Bills			406,917				718,310				939,442				(4,076,766	)
Realized gain (loss) on control investments			—				—				(65	)			—
Net realized gain (loss) on investments			406,917				718,310				939,377				(4,076,766	)
Net change in unrealized appreciation (depreciation) on non-control/non-affiliate investments, including U.S. Treasury Bills			(1,956,044	)			(6,857,594	)			(14,275,206	)			(10,979,143	)
Net change in unrealized appreciation (depreciation) on affiliate investments			(171,789	)			—				(3,380,221	)			—
Net change in unrealized appreciation (depreciation) on control investments			(1,054,260	)			5,629,212				(10,961,836	)			7,806,302
Net change in unrealized appreciation (depreciation) on investments and U.S. Treasury Bills			(3,182,093	)			(1,228,382	)			(28,617,263	)			(3,172,841	)
Net increase (decrease) in net assets resulting from operations		$	11,721,773				10,231,052			$	13,757,530			$	26,313,723
Net increase in net assets resulting from operations per common share		$	0.29				0.31			$	0.33			$	0.81
Net investment income per common share		$	0.36				0.32			$	1.01			$	1.04
Weighted-average shares outstanding			40,774,154				33,160,481				41,119,467				32,360,107