TPVG Q4 2026 earnings call transcript, November 4, 2026

Welcome to the Triple Point Venture Growth BDC Core 3rd Quarter 2026 Earnings Conference Call. At this time, all lines have been placed in a listen-only mode. After the speaker's remarks, there will be an opportunity to ask questions and instructions will follow at that time. This conference is being recorded and a replay of the call will be available in an audio webcast on the Triple Point Venture Growth website. Company Management is pleased to share with you the company's results for the 3rd Quarter 2026 Earnings Conference Call. Today, representing the company and on today's call is Jim LeBay, Chief Executive Officer and Chairman of the Board, Sajal Srivastava, President and Chief Investment Officer, Mike Wilhelms, Chief Financial Officer, and Ian Schwer, who will be assuming the role. Chief Investment Officer at Year's End. Before I turn the call over to Mr. LeBay, I'd like to direct your attention to the customary Safe Harbor disclosure in the company's press release regarding forward-looking statements and remind you that during this call, management will make certain statements that relate to future events or the company's future performance. or financial condition which are considered forward-looking statements under federal securities law. You are asked to refer to the company's most recent filings with the Securities and Exchange Commission for important factors that could cause actual results to differ materially from these statements. The company does not undertake any obligation to update your statements.

any forward-looking statements or projections unless required by law. Investors are cautioned not to place undue reliance on any forward-looking statements made during the call, which reflect management's opinions only as of today. To obtain copies of our latest SEC filings, please visit the company's website at www.tpvg.com. Now I'd like to turn the comments over to Mr. LeBay. Please go ahead. Thank you, Operator. Good afternoon, everyone, and welcome to TPVG's third quarter earnings call. Over the past several quarters, our focus has been on continuing to advance our investment sector rotation and diversification strategy by investing in high-quality venture growth stage companies across AI and other attractive venture investment sectors while steadily reducing our exposure to and monetizing our vintage 2020 through 2020. 22 portfolio investments. We will continue along this path as we seek to enhance TPVG's portfolio quality and durability, strengthen our financial position, grow our income-generating assets, and increase NAV over the long term for the benefit of the future.

Starting with some key highlights from the quarter, we're continuing to see strong demand for debt financing from leading venture growth stage companies. We signed $106 million of term sheets with venture growth stage companies at our sponsor, TriplePoint Capital. And our venture growth stage pipeline now exceeds more than $2 billion. In the third quarter, TPVG closed $43 million in debt commitments across eight portfolio companies, a 45% increase over the second quarter. We also lowered our leverage and saw an increase. in our average New Deal yields on signed term sheets. We are continuing to execute on our plan of investment sector rotation and portfolio diversification across very attractive sectors. Investing in companies such as Eridu, Heron Power, ThoughtSpot, in companies such as Eridu, Heron Power, ThoughtSpot and Mulan Space. And we remain focused on backing category-defining companies that are at the forefront of adopting and deploying AI across their product offerings. While we funded $0.7 million of debt investments during the quarter, which was driven by timing and discipline, subsequent to quarters close, TPVG has already funded $57 million through yesterday, and we're only about a third of the way or so into the fourth quarter. While we had a light funding quarter, based on the pace and momentum of the current quarter so far, including the $57 million of funding,

another $60 million of commitments, some $125 million of signed term sheets already, coupled with a large pipeline, we're expecting a strong finish here in the fourth quarter, accompanied by the strong liquidity to service it. Turning to the. Portfolio, we continue to focus on actively managing and working through our vintage 2020 through 22 credit situations. While building what we believe is a stronger and more diversified portfolio. As noted in last quarter's call, we exited Prodigy in the third quarter. which was our largest outstanding loan position. This represented an important step in our ongoing efforts to rebalance and diversify the portfolio. We expect to use these proceeds to further strengthen our liquidity position and enhance our financial flexibility. Most of our watch list exposures relate to these 2020 through 22 vintage investments, which have been on the watch list for an average of approximately six and a quarter years. Looking at our investments beginning in 2023, while newer, they continue to perform well and are trending positively, which we believe reflect the benefit of our sector rotation and diversification efforts. We're also pleased to see the fundraising activity among our companies increase significantly last quarter. Reflecting the strengths of the VC market, five of our debt to the VC market. Portfolio companies raised $1.7 billion in capital in private financing rounds during the quarter.

All of them had increased upticks in their valuation, including Inspirin, Eridu, Etched, Muon Space, and EnCharge. This brings the year-to-date total to $12.7 billion. Portfolio companies, raising approximately $2.8 billion. On the investment side, the venture capital investment environment remains robust. According to PitchBook, an estimated 5,000 deals closed during the quarter, the second-highest quarterly count on record. Through the first three quarters of the year, US VC deal value reached a record $515 billion, almost 44% of the prior five-year high. AI remains a dominant theme, accounting for 83% of the year-to-date deal value. The highest annual share on record. Venture growth stage investment in 2026 has nearly surpassed every prior year, both in capital invested but also in deal count. This growing base of large, well-capitalized, later-stage private companies continues. To expand our addressable market. On the exit side, liquidity for VC-backed companies remains concentrated. M&A generally remains a primary path. According to PitchBook, year-to-date exit value has reached a record of $2.3 trillion, but that was... ...driven by a handful of large IPO transactions. The IPO window for tech venture-backed companies has yet to broadly reopen. Within our own portfolio, while no M&A transactions are closed in the third quarter, there are several in the process and two... ...transactions recently closed post-quarter, including Senac and Fidon. Given that, a development, as of only yesterday, in fact, was the announcement by Salesforce that it has signed a definitive agreement to acquire our TPV portfolio company, Crescent.

...where we hold warrant and equity positions associated with our former debt line. We believe we remain well positioned to benefit as liquidity broadens across tech venture-backed IPOs and this M&A over the coming quarters. As a reminder, we maintain a sizable equity and warrant portfolio that continues to grow. As of September 30th, we hold warrant positions in 120 portfolio companies and equity investments in 57. A number of these companies have also been identified in... ...publications list of top candidates for venture-backed IPOs in the U.S. and Europe. TPVG continues to benefit from the AI investment megacycle. AI infrastructure remains a primary driver of capital formation, with hyperscalers alone... ...issuing approximately $225 billion of investment-grade year-to-date debt. That's more than the last prior four years combined. VCs are increasingly focused on infrastructure as access to compute becomes a key competitive advantage. We're also... ...seeing growing investments in other attractive sectors, including defense, aerospace, and energy, where data center demand is driving capital towards power and grid infrastructure. Demand for venture debt remains strong as financings continue to shift towards larger, later... ...stage transactions. We also continue to benefit from the strong support of our platform sponsor, TriplePoint Capital, which is a leader in the venture lending market with direct origination capabilities. The advisor has waived its full quarterly income incentive fees.

...since Q1 of 2025, and previously committed to maintaining that waiver for each quarter through the end of this year. In a continued demonstration of alignment with TPVG shareholders, the advisor has now amended its income incentive fee waiver and will waive its... Quarterly Income Incentive Fee for all of 2027 as well. We recently announced a leadership transition under which Saja will be leaving his role as President and Chief Investment Officer at year's end. I will continue as the CEO of TPVG. We are pleased to have appointed Ian Schwer as our Chief Investment Officer, also effective as of year's end. I want to thank Saja for a significant contribution to TriplePoint over the past 23 years. Together, we have built TriplePoint into an industry-leading and differentiated venture lending. I'm proud of the business we created and excited as TriplePoint continues to work with our venture partners and invest in leading companies to take advantage of strong long-term market trends. I look forward to continuing to work with Saja over the coming months with a smooth with an orderly transition underway. You'll hear more from Saja shortly. We have great confidence in Ian, a 12-year TriplePoint veteran with an outstanding technology investment background who's grown up within our ranks and has been instrumental in helping manage our ongoing portfolio transition. across the high growth and diversified sectors that I've been describing. In summary, we continue to make progress in strengthening and repositioning our portfolio for the long term while working diligently to maximize outcomes across credit situations.

As a result of the actions we've taken, the post-2023 broader portfolio remains very strong. As we look ahead, we remain focused on disciplined underwriting, strengthening our balance sheet, and diversifying our portfolio to capitalize and the attractive market opportunities today that enhance our long-term earnings power. With that, let me turn the call over to Sajal.

Thank you, Jim, and good afternoon, everyone. During Q3, we continued to take steps to strengthen TPVG's foundation and position the company for the long-term. Beginning with our investment activity, TriplePoint Capital signed 106 million of term sheets with venture growth stage companies during Q3, compared to 307 million of signed term sheets during Q2, 2026, and TriplePoint Capital has signed 125 million of term sheets so far in the fourth quarter. In regards to new investment allocation to TPVG during the third quarter, our advisor allocated 43 million in new commitments with eight companies to TPVG, as compared to 29.8 million of new commitments with five companies in Q2. We expect to continue to increase our allocation of new commitments as unfunded commitments continue to... expire and as we receive prepayments and repayments over the rest of the year, and have allocated 60 million of new commitments to three companies so far in the fourth quarter. During the quarter, we funded 700,000 to four companies, compared to 47.8 million of fundings to 10 companies in Q2. As Jim mentioned, our fundings during the quarter were impacted by timing, as we have already funded 57.4 million in the fourth quarter, already exceeding our guided range of 25 to 50 million. During Q3, we had 11 million in loan prepays, resulting in an overall weighted average portfolio yield. of 12.4%, and excluding prepays, our core portfolio yield was 12%. This compares to 28.6 million of loan prepays, an overall weighted average portfolio yield of 12.9% with prepays, and 12.3% without prepays in Q2. During the quarter, we sold our debt.

Thank you, Sajal, and good afternoon, everyone. Total investment income and other income for the third quarter was $20.2 million, representing a weighted average annualized portfolio... yield on debt investments of 12.4%, compared to $22.1 million and 12.9% in the prior quarter. The decline primarily reflects the July 1 disposition of our approximately $44 million investment in Prodigy, which had been our largest outstanding debt investment. Approximately two-thirds of our debt investments are floating rate loans, substantially all of which are subject to prime rate floors. Based on our portfolio and borrowing structure at quarter end, increases in benchmark interest rates would be expected to have a positive impact on net investment income as the benefit from higher investment income would more than offset the increase in borrowing costs from our revolver. We continue to manage our mix of fixed and floating rate assets and liabilities with an emphasis on maintaining financial flexibility. Net investment income for the quarter was $6.6 million, or $0.16 per share. compared to $8.3 million, or $0.21 per share, in the prior quarter. The sequential decline primarily reflects lower investment income, which includes a $500,000 reduction in accelerated income generated from loan prepayments. This decline was partially offset by lower interest expense. as we used proceeds from the Prodigy disposition to reduce outstanding borrowings under our revolving credit facility, including realized and unrealized investment activity, net decrease in net assets resulting from operations was $1.7 million, or $0.04 per share.

to execute our portfolio strategy. That concludes my prepared remarks. Operator, please open the line for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question please press star then 1 on your telephone keypad. If you're using a speakerphone, please press star then 1 on your telephone keypad. has been addressed and you would like to withdraw your question, please press star then 2. At this time we will pause momentarily to assemble our roster.

The first question comes from Crispin Love at Piper Sandler. Please go ahead.

The next question is from Paul Johnston at KPW. Please go ahead.

The next question comes from Chris Muller at Citizens. Please go ahead.

This concludes...

Thanks, Operator.

As always, I'd like to thank everyone for listening and participating in today's call. We look forward to updating and talking with you all again next quarter. Thanks. Again, and have a nice day.

The conference is now concluded.

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