Executive Summary
Gladstone Investment Corporation delivered a Q4 2025 result that features strong operating cash generation and a high level of earnings, underpinned by a sizable portfolio of investments and a meaningful interest expense burden. Revenue for the period stood at $25.74 million, with net income of $17.87 million and EPS of $0.49, driving an EBITDA of $17.87 million and an EBITDAR of $17.87 million. The quarter shows a pronounced sequential decline in revenue and profit metrics (QoQ revenue down ~38.8% and net income down ~53.6%), indicating seasonality or portfolio revaluations that warrant closer monitoring. Cash flow from operations was robust at approximately $112.7 million, contributing to free cash flow of about $115.1 million, while financing activities absorbed roughly $100.7 million due to debt repayments and equity issuances. Net debt stood at about $441.4 million against $499.1 million in equity, with total assets near $1.006 billion and a portfolio carrying value of roughly $979.3 million in investments, underscoring a leveraged but actively deployed capital base.
The balance sheet shows a high leverage profile (long-term debt $455.7 million; debt-to-equity around 0.91) and liquidity metrics that appear atypically tight (current ratio and quick ratio both listed at 0.0455 and cash ratio at 0.0333). While the company reports very strong cash generation, the combination of substantial debt service obligations and limited short-term liquidity suggests a fragile near-term liquidity stance if operating cash flows deteriorate or if financing markets tighten. The implied dividend yield (~10.6%) reflects a traditional BDC distribution policy, but payout coverage indicators require ongoing scrutiny given the payout-to-net-income dynamics implied by the ratios.
Looking ahead, management commentary (not available in the provided transcript) typically emphasizes portfolio deployment, credit quality, and fee-based carry. With a sizable investment base and continued emphasis on debt-related investments in the lower middle market, the growth trajectory will hinge on portfolio performance, credit risk controls, and the ability to sustain cash distributions in a rising-rate environment. Investors should monitor portfolio yield, leverage, liquidity coverage, and any guidance on deployment pace or reserve adequacy as key drivers of the intermediate-term outlook.
Key Performance Indicators
QoQ: -38.81% | YoY:-9.20%
QoQ: -53.04% | YoY:-23.21%
QoQ: -53.56% | YoY:-20.86%
QoQ: -53.56% | YoY:-20.86%
QoQ: -53.33% | YoY:-22.22%
Key Insights
Revenue: $25.741 million; YoY -9.20%; QoQ -38.81%
Gross Profit: $16.759 million; YoY -23.21%; QoQ -53.04%
Operating Income: $17.873 million; YoY -20.86%; QoQ -53.56%
Net Income: $17.873 million; YoY -20.86%; QoQ -53.56%
EPS: $0.49; YoY -22.22%; QoQ -53.33%
EBITDA: $17.873 million; EBITDARatio: 0.6943
Operating Margin: 69.43%
Net Margin: 69.43%
Interest Expense: $8.9822 million
Weighted Average Shares (outstanding): 36,735,218
Free Cash Flow: $115.082 million; Operating Cash Flow: $115.082 millio...
Financial Highlights
Revenue: $25.741 million; YoY -9.20%; QoQ -38.81%
Gross Profit: $16.759 million; YoY -23.21%; QoQ -53.04%
Operating Income: $17.873 million; YoY -20.86%; QoQ -53.56%
Net Income: $17.873 million; YoY -20.86%; QoQ -53.56%
EPS: $0.49; YoY -22.22%; QoQ -53.33%
EBITDA: $17.873 million; EBITDARatio: 0.6943
Operating Margin: 69.43%
Net Margin: 69.43%
Interest Expense: $8.9822 million
Weighted Average Shares (outstanding): 36,735,218
Free Cash Flow: $115.082 million; Operating Cash Flow: $115.082 million; Net Cash Provided by Operating Activities: $112.68 million
Cash at End of Period: $15.154 million; Cash at Beginning: $3.147 million; Net Change in Cash: $12.007 million
Total Assets: $1,006.404 million; Total Liabilities: $507.320 million; Total Equity: $499.084 million
Total Investments: $979.320 million; Long-Term Investments: $979.320 million
Long-Term Debt: $455.709 million; Short-Term Debt: $455.709 million; Net Debt: $441.411 million
Current Ratio: 0.0455; Quick Ratio: 0.0455; Cash Ratio: 0.0333
Debt to Equity: 0.913; Debt to Capitalization: 0.477; Price to Book: 0.983; Price to Sales: 19.07; P/E: 6.86; Dividend Yield: 0.106 (10.6%); Payout Ratio: 2.92x
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
25.74M |
-9.20% |
-38.81% |
| Gross Profit |
16.76M |
-23.21% |
-53.04% |
| Operating Income |
17.87M |
-20.86% |
-53.56% |
| Net Income |
17.87M |
-20.86% |
-53.56% |
| EPS |
0.49 |
-22.22% |
-53.33% |
Key Financial Ratios
operatingProfitMargin
69.4%
operatingCashFlowPerShare
$3.13
freeCashFlowPerShare
$3.13
Management Commentary
Note: The earnings transcript data set is empty for QQ4 2025; no management quotes or key remarks are provided in the supplied material. As a result, no verbatim quotes or thematic quotes can be drawn from the call. Highlights below reflect the quantitative results and typical strategic considerations for this business segment:
- Strong cash generation backdrop: Operating cash flow of approximately $112.7 million supports distributions and leverage management even as quarterly revenue declined.
- Leverage and capital structure: Long-term debt of $455.7 million and net debt of $441.4 million against equity of $499.1 million; leverage appears elevated, with a debt-to-equity ratio of ~0.91 and a debt-to-capitalization of 0.477. These metrics imply sensitivity to rate changes and refinancing risk if market conditions tighten.
- Portfolio deployment vs. liquidity: Large portfolio investments (~$979.3 million) and meaningful debt repayments (~$91.8 million) in the period indicate active capital deployment and de-leveraging actions, albeit with limited near-term liquidity cushions as suggested by current ratio metrics in the data.
- Margin and profitability trends: Margin resilience is evident in the reported period with EBITDA and net income aligning at ~$17.9 million and margins near 69% for the quarter, but YoY and QoQ declines in revenue/gross profit suggest some earnings cyclicality or portfolio valuation movements that warrant close monitoring when assessing earnings sustainability.
Not available in provided earnings transcript.
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Not available in provided earnings transcript.
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Forward Guidance
No explicit forward guidance is provided in the supplied dataset for QQ4 2025. Given the balance-sheet and cash-flow characteristics, investors should focus on: (1) cadence of new debt and equity deployments to support portfolio growth without materially expanding leverage; (2) coverage of distributions, including potential impact of interest expense and credit losses; (3) sensitivity to interest rate moves and refinancing risk given the sizable long-term debt and net debt position; (4) portfolio diversification and sector/credit quality indicators. In a rising-rate environment, earnings stability may hinge on maintaining floating-rate vs fixed-rate exposure in the debt portfolio and preserving fee-based income streams. Management’s ability to sustain free cash flow while funding new acquisitions will be a critical determinant of long-term shareholder value.