Executive Summary

Q3 2025 adjusted net investment income was $0.23 per share, essentially flat vs Q2 ($0.24), while GAAP NII fell to $0.03 per share due to a $7.5M accrual of capital gains-based incentive fees under GAAP .
Total investment income declined to $21.371M from $22.565M in Q2, reflecting less dividend income and lower interest income; NAV per share rose sharply to $13.30 from $12.49 on broad unrealized appreciation and disciplined distributions .
Portfolio expansion was significant: three new companies added and $187.094M deployed, the largest investment quarter to date; the 7.875% notes due 2030 ($126.5M) strengthened liquidity for continued pipeline execution .
The monthly $0.08 dividend was maintained (total $0.24 for the quarter); supplemental distributions of $0.70 were paid in October (declared in Q2), supporting an income-plus-capital-gains shareholder return model .
Catalysts: robust M&A pipeline and equity upside from portfolio gains; risks: incentive fee accruals and SOFR-linked yield compression, partially mitigated by widespread interest rate floors (~11.5–12%) on debt investments .

What Went Well and What Went Wrong

What Went Well

Robust investment activity: “we successfully acquired three new companies, deployed over $187 million of new capital, making it our single largest investment quarter” .
NAV accretion: NAV rose to $13.30 per share, driven by $37.3M unrealized appreciation and NII, partially offset by distributions, illustrating valuation tailwinds and portfolio performance .
Balance sheet strength: issuance of $126.5M 7.875% notes due 2030 and expanded credit capacity highlighted ample funding for deal flow and portfolio support .

What Went Wrong

GAAP NII pressure: NII fell to $1.161M ($0.03 per share) from $7.291M due to higher GAAP accruals for capital gains-based incentive fees; adjusted NII held steady at $0.23 .
Yield moderation: weighted-average yield slipped to 14.0% from 14.5%, reflecting lower SOFR; management emphasized rate floors to mitigate further compression .
Company-specific volatility: management cited slight downticks in EBITDA or multiples at Educators, PSI and Galaxy, underscoring dispersion in operating trends despite overall portfolio strength .

Financial Results

Metric	Q1 2025 (Jun 30, 2024)	Q2 2025 (Sep 30, 2024)	Q3 2025 (Dec 31, 2024)
Total investment income ($USD Millions)	22.178	22.565	21.371
Total expenses, net ($USD Millions)	9.764	15.274	20.210
Net investment income ($USD Millions)	12.414	7.291	1.161
Net investment income per share ($)	0.34	0.20	0.03
Adjusted NII per share ($)	0.24	0.24	0.23
Net realized gain (loss) ($USD Millions)	0.002	42.303	0.000
Net unrealized appreciation (depreciation) ($USD Millions)	(18.942)	(34.112)	37.329
Net increase in net assets from operations ($USD Millions)	(6.526)	15.482	38.490
NAV per share ($)	13.01	12.49	13.30
Weighted-average yield on interest-bearing investments (%)	14.5	14.5	14.0
Total dollars invested ($USD Millions)	0.598	19.500	187.094
Total dollars repaid/collected ($USD Millions)	3.024	73.522	5.500
Weighted-average shares outstanding (#)	36,688,667	36,688,667	36,727,873

Segment/Portfolio Snapshot

Metric	Q1 2025	Q2 2025	Q3 2025
Total investments, at fair value ($USD Millions)	899.138	853.307	1,072.230
Fair value, as a percent of cost (%)	105.5	101.6	104.9
Net assets ($USD Millions)	477.380	458.375	490.053
Net asset value per common share ($)	13.01	12.49	13.30
Number of portfolio companies (#)	23	22	26

KPIs

KPI	Q1 2025	Q2 2025	Q3 2025
Monthly distribution per common share (quarter total) ($)	0.24 (Apr–Jun)	0.24 (Jul–Sep)	0.24 (Oct–Dec)
Supplemental distribution per common share ($)	—	0.70 (paid Oct)	0.08 (from net realized gains line item; paid in Oct per Q2 declaration)
ATM activity (shares / net proceeds)	—	—	148,714 shares; ~$2.0M net
Public notes issued	—	—	$126.5M 7.875% notes due 2030

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Monthly distribution per common share	Jan–Mar 2025	$0.08/month (Oct–Dec 2024 maintained)	$0.08/month (Jan–Mar 2025 declared)	Maintained
Total quarterly common distribution	Jan–Mar 2025	$0.24 (Oct–Dec 2024)	$0.24 (Jan–Mar 2025 declared)	Maintained
Credit facility commitment	As of Feb 10, 2025	$200.0M prior to amendment	$250.0M after amendment	Raised

Management did not provide formal revenue/margin/OpEx guidance. Dividend declarations and facility amendment were the primary forward items .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
Deal pipeline and buyout activity	“Extremely active investing period” with significant IOIs/LOIs; aiming 3–5 new deals/year	“Single largest investment quarter”; three acquisitions; momentum expected to continue	Accelerating
Nonaccruals/credit quality	Four companies on nonaccrual; improving at at least one; no portfolio-wide concerns	Four on nonaccrual; two improving back to profit; overall no broad concerns	Stable to improving
Interest rate floors/yield management	Weighted-average floors ~12%; helps offset SOFR declines	Floors help sustain interest income despite declining SOFR; blended rate ~11.5%	Protective
Capital raising/liquidity	ATM program initiated; strong availability on credit facility	$126.5M notes issued; facility upsized to $250M; ample liquidity for growth	Strengthening
Tariffs/macro	Discussed tariff exposure and shifting production; no major near-term impact	No change; continued monitoring, limited expected impact	Neutral

Management Commentary

“We successfully acquired three new companies, deployed over $187 million of new capital, making it our single largest investment quarter.” — President Dave Dullum
“Adjusted net investment income…was $8.6 million or $0.23 per share…we believe [it] is a useful and representative indicator of our ongoing operations.” — CFO Taylor Ritchie
“During the quarter, we successfully issued $126.5 million in new publicly traded 7.875% notes maturing in 2030…We believe…capital will allow us to drive portfolio growth.” — CFO Taylor Ritchie
“We maintained our monthly distribution to shareholders of $0.08 per share…and paid the previously declared supplemental distribution of $0.70 per share during the quarter.” — President Dave Dullum

Q&A Highlights

NII compression in Q3 was driven by a large GAAP capital gains-based incentive fee accrual tied to unrealized appreciation; adjusted NII better reflects ongoing operations .
Interest income resilience: widespread floors (~11.5–12%) should cushion SOFR declines; blended rate targeted ~11.5% .
Credits from adviser fluctuate with new investment activity; expect elevated credits as portfolio expands .
Company-specific valuation moves: EBITDA/multiples up at Nocturne, E3, SFEG; down modestly at Galaxy/PSI/Educators due to operational transitions and mixed end-markets .

Estimates Context

S&P Global Wall Street consensus estimates for EPS and revenue were unavailable at the time of analysis due to data access limitations; comparisons to consensus cannot be provided at this time. Values would normally be retrieved from S&P Global.*

Key Takeaways for Investors

Adjusted NII per share held at $0.23 despite GAAP incentive fee accruals; watch adjusted NII as the core run-rate metric for dividend coverage .
NAV per share climbed to $13.30, reflecting broad unrealized gains; continued equity value realization remains a medium-term upside lever .
Liquidity is strong with $126.5M notes issued and facility upsized to $250M, positioning GAIN to fund its active pipeline without stressing leverage .
Interest rate floors should mitigate yield compression as SOFR declines; near-term NII volatility likely driven more by incentive fee accrual mechanics than core income .
Distribution policy remains intact: $0.08 monthly maintained and supplemental distributions paid when equity gains are realized; income-plus-gains model is central to the thesis .
Monitor portfolio-level dispersion: while overall valuations improved, select holdings (PSI, Galaxy, Educators) saw modest pressure; execution on operational improvements is key .
Short-term trading: catalysts include additional buyout closings, valuation uplifts translating into realized gains, and stable adjusted NII; risks include higher-than-expected fee accruals and macro-driven end-market softness .

Sources: Q3 2025 press release and 8-K ; Q3 2025 earnings call transcripts and ; Q2 2025 press release/8-K and call ; Q1 2025 press release/8-K and call .
Other Q3 press release (Ricardo Defense acquisition partnership): .

*Values typically retrieved from S&P Global.

GLADSTONE INVESTMENT CORPORATION\DE (GAIN)·Q3 2025 Earnings Summary