Executive Summary

Q3 2025 was stable operationally: total investment income rose slightly to $21.66M, NII was flat at $11.29M ($0.50/sh), and NAV/share declined modestly to $21.25 on realized losses tied to a restructuring; portfolio yield ticked up to 12.8% .
EPS (tracked as NII/share) met consensus at $0.50, while revenue (total investment income) modestly missed ($21.66M vs. $21.89M est.); prior two quarters also saw small revenue shortfalls and ~1–3c EPS shortfalls [GetEstimates*].
Post-quarter, originations accelerated ($93M funded in July/early Aug; net +$89M), leverage moved to 81% of NAV, and the bank facility was upsized/extended to $320M through 2029—positioning GLAD to re-grow earning assets into year-end .
Portfolio quality/mix remained conservative: ~70% first-lien at cost; three non-earning investments, but one key exposure (EG’s) was returned to accrual; management expects net originations of $50–$100M/quarter and a strong seasonal Q4 pipeline, supporting dividend sustainability .

What Went Well and What Went Wrong

What Went Well

Portfolio yield and composition: Weighted average yield increased 20 bps q/q to 12.8%, with first-lien continuing to represent >70% of debt investments at cost, supporting resilient NIM and credit profile .
Funding momentum and liquidity: Subsequent to quarter-end, GLAD closed four new platforms and one add-on totaling $93M (net +$89M), and upsized/extended the credit facility to $320M (revolver to Oct 2027, final maturity Oct 2029) to fund growth .
Management conviction on growth resumption: “We anticipate a resurgence in our portfolio growth” with attractive lower middle market deal flow and six new sponsors since March 30, per President Bob Marcotte .

What Went Wrong

Realized loss drove lower net asset growth: Net increase in net assets fell to $7.45M ($0.33/sh) from $8.80M ($0.39/sh) sequentially, primarily due to $3.6M net realized losses in the quarter (EG’s post-restructuring valuation) despite flat NII .
Revenue vs. Street: Q3 revenue (total investment income) modestly missed consensus; the prior two quarters also missed on revenue as elevated repayments and lower SOFR pressured top line [GetEstimates*] .
Non-accrual/valuation pockets: A printed circuit board investment faced booking slowdowns; Edge Adhesives remains non-accrual and in wind-down; three non-earning debt investments stood at $28.8M cost; valuation mix offset broadly, but underlying idiosyncratic risks persisted .

Financial Results

Core P&L and Balance Metrics (Actuals)

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Total Investment Income ($MM)	$25.69	$21.96	$21.57	$21.66
Net Investment Income ($MM)	$12.39	$11.22	$11.25	$11.29
NII per Share ($)	$0.57	$0.50	$0.50	$0.50
Net Increase in Net Assets per Share ($)	$0.88	$1.21	$0.39	$0.33
NAV per Share ($)	$20.18	$21.51	$21.41	$21.25
Weighted Avg Yield on Interest-Bearing Investments (%)	13.9%	13.1%	12.6%	12.8%
EBIT Margin %	71.43%*	75.07%*	77.85%*	75.51%*
Net Income Margin %	—	—	—	34.39%*

Notes: “EBIT Margin %” and “Net Income Margin %” are from S&P Global and may not be management metrics. Values retrieved from S&P Global.*

Actuals vs. S&P Global Consensus

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Consensus ($)	$24,400,330*	$22,967,400*	$21,893,330*
Revenue Actual ($)	$21,960,000*	$21,569,000*	$21,657,000*
EPS Consensus (Primary/NII per sh) ($)	$0.5317*	$0.5080*	$0.5000*
EPS Actual (Primary/NII per sh) ($)	$0.50*	$0.50*	$0.50*

Q3 2025: EPS in line; revenue slight miss. Q2/Q1: small EPS shortfalls and revenue misses amid lower SOFR and elevated repayments. Values retrieved from S&P Global.*

Portfolio & Activity KPIs

KPI	Q3 2024	Q1 2025	Q2 2025	Q3 2025
First-Lien % of Debt (cost)	>70%	—	>70%	>70%
Debt Holdings (% of FV)	—	89.3%	~90%	90%
Total Investments at FV ($MM)	$757.75	$799.50	$762.64	$751.26
Total Invested in Period ($MM)	$46.39	$151.62	$45.60	$72.95
Repayments/Proceeds in Period ($MM)	$86.42	$165.34	$81.27	$82.21
Non-earning Debt Investments	—	4 names; $52.7M cost	4 names; $29.8M FV (4.3%)	3 names; $28.8M cost; $11.5M FV (1.7%)
Leverage (% of NAV)	—	70%	62.5%	64% at 6/30; ~81% post-quarter
Credit Facility Commitment ($MM)	$268.7	—	$294	$320 (revolver to Oct 2027; maturity Oct 2029)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Common Dividend ($/sh/mo)	Jul–Sep 2025	$0.165 (Apr–Jun 2025)	$0.165 (Jul, Aug, Sep 2025)	Maintained
Series A Preferred Dividend ($/sh/mo)	Jul–Sep 2025	$0.130208 (Apr–Jun 2025)	$0.130208 (Jul, Aug, Sep 2025)	Maintained
Liquidity Capacity	Ongoing	$294M committed line (prior)	$320M committed; revolver extended to Oct 2027; maturity to Oct 2029	Increased/Extended
Quantitative Revenue/EPS Guidance	—	None	None (management qualitative outlook only)	—

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Originations & Pipeline	Healthy backlog; aim to offset wave of exits; target net originations improving in 2H25	$93M funded post-qtr; expect $50–$100M originations per quarter; strong seasonal Q4 but cautious on timing	Improving
Spreads & Competition	New deals “north of +700 bps over SOFR”; leverage <3.5x; less compression than upper MM	Still “north of +700 bps” over SOFR, often 100+ bps above middle market; disciplined on sponsor asks	Stable/Supportive
Macro/Tariffs	Tariffs shifting supply chains; domestic-focused holdings benefitting in logistics/manufacturing	Mixed macro but portfolio conservatively levered (~3x) and sponsor-backed; monitoring but not overly concerned	Watchful but resilient
Portfolio Quality/Non-accruals	EG’s restructuring progressing; several idiosyncratic names under watch	EG’s back on accrual; Edge Adhesives in wind-down; 3 non-earners, 1.7% FV	Gradual healing
Leverage & Capital	Goal to move leverage toward 0.9–1.1x over time; refinance expensive baby bond	Leverage 64% at 6/30, ~81% post-qtr; evaluating 2026 maturity and baby bond call options	Increasing/Proactive
Facility/Liquidity	Prior committed line $294M	Upsized to $320M; lower borrowing margin; extended maturities	Strengthened

Management Commentary

“We anticipate a resurgence in our portfolio growth... healthy flow of attractive lower middle market deal opportunities... closed deals with six new sponsors since March 30.” — Bob Marcotte, President .
“We ended the quarter with a conservative leverage position with debt at 64% of NAV and the bulk of our upsized and renewed bank credit facility available to support the growth of our earning assets in the next couple of quarters.” — Nicole Schaltenbrand, CFO .
“Over the past two quarters we have absorbed much of the anticipated surge in portfolio liquidity events... we are well on our way to growing the company’s investment portfolio to support shareholder distributions in the coming quarters.” — Bob Marcotte (press release) .
“We closed eight new investments since our last call for $159,000,000... strong balance sheet... expanded the bank line... well on their way to growing the company and its investment portfolio to support the shareholders’ distributions.” — David Gladstone, CEO .

Q&A Highlights

Spreads/competition: Large private credit capital not materially drifting down to GLAD’s lower middle market; GLAD continues to price “100+ bps” above middle market, resisting sponsor pushes for tighter spreads .
Macro/tariffs impact: Portfolio is domestically focused with conservative leverage (~3x); management is stress-testing, but not “terribly concerned,” noting some holdings benefit from supply chain shifts/onshoring .
Leverage trajectory and maturities: Post-qtr leverage at ~81% of NAV; evaluating 2026 maturity and a callable high-coupon note; line capacity could address maturities if needed but not preferred .
Activity sustainability: Expect strong Q4 seasonality; target $50–$100M quarterly originations, with fewer anticipated repayments vs. recent waves, driving positive net originations .
Structure mix/yield: First-out/last-out unitranche structures with bank partners can achieve “second lien pricing at first-lien attachment points,” enhancing return for risk taken .

Estimates Context

Q3 2025: EPS (NII/share) met at $0.50 vs. $0.50; revenue modest miss ($21.66M vs. $21.89M). Q2 and Q1 also modestly missed revenue with slight EPS shortfalls as lower SOFR and high repayments pressured top line [GetEstimates*].
With the facility upsized, yields stable, and net originations resuming post-quarter, Street revenue/EPS estimates for Q4 may modestly lift if deployment stays on pace and repayments remain muted, consistent with management’s commentary on a strong year-end pipeline . Values retrieved from S&P Global.*

Key Takeaways for Investors

Distribution intact and covered: NII of $0.50/sh covers the $0.495/qtr payout; monthly $0.165 declared for Jul–Sep maintained, reinforcing dividend stability .
Deployment inflection: Post-quarter net originations of ~$89M and an upsized/extended $320M facility set GLAD up for asset growth into seasonally strong Q4—key for top-line re-acceleration .
Yield/pricing discipline: Average spreads “north of +700 bps” over SOFR, leverage near ~3x on new deals, and >70% first-lien mix continue to support resilient NIM and credit .
Credit watch manageable: Three non-earning positions (1.7% FV), with EG’s returned to accrual and one wind-down ongoing; valuation headwinds appear idiosyncratic and partially offset elsewhere .
Capital markets optionality: Management evaluating 2026 maturity and callable high-coupon notes; line capacity is a backstop, but refinancing alternatives are being pursued .
Trading setup: Near-term catalysts include continued deployment updates, muted repayments, and confirmation of a strong Q4 origination pace; revenue sensitivity to SOFR and prepayment cadence are the primary swing factors .
Medium-term: If deployment sustains and credit remains stable, NII growth and potential dividend increases re-enter the discussion; watch leverage normalization and refinancing progress.

—

Sources:

Q3 2025 8-K and press release (Ex. 99.1): total investment income, NII, NII/share, NAV/share, portfolio mix, facility changes, subsequent events, distributions .
Q3 2025 earnings call transcript: deployment, spreads, leverage, non-accrual updates, outlook, capital structure .
Other relevant press release: Jul–Sep 2025 monthly cash distributions .
Prior quarters: Q2 2025 8-K/press release and call -; Q1 2025 8-K/press release and call - -; Q3 2024 8-K/press release -.

S&P Global estimate and certain financial values marked with an asterisk () are Values retrieved from S&P Global.

GLADSTONE CAPITAL CORP (GLAD)·Q3 2025 Earnings Summary