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SURO CAPITAL CORP. (SSSS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 was near breakeven on operations with net investment loss offset by realized gains; NAV/share edged down to $6.68 (from $6.73 in Q3 and $7.99 YoY), as unrealized marks weighed on the quarter .
  • Capital structure actions were significant: $35.3M of 6.00% notes repurchased in aggregate, while 6.50% converts outstanding increased to $35.0M, preserving leverage but extending maturity optionality .
  • Portfolio monetization and recycling continued: full exit of Oklo (~$4.8M realized gain), continued PublicSquare sales, modest Forge trimming; liquid assets ended at ~$23.6M .
  • IPO pipeline/catalysts strengthened: ServiceTitan IPO completed; CoreWeave filed S-1; management highlighted potential listings for Canva, WHOOP, Liquid Death, VAST Data, and eventually OpenAI—key medium-term value realization drivers .
  • Wall Street consensus estimates were unavailable via S&P Global today; no explicit company guidance given beyond a preliminary NAV/share range ($6.50–$7.00) issued in January .

What Went Well and What Went Wrong

  • What Went Well

    • Realizations and recycling: Exited Oklo with ~20x return on initially invested capital in AltC Sponsor LLC; Q4 realized gains of $9.1M supported per‑share gains of $0.39 .
    • Strategic AI infrastructure buildout: $54.5M invested in 2024 across CoreWeave, OpenAI, and VAST Data; CoreWeave filed for IPO, reinforcing near‑term monetization potential .
    • Liability management: Completed note repurchase authorization ($35.3M aggregate principal) and grew converts to $35.0M, aligning debt duration with anticipated monetization cycle .
    • Quote: “This is an exceptionally promising time for our portfolio…CoreWeave…filed for an IPO…ServiceTitan’s successful IPO…prospect of IPOs…Canva, Whoop, Liquid Death, Vast Data, and OpenAI.” — Mark Klein .

  • What Went Wrong

    • NAV pressure: FY 2024 NAV/share declined ~16% with Q4 down modestly QoQ; Q4 unrealized depreciation (-$5.2M; -$0.22/share) and net investment loss (-$3.9M; -$0.16/share) offset realized gains .
    • Legacy markdowns: Management cited Learneo as the largest negative mark, broadly taken down toward preference stack—key headwind for NAV trajectory .
    • Reduced liquidity: Liquid assets fell to ~$23.6M (from ~$39.5M in Q3 and ~$57.6M in Q2), narrowing near‑term optionality absent additional debt issuance or realizations .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
NAV per Share ($)$7.99 $6.73 $6.68
Net Assets ($USD Millions)$203.4 $157.4 $157.6
Net Investment Loss ($USD Millions)$(2.7) $(3.2) $(3.9)
Net Investment Loss ($/share)$(0.11) $(0.14) $(0.16)
Net Realized Gain/(Loss) ($USD Millions)$2.6 $(13.7) $9.1
Net Realized Gain/(Loss) ($/share)$0.10 $(0.59) $0.39
Net Change in Unrealized Appreciation/(Depreciation) ($USD Millions)$(9.0) $11.6 $(5.2)
Net Change in Unrealized ($/share)$(0.36) $0.50 $(0.22)
Net Inc/(Dec) in Net Assets from Operations ($USD Millions)$(9.1) $(5.5) <$0.1
Net Inc/(Dec) in Net Assets from Operations ($/share)$(0.37) $(0.24) <$0.01

Segment Breakdown (Top Five Investments as of December 31, 2024)

Portfolio CompanyCost Basis ($USD Millions)Fair Value ($USD Millions)% of Total Portfolio
CW Opportunity 2 LP & CoreWeave, Inc.$25.2 $28.2 13.5%
ARK Type One Deep Ventures Fund LLC (OpenAI)$17.7 $17.6 8.4%
Learneo, Inc.$15.0 $16.9 8.1%
Blink Health, Inc.$15.0 $15.1 7.2%
WHOOP, Inc.$10.0 $14.9 7.1%
Total (Top 5)$82.9 $92.8 44.3%

KPIs and Balance Sheet Snapshot

KPIQ2 2024Q3 2024Q4 2024
Liquid Assets ($USD Millions)$57.6 $39.5 $23.6
Cash ($USD Millions)$54.38 $32.74 $20.04
6.50% Convertible Notes Face ($USD Millions)$0 $25.0 $30.0
6.00% Notes due 2026 Face ($USD Millions)$75.0 $49.75 $44.67
Shares Outstanding (period-end)23,378,002 23,378,002 23,601,566

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
NAV per Share (Prelim.)As of Jan 16, 2025N/A$6.50–$7.00New preliminary range
Share Repurchase Program AuthorizationOct 29, 2024 updatePrior authorization increased by $4.3M$64.3M authorized; extended to Oct 31, 2025Raised/Extended
6.00% Notes Repurchase ProgramThrough Mar 11, 2025Up to $35.0M$35.3M aggregate principal repurchasedCompleted (fully utilized)
6.50% Convertible Notes OutstandingAug 14 → Oct 9 → Jan 16$25.0M (Aug 14)$30.0M (Oct 9); $35.0M (Jan 16)Increased issuances
DividendsFY 2024—None declaredMaintained (none)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 and Q3)Current Period (Q4)Trend
AI/Technology InitiativesQ2: Invested $10M in Canva; $15M in CoreWeave SPV; set convert/note programs . Q3: $17.5M OpenAI; $5M CoreWeave; $12M VAST Data .Year invested $54.5M in AI infra/apps; CoreWeave filed S-1; OpenAI/VAST updates .Accelerating focus and allocation to AI infrastructure.
IPO Window ReopeningQ3: Management flagged reopening; ServiceTitan impending IPO; Lime, Canva prospects .ServiceTitan IPO completed; CoreWeave S-1; pipeline includes Canva, WHOOP, Liquid Death, VAST, OpenAI .Strengthening pipeline; nearer monetization.
Capital Structure/BuysQ2: Announced $75M 6.5% converts capacity; $35M 6% note buyback . Q3: $30.3M notes repurchased; $25M + $5M converts issued .Converts outstanding $35.0M; notes repurchase totals $35.3M; share repurchase extended/increased .Proactive liability management, balanced leverage.
Monetizations/ProceedsQ3: Began PublicSquare sales; legacy position exits/writedowns .Oklo exit ($5.1M proceeds, $4.8M gain); PublicSquare common/warrants sold; Forge trimming .Continued monetization; recycling into AI infra.
NAV TrajectoryQ2 NAV/share $6.94 vs $7.17 in Q1 . Q3 $6.73; drivers: realized losses, NII loss; offset by unrealized appreciation .Q4 $6.68; drivers: -$0.22 unrealized, -$0.16 NII, -$0.06 SBC offset by +$0.39 realized gains .Slight sequential decline; YoY lower.

Management Commentary

  • “CoreWeave, the single largest initial investment in our fund’s history, filed for an IPO earlier this month…We are also extremely excited about the prospect of IPOs…Canva, Whoop, Liquid Death, Vast Data, and OpenAI.” — Mark Klein, CEO .
  • “In 2024, we invested $54.5 million in artificial intelligence infrastructure and applications through…CoreWeave…OpenAI…and VAST.” — Mark Klein .
  • “We ended the fourth quarter and fiscal year 2024 with an NAV per share of $6.68…The decrease…was primarily driven by a $0.22 per share decrease from the net change in unrealized depreciation…a $0.16 per share decrease due to net investment loss…and a $0.06 per share decrease from stock-based compensation…offset by a $0.39 per share increase from net realized gain.” — Allison Green, CFO .
  • “Our debt number has stayed the same…we would not anticipate…issuing any more convertible securities…We’re comfortable with our capitalization as it is right now.” — Mark Klein (Q&A) .

Q&A Highlights

  • NAV Outlook: Management avoids specific NAV guidance; suggests “simple math” around CoreWeave and OpenAI could indicate direction; legacy markdowns (Learneo) were the largest drag .
  • Capital Structure Appetite: Having matched converts issuance to notes repurchased, management is comfortable with current leverage and does not plan additional converts near‑term .
  • IPO Probability: CoreWeave expected soon; Lime, Canva possibly later in 2025; Liquid Death early next year; VAST discussed frequently though remains quiet—visibility is best on CoreWeave .

Estimates Context

  • Wall Street consensus (EPS/revenue/EBITDA) via S&P Global was unavailable today; as such, no formal comparison to estimates is included. SSSS did not provide explicit quantitative guidance beyond a preliminary NAV/share range .
  • Given SSSS’s structure, key performance indicators are NAV/share, realized/unrealized gains, and liquidity—not traditional revenue/EPS; consensus coverage is limited.

Key Takeaways for Investors

  • Near‑term catalysts center on IPO realization (CoreWeave, ServiceTitan already, plus potential Canva/WHOOP/Liquid Death/VAST): monitor lockup expirations and monetization timing to assess distribution potential and NAV uplift .
  • Q4 mix (realized gains vs unrealized depreciation) underscores market‑mark sensitivity; NAV path will hinge on private marks and exit pricing; Learneo markdown is a notable watch item .
  • Liability management completed the 6% notes buyback and increased converts to $35M; with ~$23.6M liquid assets, incremental investment capacity may depend on proceeds/convert taps .
  • Share repurchase program extended/increased ($64.3M auth; ~$25M remaining) may be accretive given discount to NAV, supporting per‑share value if utilized pro‑cyclically .
  • Portfolio concentration in AI infrastructure (CoreWeave/OpenAI/VAST) positions SSSS for secular tailwinds; execution risk remains around IPO timing/market windows .
  • Trading implication: stock likely reacts to validated monetization signals (S‑1 progress, pricing, post‑IPO trading) and NAV update cadence; Q1–Q2 2025 events around CoreWeave are key drivers .
  • Medium‑term: potential distributions if realized gains accumulate, consistent with BDC distribution requirements and 2020–2021 precedent, subject to monetization scale and board decisions .