Ridgepost Capital Third Quarter 2026 Earnings Conference Call - RIDGEPOST CAPITAL INC

Explicit Guidance:

• Full Year 2026: Core fee rate expected to total 103 basis points, implying a significant step-up in Q4 driven by tax credit seasonality and delayed fundraising; Fee-Related Earnings (FRE) margin expected to remain flat year-over-year relative to the first nine months of 2025 (mid-40s range); Cash tax rate expected to fall in the high single-digit to low double-digit range.
• Full Year 2027: Cash tax rate expected to increase to the mid-teens; Direct and secondary catch-up fees expected to total $6–$8 million (compared to $2.1 million YTD 2026); Core fee rate guidance of 103 basis points remains the normalized expectation for the start of 2027.
• Long-Term Targets: Achievement of aggregate $10 billion gross fundraising and deployment target across 2026–2027; Fee-paying AUM target of $50 billion by year-end 2029.
• Capital Structure: Net leverage expected to end 2026 in the mid-2s (down from 2.7x at Q3 end); Fully diluted share count approximately 129.2 million as of Q3; Dividend maintained at 4 cents per quarter.

Business-Segment Outlook:

• Fee-Paying AUM Growth: Fee-paying AUM grew 21% YoY (excluding Stellis impact) in Q3; TrueBridge AUM ended Q3 at $8.7 billion, up 32% YoY, with an expectation of continued acceleration.
• Fundraising Pipeline: Strong pipeline for Q4 2026 and 2027 with 15 funds currently in market, including: GP stake strategy (Bon Accord), Venture Capital (TrueBridge), NAV lending (Hart Capital), Middle Market PE (RCP, Qualitas), and lower middle-market direct lending (Stellis).
• Strategic Launches: Next Stellis vintage expected to launch in early 2027; Next TrueBridge primary vintage expected in early 2027 (Building on $851M raised through Sept 2026); WTI (Venture Debt) expected to be back in the market following current deployment focus, though specific timing for a successor fund not yet defined.
• Fund Sizing: Flagship successor funds at TrueBridge have increased in size by >20% average year-over-year (Fund 4 to Fund 8); Anticipated >20% uplift for upcoming TrueBridge Fund 10 vs. Fund 9; WTI next fund anticipated to rebound to sizes similar to Funds 9 and 10.
• Cross-Selling: Aggregate cross-sells since June 2024 reached $1.7 billion (approx. 15% of fundraising), up from <5% at the time of the 2024 Investor Day; continued focus on converting the 5,000+ client base to multi-strategy participation.

Market and Competitive Outlook:

• Venture Ecosystem: Velocity of capital raising and deployment in venture remains robust; Strong LP demand for secondaries evidenced by Secondaries 2 closing in **<1 year** (>$500M raised); TrueBridge remains central to the market with accelerating momentum.
• Private Credit & Tax Credit: Credit deployment seasonality expected to improve in Q4; Tax credit business pipeline building for a typically strong Q4 seasonality.
• Fundraising Trends: Year-end allocators expected to finish allocations, driving positive Q4 seasonality; 15 funds in market expected to remain consistent through Q4 2026.

Macro / Industry Outlook:

• Macro Environment: Management describes the macro backdrop as "fluid" but cites structural business factors (contractual fees, long duration) as providing stability; acknowledges headwinds from interest rate volatility, software/SaaS concerns, hyperscaler dynamics, and geopolitical conflicts (war) affecting credit deployment in Q3, with signs of improvement in Q4.
• Market Dynamics: No large fee rate step-downs or expirations expected in Q4; Fundraising momentum expected to offset Q3 delays.

Strategic Initiatives:

• Platform Integration: Continued investment in technology architecture and client data integration to enable efficient cross-marketing; "One Ridge Post" platform synergies viewed as a primary growth driver.
• Product Expansion: Expansion of lower middle-market direct lending via Stellis; Ongoing product innovation including new vintages in VC, PE, and Credit.
• Capital Allocation: Prioritization of deleveraging post-Stellis acquisition; $30 million additional share repurchase authorization approved; Share repurchases used to offset dilution from employee stock issuance.

Risks and Headwinds to Outlook:

• Macro Volatility: Interest rate moves, software/SaaS sector weakness, and geopolitical instability (war) pose risks to credit deployment timing.
• Seasonality: Q3 and Q4 results subject to pronounced seasonality in fundraising and tax credit business, which can impact core fee rates in specific quarters.
• Execution Risk: Ability to deploy new capital (e.g., WTI, Stellis) and achieve $50 billion AUM by 2029 depends on sustained market liquidity and investment performance.

Management Tone on the Future:

• Confidence Level: "Very optimistic" and "extremely excited" regarding momentum in Stellis, TrueBridge, and cross-selling capabilities; Describes business results as "consistent and stable" despite a dynamic macro environment.
• Strategic Outlook: Management views margins as having troughed in 2026 with expectations of stable year-over-year performance; Emphasizes a "winning formula" where delivering LP returns and growing AUM are mutually reinforcing.
• Operational Focus: Laser-focused on margins and profitable growth; Plans to invest prudently in infrastructure and technology to scale the platform without sacrificing profitability.