Hercules Capital — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total investment income for Q3 2026 was $140.1 million, a 1.5% increase year-over-year compared to $138.1 million in Q3 2025.
• Net investment income (NII) for Q3 2026 was $87.3 million ($0.47 per share), a decrease from $88.6 million ($0.49 per share) in Q3 2025.
• Year-to-date ending Q3 2026 total investment income reached a record $430.8 million, a 9.0% increase year-over-year.
• Year-to-date ending Q3 2026 NII reached a record $268.4 million, a 5.4% increase year-over-year.
• GAAP effective portfolio yield was 12.3% in Q3 2026, down from 13.4% in Q2 2026.
• Core yield (non-GAAP) was 11.9% in Q3 2026, down from 12.0% in Q2 2026.
• Return on average equity (ROAE) was 15.4% for Q3 2026.
• Return on average assets (ROAA) was 7.4% for Q3 2026.
• Net Asset Value (NAV) per share was $12.26 as of September 30, 2026, an increase of 0.9% from Q2 2026.
• GAAP leverage ratio was 111.1% as of September 30, 2026.
• Net regulatory leverage (non-GAAP) was 94.0% as of September 30, 2026.
• Net GAAP leverage (non-GAAP) was 109.0% as of September 30, 2026.
• Weighted average cost of borrowings was 5.4% in Q3 2026, up from 5.1% in Q3 2025.
• Interest expense and fees were $33.2 million in Q3 2026, up from $27.2 million in Q3 2025.
• Non-interest and fee expenses were $24.3 million in Q3 2026, down from $26.4 million in Q3 2025.
• Net cumulative realized gain/(loss) since inception through September 30, 2026, was ($101.5) million, representing 41 basis points of cumulative debt commitments.

Guidance and Future Outlook:

• Management expressed confidence in the strength of the platform and the ability to generate strong operating results irrespective of market dynamics.
• The company stated it remains well-positioned as it closes out the year, benefiting from operating at scale.
• Pending commitments as of October 26, 2026, totaled $571.7 million in signed non-binding term sheets.
• Since the close of Q3 2026 and as of October 26, 2026, the company closed $219.6 million in new debt and equity commitments and funded $89.2 million.

Business Segments and Product Lines:

• Total new debt and equity commitments for Q3 2026 were $701.0 million.
• Net debt and equity commitments for Q3 2026 were $557.6 million.
• Total fundings for Q3 2026 were $572.9 million.
• Net fundings for Q3 2026 were $438.3 million.
• Unscheduled early loan repayments in Q3 2026 were $148.3 million, a 74.1% decrease from $572.1 million in Q2 2026.
• Net debt investment portfolio growth was $380.7 million year-to-date ending Q3 2026.
• The debt investment portfolio composition at fair value as of Q3 2026 was 88.8% First Lien Senior Secured and 97.9% Floating Rate with Floors.
• Equity portfolio fair value was $146.8 million across 73 portfolio companies.
• Warrant portfolio fair value was $46.3 million across 114 portfolio companies.
• Assets under management reached approximately $6.5 billion as of Q3 2026, a 17.7% increase year-over-year.

Market and Competitive Landscape:

• Hercules is the largest and leading specialty financing provider to innovative venture, growth, and established stage companies backed by top-tier venture capital and select private equity firms.
• Since inception, the company has committed $29 billion to over 700 companies.
• The company's portfolio companies include Simon Data, Inc. (acquired by Monetate) and DroneDeploy, Inc. (agreement to be acquired by Procore Technologies).

Risks and Challenges:

• Early loan repayment volume decreased significantly in Q3 2026, impacting effective yields and NII.
• Realized foreign currency losses of $7.9 million occurred due to the repayment of the Euro-denominated credit facility.
• Net realized losses for Q3 2026 were ($1.9) million, including ($2.0) million in realized losses on debt investments.
• Two debt investments were on non-accrual as of September 30, 2026, with a cost of $18.8 million and fair value of $13.2 million.
• The company notes that pending commitments do not necessarily represent future cash requirements and are subject to due diligence and final approval.

Management Commentary and Tone:

• Scott Bluestein, CEO and CIO, stated that consistent new business activity and stable credit performance drove record year-to-date income figures.
• Management highlighted a 118% coverage of the base cash distribution by Q3 2026 NII.
• Management emphasized a focus on conservative balance sheet management and confidence in generating results regardless of market dynamics.
• The tone was confident regarding the platform's strength and ability to operate at scale.

Other Key Points:

• Q3 2026 NII coverage of the base cash distribution was 118%.
• Undistributed earnings spillover was $167.8 million ($0.88 per ending share).
• Available liquidity at the end of Q3 2026 was over $1.0 billion inclusive of Adviser Funds, with $506.6 million available to Hercules.
• Hercules sold 2.3 million shares under its equity ATM program in Q3 2026 for net proceeds of $39.2 million.
• On October 8, 2026, the company issued $400.0 million in 6.700% unsecured notes due October 8, 2029.
• The company has 13.0 million shares remaining available for issuance under the equity ATM program.
• Unfunded commitments represented 8.0% of total assets ($397.6 million) as of September 30, 2026.
• The company's debt investment portfolio is asset-sensitive, with 97.9% of debt investments priced at floating rates.