TriplePoint Venture Growth BDC (TPVG) 7 Aug 242024 Q2 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the TriplePoint Venture Growth BDC Corp.

Second Quarter of 2024 Earnings Conference Call. [Operator Instructions] This conference is being recorded, and a replay of the call will be available in an audio webcast on the TriplePoint Venture Growth website. Company management is pleased to share with you the company's results for the second quarter of 2024. Today, representing the company is Jim Labe, Chief Executive Officer and Chairman of the Board; Sajal Srivastava, President and Chief Investment Officer; and Chris Mathieu, Chief Financial Officer.

call Mr. the turn I over to Before this Labe, customary which considered company's safe to relate securities direct to that press statements federal or forward-looking make to performance the your attention or during you statements harbor remind company's regarding future statements under I'd management that are forward-looking will certain like release and call, the disclosure future events in law. the condition, financial

the company's are results Exchange Securities to these with to recent You that to actual from and the for cause most factors asked materially important statements. Commission filings refer could differ

any company or statements call, the reflect any projections filings, The are of made obligation management's statements by which as the of SEC latest opinions required copies any please on law. website obtain Investors forward-looking visit place undertake today. company's forward-looking not unless www.tpvg.com. our to To cautioned during to does not only update reliance at undue

like to Now to turn Labe. over I'd the conference Mr.

you, TPVG's second and quarter welcome and to call. everyone, earnings good Thank afternoon,

navigating second on continued in venture markets. quarter, focus the a what market to our the capital label remain shift the generational NVCA During says through

challenges as venture enable we path technology will existing maintaining future. strong in portfolio, believe volatility managing to liquidity market for as investment capture the increasing capital our well investment our selectively to taking steps coming growing of that continued market, the opportunities position and we stayed Given to the and for markets our public the companies on investment activity the us TPVG

dry technology imbalance capital continue activity limited our quarters. over valuation Private reset Venture limited to overhang opportunities company to Growth of TriplePoint the marks have through believe companies coming fully and mindful activity, to partner the investment levels and worked growing with generate need the to private activity. we we activity, for of and their need an through valuations companies. IPOs, the venture While exit investors not investment the investment we're be preserve seeing in the increase be through also acquisitions, inflection These balancing capital-backed continue The point. between a powder venture their not this expect continuing for merger the distributions exit patient and continues modest stage do to

While all at investor taking at of today's they friendly market. seeing advantage the terms in same investment new time, are opportunities

the cash debt Turning current to success. in from The their debt for the market this to capital and that runway capital complement with Many existing or looking for financing. who market venture the continues. continued raise demand are increase environment over stated meaningful Combining sheets XXX% in operational lending a at term TPVG. given companies financing, of XX% and investment at for activity an TriplePoint and previous XXX% XXXX, fundings new debt companies capital demand quarter expectation previously commitments by increased in venture our signed stage new growth and increased continued by

managing all through continues companies terms the venture our investors, down situations. remain we and In current team and to their our existing maintain and of portfolio with close contact monitor heads of credit portfolio,

in includes SP billion that of At the ]. industry several from double also in improved An operating the encouraged number companies half of of QX [ me, same a That's sectors. portfolio and strengthening aggregate our are across companies, time, $X and the previous excuse itself our by almost raised performance of we're excludes which acquisition metropolis, raised portfolio fundraising first of of year. as -- its costs which $X it the by this year debt billion part activity in more was than

in sectors continues cybersecurity been others about and that seeing are and including we citing activity fundraising we talking software, have calls. robotics, increased across This multiple fintech, these

portfolio to warrant believe our NAV our in XX. Touching ability positions companies positions for on over equity XX these portfolio in have well We outstanding equity and improve our bode in and positions the we positions warrant term. long

X.XX I'm over and X.X past also $XXX unfunded at in our X reducing that our boosting commitments ratio range. total we as reducing quarter. the Unfunded $XX quarter's ratio of from the ago of gross more as high liquidity end a million to leverage of made fall pleased year went million the our end. commitments, we've year X.XX years notable our as to importantly, our last And to from second progress as report leverage to target of high reduced within

of and term. financial renewal will plans. today provides here positioning and in short the source us the for our us which us facility, We and provided over These a play announced have meaningful also liquidity efforts in flexibility TPVG roles long our revolving key with credit the term capital in earlier substantial of go-forward

share. been rotation last quarters. another sizable efforts Board while measured on still diversifying prepayment during The activity industry we about these shareholders. progress and now to core earnings continued reflects of lower given expected considerations, an and and a our during will allocations, higher-than-expected federal quarter, our our investment providing to other be And repayment decision per prepayments again, the our on the targeted the the impact our dividend leverage by of higher-than-expected have our step took rate regular factoring funding again, portfolio, last and aligned the This leverage of level better what also prior Complementing first quarter portfolio power relative not and was leverage is but yield our and portfolio, of once to in forward few reducing cuts. The activity range including repayment quarter. talking our with is years, including this reduced we distributions fundings, much to think $X.XX the interest reducing target sector distribution easy this the number path geographic

management from ample one sectors raised have our companies investment have debt-to-equity investing and structures have believe Our have focus models and remains and other recently backing to venture and evaluate also in key that economics be attractive teams metrics. capital, retention deal we prudent in select high have runways, what We'll business rates. attractive ratios, whose operating hold are investors, continue to unit cash sizes,

We're encouraged date reflect progress investments parameters. made, in goals continue the and we've to to by these recent which the

been billion potential Capital X,XXX more ways date, Further, for for strategies lending broadened we're investment evaluating venture venture multibillion-dollar benefit. almost vehicles venture-backed TPVG could our than TriplePoint which period. manages that XX for and and the particularly years. given increased TPVG to a more XX during having loans Capital, TriplePoint potential platform-wide sponsor, committed multiple To has underwriting business in companies

market and TriplePoint Capital brand name exceptional staffing venture and investment opportunities reputation, increases to originations and capitalize actively grow market. in investment and leader the today's with expanding a nationwide. lending in bench ongoing in an its including continues As on

believe venture We our the capital benefits result sum long could for it as the of stakeholders the to recover when these term. and in over believe well all positions TPVG markets efforts well tangible as

Chris the to him upcoming TPVG, I'd for not not minute X the to wish only past over TriplePoint but friendship his and efforts at platform. best thank take Finally, his appreciate We dedication years. Mathieu like Capital our the at but in the a years, many retirement over also his only

Matt back this like for reins our our Galiani, the our he detail. that, in over more week joined interim As company's I'll serve Sajal our and CFO. in served and over since Matt now controller outlook we call company to December the XXXX, this welcome and cover takes as would CFO, announced with to as whom Friday we continue the search earlier the to XXXX. With to we activity

high-quality to million pipeline investment continued investment consecutive activity growth in fourth and and compared increases QX, quarter reflecting signed seeking companies Thank demand debt referrals term $XXX increased companies afternoon. originations with you, venture million for by TriplePoint Jim, in funds capital our financing. Capital select from venture as good our the team, sheet stage $XXX from

our our is second TPVG very TriplePoint new portfolio With for X to our commitment mindful reducing amount and to $XX portfolio of quarters. TPVG past in new X of TriplePoint increasing the market the new over our investment measured continue leverage in to allocation including commitments Although new conditions. companies, during diversification, of pipeline light companies regards quarter, our to activity highest in to in light originations be allocated Capital Capital to of progress TPVG, approach X million investment and objectives

the service to a Cresta Commitments Affinity, to included to [indiscernible] Sequoia companies which agents improve their platform involve artificial traditional backed software-based during intelligence other leverages Ventures, investors. software of relationship Partners, and and and quality the customer investors; by new by backed Greylock Pear Ventures Menlo QX Intelligence, and expand sales Capital, help built portfolio CRM other and and service company, intelligence

TPVG refinanced new as to new commitments quarter, the X in existing software Thus follow-on we has During industry total upside. in company. companies, in $XX well far commitments portfolio of an conjunction coming closed to portfolio X of portfolio the million portfolio made and recent QX, a as company also X with existing

quarters. is the and TPVG million X in over our X in in from companies During is which portfolio debt funded up X quarter, amount companies, investments investments highest $XX.X portfolio $XX.X past to debt million the to funding QX

over have $XX.X increase to and year-to-date efforts months, past portfolio funded million support million newer the our $XX.X XX advantages. We which

of this from quarter funded origination, investments yield QX. debt annualized portfolio in a XX.X% average weighted up The carried XX.X%

million be million to range. continues $XX $XX target funding gross quarterly Our in the to

the of the and As typically materially fundings in quarter income in contribute at end don't they the quarter a reminder, which to fund. new occur

of capital loan related to overall million line date last we million Prepayment average of XX portfolio to this portfolio. million quarter's in prepayments of million had contributed and QX, the months. XX.X%, primarily $XX and loan up due $XXX of an prepayments from representing During quarter with acquisitions, raises over prepayments past to in $XX weighted QX, $XX income large equity

from portfolio prepayments, QX. XX.X% core down was Excluding XX% in

$X $XX million principal up QX, a During from a loans principal for of the from the $XX dispositions had of the proceeds loans million scheduled had of from loans $XXX million $X million of QX. past $XX million XX months. repayments scheduled of we've and total in over repayments for $XX of of in and of proceeds total and and we principal from proceeds million repayments million Year-to-date, of disposition disposition $X the million total scheduled

in that over light had million, and $XXX repayments So investment of million. had million we've of cash only have months, XX fundings loans, disposition the period past conditions $XXX net received of to prepays, from same of contributing in contraction principal over portfolio of time market and approximately over $XX summary,

of do given XXXX, increase to repayments As expect to the XXXX to the the of rest remainder over requirements. amortization slow in the of how prepay down we the given expect we portfolio principal but pace of look has contracted this and pace year, amortization contractual

end quarter's with at With $XXX the raising regards outstandings raising X QX, raised to in fundraising with X $XXX portfolio million portfolio period companies with last debt compared debt QX $XXX raised companies billion with companies and million million companies portfolio compared XX the million X activity, of portfolio portfolio portfolio outstanding, XX during during companies in debt same companies quarter QX. over raising million Year-to-date, X over capital $XXX outstanding $X raising $XX have year. to

mentioned, a to As and active fundraising raising discussions several expecting up picking to we either see fundraising in companies shortly. continue continue launch portfolio or Jim portfolio capital activity have our process within

a quality fundraising million and $X companies from believe investments. with our for strengthen $XX credit equity the week, raising and portfolio valuation for value million Last well over company $XXX warrant We activity Flo the bodes billion announced this should of outstanding Atlantic. Health, these General a at consumer-focused

million June XX in value of fair companies a XX of companies with up quarter. and $XX in $XX investments last held million, from total warrants XX, As we equity

experienced value asset positive Revolut, We and its Revolut its $XX.X is on a statements the U.K. improve in portfolio, the net positive disclosed in per believe or not value potential equity and performance to but growth recently and exceptional of particularly and fair it over implications that for fair for quarter, a continued profitability. portfolio warrant primarily there by both the conditions our warrant in the banking as have of from impact an license financial gain currently only other as the long Our share news companies in market equity which driven net its value a for unrealized term. financial million $X.XX filed increase based obtained

and assumed. warrant events. been were and in During resulting a of million representing million, completed credit $XXX,XXX and $XX Existing In quarter, the shares additional in our on in Voices an our realized acquisitions held list Hims paid previously publicly as loans the quarter, $X.X these These recognize Mynd our from & other TFG invested Roofstock sold our investments, companies an and capital. Outdoor we have portfolio multiple well. was marked by Xx gain down activity Hers, management on during our were acquired equity and we X full, off warrants sorry, by watch companies loss -- their over

events X a quarter, with balance with portfolio of $X.X the with upgraded from was to to downgraded one And cash one company portfolio from principal balance to one primarily principal category X. balance category was category $XX category portfolio of underway. During runway from $XX company a million was due principal category X of company a X, X for financing million million downgraded X, to

announced QX approximately million has Good was value addition, category downgraded its $X.X sale In and GrubMarket. to fair in a to Eggs, which of from X debt X yesterday category with

expected QX, in is company QX. removed our watch will to with be the be consistent as our and mark of list recovery from Our

Mind category performance Despite category other Candy from the investors including challenges value to it of one $XX investments, builds and near-term grows of from of being oldest additional app. Kids X year-to-date continues generated company, its TPVG's extensions for as support X, fair receive equity its a million Candy our with loans. Moshi Mind maturity and date to

outlooks. While in strategic underway watch percentage improving relatively of could investments events financing of are credit these total the number improved operational that or has achieved or companies this well result flat list quarter, our was a which in as performance, completing process of as equity completed are

generally focus financing for not acquirers X As enable they out development to next and strategic the as continue we on the the companies, as cases, at They come and only be chilly processes, soon hard made. have continue made e-commerce cut if as to to profitability challenges. to forward past retail-focused the we, many including but the growth, in back sidelines. looking or and achieving on burn as as market over to pull M&A, lender, and clear on the to to also continues continue to these the journey, will And they price X market decide whatever decisions over possible despite follow-on transact X investors investors to quarters, the progress them the our all reception months, must face look companies remain market they've generally or their wait

as Our other well teams situations. continue watch to track list these companies as

sectors market, on and assess not As market foundation reduced be for to leverage recent only playbook we also have back further a continues deploy portfolio. net and in intend and our take focused our a but fashion conditions attractive a TPVG. step to liquidity in strong performance, our our measured that we We've outlook substantial building to companies diversify for to our to the access

our Our net portfolio a will our conditions have term improve, impact asset focus the positioning team a to market We and warrant to is believe bringing longer that positive credit value. companies for continuing to on when situations conditions are better. close market our or equity

be valuing are its and complementary TPVG's And scale strategy also are NAV. to portfolio and deploy creating size generate earnings grow power more consistent with stabilize current to the pressure earnings distribution our potential to as finally, expectations, decision including ways. in overall investment aligning to our the and broaden reduce excess with size well we We to as to and opportunities without assets

future. we plan have summary, for a and optimistic I'm our In

I Chris. that, with call over And the will to turn now

Thank and hello, everyone. you, Sajal,

a weighted million debt in yield our investment on prior and lower portfolio. the income due total For to primarily or as amount year XX.X% the investment of period. a portfolio The of a second investment compared was outstanding average $XX.X was to income decrease quarter, principal total income bearing portfolio yield XX.X%, million $XX for

on incentive our of $X These the to total management to no For expenses. utilization minimum $X.X million the of expense, quarter. facility, million second fee fees administrative million $X.X or $XX.X consisted onetime this There $XX.X compared general per interest and and quarter, $X.XX included for operating $X.X were period. which fees related share the expenses as million of million a clause year of base prior of million credit expenses were

quarter, For compared share or the $XX.X per the million share period. $X.XX for $X.XX million prior investment totaled or second income net $XX.X per year to

gains quarter, million During warrant losses equity $XX.X the of the and and write-off realized investment net of and investments company of million of primarily from disposition by million, recognized $XX.X second of losses of the net the on $X.X sale offset the on from consisting and restructuring realized partially net investments. portfolio investments

net million and quarter gains $XX.X investment $XX.X unrealized second unrealized portfolio. recorded warrant of existing offset Net the net gains the for million, $X.X change realized portfolio million in on unrealized losses unrealized net period, unrealized investment on previously on of of $XX.X during gains the debt from of the the losses and was consisting of portfolio investments equity reversal million from the by

As or at per million million of net end, per $XXX.X or to NAV, value, or compared as quarter share year-end. $X.XX share was $X.XX asset $XXX

of per date be declared quarterly company to September XX. of The a $X.XX on with a XX regular distribution record September paid share

As million of per share. the income June $XX.X income spillover or had of XX, company or undistributed estimated $X.XX

liquidity Of expire this to XXXX. update million balance $XXX at on will our investment Now million the $XX successfully leverage. during from of will and and unfunded just $XX $X in XXXX commitments $XX year-end commitments, as of million We reduced sheet million year June expire XX. unfunded an overall unfunded commitments, million

to under the an up to circumstances. We to the maintaining the [indiscernible] facility company credit feature future are in $XXX the while revolving the million certain align the its company's $XXX the utilization total under that The commitments company that company of facility end credit quarter, to better to pleased reduce size with to the increase anticipated elected subsequent allows the of facility. share renewed to million fully

$XXX available new giving under $XX renewal to renewal, million. and liquidity the consisting After cash the effect the capacity total had revolver $XXX company of million, of million of of

maintain total fixed million which We debt commitment. diversified $XXX capital a $XXX of term ended $XXX facility, a of and million outstanding, of million on has structure a currently credit was continue rate as of million to outstanding our notes $XX quarter of consisting investment-grade aggregate

improve during $XX of $XX ratio facility leverage a portfolio ATM from the our quarter million the we down with and leverage ended liquidity our paid continued levels program, X.XXx. proceeds in this credit from the as in Given to events million quarter we the quarter and

Given credit renewed are current have successfully look additional they should that leverage we with the at our we may presented revolving us. facility, sources comfortable to sources and be

Recall different term maturities of X we have notes.

occur The next to early first is set year. maturity

the refinance to existing until these dates. do their or expect Given near rates on favorable note, the we maturity prepay very term currently not amounts

today. our completes remarks this So prepared

And you operator, for so please this open could time? at line the questions

question, first At Love from we Instructions] [Operator our Piper will this will come Sandler. which time, Crispin take with

around and to portfolio at can for coming over dividend reset your to million net area $X.XX I'm especially off, portfolio when range investment starting cuts can rate outlook your the $XXX near discuss Just you the curious an $X.XX. with you income at if end. think growing sitting get investment you're net income term, the about at back quarter you here again? where decreased And you

Yes.

So that. Crispin, I'll take

considered existing to where near is target So now. near-term that at in as are ratio, of maintaining We've reset the Fed leverage some of the as rate XXXX. portfolio on looking the half impact dividend first the of of and we the the expected our we current future based strength have well expectation also come are changes which our sitting

we're the of of had quarter. things Some we are some the variables other thinking about also this

be to quite tends fee flat. Management

fee the Admin fees and consistent expected we've management incentive the is for G&A a pretty and So for year of incurred this flat fee. No rest part to of at least early pretty are be assumed and well baked quarter-to-quarter. XXXX.

NAV to with portfolio. a the portfolio ability kind to extent that assume in appreciation. all leverage assumed, scheduled result appreciation we we additional the So to have a grow of the and size NAV referred would consistent

question, think. the So I that I covers think

week Great. in -- helpful. markets, volatility just And been credit That's last a widened. or recession. of spreads potential plenty of so, have of fears then seen There in more all we've have the broader kind

in as discuss you're you looking But little that it your gotten you recently? can has are the cautious your stable? well a taking as curious that how bit So you're just current and is environment at? a more credits volatility kind we've here. changed of performing seen if like anything credits approach worse? anything about It new feel recently? seems Or kind pretty has curious outlook in of just Or the current Just

it. Crispin, Yes. I'll take

risk Our our obviously credit on reflect scores and based on current conditions. market obligors our view existing

fundraising, last capital major our but think perspective to industry about I impact venture it, sector most think Jim still activity. And so as look venture talked the year. QX, flat and our up we I And essentially investment our to QX, from is capital

we would think like I So to activity see increase. that

there think activity current private I fundamental clear is think as don't this public mismatch week's is private still investment that and more imbalance. multiples, that and I impacts volatility talked need valuation market about still Jim volatility the that the as that about, multiples valuation we to regarding the necessarily -- short. long

investment all activity our to that new it to And well are for exit more opportunities take as improve portfolio. activity few investment so and beneficial I improve a think existing not only to will quarters occur, but for

will come question next Wells from our Finian Fargo. O'Shea And with

earnings, would give rate portfolio like also the NOI? leverage deleveraging, a the A for what on said from of you quarters, which be after here. stable going follow-up would can us be few on Chris, been has exit and You

next So be all earnings say, equal? at else quarter where would

Yes.

giving portfolio without you and steady the specific So was certainly, we what existing considered size did numbers, state.

towards last worked months. to X over we know X I target. leverage that our hit have we So the

now. target we're so our at And leverage

So building the about there. turning portfolio more and it's from really it

P&L models expense the drive comments where your help some items are the you of should to your of think the and portfolio today can then there I and size models. you we resetting made So some I build about

Okay.

power the the of sounds the getting your revisited sort destination. to given on repays dividend, you it greater-than-anticipated earnings level of was like So

a rate think, XX%, base below about curve have talked the your than historically. still you nearly payout But You a rate yield, much also base you higher bit that's probably would curve. and is -- I earned normalizing

assuming costs? is bridge lever is -- there from another a fees as there normal or well So sort incentive interest of and here

grab pretty we But way. our I'll and are quarter. distributions significant think say Well, I'd in Sajal last But liquidity one. and it's shareholders had a we important to Chris look BDC, events not that million Yes. you've and hey, have of that to myself, got in very a mix and at the $XX that

range have We in core all getting leverage then yield. been power. back lower targeted mean, portfolio our and I earnings the lower it's

expect you it's But some not -- sizable dividend So that Fed the decision it's to guess yield portfolio. distributions easy and still here, rate providing about, just files but and with realigns that down cuts an this and Chris factor may the size it to the could right it shareholders. I the decision of the we it talking was Fin, in the

Doug come will question UBS. Harter next with our And from

you of Can talk think repayments in about portfolio the yield, kind also yield, outlook for of about both there? as kind you as but well base your

Sajal, it. Doug. take Yes, I'll

as XX.X%. activity, portfolio benefit the without So of reported core today, I prepayment believe, we

fixed rate. rate, I of a think is we're background -- sorry, XX% our little is Chris so book floating noise. And as getting XX%

So as on again, assets on indices, -- floors set we depending are base rate when we and originated. the

as rate more the we quarter our prime going obviously during floor rate the have is on high the loan current but as recent So book. we lowest where have to prime

our makes Yes, perspective see you'll new in portfolio. So again is higher that, is factor reduces but obviously, I one-for-one and the point the of good but a on investments rates, as not at a this onboarding of balance changes and you'll that. to would see basis, generally, rates, XX.X% again, in factor fact have then the we're we say that, impact the Fed the starting

chart And changes. our Q, is last of base impact point the a in is obviously, shows that there rate

some you specific information. So I actually get think more can

Ladenburg Christopher Nolan question with will next from our Thalmann. And come

To NAV, pick beat to percentage discussion. mean a dividend you if it's look close I But up And as to Because here. on a Fin's the of at don't horse cut enough? you XX%. did

Yes.

So the on portfolio that modeling that revenue this we based we've think and right in the We the variance generates. of We level. we that think have. the we're think done

I think I is mention vintage the Fin variables that and forgot that the prepayment the was leverage of target to rate those to the now we're one of prepayments. thing one at

think that in earlier prepayments past income us. the I more we've generate to talked

So variables that you'll some the good to line think of the on about revenue. will have of over we handle of But the be a otherwise, one just have kind variables portfolio the of top quarters. power earnings that and we think coming the beyond the

the now on Okay. will Chris, should the that assume ATM book, are utilized share And not -- the below shares trading we be when the price [indiscernible]

Yes, that's a question. fair

issuance. have and never share to vote So below not the have have we do sought

above, the we pay. that at the trade that we market any is ATM including -- so assuming would load And

correct. NAV, yes, If below it's So that's not issuing. we're

are prospective my And you degree. portfolio of final mode terms not is, in reset a liking sort that What you question given of guys you looking investments? at areas are in which what areas And -- certain industries Great. liking? are a to

investment we select following say and I'd Yes. are categories what work with. pretty venture are of much favorable sectors the investors we the that

as bit its So government enough, gov here a and and and cybersecurity there's semiconductors We of actually There's some a folks software. some robotics of AI enterprise tech surprise. making Interesting ways goes of companies, comes in bunch into But tech, mind. we've throw space software, that. is these. environmental of sure, vertical space the defining software -- mentioned health recurring sustainability and way that a mix new lot technology. to technologies. back probably love investment And little . I'd now for and But there, And call. sectors. no of

plays I there think the there's we and out them. of consumer-focused deemphasizing more are less

hope and your Chris, appreciate finally, help appreciate Great. patience. you your I I working and retirement, wish -- and I your in you well I And always with

closing any back turn this like I'd question-and-answer remarks. session. Mr. And to our the conclude to for conference Labe over will Jim

today's all with I'd like nice for and talking a to again We also look always, day. in Thanks listening updating As have thank and forward to next quarter. you participating everyone call. and again,

conference now today's for you The Thank attending presentation. has concluded.

disconnect now may your You lines.