Hercules Capital Inc (HTGC) 2024 Q3 法說會逐字稿

Good day and thank you for standing by. Welcome to the Hercules Capital third-quarter 2024 financial results and conference call. (Operator Instructions) Please be advised that today's conference is being recorded.

美好的一天，感謝您的支持。歡迎參加 Hercules Capital 2024 年第三季財務業績和電話會議。 （操作員指示）請注意，今天的會議正在錄製中。

I would now like to hand the conference over to your first speaker today, Michael Hara, Managing Director of Investor Relations. Please go ahead.

我現在想把會議交給今天的第一位發言者，投資者關係董事總經理 Michael Hara。請繼續。

All right. Thank you, Brianna. Good afternoon, everyone, and welcome to Hercules' conference call for the third quarter 2024. With us on the call today from Hercules are: Scott Bluestein, CEO and Chief Investment Officer; and Seth Meyer, CFO. Hercules' financial results were released just after today's market close and can be accessed from Hercules' Investor Relations section at investor.htgc.com.

好的。謝謝你，布麗安娜。大家下午好，歡迎參加 Hercules 2024 年第三季電話會議。和財務長塞思·邁耶 (Seth Meyer)。 Hercules 的財務表現於今天收盤後發布，可透過 Investor.htgc.com 的 Hercules 投資者關係部分查看。

An archived webcast replay will be available on the Investor Relations web page for at least 30 days following the conference call. During this call, we may make forward-looking statements based on our own assumptions and current expectations. These forward-looking statements are not guarantees of future performance and should not be relied upon in making any investment decision.

電話會議後至少 30 天內，投資者關係網頁上將提供存檔的網路廣播重播。在本次電話會議中，我們可能會根據我們自己的假設和當前預期做出前瞻性陳述。這些前瞻性陳述並非對未來績效的保證，不應作為做出任何投資決策的依據。

Actual financial results may differ from the forward-looking statements made during this call for a number of reasons, including, but not limited to, the risks identified in our annual report on Form 10-K and other filings that are publicly available on the SEC's website. Any forward-looking statements made during this call are made only as of today's date, and Hercules assumes no obligation to update any such statements in the future.

由於多種原因，實際財務結果可能與本次電話會議期間做出的前瞻性陳述有所不同，包括但不限於我們在 10-K 表格年度報告和 SEC 公開的其他文件中確定的風險網站。本次電話會議期間所做的任何前瞻性陳述僅截至今天為止，Hercules 不承擔將來更新任何此類陳述的義務。

And with that, I'll turn the call over to Scott.

然後，我會將電話轉給斯科特。

Thank you, Michael, and thank you, all, for joining the Hercules Capital Q3 2024 earnings call. Our strong operating results for the third quarter and year-to-date through Q3 2024 reflect our leadership position in the venture and growth stage lending market as well as the benefits of operating at scale with an institutional lending platform and a seasoned, best-in-class investment team. In Q3 2024, the company delivered record total investment income of $125.2 million, an increase of 7.3% year over year.

謝謝邁克爾，也謝謝大家參加 Hercules Capital 2024 年第三季財報電話會議。我們第三季和年初至今直至2024 年第三季的強勁營運表現反映了我們在創投和成長階段貸款市場的領導地位，以及透過機構貸款平台和經驗豐富、最優秀的團隊進行大規模運營的好處。 2024年第三季度，該公司實現創紀錄的總投資收益1.252億美元，年增7.3%。

Year-to-date, the company has delivered record total investment income of $371.8 million, an increase of 10% year over year as well as record NII of $244.7 million or $1.52 per share, an increase of 12.2% year over year. As of the end of Q3, Hercules Capital is managing approximately $4.6 billion of assets an increase of 10.9% from where we were a year ago.

年初至今，該公司已實現創紀錄的總投資收益 3.718 億美元，年增 10%；NII 創紀錄地達到 2.447 億美元，即每股 1.52 美元，年增 12.2%。截至第三季末，Hercules Capital 管理著約 46 億美元的資產，比一年前成長 10.9%。

Hercules has delivered record year-to-date ending Q3 2024 total gross fundings of $1.34 billion, despite intentionally slowing down new originations in Q3. Q3 is typically a slower quarter in terms of equity capital investments and overall activity across the venture ecosystem, and this year was no different. The venture and growth stage markets slowed considerably in Q3, particularly with respect to venture capital investment activity and venture capital M&A exit activity.

儘管在第三季度故意放慢了新的融資速度，但截至 2024 年第三季度，Hercules 仍實現了創紀錄的總融資額 13.4 億美元。就股權資本投資和整個風險生態系統的整體活動而言，第三季度通常是較慢的季度，今年也不例外。創投和成長期市場在第三季大幅放緩，特別是在創投投資活動和創投併購退出活動。

This slowdown, combined with many quality scale borrowers putting off debt decisions until after the upcoming presidential election and waiting for the recent Fed interest rate action resulted in a new business environment that our investment teams did not believe was favorable for disciplined and prudent capital deployment, particularly early in the quarter. Every decision that we make as a company is centered around what we believe is in the best long-term interest of our shareholders, stakeholders and borrowers, and this time was no different.

這種經濟放緩，加上許多優質規模的借款人將債務決定推遲到即將到來的總統選舉之後，並等待最近的美聯儲利率行動，導致了一個新的商業環境，我們的投資團隊認為這種環境不利於有紀律和審慎的資本部署，特別是在本季初。作為一家公司，我們所做的每一個決定都是圍繞著我們認為符合股東、利害關係人和借款人的最佳長期利益的，這一次也不例外。

As we continue to manage our balance sheet, leverage and business conservatively, we remain very well positioned to deliver another year of outstanding results and record operating performance for our shareholders. Through the remainder of the year, we continue to expect higher-than-normal market and macro volatility, given the upcoming presidential election and the ongoing challenges taking place in the global geopolitical environment.

隨著我們繼續保守地管理我們的資產負債表、槓桿率和業務，我們仍然處於有利地位，可以為股東帶來另一年的出色業績並創紀錄的經營業績。鑑於即將舉行的總統選舉以及全球地緣政治環境中持續存在的挑戰，我們預計今年剩餘時間市場和宏觀波動將高於正常水平。

After the recent Fed interest rate action, we have started to see an uptick in the number of quality later-stage companies looking to secure growth-stage debt financing. And we have also seen a recent pickup in the venture capital investment activity quarter-to-date. Our current pending commitments of approximately $630 million reflect the change in environment that we have seen post quarter end.

在最近的聯準會利率行動之後，我們開始看到尋求成長階段債務融資的優質後期公司數量增加。我們也看到創投投資活動近期有所回升。我們目前大約 6.3 億美元的未決承諾反映了我們在季度末看到的環境變化。

As a result, we remain optimistic about our funding activity for the remainder of Q4, and we expect to deliver another record year of new gross fundings for fiscal year 2024. Through year-end, we intend to continue to manage our business and balance sheet defensively, while maintaining maximum flexibility to take advantage of market opportunities.

因此，我們對第四季度剩餘時間的融資活動保持樂觀，我們預計 2024 財年的新融資總額將再創新高。靈活性以利用市場機會。

This includes continuing to enhance our liquidity position, maintaining low leverage, further tightening our credit screens on new underwritings and maintaining our higher-than-normal first lien exposure, which was at 89.5% in Q3 compared to 90.1% in Q2. We believe that positioning ourselves to be able to take advantage of the market when it is more attractive to do so will be a key differentiator of our business going forward. Let me now recap some of the key highlights of our performance for Q3.

這包括持續增強我們的流動性部位、維持低槓桿率、進一步收緊新承銷的信用篩選以及維持高於正常水準的第一留置權風險（第三季為89.5%，而第二季為90.1% ）。我們相信，將自己定位為能夠在市場更具吸引力時利用市場，這將是我們未來業務的關鍵差異化因素。現在讓我回顧一下我們第三季業績的一些主要亮點。

In Q3, we originated total gross debt and equity commitments of over $430 million and gross fundings of $272 million. Year-to-date, we have committed in excess of $2.07 billion of capital, and we have delivered record funding performance over the same period. As a result, and as previously mentioned, in Q3 2024, we generated record total investment income of $125.2 million, up over 7% year over year.

第三季度，我們發起的總債務和股權承諾總額超過 4.3 億美元，融資總額為 2.72 億美元。年初至今，我們已承諾提供超過 20.7 億美元的資金，並在同期創造了創紀錄的融資表現。因此，如前所述，2024 年第三季度，我們創造了創紀錄的總投資收入 1.252 億美元，比去年同期成長超過 7%。

And net investment income of $83.2 million, up over 8% year over year or $0.51 per share, providing 128% coverage of our base distribution of $0.40 per share. We were able to achieve 128% coverage of our base distribution despite ending the quarter with very conservative GAAP leverage of 94.6%.

淨投資收益為 8,320 萬美元，年成長超過 8%，即每股 0.51 美元，涵蓋了我們每股 0.40 美元的基本分配的 128%。儘管本季末的 GAAP 槓桿率非常保守，為 94.6%，但我們仍能達到 128% 的基礎分佈覆蓋率。

This is our sixth consecutive quarter of over $100 million of quarterly core income, which excludes the benefit of prepayment fees or fee accelerations from early repayments. This puts us in a very solid position to be able to continue to comfortably cover our quarterly base distribution despite the declining rate environment. We also generated return on equity in Q3 of 18.9%.

這是我們連續第六個季度的季度核心收入超過 1 億美元，其中不包括提前還款費用或費用加速帶來的好處。儘管利率環境不斷下降，這使我們處於非常穩固的地位，能夠繼續輕鬆地覆蓋我們的季度基數分配。第三季我們的股本報酬率為 18.9%。

Our portfolio generated a GAAP effective yield of 14.4% in Q3 and a core yield of 13.3%. Our balance sheet with conservative leverage and low cost of leverage remains very well positioned to support our continued growth objectives and provides us with the ability to go lower on yield and larger in size for higher-quality assets when warranted.

我們的投資組合在第三季的 GAAP 有效收益率為 14.4%，核心收益率為 13.3%。我們的資產負債表採用保守的槓桿率和較低的槓桿成本，仍然能夠很好地支持我們的持續成長目標，並使我們能夠在有保證的情況下降低收益率並擴大規模以獲得更高品質的資產。

This again, serves as a key differentiator of our business. The focus of our origination efforts in Q3 was on maintaining a disciplined approach to capital deployment. Our deal screening activity during the quarter was high, but we simply did not see enough quality deals to warrant aggressive deployment of capital.

這再次成為我們業務的關鍵差異化因素。我們在第三季發起工作的重點是保持嚴格的資本部署方法。本季我們的交易篩選活動很高，但我們根本沒有看到足夠的優質交易來確保積極部署資本。

As an internally managed BDC that prioritizes credit, we have the luxury of not chasing the market when we do not believe that the credit quality on new originations supports it. Our Q3 originations activity was driven by both our technology and life sciences teams once again.

作為一個優先考慮信貸的內部管理 BDC，當我們不相信新項目的信貸品質支持市場時，我們可以選擇不追逐市場。我們的第三季發起活動再次由我們的技術和生命科學團隊推動。

In Q3, approximately 61% of our fundings were to technology companies, while approximately 56% of our new commitments were to life sciences companies. We funded debt capital to 21 different companies in Q3, of which four were new borrower relationships. This is reflective of our approach during the quarter to prioritize capital deployment within the portfolio, where we know the credit quality and performance history of the underlying borrowers.

第三季度，我們約 61% 的資金流向了科技公司，而我們新承諾的約 56% 流向了生命科學公司。我們在第三季向 21 家不同的公司提供了債務資本，其中 4 家是新的借款人關係。這反映了我們在本季度優先考慮投資組合內資本部署的方法，我們了解基礎借款人的信用品質和績效歷史。

We also increased our capital commitments to several portfolio companies during the quarter, which speaks to our ability to scale alongside our borrowers as they continue to grow their businesses. Our available unfunded commitments increased slightly to approximately $489 million from $479.5 million in Q2.

本季我們也增加了對多家投資組合公司的資本承諾，這表明我們有能力在藉款人繼續發展業務時與他們一起擴大規模。我們的可用無資金承諾從第二季的 4.795 億美元略有增加至約 4.89 億美元。

The quality of the growth stage companies looking for debt financing has improved following the recent Fed rate cut. And based on active conversations that our teams are having throughout the ecosystem, we expect this to improve further post the US presidential election.

隨著近期聯準會降息，尋求債務融資的成長期公司的品質有所改善。基於我們的團隊在整個生態系統中進行的積極對話，我們預計美國總統大選後這一情況將進一步改善。

Since the close of Q3 and as of October 25, 2024, our deal team has closed $17 million of new commitments and funded $15.2 million. We have pending commitments of an additional $630 million in signed nonbinding term sheets, and we expect this number to continue to grow as we progress in Q4.

自第三季結束以來，截至 2024 年 10 月 25 日，我們的交易團隊已完成 1,700 萬美元的新承諾，並提供了 1,520 萬美元的資金。我們在已簽署的非約束性條款清單中尚未承諾追加 6.3 億美元，我們預計隨著第四季度的進展，這一數字將繼續增長。

Similar to what we saw in Q3, our expectation is that Q4 funding activity will be back-end weighted. Our focus for Q4 will remain on asset quality and prudent underwriting. In Q3, we had 4 total M&A events in our portfolio, which included three life sciences portfolio companies signing definitive agreements to be acquired and one technology portfolio company being acquired. Year-to-date, we've had 10 portfolio companies announced or complete an M&A event. Last year at this time, we had 13 portfolio company M&A events.

與我們在第三季看到的情況類似，我們的預期是第四季的融資活動將是後端加權的。我們第四季的重點仍然是資產品質和審慎承銷。第三季度，我們的投資組合中共有 4 起併購事件，其中包括 3 家生命科學投資組合公司簽署最終收購協議和 1 家技術投資組合公司被收購。今年迄今為止，我們已經有 10 家投資組合公司宣布或完成了併購活動。去年這個時候，我們進行了 13 起投資組合公司併購活動。

So our exit activity remains healthy, but slower than last year. Early loan repayments decreased in Q3 to approximately $230 million, which was within our guidance of $200 million to $300 million. Over 52% of our Q3 prepayments were attributable to M&A events or new equity capital events, which we view as a positive signal overall. For Q4 2024, we expect prepayments to be in the range of $150 million to $250 million, although this could change as we progress in the quarter. Credit quality of the debt investment portfolio remained strong quarter over quarter.

因此，我們的退出活動仍然健康，但比去年慢。第三季提前償還貸款減少至約 2.3 億美元，這在我們 2 億至 3 億美元的指導範圍內。我們第三季超過 52% 的預付款項歸因於併購事件或新股本事件，我們認為這總體上是一個正面訊號。對於 2024 年第四季度，我們預計預付款將在 1.5 億至 2.5 億美元之間，儘管隨著本季度的進展，這一情況可能會發生變化。債務投資組合的信用品質季度環比保持強勁。

Our weighted average internal credit rating of 2.24 increased slightly from the 2.18 rating in Q2 and it remains at the lower end of our normal historical range. Our Grade 1 and Grade 2 credits decreased slightly to 65.2% compared to 67.2% in Q2. Grade 3 credits increased slightly to 31.9% in Q3 versus 31% in Q2. Our rated 4 credits increased to 2.3% from 0.9% in Q2 and our rated 5 credits decreased to 0.6%. In Q3, the number of loans and companies on nonaccrual remain the same.

我們的加權平均內部信用評級為 2.24，較第二季的 2.18 略有上升，仍處於正常歷史範圍的下限。與第二季的 67.2% 相比，我們的 1 級和 2 級學分略有下降，降至 65.2%。第三季的 3 級學分略有上升至 31.9%，而第二季為 31%。我們的評級 4 學分從第二季的 0.9% 增加到 2.3%，我們的評級 5 學分下降到 0.6%。第三季度，非應計貸款和公司數量保持不變。

We had two debt investments on nonaccrual with an investment cost and fair value of approximately $92.2 million and $20.7 million, respectively, or 2.6% and 0.6% as a percentage of the company's total investment portfolio at cost and value, respectively. Based on the most recent updates that we have, we expect to largely conclude our Convoy workout efforts in Q4 as well as have a resolution to the Chorus loan before the end of the year.

我們有兩項非應計債務投資，投資成本和公允價值分別約為 9,220 萬美元和 2,070 萬美元，占公司總投資組合的成本和價值百分比分別為 2.6% 和 0.6%。根據我們掌握的最新消息，我們預計將在第四季度基本完成 Convoy 的鍛鍊工作，並在年底前解決 Chorus 貸款問題。

With respect to our broader credit book and outlook, we generally remain pleased by what we are seeing on a portfolio level, and our portfolio monitoring remains enhanced. Our focus on credit underwriting and a diversified asset base is going to continue to serve us well.

就我們更廣泛的信用帳簿和前景而言，我們總體上對投資組合層面的情況感到滿意，並且我們的投資組合監控仍然得到加強。我們對信貸承銷和多元化資產基礎的關注將繼續為我們帶來良好的服務。

During Q3 2024, Hercules had net realized losses of $0.6 million comprised of gross realized gains of $2.8 million, primarily due to the gain on equity investments, offset by $3.4 million, primarily driven due to losses on warrant and equity investments.

2024 年第三季度，Hercules 的已實現淨虧損為60 萬美元，其中已實現總收益為280 萬美元，主要是由於股權投資收益，被340 萬美元抵消，主要是由於認股權證和股權投資損失所致。

Our net asset value per share in Q3 was $11.40, a very small decrease of 0.3% from Q2 2024. We ended Q3 with strong liquidity of $572.3 million. Our liquidity position includes our fourth SBIC license, which we received in July.

我們第三季的每股淨資產值為 11.40 美元，比 2024 年第二季小幅下降 0.3%。我們的流動性狀況包括我們於 7 月獲得的第四個 SBIC 許可證。

Our fourth license provides access to $175 million of additional growth capital and will help us to maintain our overall blended cost of capital. Our balance sheet with excess liquidity, a low cost of debt relative to our peers and 4 investment-grade corporate credit ratings continues to position us well and afford us the ability to compete aggressively on quality transactions.

我們的第四個許可證提供了 1.75 億美元的額外成長資本，並將幫助我們維持整體混合資本成本。我們的資產負債表具有過剩的流動性、相對於同業較低的債務成本以及 4 個投資等級企業信用評級，繼續使我們處於有利地位，並使我們有能力在優質交易上積極競爭。

As discussed earlier, we saw a significant slowdown in the venture capital ecosystem during Q3 in terms of some of the key metrics that we monitor. Venture capital investment activity of $37.5 billion in Q3 was down 32% from Q2 levels. This was the slowest Q3 in the last 4 years in terms of venture capital equity investment activity. Year-to-date, venture capital investment activity was approximately $131.4 billion, which is largely flat from the same period a year ago, according to data gathered by PitchBook and BCA. We also saw M&A exit activity for US.

如前所述，從我們監控的一些關鍵指標來看，第三季創投生態系統出現了顯著放緩。第三季創投投資活動為 375 億美元，較第二季下降 32%。就創投投資活動而言，這是過去四年來最慢的第三季。根據 PitchBook 和 BCA 收集的數據，今年迄今為止，創投活動約為 1,314 億美元，與去年同期基本持平。我們也看到美國的併購退出活動。

venture capital-backed companies pulled back considerably in Q3 to $7.4 billion, down from $18.5 billion in Q2. Year-to-date ended Q3 2024, fundraising activity was steady relative to last year at approximately $65.1 billion. Despite the slowdown in Q3, we believe that the ecosystem remains healthy and that the recent numbers reflect a reversion back to the historical norm, the uncertainty surrounding the upcoming US presidential election and a lack of clarity around near-term Fed actions.

創投支持的公司在第三季大幅縮減至 74 億美元，低於第二季的 185 億美元。截至 2024 年第三季度，籌資活動與去年相比穩定，約 651 億美元。儘管第三季經濟放緩，但我們認為生態系統仍然健康，最近的數據反映出歷史常態的回歸、即將到來的美國總統大選的不確定性以及聯準會近期行動的缺乏明確性。

Consistent with the aggregate data for the ecosystem during Q3, capital raising across our portfolio was down with 18 companies raising approximately $600 million in new capital, down from $1.7 billion raised in Q2 and $2.6 billion raised in Q1.

與第三季生態系統的總結數據一致，我們投資組合的融資金額有所下降，有18 家公司籌集了約6 億美元的新資本，低於第二季籌集的17 億美元和第一季籌集的26 億美元。

Year-to-date ending Q3, we had 58 portfolio companies raised over $4.9 billion of new capital, which is nearly the same amount of equity capital that our portfolio companies raised last year through the same period. Given our strong operating performance in Q3, we exited the quarter with undistributed earnings spillover increasing to over $152 million or $0.94 per ending shares outstanding.

截至今年第三季度，我們有 58 家投資組合公司籌集了超過 49 億美元的新資本，幾乎與我們的投資組合公司去年同期籌集的股本金額相同。鑑於我們在第三季的強勁經營業績，本季末，我們的未分配盈餘溢出增加至超過 1.52 億美元，即每股已發行股 0.94 美元。

For Q3, we announced our base distribution of $0.40 and a supplemental distribution of $0.08. This represents our 17th consecutive quarter of being able to provide our shareholders with a supplemental distribution on top of our regular quarterly base distribution. In closing, our scale institutionalized lending platform, and our ability to capitalize on a rapidly changing competitive and macro environment continues to drive our business forward and our operating performance to record levels.

對於第三季度，我們宣布基本分配為 0.40 美元，補充分配為 0.08 美元。這代表我們連續第 17 個季度能夠在常規季度基本分配的基礎上向股東提供補充分配。最後，我們規模化的製度化貸款平台，以及我們利用快速變化的競爭和宏觀環境的能力，繼續推動我們的業務向前發展，並將我們的經營業績推向創紀錄的水平。

In Q3, Hercules delivered its sixth consecutive quarter of over $100 million of quarterly core income, which excludes the benefit of prepayment fees or fee accelerations from early repayments. Our success is attributable to the tremendous dedication, efforts and capabilities of our 100-plus full-time employees and the trust that our venture capital and private equity partners place with us every day. We are thankful to the many companies, management teams and investors that continue to make Hercules Capital their partner of choice.

第三季度，Hercules 連續第六個季度實現了超過 1 億美元的季度核心收入，其中不包括預付款費用或提前還款帶來的費用加速的好處。我們的成功歸功於 100 多名全職員工的巨大奉獻、努力和能力，以及創投和私募股權合作夥伴每天對我們的信任。我們感謝眾多公司、管理團隊和投資者繼續選擇 Hercules Capital 作為合作夥伴。

I will now turn the call over to Seth.

我現在將把電話轉給塞斯。

Thank you, Scott, and good afternoon, ladies and gentlemen. Q3 marked another solid quarter of income generation and balance sheet strengthening. Record total investment income of $125.2 million was based on a solid core income of $116.1 million or core net investment income of $0.45 per share. Early repayments of approximately $230 million were within the guidance range, generating a 4% acceleration rate in noncore income. Our cost of debt ticked up slightly to 5.1% and our SG&A expenses were just below my guidance.

謝謝斯科特，女士們先生們下午好。第三季標誌著創收和資產負債表又一個強勁的季度。創紀錄的 1.252 億美元總投資收入是基於 1.161 億美元的核心核心收入或每股 0.45 美元的核心淨投資收入。約 2.3 億美元的提前還款在指導範圍內，使非核心收入加速了 4%。我們的債務成本小幅上升至 5.1%，SG&A 支出略低於我的指引。

The net result was a solid $0.51 net investment income per share of earnings. On the balance sheet side, we increased available liquidity by $70 million in July when we concurrently retired $105 million of institutional notes and received approval for our fourth SBIC license, unlocking another $175 million of liquidity.

最終結果是每股收益 0.51 美元的淨投資收益。在資產負債表方面，我們7 月的可用流動性增加了7,000 萬美元，同時收回了1.05 億美元的機構票據，並獲得了第四個SBIC 許可證的批准，從而又釋放了1.75 億美元的流動性。

We ended the quarter with more than $570 million of available liquidity and more than $930 million across the platform, including the adviser funds managed by our wholly-owned subsidiary, Hercules Advisor LLC. With all of this in mind, I'd like to review the following areas: income statement performance and highlights, NAV unrealized and realized activity, leverage and liquidity, and finally, the financial outlook. Turning first to income statement performance and highlights.

本季結束時，我們的可用流動性超過 5.7 億美元，整個平台的可用流動性超過 9.3 億美元，其中包括由我們的全資子公司 Hercules Advisor LLC 管理的顧問資金。考慮到所有這些，我想回顧以下幾個方面：損益表表現和亮點、資產淨值未實現和已實現的活動、槓桿和流動性，最後是財務前景。首先來看損益表的表現和亮點。

As mentioned previously, total investment income in Q3 was a record $125.2 million, driven primarily by our record first half growth in the debt portfolio. Core investment income, a non-GAAP measure was a solid $116.1 million.

如前所述，第三季的總投資收入達到創紀錄的 1.252 億美元，這主要是由我們上半年創紀錄的債務投資組合成長所推動的。以非公認會計準則衡量，核心投資收入為 1.161 億美元。

Core investment income excludes the benefit of income recognized as a result of loan prepayments. Net investment increased to $83.2 million or $0.51 per share in Q3, a 1% quarter-over-quarter increase. Our effective and core yields decreased modestly in the third quarter to 114.4% -- sorry, 14.4%, and 13.3%, respectively, compared to 14.7% and 13.7% in the prior quarter.

核心投資收入不包括因提前償還貸款而確認的收入收益。第三季淨投資增至 8,320 萬美元，即每股 0.51 美元，季增 1%。第三季我們的有效收益率和核心收益率小幅下降至 114.4%——抱歉，分別為 14.4% 和 13.3%，而上一季分別為 14.7% 和 13.7%。

The decline in the core yield during the quarter was largely driven by the prepayment of certain legacy higher-yielding assets as well as a slightly lower onboarding yields for more recent originations. Third quarter gross operating expenses were $44.3 million compared to $45.5 million in the prior quarter.

本季核心殖利率的下降主要是由於某些遺留高收益資產的預付款以及最近發起的新資產的初始收益率略低所致。第三季總營運費用為 4,430 萬美元，上一季為 4,550 萬美元。

Net of costs recharged to the RIA, our net operating expenses were $42.1 million. Interest expense and fees increased to $22.4 million from $21.5 million in the prior quarter due to greater utilization of the credit facilities as a result of the refinancing of the $105 million notes. SG&A decreased to $21.9 million, in line with my guidance.

扣除向 RIA 充值的成本後，我們的淨營運支出為 4,210 萬美元。由於 1.05 億美元票據的再融資，信貸額度的利用率提高，利息支出和費用從上一季的 2,150 萬美元增加到 2,240 萬美元。 SG&A 減少至 2190 萬美元，與我的指導一致。

Net of costs recharged to the RIA, the SG&A expenses were $19.7 million. Our weighted average cost of debt increased slightly to 5.1%, ROAE or NII over average equity increased -- or decreased to 18.9% for the third quarter and ROAA or NII over average total assets decreased slightly to 9.5%.

扣除向 RIA 充值的成本後，SG&A 費用為 1,970 萬美元。我們的加權平均負債成本小幅上升至 5.1%，第三季 ROAE 或 NII 相對於平均股本的成長或下降至 18.9%，ROAA 或 NII 相對於平均總資產的比例小幅下降至 9.5%。

Switching to NAV unrealized and realized activity, during the quarter, our NAV per share decreased slightly by $0.03 per share to $11.40 per share. This represents a NAV per share decrease of 0.3% quarter over quarter. The main driver was the investment portfolio net unrealized depreciation of $13.9 million, primarily driven by a single portfolio company investment that remains on nonaccrual.

轉向淨值未實現和已實現活動，本季我們的每股淨值小幅下降 0.03 美元，至每股 11.40 美元。這意味著每股資產淨值環比下降 0.3%。主要驅動因素是投資組合淨未實現折舊 1,390 萬美元，主要是由仍為非應計的單一投資組合公司投資推動的。

Our $13.9 million of net unrealized depreciation was the result of $15.5 million of net unrealized depreciation on the loan portfolio, offset by $3.6 million of appreciation to the privately held equity and warrant portfolio and $2.6 million of appreciation to the publicly held equity and warrant portfolio. In addition, we had $1.6 million depreciation due to the reversal of prior unrealized appreciation, $3.6 million of depreciation attributable to other investment-related receivables offset by $0.6 million of appreciation on forward currency.

我們的1,390 萬美元的未實現淨折舊是貸款組合的1,550 萬美元的未實現淨折舊的結果，被私人持有的股權和認股權證投資組合的360 萬美元的升值以及公開持有的股權和認股權證投資組合的260 萬美元的升值所抵銷。此外，由於先前未實現升值的逆轉，我們還有 160 萬美元的折舊，其他與投資相關的應收款導致的 360 萬美元的折舊被遠期貨幣升值的 60 萬美元所抵消。

On leverage and liquidity, our GAAP and regulatory leverage decreased modestly to $94.6 million and 85.1%, respectively, compared to the prior quarter due to healthy prepayment volume in the quarter. Netting out leverage with cash on the balance sheet, our net GAAP and regulatory leverage was 92.5% and 83.0%, respectively. We ended the quarter with over $570 million of available liquidity.

在槓桿和流動性方面，由於本季預付款量良好，與上一季相比，我們的 GAAP 和監管槓桿分別小幅下降至 9,460 萬美元和 85.1%。以資產負債表上的現金扣除槓桿後，我們的淨 GAAP 和監管槓桿分別為 92.5% 和 83.0%。本季結束時，我們的可用流動資金超過 5.7 億美元。

As a reminder, this excludes capital raised by the funds managed by our wholly-owned RIA subsidiary. Inclusive of these amounts the Hercules platform had more than $930 million of available liquidity. The strong liquidity positions us very well to support our existing portfolio companies and source new opportunities. On the outlook points. For the fourth quarter, we expect core yield to be between 13% to 13.3%, excluding any future benchmark interest changes.

需要提醒的是，這不包括我們全資擁有的 RIA 子公司管理的基金所籌集的資金。包括這些金額在內，Hercules 平台擁有超過 9.3 億美元的可用流動資金。強大的流動性使我們能夠很好地支持現有的投資組合公司並尋找新的機會。關於展望點。對於第四季度，我們預計核心收益率將在 13% 至 13.3% 之間，不包括任何未來基準利率變化。

As a reminder, more than 97% of our portfolio is floating with a floor and presently, more than one-third of our portfolio is at the contractual floor following the September prime rate reduction. Although very difficult to predict, as Scott communicated, we expect $150 million to $250 million in prepayment activity in the fourth quarter. We expect our fourth quarter interest expense to increase slightly on the growth of the balance sheet compared to the prior quarter.

提醒一下，我們超過 97% 的投資組合在有下限的情況下浮動，目前，在 9 月優惠利率下調後，我們超過三分之一的投資組合處於合約下限。儘管很難預測，但正如 Scott 所說，我們預計第四季度的預付款活動將達到 1.5 億至 2.5 億美元。我們預計第四季度的利息支出將因資產負債表的成長而較上一季略有增加。

For the fourth quarter, we expect SG&A expenses of $22 million to $23 million and an RIA expense allocation of approximately $2.7 million. Finally, we expect a quarterly dividend from the RIA of approximately $1.6 million to $1.8 million per quarter which is an increase to my prior guidance.

對於第四季度，我們預計 SG&A 費用為 2,200 萬至 2,300 萬美元，RIA 費用分配約為 270 萬美元。最後，我們預計 RIA 每季的季度股息約為 160 萬至 180 萬美元，這比我之前的指導有所增加。

In closing, our balance sheet remains strong to support our existing portfolio as well as opportunistically invest in the best opportunities. I will now turn the call over to the operator to begin the Q&A portion of our call.

最後，我們的資產負債表仍然強勁，可以支持我們現有的投資組合，並伺機投資最佳機會。我現在將把電話轉給接線員，開始我們電話的問答部分。

Operator, over to you.

接線員，交給你了。

(Operator Instructions) Crispin Love, Piper Sandler.

（操作說明）Crispin Love，Piper Sandler。

Thank you and good afternoon, everyone. Scott, fundings were lighter in the quarter as you discussed and you've been vocal in the past that you don't need to grow for growth's sake. But as you look out a little further beyond the election and even in the next year, can you discuss just some of your expectations for deal activity in B.C. broadly and what that could mean for Hercules? Would you expect a big wave of deal activity in 2025? Just curious on how you're thinking about that in the intermediate to longer term here. Thank you.

謝謝大家，大家下午好。斯科特，正如您所討論的那樣，本季度的資金較少，並且您過去一直直言不諱地表示，您不需要為了增長而增長。但是，當您進一步展望選舉之後甚至明年的情況時，您能否討論一下您對 BC 省交易活動的一些預期？從廣義上講，這對赫拉克勒斯意味著什麼？您預計 2025 年會出現一波交易活動嗎？只是好奇您在中長期內如何考慮這一點。謝謝。

Sure. Thanks, Crispin. Look, longer term, we continue to be very optimistic about the health and vibrancy of the venture capital ecosystem. The numbers that we saw in Q3 from an industry perspective were reflective of what we saw within our own portfolio in terms of a slowdown with respect to some of the key metrics that we monitor. We've said this very consistently, and we'll continue to say it going forward.

當然。謝謝，克里斯平。從長遠來看，我們仍然對創投生態系統的健康和活力非常樂觀。從行業角度來看，我們在第三季度看到的數字反映了我們在自己的投資組合中看到的情況，即我們監控的一些關鍵指標的放緩。我們一直這麼說，我們將繼續這樣說。

Venture debt, growth stage debt is designed to supplement equity. It's not designed to replace equity. And so when the equity markets in terms of venture capital investment activity are slow, it's not the right time, in our opinion, to be aggressively putting capital to work. Our team is speaking to hundreds of people within the ecosystem on a pretty consistent basis. We had numerous conversations with management teams, with venture capital investors, with Board members throughout the course of Q3.

風險債、成長期債是為了補充股權而設計的。它並不是為了取代股權而設計的。因此，我們認為，當股票市場的創投投資活動緩慢時，現在不是積極投入資本的適當時機。我們的團隊正在與生態系統中的數百人進行非常一致的交流。在整個第三季度，我們與管理團隊、創投投資者和董事會成員進行了多次對話。

And what we heard virtually consistently across the board is that a lot of the better quality later-stage companies were hesitant to take action in terms of financing in Q3, and that they wanted to wait it out to see what would happen with the Fed rate action and waited out to see what would happen with the upcoming presidential election. Subsequent to quarter end, we've seen a very big change in terms of mentality. You can see that in terms of our pending commitments of over $600 million. Based on active dialogue that we're having now, we expect that number to continue to grow. So we remain optimistic.

我們幾乎一致地聽到的是，許多質量較好的後期公司在第三季度的融資方面猶豫不決，他們想等待，看看美聯儲利率會發生什麼。會發生什麼。季度末之後，我們看到心態發生了很大的變化。您可以從我們超過 6 億美元的未決承諾中看出這一點。根據我們現在正在進行的積極對話，我們預計這個數字將繼續增長。所以我們保持樂觀。

I would just caveat that by saying that when we see a period, whether it's a month or a quarter or a half a year, where the market is not conducive for prudent credit deployment, we're simply going to hold our dry powder and wait for better opportunities. And that's exactly what we did in Q3.

我想警告的是，當我們看到一段時期，無論是一個月、一個季度還是半年，市場不利於審慎的信貸部署時，我們只會持有乾粉並等待以獲得更好的機會。這正是我們在第三季所做的。

Great. Thank you, Scott. I appreciate that. And then you mentioned the election a few times during your prepared remarks. So just with the election less than a week away, can you just speak to some of the potential implications for venture capital as a whole? And then Hercules specifically as it relates to different potential outcomes in the election. And then just kind of how those implications could impact the near or longer term? Thank you.

偉大的。謝謝你，斯科特。我很欣賞這一點。然後你在準備好的演講中多次提到了選舉。距離大選還有不到一周的時間，您能否談談對整個創投的一些潛在影響？然後是赫拉克勒斯，因為它與選舉中不同的潛在結果有關。那麼這些影響會如何影響近期或長期？謝謝。

Sure. Dangerous loaded question, but I'll certainly do my best to be responsive. Look, I think there are a number of scenarios that could play out next week. I think the scenario that we're probably most concerned about that would have an impact on Hercules and have an impact, I think, on the venture capital industry as a whole is we wake up Wednesday morning, and we don't have an outcome, right? And I think that's what we are probably most concerned about.

當然。這是一個危險的問題，但我一定會盡力回應。聽著，我認為下周可能會出現多種情況。我認為我們最擔心的情況可能是對赫拉克勒斯產生影響，並對整個風險投資行業產生影響，那就是我們週三早上醒來，卻沒有結果。我認為這可能是我們最關心的。

There are pluses and minuses in either direction. And from our perspective, we think the most important thing is that we have clarity in terms of who is the winner of the election come next Tuesday. But I think the scenario that we're most concerned about that we keep hearing a lot of anxiety about is the scenario where it's a disputed election, there is no winner and we're all in sort of a period of paralysis where you're just waiting to see what's going to happen. And that's what we're managing right now the business pretty conservatively to navigate around.

兩個方向都有優點和缺點。從我們的角度來看，我們認為最重要的是我們清楚誰是下週二選舉的獲勝者。但我認為，我們最擔心的情況是，我們不斷聽到很多焦慮，這是一場有爭議的選舉，沒有贏家，我們都處於一種癱瘓時期，你在這種情況下只是等著看會發生什麼。這就是我們目前正在相當保守地管理業務的原因。

Great. Thank you and appreciate you taking my questions.

偉大的。謝謝您並感謝您回答我的問題。

Thanks, Crispin.

謝謝，克里斯平。

Brian Mckenna, Citizens JMP.

Brian Mckenna，公民 JMP。

Thanks. Good evening, everyone. I know you've got a bunch of questions about this really over the past 18 months, but what are you seeing in the market today from a competitive perspective? You're clearly in an industry-leading position, and it doesn't appear that there are a lot of other direct competitors in the market. But at some point, does this change at all? And then also related, have you seen any of the larger private credit players coming into the space or trying to come into this space just to go after the opportunity more broadly?

謝謝。大家晚上好。我知道在過去 18 個月裡您對此確實有很多疑問，但是從競爭的角度來看，您現在在市場上看到了什麼？您顯然處於行業領先地位，而且市場上似乎沒有很多其他直接競爭對手。但到了某個時候，這種情況會改變嗎？另外，您是否看到任何較大的私人信貸參與者進入該領域或試圖進入該領域只是為了更廣泛地尋求機會？

Sure. Thanks for the question, Brian. I'll answer this similarly to how I answered it last quarter, which is that the market is competitive. We continue to see competition on the majority of deals that we underwrite and look at. Having said that, there is no real consistent competition that we see on every transaction or in the majority of transactions that we originate and underwrite.

當然。謝謝你的提問，布萊恩。我的回答與上個季度的回答類似，即市場競爭激烈。我們承保和考慮的大多數交易仍然存在競爭。話雖如此，我們在每筆交易或我們發起和承銷的大多數交易中都沒有看到真正一致的競爭。

Our business on the asset side is very diversified. We have a distinct investment team that focuses on life sciences. We have a distinct investment team that focuses on technology. Within those 2 verticals, we have sub verticals with teams of experts that focus on particular parts of the market. So we make sure that we're touching every company.

我們資產端的業務非常多元化。我們擁有一支專注於生命科學的獨特投資團隊。我們擁有一支專注於科技的獨特投資團隊。在這兩個垂直領域中，我們有子垂直領域，由專注於市場特定部分的專家團隊組成。因此，我們確保接觸到每家公司。

Depending on the vertical, depending on the stage, we will see sporadic competition from a variety of different players. In terms of the larger question about larger asset managers and private equity firms coming into the space. We've seen that from time to time. It has not been consistent. There will be periods or quarters or certain types of deals where some of the larger asset managers will come in and be a little bit more aggressive.

根據垂直領域、不同階段，我們會看到來自各種不同參與者的零星競爭。關於大型資產管理公司和私募股權公司進入該領域的更大問題。我們時常看到這樣的情況。它並不一致。在某些時期或季度或某些類型的交易中，一些較大的資產管理公司將會介入並採取更激進的態度。

But what we can say sort of definitively is that none of them have the consistency of being in the venture and growth stage market for the last 20 years. None of them have the track record that our team has in terms of $21 billion of deals over a 20-plus year period. And that's very hard to replicate and duplicate. So I think we're positioned very well from a competitive perspective. When we do compete, we primarily are competing with equity.

但我們可以肯定地說，他們中沒有一個人能夠像過去 20 年來那樣始終如一地處於風險投資和成長期市場。他們中沒有人像我們團隊一樣在 20 多年的時間內完成了 210 億美元的交易。這很難複製和複製。所以我認為從競爭的角度來看我們的定位非常好。當我們競爭時，我們主要是在公平競爭。

So the companies that we're talking to are either going to do a deal with us or they're going to raise equity capital. But competition is something that we watch very closely. If we see changes, we'll obviously make decisions to react appropriately, but we have a long-term outlook on this business.

因此，我們正在交談的公司要么會與我們達成協議，要么會籌集股本。但競爭是我們非常密切關注的事情。如果我們看到變化，我們顯然會做出適當反應的決定，但我們對這項業務有長期的展望。

Yeah. Super helpful. Thanks, Scott. And then just a follow-up here. It's great to see such strong dividend coverage, specifically given where we are in the cycle and what will likely be a number of base rate cuts moving forward. But how should we think about the base dividend heading into next year?

是的。超有幫助。謝謝，斯科特。然後這裡只是後續行動。很高興看到如此強勁的股息覆蓋率，特別是考慮到我們所處的周期以及未來可能會出現的多次基本利率下調。但我們該如何看待明年的基本股利呢？

Is the $0.40 quarterly level a good baseline and then you'll continue to pay specials around that based on the level of excess earnings? Just any thoughts there would be helpful.

0.40 美元的季度水平是一個好的基準嗎？只要有任何想法都會有幫助。

Sure. Brian, the dividend is ultimately a Board decision, and the Board doesn't make those decisions on a prospective basis. Given the coverage, I can tell you, just institutionally, we feel very comfortable with our ability to continue to cover the base distribution. And as we've demonstrated now over the last 17-plus quarters, to the extent that we have excess spillover income, which we continue to have, it is our view and our belief as an organization that we have an obligation to return as much as that as we can to our shareholders. And so to the extent that, that spillover remains the same, to the extent that our business continues to perform, we have every intention to continue to deliver supplemental distributions to our shareholders on a go-forward basis.

當然。布萊恩，股利最終是董事會的決定，董事會不會根據預期做出這些決定。考慮到覆蓋範圍，我可以告訴你，就制度而言，我們對繼續覆蓋基礎發行版的能力感到非常滿意。正如我們在過去17 個多季度所證明的那樣，就我們擁有的超額溢出收入而言，我們將繼續擁有這種收入，作為一個組織，我們的觀點和信念是，我們有義務返還盡可能多的資金。因此，只要這種溢出效應保持不變，只要我們的業務持續表現，我們就完全打算繼續向股東提供補充分配。

Okay, great. I'll leave it there. Thank you.

好的，太好了。我會把它留在那裡。謝謝。

Thanks, Brian.

謝謝，布萊恩。

John Hecht, Jefferies.

約翰‧赫克特，傑弗里斯。

Hey, guys. Thanks very much. If I'm thinking right, you guys have your 20th anniversary coming up, so congratulations on that. I just want to dive a little bit more into some of the factors and the macro factors impacting originations from some of the prior questions. Number 1 is, from an interest rate uncertainty perspective, I mean how -- for your portfolio, and I'm sure there's different cohorts within the portfolio, how much flexibility do they have in terms of waiting to see what's going to happen? Do they just have a specific window of time to make a decision? Or is there a lot of time for them to wait and see and make a decision?

嘿，夥計們。非常感謝。如果我沒猜錯的話，你們的 20 週年紀念日即將到來，所以恭喜你們。我只是想從之前的一些問題中更深入地探討一些影響起源的因素和宏觀因素。第一，從利率不確定性的角度來看，我的意思是，對於你的投資組合，我確信投資組合中有不同的群體，他們在等待觀察將要發生的事情方面有多大的靈活性？他們是否只有特定的時間來做決定？還是有很多時間讓他們觀望並做出決定？

So a couple of things there, John. First, thanks for the remarks regarding the 20th year anniversary. That's a significant milestone for Hercules Capital and our ability to consistently outperform over that period is really a credit to the team that we've built.

約翰，有幾件事。首先感謝您就20週年紀念發表的演講。這對 Hercules Capital 來說是一個重要的里程碑，我們在此期間持續表現出色的能力確實是我們所建立的團隊的功勞。

We've got the best employees in the business, and we certainly appreciate you recognizing that special event for the company. In terms of the rate question, the challenge here is that as you probably recall, the vast majority of our deals when they're underwritten have a contractual interest rate floor that's set at the market yield as of that time.

我們擁有業內最優秀的員工，我們當然感謝您認可公司的這項特殊活動。就利率問題而言，這裡的挑戰是，正如您可能還記得的那樣，我們的絕大多數交易在承保時都有一個合約利率下限，該利率下限是根據當時的市場收益率設定的。

It's not the case in every transaction, but it is the case in the majority of transactions that we do. So a lot of the quality companies that we were talking about that we were talking to in the early parts of Q3, they were looking at the rate environment. I think the consensus was pretty clear that the Fed was going to cut.

並非每筆交易都是如此，但我們所做的大多數交易都是如此。因此，我們在第三季初期與我們談論的許多優質公司都在關注利率環境。我認為聯準會將降息的共識非常明確。

We were in discussions with those companies. We may have had initial indications of interest out, but they simply wanted to wait to receive a term sheet because they knew that the term sheet subsequent to a Fed rate action, if it reflected a cut, would potentially be more attractive.

我們正在與這些公司進行討論。我們可能已經初步顯示出興趣，但他們只是想等待收到條款清單，因為他們知道聯準會利率行動後的條款清單，如果反映降息，可能會更具吸引力。

We didn't want to force those decisions. We were seeing a slowdown in the market. So we made the decision to wait it out. Subsequent to the Fed taking action, reducing the Fed funds rate by 50 basis points, we've seen a significant increase in terms of the number of companies that are now willing to actually pull the trigger on debt financings. And that's why you've seen our pending commitments go up to $630 million in a very short period of time.

我們不想強迫做出這些決定。我們看到市場放緩。所以我們決定等待。在聯準會採取行動，將聯邦基金利率降低 50 個基點後，我們看到現在願意實際啟動債務融資的公司數量顯著增加。這就是為什麼我們的待決承諾在很短的時間內就達到了 6.3 億美元。

Okay. That makes sense. And then I hope this isn't loaded at all, but assuming that we do have clarity after the day of the election, is there -- like depending on the outcome, whether it goes either way. Are there certain sectors that you think will be impacted and more vibrant and more active relative to others depending on the outcome of the election?

好的。這是有道理的。然後我希望這根本沒有加載，但假設我們在選舉日之後確實有明確的信息，那麼是否存在 - 就像取決於結果，無論它是否會發生。根據選舉結果，您是否認為某些行業會受到影響，並且相對於其他行業更加活躍和活躍？

Sure. I mean there's definitely an argument that certain sectors, certain verticals will be impacted either positively or negatively depending on who will win. I'm not going to get into that on the call because we're obviously going to make decisions in terms of sector allocations. I mean, we just don't want to signal to the market what we're going to do, but we do believe that there are specific sectors that will respond favorably and then certain sectors that will be more negatively impacted depending on who wins next week.

當然。我的意思是，肯定有人認為某些行業、某些垂直行業將受到積極或消極的影響，這取決於誰將獲勝。我不會在電話會議上討論這個問題，因為我們顯然會根據部門分配做出決定。我的意思是，我們只是不想向市場發出我們將要做什麼的信號，但我們確實相信，某些特定行業會做出有利反應，而某些行業則會受到更大的負面影響，這取決於誰是下一個贏家星期。

Okay. That makes sense. And then finally, if I can, I can't remember if we've had a conversation about AI and what you're thinking in terms of -- I mean, obviously, the massive development of that in the industry. And what kind of opportunities that might present to you?

好的。這是有道理的。最後，如果可以的話，我不記得我們是否有過關於人工智慧的對話以及你的想法——我的意思是，顯然，產業中人工智慧的大規模發展。可能會為您帶來什麼樣的機會？

Yeah. Look, it's a massive evolution in the technology space. Our team has been doing a lot of work on artificial intelligence, broadly speaking, we've been very selective in terms of the companies that we are pursuing within the artificial intelligence space. I would sort of describe our approach to the space right now is wanting to 10 gently be exposed. We're looking for companies that have AI elements to them, but we've not been super aggressive with respect to pure-play AI companies because we sort of view the market like we viewed the battery market 15 to 20 years ago.

是的。看，這是技術領域的巨大演進。我們的團隊在人工智慧方面做了很多工作，從廣義上講，我們對我們在人工智慧領域追求的公司非常有選擇性。我想描述我們現在對這個空間的態度是希望 10 輕輕地暴露出來。我們正在尋找具有人工智慧元素的公司，但對於純粹的人工智慧公司，我們並沒有非常積極，因為我們對市場的看法有點像 15 到 20 年前的電池市場。

There's a ton of capital going into the space. There's a ton of interest in the space. There's going to be a lot of winners, but there's also going to be a lot of losers. And when you're an equity investor, you can afford to make those bets. When you're a secured lender that focuses on credit, you can't have a lot of losers.

有大量資本進入該領域。人們對這個領域非常感興趣。將會有很多贏家，但也會有很多輸家。當您是股權投資者時，您就有能力進行這些押注。當您是專注於信貸的有擔保貸款人時，您不會有很多失敗者。

And so we're playing the space tangentially. We've booked transactions with a lot of very strong companies that we're excited about. But we'll continue to sort of approach pure-play artificial intelligence companies pretty selectively here.

所以我們正在切向地玩這個空間。我們已經與許多非常強大的公司預訂了交易，我們對此感到很興奮。但我們將繼續有選擇性地接觸純粹的人工智慧公司。

Hey, thanks for the color.

嘿，謝謝你的顏色。

Thanks, John.

謝謝，約翰。

Finian O'Shea, WFS.

菲尼安·奧謝，WFS。

Hey, everyone. Good afternoon and Happy 20th as well. I guess I want to go back to the market or origination topic. There's a lot to sort of tie together there between the opening remarks and the Q&A. So it sounded like, Scott, Q3 is light on volume, but also the quality hasn't been great. And tying that -- does that tie to some of maybe the other comments on competition that maybe you don't view as long term consistent?

嘿，大家。下午好，20 號快樂。我想我想回到市場或起源話題。開場白和問答之間有許多關聯。所以聽起來，斯科特，Q3 的音量很小，但品質也不是很好。並將這一點聯繫起來——這是否與您認為長期不一致的其他一些關於競爭的評論有關？

Is that the case? And if so, why would that change? Because it does feel like everybody is raising a lot of money and looking down new -- into new cabinets for yield and so forth. So just seeing if you can add to that.

是這樣嗎？如果是這樣，為什麼會改變？因為確實感覺每個人都在籌集大量資金並尋找新的東西——新的內閣以獲得收益等等。所以只是看看你是否可以添加它。

Sure. First up, Fin, thanks for the remarks on the 20th anniversary, again, I certainly appreciate that recognition. In terms of the question, I think there's a lot there as well. I'll do my best to be responsive. And if you want additional color, obviously happy to continue to engage on it.

當然。首先，Fin，感謝您在 20 週年紀念日上發表的講話，我再次感謝您的認可。就這個問題而言，我認為也有很多問題。我會盡力做出回應。如果你想要更多的色彩，顯然很樂意繼續參與其中。

With respect to our view of the credit market for venture and growth stage lending in Q3, it was both slow and it was soft in terms of quality. There were a lot of companies that we saw, particularly in the early innings of Q3 that were subscale, that were thin on liquidity, that were coming to the debt market because they did not have a lot of other alternatives. That's certainly not the case in every instance, but that was the majority of what we saw coming to market, particularly in early Q3. We chose to sit that out. We were focused on quality.

就我們對第三季風險和成長期貸款信貸市場的看法而言，它既緩慢又品質疲軟。我們看到很多公司，特別是在第三季初期，規模較小，流動性不足，進入債務市場是因為他們沒有很多其他選擇。當然並非所有情況都是如此，但這是我們看到的大部分進入市場的產品，特別是在第三季初。我們選擇袖手旁觀。我們專注於品質。

We saw a lot of opportunities within our own portfolio to put capital to work. We ended up committing in excess of $400 million in the quarter. We ended up funding nearly $275 million in the quarter. Year-to-date, we have funded a record $1.3 billion. Year-to-date, we have committed $2 billion.

我們在自己的投資組合中看到了許多利用資本的機會。我們最終在本季承諾了超過 4 億美元。我們最終在本季籌集了近 2.75 億美元的資金。今年迄今為止，我們已資助創紀錄的 13 億美元。今年迄今為止，我們已承諾投入 20 億美元。

So our origination efforts have not slowed down year-to-date. We just pulled back in Q3 because we didn't see the quality to support aggressive capital deployment.

因此，我們的原創工作今年迄今並沒有放緩。我們剛剛在第三季撤資，因為我們沒有看到支援積極資本部署的品質。

Okay. Thanks. It sounds idiosyncratic more so than a powerful force, I guess. A follow-up, if I may. Seth, can you talk about the -- why the guidance went up on the RIA?

好的。謝謝。我想，這聽起來比一股強大的力量更特殊。如果可以的話，請跟進。 Seth，您能談談為什麼 RIA 的指導意見會上升嗎？

Yeah, absolutely, Fin. So we're taking the guidance on the RIA dividend up slightly because of the performance that the portfolio is achieving as well as the growth of that portfolio. As you know, we've been allocating pretty consistently, maybe around 20%, 22% of the investments that we've been making since the inception in 2021. And that portfolio is really now at a mature stage. It's also achieving that maturity level where it's receiving prepayments just like the BDC is.

是的，絕對是，芬。因此，由於投資組合所取得的表現以及投資組合的成長，我們對 RIA 股息的指引略有上調。如您所知，自 2021 年成立以來，我們一直在分配相當一致的投資，大約為 20%、22%。它還達到了像 BDC 一樣接收預付款的成熟度水平。

And so with that, we could see that the outlook was a little bit more positive than I had guided, and so we wanted to tick it up a little bit.

因此，我們可以看到前景比我指導的要樂觀一些，所以我們想稍微提高一點。

And is there eventual -- is there embedded, say, potential upside from performance fees? I know it's early in the life and maybe those come later upon realizations or whatnot. Is that -- is this rate sort of lower than it would be down the line, all else equal?

比如說，績效費最終是否會帶來潛在的好處？我知道這還處於生命的早期，也許這些都是後來的認知或其他什麼的。在其他條件相同的情況下，這個利率是否比未來的利率低？

So yes is the short answer. Of course, there's the opportunity, but it is the same way that we look at the equity and warrant options that we get in the BDC portfolio. We see those as opportunistic to defray any debt losses that we may incur. And so we don't look at those as a huge equity home run opportunity for that performance side, Fin. So I would say that certainly, structurally, that is there but it's not something that we're betting on.

所以簡短的回答是肯定的。當然，機會是存在的，但這與我們看待 BDC 投資組合中的股票和認股權證選擇權的方式相同。我們認為這些都是機會主義的，可以彌補我們可能產生的任何債務損失。因此，芬，我們並不將這些視為表現上的巨大股權本壘打機會。所以我想說，從結構上來說，這當然是存在的，但這不是我們所押注的東西。

Okay, thanks so much.

好的，非常感謝。

Thanks, man.

謝謝，夥計。

Christopher Nolan, Ladenburg Thalmann & Co.

克里斯多福諾蘭、拉登堡塔爾曼公司

Hey, guys. Congratulations on the 20. On a broader issue, taxes on unrealized gains is something, which has sort of been proposed in all the discussions, in particular, in California. And how do you see that impacting your business?

嘿，夥計們。恭喜 20 週年。您如何看待這對您的業務的影響？

So we would see that as impacting our business no differently than any other investment business. And so I think that we're going to be dragged along with the tide with that. And therefore, when you look at the relative performance, Chris, I don't think that it would impact us any more negatively or positively than others. We do enjoy the fact that we are a pass-through entity. So keeping in mind that the BDC itself is a RIC.

因此，我們認為這對我們業務的影響與任何其他投資業務沒有什麼不同。所以我認為我們將被拖隨潮流。因此，當你看看相對錶現時，克里斯，我認為這不會比其他人對我們產生更多的負面或正面影響。我們確實很享受我們是一個傳遞實體這一事實。因此請記住，BDC 本身就是一個 RIC。

We're passing on the earnings up into the investors. That profile could be a taxable or tax-exempt entity. But we would not see ourselves as disproportionately impacted by that.

我們將收益轉嫁給投資者。該資料可以是應稅或免稅實體。但我們不會認為自己受到了不成比例的影響。

Okay. And then I guess the follow-up question is for 2025, what regulatory change affecting BDCs would you guys be at the top of your wish list?

好的。我想接下來的問題是 2025 年，你們最希望看到哪些影響 BDC 的監管變化？

That's an open field question. As an industry, we have been hopeful that Congress would take up the AFFE issue for inclusion and basically excluding the expenses when calculating the total returns and disclosure to their companies. So that's certainly top of the industry list. It does not impact us directly as much. But Scott has something additional that is -- go ahead.

這是一個開放領域的問題。作為一個行業，我們一直希望國會能夠將 AFFE 問題納入其中，並在計算總回報和向公司披露的資訊時基本上排除費用。所以這無疑是業界中名列前茅的。它對我們的直接影響沒有那麼大。但斯科特還有一些額外的事情，那就是——繼續吧。

Yeah. I was just going to say, I think the top of the list on the investment side would be the ineligible asset restrictions. That's something that we've been talking about for a long time. We think it disproportionately impacts negatively businesses like Hercules Capital. And if we could have our pick, we would certainly look for that to change going forward.

是的。我只是想說，我認為投資方面最重要的是不合格資產限制。這是我們已經討論了很長時間的事情。我們認為這對赫拉克勒斯資本這樣的企業產生了不成比例的負面影響。如果我們可以做出選擇，我們肯定會尋求未來的改變。

Yeah, the indexing of that would be great.

是的，如果能建立索引那就太好了。

Okay. Thank you.

好的。謝謝。

(Operator Instructions) I am showing no further questions at this time. I would now like to turn it back to Scott for closing remarks.

（操作員說明）我目前沒有提出任何進一步的問題。現在我想請史考特作結束語。

Thank you and thanks to everyone for joining the call today. As a final note, we will be participating in the Citizens JMP Financial Services Conference on November 12 in New York. If you are interested in meeting with us at this event, please contact Citizens JMP directly or Michael Hara. We look forward to reporting our progress on our Q4 2024 earnings call. Thanks and have a great rest of the day.

謝謝大家今天加入電話會議。最後一點，我們將參加 11 月 12 日在紐約舉行的 Citizens JMP 金融服務會議。如果您有興趣在本次活動中與我們會面，請直接聯絡 Citizens JMP 或 Michael Hara。我們期待在 2024 年第四季財報電話會議上報告我們的進展。謝謝，祝你今天休息愉快。

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

感謝您參加今天的會議。這確實結束了該程式。您現在可以斷開連線。