Runway Growth (RWAY) Q3 2026 Earnings Call Transcript

DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• Co-Chief Executive Officer and Co-Chief Investment Officer - David Spreng
• Co-Chief Executive Officer and Co-Chief Investment Officer - Michael Rovner
• Chief Financial Officer - Carmela Thomson
• Chief Credit Officer - Avisha Khubani
• Assistant Vice President, Investor Relations - Quinlan Abel

TAKEAWAYS

• Total Investment Income -- $40.6 million, an increase from $36.7 million for the same period last year.
• Net Investment Income -- $15.9 million or $0.38 per share, compared to $15.7 million or $0.43 per share in the prior year period.
• Net Asset Value -- $11.94 per share, an increase from $11.91 as of June 30, 2026.
• Investment Portfolio Fair Value -- $1.1 billion at quarter end, decreasing from $1.2 billion in the second quarter due to significant loan repayments.
• Debt Investment Yield -- 15.8% on a dollar-weighted annualized basis, reflecting the impact of prepayment fees and accelerated end-of-term payments.
• Core Portfolio Yield -- 14.0%, which excludes nonrecurring fees to provide a consistent comparison of recurring earnings power.
• Liquidity Events -- $140 million in total, including $130.7 million in full loan repayments from four portfolio companies.
• Largest Loan Exit -- $72.3 million from the full repayment of the loan to 3PL, which followed that company's acquisition by Descartes.
• Leverage Ratio -- 1.1x debt to equity, representing a decrease from 1.36x at the end of the second quarter.
• Available Liquidity -- $216.6 million, consisting of $3.6 million in cash and $213 million in borrowing capacity under the KeyBank credit facility.
• Share Repurchases -- $4.8 million for 769,037 shares during the quarter at a discount to net asset value.
• Expanded Share Repurchase Program -- $30 million authorized through Sept. 30, 2027, to facilitate ongoing capital returns.
• New Note Issuance -- $46.3 million in 7.75% unsecured notes due 2031, issued on Oct. 1, 2026.
• SWK Note Redemption -- $33 million of 9% notes redeemed on Nov. 3, 2026, to lower the company's cost of capital.
• Marley Spoon Write-Down -- $10.8 million net change in unrealized loss during the quarter as the borrower executes a revised operating plan.
• Marley Spoon Bridge Loan -- $9.6 million at quarter end, with a subsequent increase of $4.1 million provided after the period closed.
• Weighted Average Risk Rating -- 2.26, the lowest level reported by the company since Sept. 30, 2023.
• Portfolio Credit Quality -- 94% of the portfolio at fair value maintained a risk rating of three or better on the company's five-point scale.
• MedMinder Repayment -- $25 million senior secured first lien loan repaid after quarter end, generating an internal rate of return of 36.7%.
• Operating Expenses -- $24.7 million, increasing sequentially due to the inclusion of SWK assets and the absence of a one-time incentive fee reversal.
• Post-Quarter Prepayments -- $55 million in debt prepayments received between Oct. 1, 2026, and Nov. 5, 2026.
• SWK Accretion -- $0.05 per share to quarterly net investment income, which management expects to continue as the acquired portfolio matures.

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RISKS

• Thomson stated, "The change in net unrealized losses was driven by a $10.8 million write-down on our investment in Marley Spoon," highlighting a specific area of credit concern within the portfolio.
• Rovner warned that "it may be a little while before we see net growth in the portfolio, given the size of the repayments," acknowledging a short-term headwind to total assets.
• David Spreng noted that an "evolving macroeconomic backdrop that has put pressure on the BDC sector as a whole" contributes to the company's cautious origination strategy.

SUMMARY

Runway Growth Finance Corp. (NASDAQ:RWAY) executed a strategy focused on portfolio optimization and balance sheet deleveraging during the third quarter. Management reported the intentional moderation of new originations to focus on credit quality and capital allocation initiatives, including an expanded share repurchase program. The company utilized significant loan repayments to return leverage to its target range and increase sector diversification following the acquisition of SWK earlier in the year. The leadership transition included the promotion of internal executives to the roles of Chief Financial Officer and Chief Credit Officer to maintain underwriting standards.

• Management promoted Carmela Thomson and Avisha Khubani to Chief Financial Officer and Chief Credit Officer, respectively, to maintain organizational continuity and underwriting consistency.
• The exit of the $72.3 million loan to 3PL reduced portfolio concentration and contributed to the improvement in the weighted average risk rating.
• Management expanded the share repurchase program to $30 million to address trading levels that David Spreng stated "significantly misprice our credit profile."
• CFO Carmela Thomson noted that the company expects higher interest rates to benefit portfolio yields, stating that "more than 50% of our borrowings are at fixed rates."
• The company is managing a bridge loan facility for Marley Spoon that Michael Rovner stated is "intended to preserve value and protect our position" during the borrower's restructuring.
• The company priced its new baby bond issuance at a narrower spread than its previous debt offering earlier in the year to optimize its overall cost of capital.

INDUSTRY GLOSSARY

• BDC (Business Development Company): A closed-end investment company that invests in small and mid-sized businesses and must distribute at least 90% of its taxable income to shareholders.
• NII (Net Investment Income): The income remaining from an investment company's portfolio after deducting all operating expenses.
• NAV (Net Asset Value): The total value of a company's assets minus its total liabilities, typically expressed as a per-share amount.
• PIK (Payment-in-Kind): A feature where interest is paid by increasing the principal balance of the loan rather than in cash.
• Baby Bonds: Small-denomination unsecured debt securities, usually issued in $25 increments, that are traded on public exchanges.
• IRR (Internal Rate of Return): A metric used to estimate the annualized rate of return on an investment or loan.
• Senior Secured Loan: A debt instrument that holds the first claim on a borrower's assets and is backed by specific collateral.

Full Conference Call Transcript

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Runway Growth Finance Third Quarter 2026 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Quinlan Abel, Assistant Vice President, Investor Relations. Please go ahead.

Quinlan Abel: Thank you, operator. Good evening, everyone, and welcome to the Runway Growth Finance Conference Call for the third quarter ended September 30, 2026. Joining us on the call today are David Spreng and Michael Rovner, Co-Chief Executive Officers of Runway Growth Finance and Co-Chief Investment Officers of Runway Growth Capital LLC, our investment adviser, and Carmela Thomson, Chief Financial Officer. Our investment adviser's Chief Credit Officer, Avisha Khubani, will join us for Q&A. Runway Growth Finance's third quarter 2026 financial results were released just after market close today and can be accessed from Runway Growth Finance's investor relations website at investors.runwaygrowth.com. We have arranged for a replay of the call to be available on the Runway Growth Finance webpage.

During this call, I want to remind you that we may make forward-looking statements based on current expectations. The statements on this call that are not purely historical are forward-looking statements. These forward-looking statements are not a guarantee of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements, including, without limitation, market conditions caused by uncertainty surrounding interest rates, changing economic conditions, and other factors we identify in our filings with the SEC.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions can prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions can be incorrect. You should not place undue reliance on these forward-looking statements. The forward-looking statements contained on this call are made as of the date hereof, and Runway Growth Finance assumes no obligation to update the forward-looking statements or subsequent events. To obtain copies of SEC-related filings, please visit our website. With that, I will turn the call over to David.

David Spreng: Thank you, Quinlan, and thank you, everyone, for joining us this evening to discuss our third quarter 2026 results. Today, I will discuss our strategy and notable developments for the quarter, Mike will reflect on our portfolio activity, and Carmela will unpack our financial results. Before I dive into the quarter, I want to provide additional color on our recent leadership appointments and how we structure our team. Earlier this year, we were thrilled to promote two longstanding members of our leadership team, Carmela Thomson and Avisha Khubani, to Chief Financial Officer and Chief Credit Officer, respectively. Carmela has been with Runway since before our IPO and has overseen the company's financial operations for several years.

Avisha has played an integral role in our investment adviser's portfolio and credit monitoring team for the past eight years. In August, we also welcomed Michael Rovner as Co-CEO of the BDC and Co-CEO and Co-CIO of our adviser. Mike brings with him an expansive network and unique perspective shaped by his career as a founder, investor, and venture lender, as well as his time as a Managing Director at BC Partners. These appointments represent a meaningful expansion and strengthening of the leadership team at the BDC and our investment adviser.

As we've grown the company and continued to promote from within, our evolution reflects the stability and continuity of our organization, the depth of our existing talent, and our commitment to maintaining strong underwriting and high credit standards. I look forward to working alongside this team in the months ahead as we continue to execute upon the disciplined investment strategy that has guided Runway since our founding. Turning now to the quarter. In the third quarter, we continued to make progress on our objectives related to optimizing the portfolio, increasing diversification, lowering our risk profile, and maintaining the competitive positioning of our business.

As we've previously discussed, our acquisition of SWK, which closed in Q2 of this year, was an important step in advancing these objectives, increasing our exposure to the healthcare and life sciences sector, lowering our software concentration, and reducing our average loan size. Beyond the positive impacts of the acquisition, we also had multiple levers available to us as we continue to optimize our portfolio, including sourcing new and attractive loans, refinancing loans, and selectively syndicating portions of new originations. We posted a strong earnings quarter, delivering NII of $0.38 per share and an improved net asset value of $11.94 per share.

Carmela will discuss our results in greater detail shortly, but we believe our performance reflects strong execution and a commitment to active portfolio management. Let's turn to our capital allocation strategy. During the third quarter, we operated against a continuation of the market dynamics we observed in the first half of the year, including an evolving macroeconomic backdrop that has put pressure on the BDC sector as a whole. As a result, we continue to believe current trading levels of our shares do not accurately reflect the fundamentals of our business and significantly misprice our credit profile. In addition to portfolio optimization, we are continuing to take a thoughtful approach to capital allocation.

This includes a measured approach to new origination and a greater focus on capital return, including affiliate purchases and stock buybacks. Last quarter, BC Partners and its affiliates made a commitment to potentially purchase up to 10% of the company's outstanding common stock over the next two years. In line with that approach, today we've announced that our board has expanded our share repurchase program to $30 million. This expanded program is authorized through September 30, 2027. The management team also continues to purchase shares independently of these initiatives, underscoring our deep confidence in the Runway platform and its ability to deliver results over time. While originations were intentionally moderated during the quarter, our deal pipeline remains active.

That said, we remain highly selective with a continued focus on credit quality and prudent balance sheet management. We believe patience is a virtue, particularly in the current venture lending environment where we are seeing some loosening of underwriting standards in certain parts of the market. Looking ahead, I remain highly confident in our team, our strategy, the strength of our portfolio, and our ability to deliver strong, consistent results. Now, I will turn it over to Mike for more detail on portfolio activity during the quarter.

Michael Rovner: Thank you, David. It's a pleasure to participate in my first official earnings call as Co-CEO and Co-CIO. One of the most important lessons I've learned from leading organizations over the years is that setting the right goals is important, but execution is what ultimately matters. Under David's leadership, Runway established a clear set of priorities to strengthen the portfolio, position the business for sustainable earnings power, and create value for our shareholders. Through the commitment and hard work of the broader Runway team, we've made notable progress this year on each of those priorities. We have broadened and diversified our portfolio over the last several quarters, with a key catalyst being our acquisition of SWK earlier this year.

As a result, our concentration metrics have shown marked improvement, with our average principal loan size decreasing by 21% since the beginning of 2025. Our efforts as active managers have also led to the improvement of the average risk rating of our portfolio. As we committed to earlier in the year, we have reduced the leverage level in our portfolio. We ended Q3 at approximately 1.1x debt to equity after running at nearly 1.4x during Q2 after using debt to help fund the SWK acquisition. We believe this deleveraging, funded largely by repayments from our borrowers, demonstrates the overall quality of our portfolio.

Though there may be quarterly variances, we are actively managing our balance sheet to ensure we operate within our target range over time to maintain optionality as we ramp origination activities. Finally, we have initiated and expanded our share repurchase program, which further aligns our capital allocation strategy with shareholders and takes advantage of a very attractive valuation in our shares. We know there is more work ahead, but the progress we have made reinforces my confidence in the foundation we are building and in our ability to execute on the priorities that matter most to our shareholders. While we cannot control every market outcome, we can control how we allocate capital, underwrite risk, and manage the business.

The areas we can control will continue to be our focus. Now turning to portfolio activity for the quarter. As David touched on, we deliberately paced new originations and focused on portfolio optimization. Our deployments in Q3 were comprised of follow-on investments in an aggregate amount of $8.5 million to four existing portfolio companies. We also generated liquidity events totaling $140 million, including four full repayments totaling $130.7 million, $8.7 million in other scheduled loan principal amortization payments, and $600,000 in equity proceeds. Notably, this quarter, we experienced the full repayment of our loan to 3PL, also known as Extensiv, after the company was acquired by Descartes. This was the largest loan in our portfolio, totaling $72.3 million.

This full repayment marked an important step forward in our ongoing efforts to reduce concentration, contributing to a lower average principal loan size and a lower proportion of the top 10 loans in our portfolio. The repayment also contributed to a lower weighted average risk rating of 2.26 compared to 2.33 last quarter. 3PL is just one example of how our active portfolio management and close engagement with borrowers help support positive outcomes for both our portfolio companies and our investors. We believe the healthy level of repayment actively demonstrates the underlying strength of our portfolio. I would also like to provide an update on our loan to Marley Spoon.

During the quarter, we amended our facility to eliminate approximately $28.9 million of unfunded commitments, reducing our exposure. As of quarter end, we had also provided access to approximately $9.6 million bridge loan, and subsequent to quarter end, we increased the bridge facility by approximately $4.1 million. The bridge is intended to preserve value and protect our position while the company executes a revised operating plan focused on cost reduction and financial sustainability. We remain actively engaged with the management team as the restructuring process evolves, and we continue to evaluate multiple paths to maximizing our recovery.

Looking more closely at SWK's contributions since the acquisition closed, the portfolio continues to create value through both liquidity events and the opportunity to upsize existing commitments. For example, since the deal closed, we upsized loans to three strong SWK borrowers with a total upsize value of $34 million and had a realized gain of $3.4 million on $10 million in proceeds from our Eton warrants. Subsequent to quarter end, we also experienced the full repayment of a $25 million senior secured first lien loan to MedMinder, generating a 36.7% IRR. In our view, there is sustained long-term demand for venture debt, and Runway is well-positioned to capitalize on that opportunity.

While we moderated originations during the quarter, we remain in active dialogue with sponsors and founders across the ecosystem. Over the next 12 months, we believe our expanded sourcing channels can support continued pipeline growth, though the pace of new investment may not always match the timing of portfolio repayments. We believe that the continued performance of our portfolio, combined with disciplined loan origination and our commitment to repurchase shares while they remain undervalued, collectively represent the most balanced approach to creating long-term shareholder value while narrowing the discount to NAV. Now, I'll turn it over to Carmela to provide a deeper dive into our financial results and portfolio performance.

Carmela Thomson: Thank you, Mike, and thank you everyone for joining us today. Turning to the third quarter financial performance, we generated total investment income of $40.6 million and net investment income of $15.9 million, compared to $37 million and $18.2 million respectively in the second quarter of 2026. Our total investment portfolio had a fair value of $1.1 billion compared to $1.2 billion in the second quarter. The change primarily reflects the impact of repayments. As of September 30, 2026, Runway had net assets of $494.7 million, down 2% from $502.6 million in the second quarter of 2026. NAV per share was $11.94, compared to $11.91 as of June 30, 2026.

The quarter's NAV per share growth was driven by share repurchases and repayments, but was offset by an additional write-down on Marley Spoon. We delivered $0.38 per share of net investment income and a base dividend of $0.33 per share. At quarter end, we had spillover income of approximately $0.76 per share. NII during the quarter was positively impacted by prepayment fees and accelerated end-of-term payments related to prepayments. This quarter, our debt portfolio generated a dollar-weighted average annualized yield of 15.8%, up from 14.2% in the second quarter of 2026. We expect the recent Fed rate hike to benefit portfolio yields in Q4, with further hikes as currently priced by the market providing additional upside.

With more than 50% of our borrowings at fixed rates, we expect higher base rates will also support our earnings power. Looking at our weighted average risk rating, our system is based on a scale of one to five, where one represents the most favorable credit rating. Within our scale, a category three loan represents a situation where we have identified early indicators that warrant enhanced oversight, such as performance trending below plan, increased monitoring requirements, or higher loan-to-value levels while the collateral remains intact. Importantly, a category three designation reflects our proactive monitoring framework rather than an impaired credit.

Our weighted average risk rating during the quarter improved to 2.26 compared to 2.33 in the second quarter and 2.66 in the first quarter, as 3PL paid off and we saw improvements in risk ratings across other names in the portfolio. As of September 30, 2026, 94% of the portfolio at fair value had a risk rating of three or better, underscoring the quality of the names in our portfolio and our confidence in their performance.

The consistent improvement in our weighted average risk rating, which is the lowest it has been since September 30, 2023, is a testament to the quality of the names in our portfolio, the strength of our monitoring framework, and the hard work our team has done to create a more balanced portfolio. We believe our disciplined risk and valuation process provides a clear, consistent framework for evaluating our portfolio, which reinforces our confidence in its underlying credit quality and long-term performance. Looking at expenses, total operating expenses were $24.7 million compared to $18.8 million for the second quarter of 2026.

The sequential increase in our operating expenses primarily reflected the absence of a one-time incentive fee reversal that benefited the second quarter of 2026, as well as a higher management fee base in the third quarter that now includes the acquired SWK assets. We recorded a net realized gain of $10,000 during the third quarter of 2026, compared to a net realized loss of $45.3 million during the second quarter of 2026. We recorded a net change in unrealized losses of $5.2 million compared to a net change in unrealized gains of $54.3 million in the second quarter of 2026.

The change in net unrealized losses was driven by a $10.8 million write-down on our investment in Marley Spoon, which offset net unrealized gains of $5.6 million across the rest of the portfolio, primarily related to the repayment of our loan to 3PL. During the third quarter, we experienced total liquidity events of $140 million, including $139.4 million in repayments. As Mike mentioned, the most significant component of this figure was 3PL. We currently expect elevated prepayments to continue through the fourth quarter, although some could be pushed into subsequent periods.

As of September 30, 2026, our leverage ratio and asset coverage were 1.10 and 1.91 times, respectively, compared to 1.36 and 1.74 times at the end of the second quarter. Our leverage is now back within its target range after running an elevated level during the second quarter. Our total available liquidity was $216.6 million, including unrestricted cash and cash equivalents, and we had borrowing capacity of $213 million under our KeyBank credit facility. To further strengthen our balance sheet and lower our cost of capital, subsequent to quarter end, we issued 7.75% baby bonds, generating net proceeds of approximately $43.7 million.

We are pleased with the pricing on the baby bonds, which reflects a narrower spread than the baby bonds we issued earlier in the year. We primarily used the proceeds to repay our $33 million, 9% SWK notes due January 2027, which we redeemed in full on November 3, 2026. In line with our capital allocation strategy and increased emphasis on share repurchases, we repurchased $4.8 million of shares during the quarter. In addition, as previously noted, today we announced that our board has authorized an expanded share repurchase program of $30 million, which will run through September 30, 2027. We have $22.1 million in share repurchases remaining as of today.

We believe the expanded share repurchase program presents an attractive option to reallocate capital towards repurchasing shares while they trade at a significant discount to NAV. Finally, on November 4, 2026, our board declared a regular distribution for the fourth quarter of 2026 of $0.33 per share. With that, operator, we can open the line for Q&A.

Operator: If you'd like to ask a question at this time, please press star 11 on your touchtone phone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question comes from Mickey Schleien with Clear Street.

Mickey Schleien: Yes, good afternoon, everyone. The weighted average debt investment yield increased nicely from 14.2% to 15.8%, despite the significant repayments, which I assume would be repayments on higher-yielding investments. How much of the improvement reflected accelerated OID and end-of-term payment income from those repayments versus higher recurring portfolio yields?

Carmela Thomson: Hi, Mickey. Our yield does incorporate some non-recurring income. Our $0.38 of NII per share incorporates $0.10 per share of non-recurring, and this is comprised of prepayment fees of $0.08 and then another $0.02 related to other fees, such as amendment fees, commitment fees, and such. While that's non-recurring in nature, we do tend to have $0.01-$0.02 per share each quarter in other fees. Not as unique as the prepayment fees that tend to be more one-off each quarter. With that brings us down to a net $0.10, and then this is partially offset by a one-time $0.02 expense related to debt costs.

The net one-time impact would likely be around $0.06 per share, comprised of the $0.08 of prepayment and the $0.02 of one-time debt costs. In terms of the yield, that's what you'll see with the yield of the 15.8%, so that incorporates those non-recurring fees that I just mentioned. The core yield, which I also believe is in our presentation, is 14%, so that's more of the core portfolio yield, not including the non-recurring fees to get a better comparison quarter over quarter.

Mickey Schleien: I understand that. I appreciate your explanation. If I could, just one follow-up. You received approximately $140 million of proceeds in the quarter. You funded only $9 million. I think you received another $55 million of prepayments this quarter. How much of this runoff was anticipated? What does the pipeline look like, and when do you think the portfolio might resume growth on a net basis?

Michael Rovner: Sure, Mickey. I will go ahead and handle that question. Well, obviously, we have had a very strong repayment quarter in Q3. As you noted, Q4 is also off to a strong start. It is a little early to be able to predict where we would end up in Q4. Obviously, we have two months left, but we are certainly on pace to achieve or even outpace what we saw in Q3. The pipeline is building, and we remain actively engaged with sponsors and founders. We are working on our sourcing, and though I think it may be a little while before we see net growth in the portfolio, given the size of the repayments.

Carmela, I do not know if you wanted to add anything.

Carmela Thomson: No, I think that is right. I think as repayments come in the coming quarter, and in our prepared remarks, we noted elevated prepayments. We will use that also to balance repurchases of shares as well as new loans, but obviously keeping in mind our credit strategy and making sure that we are bringing on loans that still continue to meet that high credit mark.

Mickey Schleien: I understand. I appreciate your time this evening, and thank you for taking my questions.

Carmela Thomson: Thank you.

Operator: Our next question comes from Richard Shane with J.P. Morgan.

Richard Shane: Yeah, thanks. This is on for Rick. I guess just thinking about the SWK accretion, you talked about how it was $0.05 accretive quarterly NII. Going forward, do you expect any incremental benefits to the run rate?

Carmela Thomson: I think the $0.05 is pretty much what you should expect. I think the difference that you may see as loans mature, that could taper off or prepayments on any SWK loans. But $0.05 is still currently what we're projecting and what we see in the portfolio today.

Richard Shane: Got it. Thank you.

Operator: Our next question comes from Erik Zwick with Lucid Capital Markets.

Erik Zwick: Good afternoon, everyone. I guess maybe starting with a bit of a follow-up to one of Mickey's questions, and you mentioned it may be a little bit before we start to see net portfolio growth again, just given the pace of prepayments as well as the balance between new investments and share buyback. I know you said you will kind of take a measured approach to new investments. If I understood Carmela's math correctly, it sounds like there was a $0.06 kind of net benefit to the results this quarter. So, without those, you would be at about a $0.32 run rate, so a penny below the current dividend level.

So, obviously, the opportunity to repurchase shares at a massive discount where the stock trading today is very compelling, and the math there is strong, and with measured investments, kind of a measured approach to investments. I realize it is a long-winded question, so I guess the crux of it is, how do you feel about the sustainability of the dividend at this level as you approach 2027, given the fact that the portfolio may shrink again, and you are devoting repayment dollars toward the buyback as well?

Carmela Thomson: Sure. We do expect to cover our base dividend in the following quarter and full year. Beyond that, for 2027, it is hard to predict at this point in time because it does depend on a few variables. You noted that as well. How much and how quickly our loans repay, and then also how fast we deploy that capital into the high-quality new loans, and then also the level of share repurchases. We are anticipating picking up the pace of our share repurchases as well as our loans prepay, then we will use those funds towards that as well. It really depends on that mix and where we will land towards that end of the year going into 2027.

Erik Zwick: Thanks, Carmela. Then just my other question. Mike, I think you used the language sustained long-term demand with referring to the venture lending market. Just curious, does higher rates now and the prospect for rates potentially even going higher, how does that impact the opportunity there? Do certain borrowers tend to back away or wait? Just kind of curious, and maybe a question for David as well, just in his experience, how do higher rates impact the venture lending opportunities?

Michael Rovner: I was pausing to see if David wanted to take that one. My view is it is obviously going to be difficult to predict what we see in the coming 12 months. I will say that higher rates can dampen deal flow, but as things stand right now, we are feeling pretty good about the growth in our pipeline and the number and diversification of opportunities that we are seeing.

Erik Zwick: Thanks, Mike. That is all for me.

Operator: As a reminder, if you would like to ask a question at this time, please press star 11 on your touchtone phone. Our next question comes from Merrill Ross with Compass Point Research & Trading.

Merrill Ross: Thank you, and good evening. Just thinking about how you hold your pipeline together when you are funding so few loans. It seems like that is part of your franchise value, is that you continue to meet the needs of your borrowers. With your activity so subdued, I am wondering when you feel concerned that you are not funding enough loans to stay in the mix.

Michael Rovner: That is a great question. Obviously, it is a bit of a balancing act. As we have said in prior quarters, we want to take a measured approach to new loan origination while we focus on seeing repayment in our current portfolio, looking to add diversification while supporting our existing borrowers. I think we have at least done a good job so far of that balancing act. We were active in a smaller way this quarter, looking more to focus on liquidity generation and also support for our existing borrowers. I do think that it is important for us to continue to be active in the market and to continue to build our pipeline.

So, a good question to watch as we execute in Q4 and beyond.

Merrill Ross: Thank you.

Operator: Our next question comes from Christopher Nolan with Ladenburg Thalmann.

Christopher Nolan: Hi. David mentioned affiliate purchases in his comments. What does that mean?

David Spreng: It means affiliates of Runway and BC, so management team, other funds within the BC family, that kind of stuff. Think of it as BC broadly defined.

Christopher Nolan: Okay, so you might be buying assets from BC-affiliated entities?

David Spreng: No, the other way around. BC-affiliated entities may be buying shares of Runway.

Christopher Nolan: Okay, so this is related to the share repurchase.

David Spreng: Correct

Christopher Nolan: commitment that BC. It is not a transfer of investment assets or.

David Spreng: No, no. No.

Christopher Nolan: Okay. And for your share repurchase program, what sort of window do you have quarterly to do that?

Carmela Thomson: Yeah, so we can set up the 10b5-1 program to occur through the quarter as long as we're setting it up prior to the blackout period, which is around a week prior to quarter end. So we can set that up to be active during that process.

Christopher Nolan: Does the stock really have enough liquidity to really help you guys really move the needle on an ongoing basis like this?

Carmela Thomson: We have limitations in terms of how much we can buy in a day. We think it helps bring the stock price up marginally on a daily basis that we've seen. But yes, volume certain times can be thin.

Christopher Nolan: All right. You are sort of in an interesting spot here where you are guiding for slower portfolio growth for various reasons. Your leverage ratios are way down, your stock price is way down, and you are making really good headway on the buybacks. Have you considered doing a share tender?

Michael Rovner: It is certainly something that has been discussed as our board and management team consider all the options that are available to us.

Christopher Nolan: Okay. That is it for me. Thank you.

Operator: That concludes today's question and answer session. I would like to turn the call back to David Spreng for closing remarks.

David Spreng: Thank you, operator, and thank you all for joining us today. We wish you a happy and healthy end to 2026 and look forward to discussing our year-end results in 2027.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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