Gladstone Capital Reports Decrease in Revenue and Net Income for Third Quarter

Gladstone Capital Corporation reported its financial results for the third quarter and nine months ended June 30, 2025, revealing a decrease in both revenue and net income compared to the same period last year. The company generated total investment income of $21.7 million for the quarter, down 15.7% from $25.7 million in the prior year. For the nine-month period, total investment income was $65.2 million, a decline of 10.6% from $72.9 million. The decrease in revenue was primarily attributed to a 10.1% drop in interest income, which fell to $20.9 million from $23.2 million year-over-year, alongside a significant reduction in success fee and other income.

In terms of profitability, Gladstone Capital reported a net investment income of $11.3 million for the quarter, down 8.9% from $12.4 million in the same quarter of 2024. For the nine-month period, net investment income totaled $33.8 million, a decrease of 3.8% from $35.1 million. The company experienced a net increase in net assets resulting from operations of $7.4 million for the quarter, a substantial decline of 60.9% compared to $19.1 million in the previous year. For the nine months, the net increase was $43.2 million, down 31.1% from $62.7 million.

Operationally, Gladstone Capital's investment portfolio consisted of 51 companies as of June 30, 2025, with an aggregate fair value of $751.3 million, a decrease from $796.3 million as of September 30, 2024. The company made significant investments during the nine months, totaling $204 million in new portfolio companies and $66.1 million in existing companies. However, it also recorded substantial principal repayments and net proceeds from sales, amounting to $329 million. The company’s loans to three portfolio companies were on non-accrual status, representing 4.1% of the cost basis of all debt investments.

Looking ahead, Gladstone Capital's management expressed cautious optimism, noting that the company remains committed to its investment strategy focused on lower middle-market companies. The firm has a total commitment amount of $320 million under its revolving credit facility, which has been extended to October 2027. The company also declared monthly distributions of $0.165 per common share for the upcoming quarter, maintaining its commitment to return capital to shareholders while navigating the current economic landscape. The outlook remains contingent on market conditions and the performance of its portfolio companies, with management emphasizing the importance of maintaining compliance with regulatory requirements to sustain its status as a regulated investment company.