Hercules Capital’s fourth quarter results missed Wall Street’s revenue and non-GAAP profit expectations, with management pointing to robust origination activity and portfolio growth as primary drivers. CEO Scott Bluestein highlighted record new debt and equity commitments, stating, “Our momentum continued in Q4, with record originations of $1.06 billion.” Management’s emphasis on balancing growth with a defensive credit approach, particularly in the technology and life sciences sectors, shaped the operational outcomes for the period. Despite a modest decline in operating margin, the company maintained a stable liquidity position and reported strong credit quality across its diverse portfolio.
Is now the time to buy HTGC? Find out in our full research report (it’s free for active Edge members).
Hercules Capital (HTGC) Q4 CY2025 Highlights:
- Revenue: $137.4 million vs analyst estimates of $141.5 million (12.8% year-on-year growth, 2.9% miss)
- Adjusted EPS: $0.48 vs analyst expectations of $0.49 (2.5% miss)
- Adjusted Operating Income: $86.98 million (63.3% margin, 7.2% year-on-year growth)
- Operating Margin: 63.3%, down from 66.6% in the same quarter last year
- Market Capitalization: $2.90 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Hercules Capital’s Q4 Earnings Call
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Brian McKenna (Citizens): Asked about deployment opportunities amid market volatility. CEO Scott Bluestein responded that Hercules plans to be aggressive where prudent, citing robust Q1 commitments as evidence of this strategy.
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Crispin Elliot Love (Piper Sandler): Inquired about software portfolio confidence and AI disruption risks. Bluestein explained Hercules focuses on mission-critical, AI-enabled software firms and applies conservative underwriting to mitigate risk from disruptive trends.
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Finian Patrick O'Shea (Wells Fargo): Questioned the sustainability of supplemental distributions and growth expectations. Bluestein emphasized strong liquidity and an active deal pipeline, dismissing suggestions of a pause in platform growth.
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Douglas Michael Harter (UBS): Asked about balancing aggressive deployment with patience amid uncertainty. Bluestein stated Hercules is selectively pursuing attractive opportunities while retaining dry powder to remain flexible as market conditions evolve.
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Ethan Kaye (Lucid Capital Markets): Sought specifics on portfolio monitoring for AI disruption. Bluestein detailed frequent engagement with portfolio companies and monitoring of key indicators to identify and address early signs of risk.
Catalysts in Upcoming Quarters
In the quarters ahead, our analysts will track (1) the pace and mix of new originations, especially in life sciences versus technology, (2) the expansion and fundraising progress of the private funds business, and (3) credit quality trends, with a focus on early indicators of risk in the technology portfolio. Execution on disciplined underwriting and capital deployment will be critical in navigating the evolving market environment.
Hercules Capital currently trades at $16.06, down from $16.60 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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