10-Q · May 6, 2026
Gladstone Capital Corporation's Q2 2026 10-Q indicates a notable increase in net investment income, rising to $11.8 million from $11.2 million in the previous year, reflecting a growth of 5.3%. The company also achieved…
Earnings analysis · 10-Q
GLAD earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
Gladstone Capital generated $24.495 million of fiscal Q3 investment income, up 13.1% year over year, while improved investment marks produced a $2.994 million quarterly net gain from investments and other. However, net…
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Gladstone Capital generated $24.495 million of fiscal Q3 investment income, up 13.1% year over year, while improved investment marks produced a $2.994 million quarterly net gain from investments and other. However, net investment income declined 2.6% to $11.005 million as net expenses increased 30.2%, with higher borrowing costs a major driver. Portfolio growth and 218.6% debt asset coverage support liquidity, but rising non-accrual exposure and an 11.8% portfolio yield, down from 12.8%, temper the outlook.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
What stood out
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Investment income increased 13.1% year over year
Total investment income rose $2.838 million, or 13.1%, year over year to $24.495 million in fiscal Q3 ended June 30, 2026. Interest income increased $3.441 million, or 16.5%, to $24.294 million as the weighted-average interest-bearing portfolio balance rose $175.2 million to $822.4 million.
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Portfolio valuation result turned positive
Quarterly net gains from investments and other swung to a $2.994 million gain from a $3.605 million loss a year earlier. The company recorded $3.014 million of net unrealized appreciation, led by Engineering Manufacturing Technologies at $3.193 million and Dutch Gold Honey at $2.385 million.
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Portfolio grew by $92.0 million at cost
The investment portfolio expanded to a $968.7 million aggregate cost basis across 59 companies at June 30, 2026, from $876.6 million across 55 companies at September 30, 2025. During the first nine months, GLAD made $138.5 million of new investments and $86.3 million of follow-on investments.
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Credit capacity and asset coverage remain solid
Liquidity capacity increased: the credit facility commitment reached $365.0 million, with an accordion to $400.0 million, and its revolving period extends through October 31, 2027. Reported asset coverage on indebtedness was 218.6%, above the 150% regulatory minimum.
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Debt maturities were refinanced and extended
GLAD completed a $60.0 million issuance of 7.00% notes due 2029 in June 2026 and received approximately $58.8 million in net proceeds. It also redeemed $207.0 million of long-term debt during the first nine months, including $150.0 million of 2026 Notes and $57.0 million of 2028 Notes.
What to watch
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Non-accrual exposure increased materially
Credit quality weakened versus fiscal year-end: non-accrual loans had a $46.0 million cost basis, or 5.2% of debt investments, and $26.7 million fair value at June 30, 2026, versus $28.8 million, or 3.6%, of cost and $13.0 million fair value at September 30, 2025. The 10-Q's Item 1A does not add new risk factors relative to the 2025 annual report.
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Expense growth exceeded income growth
Despite 13.1% investment-income growth, quarterly net investment income declined $0.289 million, or 2.6%, to $11.005 million because net expenses rose $3.127 million, or 30.2%, to $13.490 million. Interest expense increased $2.009 million, or 45.1%, to $6.460 million.
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Lower rates pressure net investment income
Portfolio yield declined to 11.8% from 12.8% a year earlier, primarily because of lower interest rates. GLAD estimates that a 100-basis-point decline in rates would reduce net assets from operations by $5.494 million, excluding incentive-fee effects.
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Investment deployment drove operating cash outflow
Operating cash flow was negative $54.1 million for the nine months ended June 30, 2026, versus positive $91.1 million a year earlier, as repayments and sale proceeds fell to $138.9 million from $329.0 million while investment purchases totaled $224.8 million. Free cash flow is not a meaningful or disclosed metric for this BDC.
Management's outlook
The 10-Q contains no quantitative earnings or revenue outlook. Management declared monthly common distributions of $0.15 per share for July, August, and September 2026, totaling $0.45 for the quarter, but this is not operating guidance.
Earlier filings 4
10-Q · February 4, 2026
Gladstone Capital Corporation reported Q1 results for the period ending December 31, 2025, revealing a marginal increase in EPS and a notable rise in investment income, although revenue slightly declined from both prior…
10-K · November 17, 2025
Gladstone Capital Corporation's 10-K for the year ended September 30, 2025, shows a decrease in total investment income driven by lower interest income and other income declines. The firm reported net investment income…
10-Q · August 4, 2025
Gladstone Capital Corporation reported a revenue of $21.7 million in Q3 2025, down 15.7% year-over-year, driven by a 10.1% decline in interest income. The company's net investment income fell by 8.9% to $11.3 million,…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.