Quarter: Q4 and YE 2025
Speaker: Alex Baluta, CEO of Flow Capital
Related resources and filings are available at 2025 Investor Relations.
Operator
Good morning, and welcome to Flow Capital’s Q4 and Full-Year 2025 Earnings Call.
Today’s discussion is being recorded on Friday, April 17, 2026, and may contain forward-looking statements that reflect current views with respect to future events. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.
I will now turn the call over to Alex Baluta, Chief Executive Officer of Flow Capital.
Alex Baluta
Thank you very much, Joelle, and thank you everybody for joining us for our Q4 and 2025 year-end financial results. I’m joined today by our CFO, Michael Denny. Our Q4 and YE 2025 results are available on SEDAR and on our website under the Investor Relations section.
Full-Year 2025 Highlights
2025 was a record year for Flow Capital:
All in all, it was an excellent year. This is the highest growth rate and highest revenue we’ve recorded in our history. If you recall, in late 2018, we transitioned to venture debt from what the prior company used to do, which was royalties. That has been a very successful transition.
Q4 2025 Highlights
Those assets are primarily in loans, but I’ll mention later that we are starting to increasingly make small equity investments.
One thing I did want to highlight is that the presentation of our financial statements has changed somewhat, we’ve tried to simplify it. We also have a new auditor this year, PricewaterhouseCoopers, and that has been an excellent experience. I want to thank them for their guidance and hard work.
Capital Deployment & Strategy
For the year, we deployed $27.5 million; of that, $17.7 million was into new investments and $9.8 million into follow-on investments in existing companies. That’s an important part of our model and has become increasingly so.
We typically do small initial tranches ($2 million, $3 million, or $4 million…) and as the company continues to deliver, we may add additional tranches, sometimes up to four. From our perspective, that’s a de-risked investment because we’ve watched the company perform and are comfortable with their capabilities.
It’s also worth noting that a small portion of our investments is now going into direct equity. For the year, we did about $1.2 million of equity. This is not a core part of our business, but we may take larger equity positions in existing investments where we have strong conviction. That adds upside to our overall performance.
Portfolio Performance
We had $12 million in repayments across four deals, including approximately $470,000 in prepayment fees, another important part of our model.
Returns included:
In addition, we exited a previously written-down investment after several years of working with management, resulting in a successful outcome and continued equity upside.
Looking at the portfolio, we have $73.5 million in invested capital:
These equity-like positions are a key part of our model. Not all of them will generate returns, but when they do, they tend to perform meaningfully well and offset any losses.
Over the past seven-plus years, our portfolio IRR has been approximately 24%. That’s a strong result and reflects our approach to underwriting, risk management, and portfolio construction. Overall, the health of the portfolio is very good today, probably as strong as it has been in several years.
At Flow Capital, we are in a unique position. We are an evergreen fund with approximately $38 million in equity. Capital from repayments is redeployed, and we also have warehouse lines that can be paid down, meaning we don’t have deployment pressure.
This allows us to remain selective and maintain underwriting discipline without margin erosion from unused capital. As a result, we may not close as many deals, but we maintain quality. With many larger funds gated, I expect pricing pressure to ease over time.
As a reminder, we focus on high-growth companies, typically growing over 20%, with revenue above $5 million, and invest $2 million to $10 million per company.
SAFERs
Lastly, I want to mention SAFERs.
For CAD SAFERs:
For USD SAFERs:
For investors who are interested, please feel free to call us at any time, or email Michael Denny, CFO, at michael@flowcap.com.
Q&A Session
Operator: We will now begin the question-and-answer session. Should you have a question, please press star followed by one on your touch-tone phone.
Question 1
Ed Solba: Hi, Alex. Congrats on the quarter and the year.
Alex Baluta: Thank you.
ES: I joined late, did you mention the book value per share?
AB: Yes, book value per share was $1.27, up from $1.20 the prior year.
ES: Very nice. That’s it for me, thank you.
AB: Thank you, Ed. Thanks for being a long-time supporter, and happy to chat at any time.
Question 2
Trevor Wilcox: Good morning. A couple of quick questions. First, can you characterize what drove the big increase in revenue this year? I think that’s great, and can you break down the three main drivers?
Alex Baluta: It really comes down to deployment of capital, two things: new deals and follow-on investments.
Our average loan duration at issuance is about three years, or 36 months. In practice, many are repaid early, so let’s assume roughly 30 months on average. If we are deploying more capital each year than we are being repaid, and the duration is roughly two and a half to three years, you will see the portfolio continue to grow.
So it is really a function of capital deployment, both into new deals and follow-ons. We have been focused on this market for about eight years. It is our core business. We are doing slightly more equity, less than 5% of total assets, which are non-yielding investments.
But overall, we remain focused on cash-yielding, monthly-pay loans to high-growth companies, and we are simply deploying more than we are being repaid.
It is actually a very simple business. You source high-growth companies, make strong risk-adjusted credit decisions, monitor those companies, and work with them. In the vast majority of cases, those companies refinance us through an exit, a sale, refinancing with cheaper credit, or a large equity raise.
Over the coming year, I expect we will see one or two of those events. That is a natural progression of the portfolio. It is pretty straightforward. No magic, just hard work.
TW: That’s helpful. What are the challenges in maintaining that growth?
AB: I mentioned some of the industry headwinds before. We need to be careful not to make investment decisions that do not meet our risk-adjusted return thresholds. One of the key challenges is staying the course on quality, even if that means slowing down deployment when market conditions move outside our comfort zone.
We do not have deployment pressure, which is an advantage. But if deployment slows, revenue growth will also slow. And if we have early repayments, which we have had, and as I mentioned, our average duration is under 36 months, that reduces deployed capital.
Usually, early repayments are a positive. They occur because something good has happened at the company. They have grown, improved their credit profile, or raised equity. Those repayments often come with prepayment fees, which provide some upside.
But ultimately, we still need to redeploy that capital. The challenge is ensuring we continue to source enough high-quality deals, especially in a market where pricing pressure exists due to excess capital that entered the space in 2022, 2023, and 2024.
Given that, I would not be surprised to see a slower growth rate in the coming quarters, as we remain disciplined in deployment.
TW: Understood. One more question on risk management. How are you managing portfolio risk, especially given market conditions?
AB: The 24% seven-year IRR I mentioned includes losses and write-downs. We are fairly aggressive, or conservative depending on how you look at it, in that we tend to write down loans and warrants quickly. We do not like writing them up, as they are uncertain and long-term. It really comes down to philosophy.
Earlier I mentioned four repayments. We actually had five. The fifth was a deal that had been written down to zero years ago, but we continued working with management. That is a key part of our approach. We monitor all our companies monthly; every company provides monthly financial statements. We track trends, maintain covenants, and speak with management regularly, often more than monthly.
We proactively flag issues. Management teams are naturally optimistic. They must be. We focus on the non-optimistic scenarios. We will often say: “This metric is starting to trend offside. Are you concerned? What can we do? How do we manage it?”
Covenants help provide structure for those discussions, but even before a covenant is tripped, which does not happen often, we are actively monitoring performance.
Our credit team has deep expertise in high-growth companies, and we invest heavily in infrastructure to track performance and behavior. Many companies tell us we provide better operational feedback than their boards. Not always, but often. That is critical for managing risk. If a company is missing targets, we can help them adjust, slow growth, reduce burn, which benefits both them and us.
If something does go off track, we stay engaged. We do not walk away unless absolutely necessary. We have worked with companies for years to improve outcomes. For example, we exited a company late this year that had been struggling for over four years. It ultimately resulted in a successful outcome and continued upside for us. In another case, we recovered 92 cents on the dollar and still retain equity and a structured repayment tied to revenue.
It is a full-cycle approach: monitoring, engagement, restructuring when needed, and long-term partnership. It is heavy lifting, but it has served us very well.
We will continue to operate that way. And importantly, the upside from our equity positions has historically more than offset modest principal losses across the portfolio.
TW: Fantastic. Thank you. Sounds like you have strong management and a lot of flexibility in the model.
AB: Thank you, we appreciate your support and the questions.
Operator: There are no further questions.
Alex Baluta
Thank you very much, everyone, for joining. As mentioned, you can find our results on our website and on SEDAR. Our Q1 results will be out in four to six weeks, and we look forward to speaking with you again soon.
