Good afternoon, ladies and gentlemen. Welcome to the TriplePoint Venture Growth BDC Corp. Fourth Quarter 2024 Earnings Conference Call. At this time all lines have been placed in a listen-only mode. After the speakers' remarks, there will be an opportunity to ask questions and instructions will follow at that time. This conference is being recorded, and a replay of the call will be available in an audio webcast on the TriplePoint Venture Growth website. Company management is pleased to share with you the company's results for the fourth quarter and full fiscal year of 2024. Today, representing the company is Jim Labe, Chief Executive Officer and Chairman of the Board; Sajal Srivastava, President and Chief Investment Officer; and Mike Wilhelms, Chief Financial Officer. Before I turn the call over to Mr. Labe, I'd like to direct your attention to the customary safe harbor disclosure in the company's press release regarding forward-looking statements and remind you that during this call, management will make certain statements that relate to future events or the company's future performance or financial condition, which are considered forward-looking statements under federal securities law. You are asked to refer to the company's most recent filings with the Securities and Exchange Commission for important factors that could cause actual results to differ materially from these statements. The company does not undertake any obligation to update any forward-looking statements or projections unless required by law. Investors are cautioned not to place undue reliance on any forward-looking statements made during the call, which reflect management's opinions only as of today. To obtain copies of our latest SEC filings, please visit the company's website at www.tpvg.com. Now I'd like to turn the conference over to Mr. Labe. Please go ahead.

Thank you operator. Good afternoon everyone and welcome to TPVG's fourth quarter earnings call. Throughout much of 2024, the venture markets for growth stage companies continue to be challenging and we continue to be patient and selective. This was reflected in TPVG's lower investment activity over the first three quarters of the year. Heading into the second half of the year and accelerating in the fourth quarter led by the AI sector, we saw improvement in venture growth stage investment activity. Against this backdrop, TPVG's pipeline markedly increased. We're encouraged by these positive signs and also think the outlook on the investment sectors we are investing in. As we position TPVG to capitalize on an improving venture capital market, we also remain focused on proactively managing the portfolio, continuing on the path of portfolio diversification and investment sector rotation and maintaining our strong liquidity. Turning to the quarterly results, we generated net investment income of $12.6 million, or $0.32 per share, over earning our regular quarterly dividend. Regarding our strengthening pipeline, signed term sheets with venture growth stage companies at our sponsor, TriplePoint Capital, increased 246% to $323 million in the fourth quarter. This is the highest level in 2.5 years. We have also added another $215 million of signed term sheets for venture growth stage companies at TPC in the first quarter year-to-date. At this rate, we believe signed term sheets in this quarter may exceed last quarters. All of this bodes very well for TPVG and represents potential future debt investment opportunities. Our new debt commitments to venture growth stage companies in the quarter also reached two year highs to $72 million, increasing 75% compared to the prior quarter. Since the end of the quarter we closed an additional $53 million in debt commitments. We also achieved $50…

Thank you, Jim, and good afternoon. Let me begin by reviewing our performance in Q4 and full year 2024 and as well as highlight key expectations for 2025. Regarding investment portfolio activity during Q4, TriplePoint Capital signed $323 million of term sheets with venture growth stage companies compared to $93 million of term sheets in Q3, reflecting positive signs for the recovery of the venture lending market and our growing pipeline as we are seeing increased demand for debt financing from well-positioned to well-capitalized and growing venture growth stage companies in sectors we are targeting. For the full year, TriplePoint Capital signed $736 million of term sheets with venture growth stage companies, up almost 60% from $471 million of signed term sheets in fiscal year 2023. With regards to new investment allocation to TPVG during the fourth quarter, we allocated $72 million in new commitments with four companies to TPVG up more than 75% from our $41 million of commitments to four companies in Q3. 75% of the commitments made during the fourth quarter were to new portfolio companies, reflecting our focus on diversification and sector rotation and included Ao1 Holdings, also known as Players Health, a technology company, providing digital risk management services reporting tools and insurance products to sports organizations, Muon Space, an end-to-end space systems provider that designs, builds and operates low earth orbit satellite constellations and Parry Labs, a digital systems integrator for modernizing legacy platforms and accelerating new development in the defense industry. During the quarter, we also refinanced an existing portfolio company in conjunction with an upside. For the full year, we closed $175 million of debt commitments with 13 companies at TPVG, of which eight were new companies and five were existing portfolio companies compared to $32 million of debt commitments in 2023…

Thank you, Sajal, and hello, everyone. I’m excited to be part of the TriplePoint platform and I look forward to working alongside our talented team to position the company for the future. For the fourth quarter, total investment income was $26 million with a portfolio yield of 15.8% as compared to $33 million and a portfolio yield of 15.6% for the prior year period. The decrease in total investment income was primarily due to a lower weighted average principal amount outstanding on our income bearing debt investment portfolio, partially offset by the higher portfolio yield. Total investment income for the full year of 2024 totaled $109 million with a portfolio yield of 15.7%. This compared to $137 million for the prior year period with a portfolio yield of 15.4%. For the fourth quarter, total operating expenses were $13.1 million lower when compared to the $15.7 million for the prior year period. These expenses consisted of $7.6 million of interest expense, $3.4 million of base management fees, $500,000 of administrative expenses and $1.6 million of G&A expenses. Due to the shareholder friendly total return requirement under the incentive fee structure, there was no incentive fee this quarter. Total operating expenses for the full year of 2024 totaled $54.1 million as compared to $63.7 million for the prior year period, a 15% decrease. For the fourth quarter, net investment income totaled $12.6 million or $0.32 per share compared to $17.3 million or $0.47 per share for the prior year period. For the full year of 2024 net investment income totaled $54.5 million, or $1.40 per share, as compared to $73.8 million, or $2.07 per share for the prior year period. Now turning to realized and unrealized gains and losses. For the fourth quarter, net realized losses on investments totaled $300,000 as compared…

[Operator Instructions] And your first question today will come from Crispin Love with Piper Sandler. Please go ahead.

Thank you. Good afternoon, everyone. First, can you discuss your views on credit into 2025? It seems that you haven't experienced any new credit issues as of late with the recent unrealized losses being driven by prior watch list loans rather than any new ones. So just curious on the forward outlook there and confidence on credit into 2025?

Yes, this is Sajal. I'll take it. I'd say, yes, we're pleased that the number and the names on our watch list has been improving for the past three quarters and I think it's a function of again execution on those companies robust fundraising and equity activity as well. And so I'd say, our perspective is that as long as the market and performance of our portfolio companies continue to be stable, that credit outlook should be stable or improving over the course of 2025. But obviously if market conditions don't improve or portfolio companies don't perform, that could change.

Okay, great. That's helpful. And then just on prepays, they were pretty elevated in the quarter. Can you discuss some of the key drivers there? Are there some one offs and then just early thoughts on 2025 for prepays?

Yes, I'll take this one. So I would say, our prepay activity, a part of it is associated with our intentional goal of rotating out of certain sectors, in particular consumers. So we've seen in 2024 about 60% of our prepays were from e-commerce and consumer related companies. So kind of along our goals of the portfolio rebalancing. And as we look to 2025, we continue to expect that the pace of one prepay per quarter. But I think as we look at it just practically these prepays will come from some of our older vintages. So these will be more seasoned assets and so, should have less of a volatile impact on NII, so to speak, for the quarters in which they occur.

Great, thank you, Sajal. I appreciate you taking my questions.

Your next question today will come from Brian McKenna with Citizens. Please go ahead.

Thanks. Good evening, everyone. So, you reported $0.32 per share of NII in the quarter. Some of the impact from lower base rates into year-end still have to flow through the P&L. And you saw the two names on the watch list so are you still comfortable with the $0.30 quarterly dividend. And then is there a way to think through where and when dividend coverage ultimately troughs?

Yes. So, I would say our perspective and as mentioned in our prepared remarks, I think historically we've focused on covering our dividend from NII on a full year basis and we've been pretty consistent about it. Although we've had a quarter or two where we've under earned and then made it up on a full year basis. Heading into 2025, I think we're realistic when it comes to dividend and mindful that it's the levers of portfolio growth and prepays that have an impact on it. We do expect fundings to be higher in 2024 and prepayments to be lower. But I think the reality is, we're going to be pragmatic and if portfolio growth doesn't materialize, we'll have to take that into account and be realistic about it.

Okay, that's helpful, thanks. And then just looking at yield on new fundings in the quarter, they totaled 13.5%. That's 200 plus basis points below the average yield of the portfolio at year end. So how should we think about the overall yield of the portfolio as assets continue to turn over throughout 2025, assuming no change in base rates from here?

Yes. I mean I think we continue to believe that our – will hold our yield profile of the portfolio. I think obviously, with the base rates going down 100 basis points over the last 12 months. It takes a little bit of time for that to flow through and then stabilize. But keep in mind, we do put set prime rate floors for our new investments and our older investments. So even though 2/3, as Mike said, of the portfolio is floating rate. We do have the benefit of prime rate floors. But again, I think as we look to venture lending in general, there is a target return we all expect to make as lenders. That's relatively high. And so that's why we're not anticipating more spread compression. And then I think from our perspective, we'll continue to see the benefit of prepaid, which was then help to boost the overall portfolio on a total basis as well.

Okay. Great. I'll leave it there. Thank you.

[Operator Instructions] And your next question today will come from Casey Alexander with Compass Point. Please go ahead.

Yes. Good afternoon. Welcome, Mike, to the team. I have – I'm wondering – and I think you can only answer this as of 12/31. To what extent has the whole portfolio reset now based upon the 100 basis point decrease in base rates? Or is there still some more portfolio positions that have to reset in 2025 in the first quarter of 2025. And if so, like how far along the process are we?

Yes, Casey, I'll take it. So I would say when base rates change, they generally are effective immediately or within the next month for our portfolio companies. So you'll see that with the funded assets relatively quickly flow through obviously, with our unfunded commitments. There's a combination of floaters and fixed rates with – or floaters with primary floors and so it's a function of also just new asset fundings and when those were originated then that could impact the portfolio. But I would say, generally, to answer your question, it should all have been really flushed through already, so to speak.

Okay, great, thanks. That's helpful. Secondly, you borrowed less than what you're refinancing, I assume that the difference is headed for the credit facility for the time being in the hopes that you can capture it in some other unsecured financing in the future that rounds up at a lower cost than the one that you did just now. Is that the right way to think about it? [Indiscernible]

Yes. We are – I was going to say – I mean, Casey, we are looking to optimize our balance sheet leverage and also looking to rebalance because as of right now, and I mentioned in my prepared remarks, of the $400 million outstanding, $395 million of that is term debt. And so we had the option to refinance this $70 million maturing with the full $70 million, but we opted to raise less in that effort to rebalance and try to push more of our debt to our revolving facilities.

Is that balancing act, does that help you maintain an investment-grade rating with the rating agencies by not having too much unsecured as a portion of your liability stack.

Yes. In part, yes. That went into the – our overall decision.

Okay. All right. Thanks for taking my questions. I appreciate it.

Thank you.

And your next question today will come from Christopher Nolan with Ladenburg Thalmann. Please go ahead.

Hey, guys. Following up on Casey's question – does – should we expect higher leverage through 2025?

Yes. I mean I think we talked a lot – yes, I was just going to say we've talked a lot about portfolio growth. That's what we're expecting here in 2025. And so we're also expecting with that growth that our leverage would climb back up.

Okay. And that's not assuming any ATM because your share price is trading below book, right?

Correct. Yes. We don't currently have any assumption for any further raises under the ATM.

Okay. And then I guess, it's more of a strategic question for Jim. Jim, I was fascinated by your comments on AI and how you guys are making investments in that. Any possibility of AI sort of cutting down the expense ratios for BDCs or improving returns?

Well, AI is going to continue to be universal, prevalent and helping across the Board, not just probably BDCs, but just in general you name the sector law, finance, software, communications, education. But speaking of AI, yes, it’s prevalent. It's probably one out of every three investments we're seeing these days, but one definitely needs to be careful of any hype. There's a lot of inflationary valuations which are going on out there. But at least regarding our AI portfolio and this is at the platform, not just as well as at the growth stage. There's some very exciting niches we're in, durable ones with proprietary datasets and so forth. We're not in that bigger universe of these wide open models. How it would apply specifically, we're actually employing some within our due diligence and a couple other things. So I'm not exactly sure yet how it's going to apply to the BDC business. We've got to avoid that buzzword. There's not a conference I don't go to whether it's venture conference technology whatever where AI doesn't come up. So I'm glad we got an AI question here.

And then actually here's a second follow-up AI question. One of the features of a large language model AI as I understand it, I'm no expert, is the ability to read into contracts. And then together with things like blockchain which basically enables to automate execution of contracts, are you seeing more of an adoption of those technologies, which you as a lender would get a much more real-time view into a customer's contracts?

Well, we have to be a little bit careful because all companies, we have AI policies and things and there are some shortcomings of AI even as it continues to evolve, especially given hallucinations and other things like that. But where we're more involved is in these investments where it is in these companies and machine learning and the large language models and data analytics and automation solutions aimed in more unique use cases and applications. I'm stopping short of saying this is something that we actively deploy or can deploy right now, if I'm answering your question.

Yes, you are. Okay, great. Thank you. And Mike, welcome.

Thank you.

And your next question today will come from Paul Johnson with KBW. Please go ahead.

Yes. Good evening. Thanks for taking my questions. So I just want to make sure I'm kind of hearing you clear on it. You made it pretty loud and clear about growing the portfolio and probably using leverage to do that. But I'm just curious because over the last year, two years, a little over a year, the most of the discussions on the calls were about kind of reducing leverage back down into the target range and less attractive potential markets to deploy into. So I'm sensing obviously a shift here to where you're going to be more comfortable with taking leverage back up again now that you've kind of reduced it to a more comfortable level. So just want to make sure that's what you guys are messaging and what I mean is it based on credit issues that you believe are more under control or a lower level of unfunded commitments that are out there or is it just simply just the vintage that you’re seeing here in 2025?

Yes. Paul, good question. Let me start. So I'd say that what's fundamentally driving the kind of the outlook for portfolio growth is, as we said in our prepared remarks is improving market conditions in the venture capital markets and then improving demand from high quality companies that meet our credit underwriting criteria. So I would say those are kind of the primary basis as we look to what's driving our commentary about portfolio growth. It's just it's market recovery and it's the quality that we're seeing, which we did not see over the last seven quarters. So I think absolutely a change from our perspective based on kind of again, the market conditions improving as it comes to leverage. Let me just be clear. Our leverage right now is artificially high, as Mike said, because of the magnitude of term debt that we have outstanding. So inherent with our liquidity and cash position right now, we can fund a fair amount of portfolio growth with just the cash we have on hand with no material change to our leverage ratio. And then as the portfolio grows, and again, we obviously have to factor in prepayment activities and things like that, then we would see our leverage ratio increase as portfolio growth was in excess of again the cash that we have right now. I think to Mike's other comment, one of the challenges of venture lending is the prepayment activity. As we said, one prepayment a quarter, if you look at where we are right now, given our continued prepayment activity of outlook for one a quarter, we don't have the revolver to pay down. And so we need to have a better balance between long-term debt and revolving debt. So when we have those periods of prepayments, we're able to benefit from reduced interest expense, pay it down the revolver, and then wait till the portfolio fundings come redeploy. Then when we get to higher overall utilization of our warehouse facilities, then we look to either going to the term markets or to the equity markets if the stock is cooperating to replenish and balance it out. So I think it's going back to that playbook. We're not there yet. We've got a fair amount of liquidity deployed before we even talk about increasing our leverage. But again, if our assumptions of portfolio growth and muted prepayment activity come to fruition, then we'll see that slightly higher leverage tick up over the course of the year.

Great. Appreciate all the clarification on that. Very helpful. And then just one last question for me. I mean in terms of your fintech investments, particularly, the more successful ones like Progeny [ph]. Just curious, kind of in your mind how many of those companies are dependent on bank partnerships?

Yes, if fintechs in general. So I would say it's a. It depends on the type of fintech. So to the extent that we have lending fintechs then they have warehouse providers and I'd say the vast majority of our lending related fintechs have multi syndicate or multiple credit facilities with syndicates of lenders. Progeny, for example has actually tapped the securitization markets before. So those are. We're well positioned from that perspective as we looked to our payments and other related fintechs. Absolutely. That is something at time of underwriting we're very cognizant of. I think the good news is because we focus on venture growth stage companies, these are more proven out, more robust older companies, they've had the benefit of track record to have multiple counterparties on the banking side across geo, so well protected. If these were earlier stage companies, that would be more of a concern. But again given the venture growth stage focus, less of a risk for our fintech portfolio companies.

Thank you very much. That’s great.

That concludes our question-and-answer session. I would like to turn the conference back over to Mr. Jim Labe for any closing remarks. Please go ahead.

Thanks, operator. As always, we'd like to thank everyone for listening and participating in today's call. We look forward to updating and talking with you all again next quarter. Thanks once again. Have a nice day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.