SSSS - Earnings call transcript Q2 2024

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Operator

Hello, and welcome to SuRo Capital's Second Quarter 2024 Earnings Call. My name is Melissa, and I will be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions]. I'll now turn the call over to Evan Schlossman. ahead. go Please

Evan Schlossman

earnings that by our or industry impact uncertainties, from in plans, be and statements. Please in risks, customary joining available or Replay our condition. our in and and recorded release are of and call by results Presentations. reproduction differ conference for SuRo strictly information live today's I'm future also under call to economy is made our actual market remarks Events to reflected call disclosures is results Allison regarding website, the is relate of not of business, condition call. and Mark prohibited. I form included corresponding future These Relations, in of intentions slide performance future forward-looking Thank and like This Today's expectations suggested to today's or today. Investor call our broadcast Statements constitute materially which to www.surocap.com. that property Chairman us website today's SuRo and a today prepared press forward-looking the or on involve issued Green. Officer, being estimates Financial financial this the and the information. management guarantees financial of attention that the your Chief today's of future joined global statements, a any performance any would call is Klein; in detrimental Capital our volatility number unauthorized and portfolio to presentation including may is press you by Chief on note on Executive webcast and Capital, www.surocap.com Officer at to statements our release or forward-looking our the may the companies, could events cause

time to in to, do Actual forward-looking update factors, time SEC. such of does required the to a from statements filings statements company's not those including, of limited but so results the from differ as unless forward-looking with materially law. a described may Management the undertake by those result number not in to

of sec.gov. filings, please www.surocap.com at latest copies visit website or obtain our at the in SuRo SEC's To website SEC Capital's

like the I Mark Klein. Now turn over call to to would

Mark Klein

Thank for afternoon, to SuRo share would and thank Good you, us. Capital's We Evan. results joining quarter you the XXXX. like second of

seen quarter year. second as positive the for equity cuts of with change U.S. rate increasingly to sharp market the sentiment. and confluence in as the in onset not volatile, The led investors markets factors in of was investor March in of a spiking and the VIX But since prospect last the quarter levels economy confident became of of the COVID become to broadly A has later week, domestic global XXXX.

below and construction, and for on when time employment, manufacturing jobs data the disappointing growth Thursday's unemployment. XX-year job a treasury were Last exacerbated February. since first on report X% Friday yields decelerating pushed U.S. showed Investor rising weak fears

Outside of the in investor lines on AI. ongoing U.S., Middle unexpected East. for as uncertainty their issue We the weaker-than-expected some Bank technology the of guidance companies geopolitical also skepticism investment week large-cap hike monetization fueled Japan forward an conflicts rate time for last driving investor in saw

reached increasing said, XXXX. QX venture both interest According PitchBook-NVCA private since levels count interest. of highest Monitor, With companies multibillion-dollar deal several AI capital to raises, in see technology that the significant their QX Venture saw With QX, value XXXX from to investor quarterly continued investors. and

of total billion financing same xAI's source, financing the deal quarter's the up along made $X.X fact, debt with $X according value. to Series C Series CoreWeave's XX% billion In B and over second

into invested have SPV. an via to pleased the are we CoreWeave round announced, previously $XX As million funding

AI integrate investment to $XX suite. a in across Canva, which to addition continues its million In product

mid encouraged of performance Skims are increasing and markets as to despite we early of see with that broadened set of Chime appetite signaling the public for the have the and and While such we recent volatility started struggling technology companies the cap marquee public increased, performance recent Kardashian's positive markets, investor to IPOs indications [ small ] from potential companies names. upcoming has

We late-stage IPO For strengthening quarters, have existing portfolio these the Death deployed capital reopening we compelling the last several CoreWeave, entry investments companies Liquid positioned at well the already Canva of window. are the into such as technology and that for prices. believe

up to I in X% Board initial market announce I an a notes discuss Directors. approved XXXX. notes we note repurchase like yesterday amount placement, note in in the remarks. to during up to in by $XX to into XXXX that to an the our via would also amount million. repurchase have Under of repurchase $XX due program issue discuss prepared agreement convertible like purchase principal with in program, million of are issuance due her aggregate institutional aggregate Allison program authorized would our the our to to which X.X% principal open will with now million us we up note entered private of allows $XX of investor

notes well We a for convertible position number of believe us reasons. the

First, a shareholders. the significant XXX% our at this transaction our converted, from meaningfully If in $X.XX be our accretive notes would to share, are premium signaling today's per confidence from closing investor. convertible initially approximately portfolio price,

of the debt of a Second, X to our the capital. our extend portion will maturity years, ability notes deploy by strengthening

believe the favorable. given is purchase note of prevailing rate prepared the Allison highly during her remarks. we interest X.X% agreement rates, interest discuss will Finally,

$X.XX per $X.XX per last year. Please million value Turning net second in to net the quarter asset or value of Slide of QX and to quarter our per share in to X. ended $XXX.X NAV We of share results. a QX asset compares turn $X.XX share. This a with

to I cash first position. Turning highlight our positions, our top will want X to

Blink Locus of positions the XX As portfolio for CoreWeave our investment representing gross These of $XX.X Health, Learneo, value. top approximately of quarter ServiceTitan as for of at XX% available were our and Capital's investment end, assets. approximately positions accounted million, XX% is fair cash SPV, SuRo X June Robotics.

as excited Save increase to greater Blink our top discuss looking proposition like lines XX create Health's positions and Quick portfolio. I on Additionally, detail, investments of pharmacies pharmaceutical Health. Blink find bill chain to starting relationships would in way XX, partnerships June manufacturers the increase of value now around value continues expand best first coming significantly to to believe with Health positioned product. ] medications. years. months looking is Blink to in Blink with about base manufacturers XX% additional for company distribute approximately Save well a some customer of investment while Quick pharmaceutical our from with price accounted with the significant and pharma their the positioning maintaining U.S. for to We [ rates the and product BlinkRx consumers Health's market the entire all to the larger and remain its signed the the their SaaS

investment dominant of in investment a Patrick internationally Ronaldo Soccer given metrics recognized one like leader Body our is best-in-class combination with in performance to how Next, variability consumers its find WHOOP more. choose recovery of and investors, Manning, itself our WHOOP in one day. WHOOP training specific fitness user recently We several Eli allows as discuss Weight launch the success Scottie sleep an partnerships including more from a Health. Cristiano leader band ambassador cement proposition heart like features ] Phelps, to to wearables a of from. and Mcllroy, Connected wellness insights Rory and largest greater These brand most press value I WHOOP's may Slide incredibly and a users Star, according WHOOP, continue trends WHOOP to wearable an resting XX X. partnership affect with by to to position. remain Withings, Home's, on optimize in and the Ronaldo, The ability about path announced another continues software wearable category. Please WHOOP's of perform [ Michael even would to heart space, to actionable The becoming create and to in lifestyle rate a the Composition turn excited May. and to and operating Scheffler WHOOP'S for of announcing global the behaviors to provides feature health and understand release rate. as

online has second to discount to to made design significant $XX Canva, Canva reported empower as investment Canva broader during investment the tender. is primary to million on ecosystem. terms a at in itself an in As last into Bloomberg, further design. productivity in company previously initial Since a the the software According valuation the platform a we came strides made discussed, Canva's to of mission collaboration with the company significant similar world design quarter, financing. tender the integrate our everyone the

platform. to of General Canva billion services worldwide $XXX Artlist Venture Bloomberg, company sales equity directly the annualized to from a billion partnership Catalyst, localized year-over-year. allowing has surpassed Iconiq and integrate investors, company including HP July, the For creators to in rate its with revenue options. In expand raised digital design XX% Artlist collection over $X.X print at a announced announced example, partnership to from Canva with Bessemer Canva assets PitchBook, May, royalty-free the in growing printing a has According According with more. financing to into in Partners, through

about excited its captures it markets. Please turn and further as footprint market positioning traction in international Canva's are X. We Slide enterprise and the expands to

from CoreWeave's or X training GPUs, a stages output using in of users. To of computing SPV networking critical foundation serve clusters made LP we coupled solution. a Opportunity cases is model end investment is that NVIDIA suite in its CoreWeave flexible fast groundbreaking connected shares. a offers cloud CoreWeave phase, quarter, second providing a and Series to AI infrastructure. initial ultimately C the and learning the delivering access preferred training during computers the distributed provider for Additionally, $XX is CoreWeave NVIDIA's machine million use and with for specialized cloud InfiniBand invested [indiscernible] and Quantum to CW

up CoreWeave of X using solutions speed with one offers GPUs. times networking the as powerful NVIDIA as seconds. most short Additionally,

In company to is a CoreWeave fact, generalized according X faster provider. a platform major cloud Service Inference than blogpost, XXx to

internationally. momentum. in announced month Blackstone investment be grow facility by capacity the an agreement according at U.S. release led for to continued CoreWeave's managed by further debt will our in used press This participation CoreWeave both and a AI, large its CoreWeave billion to financing has Since serve Magnetar debt the early impressive of forefront to with from that May, company Coatue. enterprises $X.X and Later funds

cloud X announced plans XXXX. CoreWeave to according investment best-in-class has $X.X to on Norway, to addition its release, financing In early raised and will company again to of adoption. Please we by portfolio company investors their growth a inference, Fidelity, Magnetar One from its open and in With turn and U.K. announced and end of equity in Slide in EU Coatue, X. press the in This Altman. highlight May. billion Spain accelerated over exponential is -- like expand by expansion PitchBook, Page our we'd capitalize its Sponsor is in debt June, believe such the AltC CoreWeave LLC, $X to $X.X sponsor billion the to centers led expansion and new Sam data invest AI CoreWeave According others. additional continue Sweden SPAC billion to

combination As business Oklo, during the previously discussed, power company. clean fast QX, approved a vision shareholders AltC acquisition, with

May, Oklo are to our data press the one company Hyperscale partnership sustainability. state-of-the-art always month, completed significant including forward few Oklo power nuclear clean data exciting recycling of XX-year this announced reasons. effectiveness potential release, of to purchase is late announced in and a on business fuel uses, with press happy cost AI-related its recycling, edge the add to is Oklo to of which many a process, the company has according release, a we centers. In of marking advanced clean cutting fuel a agreement. supply step XXX part for While power combination, energy sponsors SPAC center according with a Last to enhancing Wyoming the the megawatts as successful campus demonstration to its fuel particularly

infrastructure on Our AI. investment thesis around the focusing specifically first been of delivered, AI has

the units. Transitioning gives us public CoreWeave the AI combination the to AltC through exposure and X Opportunity foundations to Oklo, our investment new the of structural further in now between plus LP investments. CW Our business

value. stability As in our public stated, is this to lockup trading. given like approach, holding restrictions that previously positions their reiterate restrictions position SuRo's line our end. I our PublicSquare expire, public with when expire shareholder we it position's commitment monetize as to would subsequent and is further to relative shares objective a quarter's In began lockup sell to to also initiatives enhance in there

deployment tender Given offer of recent in compared discuss of our the is remarks. and capital. discount auction her the value stock we asset to tender was prepared at per efficient traded Allison net accretive results Dutch an believe modified share, the offer our will

drive investments Chief with well recent and it Allison, you hand over Officer. positioned we shareholder are Financial believe I we to Given And to return. Thank broader will for portfolio, that, attention. your our our

Allison Green

you, and during financial Mark's update Thank I XX, like QX to more results QX. activity of quarter would detailed with of investment tender June of and including Dutch results our the announced Mark. modified review follow during offer a second executed auction as

I'll on detail X.X% Board repurchase program current provide the more note and note liquidity. Please X. agreement turn our repurchase Slide Additionally, and to approved

X C Class As Mark SPV in investment quarter, an in and Opportunity shares we is LP, a common that CoreWeave's shares. mentioned, in Series the a second million interest million investment through transaction invested during preferred completed $XX the Canva's $XX CW secondary a of A

interest in PayJoy in proceeds Capital approximately of the membership second Architect net $XX redeemed quarter, million. our resulting During SPV we

approximately in limited our and net with our for ended fair The X% We driven in the an of and of alternative a our decrease portfolio as the financial Plus. Please Subsequent partner Approximately QX XX. Please share quarter a July approximately share investment resulting the True $XXX,XXX the value. decrease approximately Sustainability from increase reporting. per X during quarter Data, for decrease portfolio as $XXX,XXX. Please XX. of our accounted our to from respectively. share a companies. in share our allocation of tender NAV of per offset investments $X.XX to June consumer X category the received to turn XX, top investment investment accounted a NAV investment in turn of Segmented in also X. began to the themes, approximately portfolio. repurchase unrealized of date, our end turn energy at cloud XX. and value fair XX. financial was of XX% fair with resulting We we value The related and net approximately $X.XX impact following loss. And compensation of end, common from per and invested quarter. was consistent lockup per of depreciation and investment per at were the share a technology distribution was XX% Ventures sell to common of stock second partially NAV offer have X% on to the during per general gain XX% AI, approximately portfolio XX% in Slide of expiration categories social, share by portfolio sold our shares portfolio, stock-based quarter is the $X.XX, in primarily quarter shares to realized of $XXX,XXX representing of which mobile XXXX largest Big by XXX,XXX decrease our increase and to fund our $X.XX due public next recent to we related from share $X.XX technology Global $X.XX by $X.XX Slide Marketplaces PublicSquare of the To PublicSquare and proceeds, per their portfolio education with for June of of was Slide the

shares As expiration shares per at XXXX, fund per be properly of following than that tender offer of $X.XX of repurchased February mentioned of of the Mark, that shares, purchase October X cash. Pursuant stock Accordingly, cash using less up common The our $XX.X is fees on stock our shareholder offer, X terms March initiatives repurchase yet price $X the April price pay auction not of greater the under of to share of by on by like Dutch X, the may would authorized tender per tender for in repurchase than on a commenced to approximately enhance million. to per at available of as is a through we program $X.XX tendered million not related and is value representing the per XX, which Capital SuRo of to share the outstanding XX.X% to modified asset available share approved offer use our and XX expenses. tender a committed increments XXXX. share $X XX, and Board million SuRo offer, the net of shares per that shares. the February to and Directors XXXX. common also purchase shares dollar purchased The XX, share, share all the X.X% value note I We purchase common represented price stock share share to Capital program value. of

the executed entered provide due of purchase maximum the million to to in X, a purchase on to of and notes million issue pursuant notes to aggregate notes. convertible Capital may XXXX, agreement, like we we XXXX. for an amount convertible detail August Pursuant purchase up principal to a agreement initially convertible agreed principal I'd sell to On of Next, X.X% X.X% issue note note which due agreement XXXX. amount to purchase the aggregate agreed more $XX into note up $XX SuRo purchaser and the

Thereafter, time issue acquire $XX sell and the about initial notes terms a and or the modified to with private maximum million we additional up we and thereafter and notes and as the agree us, date, and mutually purchaser purchaser one purchaser additional and notes $XX or more aggregate notes. XX, convertible offerings we notes to XXXX, upon offerings. such and issue million and up or will any new for of additional the the on to August the The will issue of at purchase between in notes may both mutual for pricing additional agreement subsequent sale

time August beginning arrears XX, a the XX, September will redeemed notes a per shares XX note may XXXX, conversion convertible on of in sole in from stock with XXX.XXXX mature at our of common whole proceeds equating in purchase The as convertible after share, XX The notes the investment December at of rate year $X.XX an convertible quarterly or the make will upon adjustment agreement. representations, August the XX, of March objective and note time common repay XXXX. be of warranties corporate XXXX, and by on on conversion June in our XX, X.X% part per used in net or be X, The purchaser's per to convertible time and initial September customary investments any our of fulfillment conditions. notes on amount purposes. Interest at the at option to from stock be or investment other subject and to The our rate into convertible shares discretion will $X,XXX at certain notes strategy covenants purchase principal will of indebtedness, accordance the provided outstanding offering be to for agreement price general and the paid company. includes

notes XXXX to XXXX which approved Securities Act of with aggregate through amended, I'd SuRo XXXX on XXXX, of principal Additionally, of the repurchase On XX.XX% as market like in our due us allows and Board as of amended. X, $XX program, program. manner open detail provide note as amount of to X% a in provisions more the note August block Act comply discretionary or transactions, Company up such will the Investment including purchases Capital's Exchange million repurchase the repurchase to Directors

X% not August of any XXXX, due note repurchase yet program. had notes repurchased we of under XXXX As the the X,

comments. Capital's approximately unrestricted are currently, SuRo At and review to common concludes and ended to with interest moment in including company's approximately a take stock liquid your to We XXXX, June million the of XX. $XX.X liquidity Capital. assets, thank approximately shares like position million of would June $X.X public for of the I outstanding. That you XX, cash would $XX.X as SuRo of in support Finally, like quarter securities. and there my million XX,XXX,XXX We

start I'll session. the of Now call operator the Operator? over Q&A turn to for the the

Operator

Fund. from [Operator a Mac of Instructions] Sykes We Gabelli have question

Macrae Sykes

the the the rebuilding wish for mix. wanted some in congratulations to just you team innovative on companies portfolio. I Certainly

Mark Klein

you, Thank Go ahead. Mac.

Macrae Sykes

a cycle Actually, while, just I and questions from but I ask one I wanted have question, about since sub I know it's wanted I'm the to X that. IPO been to -- limited to

So just them. ask

then for an may you is typically the that is the how what that typical realization? And balance lockup First, of the long on realize for IPO, percentage the of opening? typically kind

is what's company $XX gain a And point and paid And retained some timing XYZ realizations? then this to last the by then then at assuming of typically, out investors? the my dividends question on shield around company, gains? any is potential what offset to And million is carrying the following tax company what is

Mark Klein

to way best ask question. the one That's

So supportive shareholder. kind thanks and the for of words all, thanks -- first being for a

part I before and -- think the in kind IPO it's last up September, of early the we now, see well of would QX certainly going was gearing the of in cycle, into anyhow. think right expectations ramp-up in pretty entered we're documented as market, summer the week IPO I the the you see exited to still sort press which the the of end

think what's with that's consistent broadly I out So there.

additional Specifically traditional up typical IPO or in are for what's locked typically is any months. X shares

So have towards IPO [ -- the in way, traditional would occurs. ] we X direct be. that liquidity Typically on that there's but after IPOs listing months don't

far gains of As speaking, distributions the all gains. as on distribute BDC, a we're required a basis, capital our generally functionally, concerned, are to as

distributed. be would those So

year amount actually as But think capital of we As don't at we losses. tax carried into far tax shield, shield. I this look as the a anything some

in So dividend exhausted, those be dividends. out position. When would against the losses we capital the losses. application first a obviously then capital gains would And would be of have those we capital pay

communicative very out we the have lay our in for Thank ourselves as to past, pay find position we we investors dividends. in are We will strategy the and dividend it you. about been our

Operator

much. very you Thank

in queue, questions Klein remarks. over closing further to to any I Mark no turn would back for the like have it we As

Mark Klein

of for investors. have thank thank know call markets the team, joining you to today. our Thank I SuRo want chaotic. the I the been a everybody all from bit

much. and you the very time to be took today, hear supportive. to appreciate So our you story I listen that Thank us

Operator

Thank That conference. today's much. very you concludes

disconnect. now may You

SuRo Capital (SSSS) 7 Aug 242024 Q2 Earnings call transcript