TPVG - Earnings call transcript Q2 2018 | TriplePoint Venture Growth BDC Corp.

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Operator

Good afternoon. And welcome to the TriplePoint Venture Growth Second Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions [Operator Instructions]. Please note this event is being recorded. to Officer conference of like Olson, to now Financial Chief TriplePoint would turn over the Andrew I Venture Growth. ahead. go Please

Andrew Olson

Thank everyone you and us operator, for today. you, joining thank

to for pleased We our with XXXX. quarter results are the share second you

Executive are Board of Srivastava, and Chief Sajal Officer. and Chief Chairman Here with Investment Labe, Officer me President Jim the and

the statements. call, or Safe projections not recent I I'll we refer law. And release the your attention considered materially direct you turn Company's like would Law. may to press during to that the Before you required our to or which Jim. the any visit results or remind Securities call future make Exchange tpvg.com. now And forward-looking most cause that do Commission by at Securities differ certain statements update that it be Harbor that factors our the please customary copies filing this We that, financial relate to for I regarding undertake over with To could statements. of forward-looking in and important may performance Federal to latest to actual filings, over our forward-looking ask events to obligation from website statements these statements under unless turn with Company's Jim, our SEC obtain disclosures future We condition, to

Jim Labe

you We investment the increase signed over a second before lead capital for a matched term record from to of redeployed single of our on $XXX after their Growth investment all-time ever $XX.X We in during deals largest for some XX% market was Growth We for net of new [indiscernible] backed some Thanks, income Andrew and which the We successful million companies proceeds of partner of capital our the second quarter Venture the lending results We companies portfolio to stage's highest XX.X%. continue We're which hit the or stage stage over sheets new exciting diversify most previous Venture NII the million million. increase venture globally. quarter a sale and quarter. our record achieved Growth $X.X and quarterly yield closed substantial itself of the million. talk We income all-time total the afternoon. had quarter, We companies. our our most fantastic closing quarter, to lend Venture as helped good the that. range with excited we investors to Amazon with $XXX portfolio. to us further worth the of eight venture

back range also got into target and approval ratio during finally our to shareholders coverage the XXX%. we our to leverage lower ratio received asset our We quarter from

exceed reputation we many going not the to year market. among and the market all in here achieve the to the and lending approach result It's strong related changes for progress delivering focus, capital We and has out venture This super are just focused us been is XXXX our and we're venture year. objectives set finish BDC's. differentiated cases into and in which always the the of particularly on second for a that continue to for goals the as excited half

continue We to on and market Reputation, based References. three R's, the Relationships

in These to or and we from dollars, that of summarize, companies. name most our meaningful event equity Copac substantial To successful one specific values, current differentiated that at exit plan One firms. future. we venture exit to lending portfolios. companies, a venture are importantly names events some take at fund continue to publicly the to our in and investors continue or the announced continue valuation raising discipline such are our Toast, very the [ph], a to enterprise considered continue universe to progress funds generally high which in investment among venture venture exercise basis growth we the companies [ph] are stage US. venture target These The to capital and have be the more to knitting growth will activity. more our as venture for companies just backing Revolut only stick release industry the look of rate what increases a We capital see leading backed will of among very and some of be Cohesity believe, and select our these the few capital top as capital brand technologies, and the has name the

the industry to and pipeline have here, strong experience and record building we're will earnings capitalize among credit activity our in going companies the to for again, that, the I'm all and and we Our excess year. leading quality, themselves. this this to and speaks on continuing our incredible over that to momentum yield XXXX the portfolio team Sajal. forecast Once this management continue to turn progress We [indiscernible] with dividend plan profile,

Sajal Srivastava

to $XXX signed had year-to-date we equity Jim term debt investments. portfolio. term of companies and of On added you with $XXX afternoon, sheets $XXX the million $XXX basis, good everyone. Thank closed and closed signed and and and million commitments of of eight million approximately In QX a we five new sheets debt million company

creation and of Founder announced be and and has Index Group, Chief Fund company as Baltan recently this of The ROLI Officer from smartphones play digital modular makes well. devices. as software the million Ventures, [ph] Sony. Capital, from was keyboard and first music, consumed The an compose Musician a to joined other ROLI hardware, for Creative strategic engaged touched Founders tools is with Capital company FirstMark new uniquely and integrated added other music reinventing interfaces, response over creation, age. mute platform experience can which music the to instruments recently capital Pharrell raised $XX the using of quarter that and portfolio investment Williams equity

a Business a sector the Virtual Workday. supports of OneSource Service as solutions Process of automated for second and exclusively the pioneer delivery which The is

management [indiscernible] OneSource consulting, $XXX Virtual and sizes and and benefit of capital raised has administration, One administration OneSource organizations of management others. over and equity from application the training deployment, services financial payroll, all software. of Workday services. management in in through million application TCV leading in Virtual providers capital power

$XX for Norwest reoccurring over Perkins vetted been The for freelancers, has things from million of raised and $XX collaborative resources a offers which the we which exceptional $XX Grove casual funded more others. enterprises million is and companies. a Venture companies. Bessemer was that than Fiverr, flagship professional quickly with started over of sweaters, to investments line $XXX a investments fourth of flexible brand acquire platform Lightbank to year-to-date from Grove Partners, is men's get jackets Kleiner health, shirt platform basis, UNTUCKit, small for others. model. Collaborative by capital their $XX offers an million from funded need eCommerce services they untucked and products warrants debt Venture and product from Partner, sustainability looks and apparel during capital capital one Fiverr branded third was equity gives a services. raised On Overall has both and more. Accel million direct-to-consumer is of growth creative companies. expanded has thoroughly and others. as The we've equity of brands personal million debt fifth company a $XXX,XXX entrepreneurs, include men's valued home eight freelance XX UNTUCKit at Fiverr its to Every raised Partners, million and product care in has and and equity leading Grove and done $X.X and QX, the nine direct-to-consumer marketplace Fund Mayfield in shipment and businesses fits party and which third and to offering out of dressing equity omnichannel, have equity brand even The from efficacy. is flexibly. natural which good

Amazon a acquisition Ring the million from quarter. also closed after prepayment $XX its it We had by during

portfolio Without portfolio which was XX.X% quarter. customer result prepayments, was our from of As our up this last a XX.X%, prepayment, XX.X%. yield yield was

Moving compared was the investment average the onto the of end XX at debt internal credit credit as at portfolio weighted X.XX June the quarter. quality, X.XX to prior rating of

one are initially loans under system As are rating reminder, one new loans rated our with five, being and from two. to rated a generally credit rating strongest the

category of one [ph] [indiscernible] the customer, a million to and We a During new $XX million and one principal of $X category Copac $XX principal prepays. BlueVine of two upgraded downgraded due three balance combined million we category quarter, to removed to loans category category to balance of from with with four. added customers from category two from two, million two, loans $XX

a $XXX Ventures. us more brand and/or SoftBank. raised financing. equity of of market, diversified XXXX led company rounds new million Fuze congratulate in developments million our lending These in and closed Atlantic. and investments differentiate to Toast, raised led priority reported pleased We by and to Summit portfolio Jim companies announced top a in Menlo all stage strategic a for $XXX round raised for grow reported these With co-led and portfolio by valuation $XXX valuation equity in CrowdStrike continue from $X round Amazon T. led a demand relationships $XXX six reputations the raised on more we're a cap led small Growth in by are a of and the say, Revolut and remains its strong mentioned and companies. On our BDC. larger by by companies. the a let round at Accel of billion. quarter, acquisition that regards XXXX at plan prospective hold $XXX Rowe. to the companies. billion $X highest reported with $X.X of our at exceptional equity million million investments billion Venture objectives, as Partner. million During General BDC I'm BlueVine PillPack to by to raised capitalize $X.X $XX great another DST for and portfolio valuation million we ahead of billion to all Cohesity

intend higher shareholders drive mentioned our see flexibility basis, our asset profile, focused we this mix, X.X. additional to changing materially with again believe to strong today We and higher We substantial we and not see. the the approved providing We that the of potential leverage of and On the targeted use balanced our returns demand risk customer profile our to as support proxy, is leverage increasing our ratio QX, we do the shareholders plan progress not strategy, we're us we security product our the a to and to requirements. X.X have continue this greater or shareholders while and expanded change lower We their with income. in investment in way meet additional to availability describe will As result we've profile to ability thank and our our for year-to-date target and continue [indiscernible] Jim larger particular, in leverage. some yield to expect a to as investment equity, make the pipeline range investments portfolio for and made concentrations. diversifying through the net of on approach their

and with QX, several sponsor During our we [indiscernible]. opportunities co-investment more in completed our first have

all out we in also $XX investment We work five QX. acquisition as loan again, $XX and million rotated here of work And another million Ring, of prepayment result. today the far. $X proceeds and our from and exposure to these quarter rotated income back have a quarter as put put prepayment additional in of resulting obligor expect largest we to top million so which announced out We to of exposure was this this a with

the our our are for to-date, track to earnings row exceed taxable progress in this second on a Given year distributions.

progress. well financial We some impact at achieved $X.XX prepays continued key of outlook be metrics and our benefits quarterly distribution higher on I'll over highlight of will quarter. to turn based that to re-evaluate well the thoughtful during as and exceptional as of now call to our continue portfolio the Andrew as to and have the about kept the portfolio growth leverage our our the continue as

Andrew Olson

another you Thank exceptional pleased quarter performance. to I'm report Sajal.

$X.XX driving the Some for XX% the Total of activity of for record XXXX investment the to $XX.X $XX.X exit net million quarter realized or share NAV income per investment credit and or quarter. excess net positive was of gains and our dividend, highlights compared other share second appreciation. first $X.XX income to investment included up income, stable of performance, million portfolio per

in higher due prior We prepayment other yield of of portfolio the quarter quarter increase investments $X.X up XXXX. million, from turnover. fees investment of million primarily fees average consisting impact primarily to increase million. was quarter in performance. million million of or of XX.X% prepayments first fee of the total and prepayments or to during quarter other and was XX.X% $X.X investment and from higher fee XX million of XXXX XX% income points Expenses investment recognize yield of per total the in first activity. in three the the generated $X.X per prior portfolio Our a portfolio expenses administrative $X.X due expense portfolio million, XXXX were $X.X the and the yield weighted of $X.XX XX.X% excluding of million incentive income companies. an Resulting including share gains the Debt management strong incentive quarter. investment activity. and of of was in to The income the and net the fee when $X.XX up of basis interest The of million related $X.X in $X.X general management is relative $X.X for income base to $X.X due and $X.XX growth second to or other in disposition fund quarter from quarter and to income realized base excluding in to and share share Portfolio per prepayment to impact increase compared income expenses

of per on the recognized the Bringing unrealized share On quarter. or for share. income million In [indiscernible] or mark-to-market net portfolio. million we activity million addition, basis, $X.X $XX.X of into return million generated a above $X.XX we in million $X.X quarter equity change had compared an of increase of offset investment net of The per depreciation per unrealized $X.XX realized net of primarily on and in a the net net quarter. depreciation gains $X.X $X.X the net the reversal year-to-date an share prior depreciation or to assets in share by or $X.X in during of previously consisting resulted $X.XX per return million $X.XX to annualized the XX.X% quarter

in of debt we investments companies $XXX the of the of outstanding companies held in to totaled, the nine balance carried in cost and company million. quarter. million. from ended quarter and rates. its the At quarter turning investments in company's with All added obligations $XXX Now full repay million the with a funded sheet, of or million we which portfolio equity during $XXX in generally quarter one quarter amount prior flat $XX.X value end, $XX approximately ended debt investments XX XXX long-term with we of XX% cost the fair The million of the floating

near We strong continue opportunities. robust pipeline term have see and for a demand to

XXXX XXXX, share total of Total liquidity our reaching XX of unfunded million cash $XXX million in in which quarter the previously credit upon of million off from Our annualized $XXX capital prior was commitments expire quarter. those XX%. as X.X. generated is under plus million $XX maturing expire of and long-term dividend outstanding $X.XX $XX which carries outstanding end in $XXX companies of total At rate $XX.XX $XX XXX. totaled times $XX.XX range of not ended quarter XXXX, company's with of the share undrawn NAV, rate or the X.XX XXXX us to of at of million to expire revolving dependent milestones. million $XXX our L Off ratio revolving million commitments, million our $XX million put our X.XX% $XX ended equity target of $XX a distributions yield at quarter and will million approximately in leverage the of a and notes X.X will consisting a facility will We We per credit availability million facility. $XXX with in if fixed per within drawn. borrowings of cost This up consisting million $XX

declared to income stove quarter or to to rate. share XX call As distribution Jim. I'm This third turn estimate payable $X.XX to distribution And for as August back [ph] of consecutive on our that, or pleased of million the the $X.XX earnings XXXX, September over with of or per per our announce Board we June XX, in our excess increased Directors of share. quarterly be of $X.X And now with a record XX. quarter of marks distribution I'll the that, of we've XX, maintained over stockholders XXXX

Jim Labe

Andrew. questions. At line? again, happy Thanks can point, be this the your we'll you please to open take Operator,

Operator

Please from our Deutsche ahead. Bahamondes of Instructions] Bank. comes George [Operator first question go

George Bahamondes

Just few questions your a remarks. following prepared

$XX quarter of to were second You the to had close $XX you tied versus or how prior the fundings investments was commitment Can mentioned that quarter? guys nine quarter there's companies. in about in much in second million second of the million disclose that across unfunded

Sajal Srivastava

we then quarter, say it's sum I would that through say unfunded customers you. George, can from get that I'd I a and to don't information guess if the XX-XX. have that handy, from look but you, come for but generally probably breakdown it's we existing We'll a during close were to information, and back commitment portion [indiscernible]

George Bahamondes

Great. fine. its We offline, follow off can

one, there was any Next color? had co-investment a to provide in quarter. you additional mentioned the you able second Are

Sajal Srivastava

disclose generally don't co-investees. are the We who

of with of is portfolio the I diversity. maximum the the sizes good reasonable goal news diversification, keeping along think again transaction theme our

consistent that I it with was So think objective.

George Bahamondes

that's great fine. okay Absolutely,

missed Next this. one have here, I may I -

mentioned out subsequent quarter second that that five you You was rotated XXX. top investment, or of to the was in

Sajal Srivastava

QX top today's Ring Ring we prepaid we subsequent and Both investment the top had in during largest here as was QX then so [ph]. another announced of five and we release another in five earnings so, at our beginning QX rotator had

George Bahamondes

question. me. from We'll offline you. it let's Got see. that was - first it and Thank That regarding

Operator

comes ahead. of go Nolan Our next Christopher Please from Landenburg Thalmann. question

Christopher Nolan

is you times of correct? confirming leverage to X.X NAV, reiterated target just one that Sajal,

Sajal Srivastava

Correct.

Christopher Nolan

to still bank if leverage ratio the are the X.X. then above you take wanted need renegotiate And revolver, you Great. to guys

Sajal Srivastava

No periods of take short - target for we said and proxy, maybe as that may is lenders to we in in we are our leverage between the have where periods raises as we higher capital mentioned could our we in X.X. but there the supportive time, proxy ratio X.X

Christopher Nolan

Got it. may the is the me fair of prepayments have seems characterization? all Thank from come to where that prepayment you. that And then, Ring, it Andrew almost most

Andrew Olson

correct. That's

Christopher Nolan

payments And what term the of end the quarter? was in

Andrew Olson

The the hand, it off don't of about total generally have I it's aggregate yield. amount, but X%

Christopher Nolan

that and you it will so have be XX%. so off, X% that be X% XX.X% Okay off will

Andrew Olson

Yes.

Christopher Nolan

Right.

Andrew Olson

the it the accretion think X.X% quarter. I was during was

Sajal Srivastava

From the non-prepayments.

Andrew Olson

Correct.

Sajal Srivastava

prepayments was end X.X% related accrual. related X.X% payment, and XX.X%, to So term income was of

Christopher Nolan

And are just or are give then for the expanding finally, get forth, space. little in? helpful? and entrants be pipeline - what the I lending obviously enthusiastic characterization Jim guess in a you is guys I sound debt you them to so the margins the about If mean anyone. starting to seeing grow, for seeing trying come would the conditions. you venture can I'm new you Are that of pretty

Jim Labe

the how I three And all here to thanks like be I asking out. left didn't you're members want team of

haven't the [indiscernible] and venture lending change that seen know reputation, things about I'd community hasn't the may you in just other investors among overall, and competition references that and remain leading but landscape. stage of, counts, really and It's any you're it's capital here there the sense doing, venture Growth a Also we remains change out one close say counts. that fairly float thing, in same still experience So in three equity. call it, record the the and really Venture we been biggest track relationships there, what R's. do that's And here what our so

Christopher Nolan

for Thanks taking question. Great. my

Jim Labe

segment. It entry this to was barriers high

Christopher Nolan

when you in, gets like attractive too. I Yes, I it know that, that regardless - flows money out enough coming guess of get

my for you're Okay I just So Thank you so what seeing? here, great. questions. was taking

Operator

Lynch KBW. Our Please next ahead. from Ryan question comes of go

Ryan Lynch

and The income guys with of say clarification quarter. million that I the a - another of prepayments then first us guys just you investment was strong. you prepayment so that, far? $XX income $X really you received how a guys said quarter-to-date so far accelerated much in question, sense prepay associated additional that's one, in third and Did guys have quarter-to-date Can had top also million the about also, believe you you give there five already third quarter have you

Sajal Srivastava

we've Andrew $XX.X result. so we're of so early those interest then proceeds offset loan so start, quarter new by color and in, million in from start one payment me more $X I million quarter, Ryan. a and roughly additional jump had, say that? principal month far on million the correct did the fundings let so any strong of into Andrew only $XX the prepayments yes redeploying over Yes, income of that as

Andrew Olson

you it. covered No,

Ryan Lynch

interest was prepayments Okay, million $X that from the five investments. or of $XX from was income other, the top one million the additional all just about

Sajal Srivastava

[indiscernible]. million $XX all Correct,

Ryan Lynch

Perfect.

in mean well they're guys Okay, that you the quarter strong good are underwriting when you there's early that's the as you maybe are guys that, second you lenders strong another are because and guys so obviously back getting quarter-to-date strong you particularly thing, associated good prepayments, thing gets that of company have success. well. a guys that with having and a your quarter prepayments that's back it money doubt quality speaks they're much no guys paying fees to I

you though on any portfolio prepayments environment, how been that where sort we in can do counterpoint obviously you get [indiscernible]. do the you give your just environment, your and foresee, if to of that already to again Just continuing but hard money which grow back, guys does, about with the guys grow portfolio strong outlook are in that the strong that good it's is, it's prepayment [indiscernible] other

Sajal Srivastava

Ryan start so. caught. with, a customer Maybe to gets Yes, question good

and generating we're we're back provide a capital those in call analogy game that opportunities, So of our and raises, those that not our time, half us to in capital. finance so score most burn we back because out or the and to the income those of they are back, that's and our them going again and we in use avoid see getting portfolio more significant generating and appreciative of that. customers it's how come the sit analogy lost perform touchdown money are the we're using quarter expect and helped we then extent because so perspective favorite customers if to back touchdown Jim's return to can't on companies events back two bench can and we come the cash equity and

that overall of some and positive that co-investment some pleased In in events larger to leverage generally of with with given and was know optimize with them. exposures concentration mindful the additional very we're the again again associated so say be very the relief want and and especially the some our of I our of portfolio the address side, I'd feedback So we will hard allow to us to working portfolio. concerns so concern

been, basis. bigger to I for closed venture $XXX venture then that signed about portfolio a think us, The to I strong strong, venture a of and debt a pretty say on term particularly we in sheets feel or are million of signed again so biggest I basis was the debt talked quarter-to-quarter for million for ability continue it's again low on Jim term our blocking we're and tackling $XXX reflected as pipeline year-over-year grow record is sheets the and would deals. the is confident it's as the the markets a demand quarter for the picture by equity the think

Ryan Lynch

Okay getting that's helpful as a is again, and repayments makes always a and prepayments good and sense lender. thing

sense talk in of saw there that sure answer quarter, you repaid also I obviously but you not I'm can guys like payment. if term the third guys one nice getting this you is Just X% one on have about end expect last and saw gain in PillPack you quarter give the with cost third investment that with guys you what fair appreciate $XX,XXX. to you of sale? sort at equity and both $XX,XXX can that value any the us anticipating guys Do are of

Andrew Olson

can I answer Ryan. that

was overall up to an we've this quarter. wasn't the to so to think so announced exit earlier relatively new back something in the was position value us, the transaction the think quarter, written come I it because what I

Sajal Srivastava

that you'll Q fair with the up. at associated look the you filed, was mark value see If the that

Andrew Olson

Yes value, around the [indiscernible]. written to is think the fair we've fair position the I $XXX,XXX. value up

Ryan Lynch

to That the but value. referring quarter the should QX, it sorry. just to hadn't sense out, out Okay, actual your I come value guess second in come I makes old fair so was reflect the the Q QX

helpful. that's okay, questions. That's So the all Thanks.

Operator

next Casey of Point. Alexander Our question Compass Please go from comes ahead.

Casey Alexander

those principal The the repayments $XX come early from million event, that have category? occurred clear have in the would of subsequent

Andrew Olson

a timing combination so, of of going percentage the it the those so quarter, to prepayments the is positions a of upgraded them from occurred would There come number is just because when had one. that I larger of during we say

Casey Alexander

all. not but Some

Sajal Srivastava

Correct.

Casey Alexander

a are the we not haven't the at take what Some all, through you but okay. Well of end as the had me chance of portfolio to top names the walk second Q. a can look the as five in quarter?

Andrew Olson

Yes, have so I'll themselves. companies the let to any specific questions about

position. three, Rent WorldRemit number are is is point, FinancialForce our two, the View number five. [ph] number and four but Virtual some Sajal is number number is and is okay Jim think at I Instruments Runway

Casey Alexander

sorry didn't number I'm I hear four.

Andrew Olson

WorldRemit. Number four is

Casey Alexander

WorldRemit, great.

still which realize is the update to I the - of Munchery on assume orange, and you help are those? on what the Mind Okay two Candy, I doing any guys value and

Sajal Srivastava

those to these and actively themselves don't and there so companies as say any we they work to they're I'd public investors them help companies with businesses. specifically very Yes, continue they the optimize I hard work. kind the updates think reposition but active, at we are of continue as

Casey Alexander

from That's it Thank you. all Okay, right. me.

Operator

Jim for session. the back This remarks. closing turn would concludes to Labe our to conference question-and-answer any like over I

Jim Labe

for business. Venture and hear you of all what again pretty for Thanks your if remainder Growth. we're everyone speak you In and of still TriplePoint XXXX to and in care to close by soon. again I'll the support short tell we'll expressing we excited with operator. Take Thanks my you can't holds about our and believe continued appreciation interest it

Operator

you attending Thank is conference. conference today's for now The concluded.

You may now disconnect.

TriplePoint Venture Growth BDC (TPVG) 1 Aug 182018 Q2 Earnings call transcript