Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Flow Capital Corp (AHFCF, Financial) reported another record quarter in terms of recurring revenue, marking the fourth sequential quarter of growth.
- The company achieved a record book value per share of $1.255, up 2.4% from the prior quarter and 37% over the last two years.
- Total assets increased to $65.8 million, up 12% over the prior year.
- Flow Capital Corp (AHFCF) deployed $29 million in new capital over the last 12 months, setting a 12-month record.
- The company has been profitable for over 17 consecutive quarters, demonstrating consistent financial performance.
Negative Points
- The company's total reported revenue under IFRS was $2.1 million for the quarter, which can be distorted due to IFRS accounting standards.
- Despite strong performance, Flow Capital Corp (AHFCF) remains a small player in the venture debt space with $60 million in assets compared to the $30 billion market.
- The company has set ambitious targets to grow its assets to $100 million, $250 million, and $500 million, which may pose significant challenges.
- The reliance on non-IFRS measures like recurring revenue and recurring free cash flow may make it difficult for some investors to track real performance.
- The company did not provide specific forecasts, which may leave investors uncertain about future performance.
Q & A Highlights
Q: Can you provide more details on the record recurring revenue reported for Q2 2024?
A: Alex Baluta, CEO: We reported $1.9 million in recurring loan interest income for Q2 2024, which is up 5.7% from Q1 and up 28.5% from Q2 last year. This marks the fourth sequential quarter of growth in recurring revenue.
Q: What were the key milestones achieved during the quarter?
A: Alex Baluta, CEO: We achieved several milestones, including record recurring revenue of $1.9 million, record book value per share of $1.255, and record total assets of $65.8 million. Additionally, we deployed $29 million in new capital over the last 12 months, a 12-month record for us.
Q: Can you elaborate on the recent investments made by Flow Capital?
A: Alex Baluta, CEO: We closed a $5.4 million investment into GetTattle, a SaaS B2B company focused on global customer experience improvement. We also made a follow-on investment into MiniLuxe, an existing portfolio company. After the quarter ended, we closed a $6.8 million investment in a tech-enabled marketplace for co-living spaces and a $5.4 million investment in a media measurement provider.
Q: What is the current status of Flow Capital's revenue run rate target for the year?
A: Alex Baluta, CEO: We had targeted a $10 million revenue run rate in recurring revenue for the year. Currently, including recent investments, we are over $9 million and approaching our target. Given the strength of our pipeline, we feel comfortable that we will hit our targets before the end of the year.
Q: How has the portfolio performed in terms of IRR?
A: Alex Baluta, CEO: Our trailing six-year IRR, as press released on June 11, 2024, is over 26%. We continue to see good performance in our portfolio and strong growth in our deal opportunities.
Q: What are Flow Capital's long-term growth targets?
A: Alex Baluta, CEO: We are targeting to grow our assets to $100 million, $250 million, and then $500 million over the next several years. While not making any forecasts, we feel strongly that these targets are achievable given our infrastructure, team, and internal processes.
Q: Can you provide more context on the venture debt space and Flow Capital's position within it?
A: Alex Baluta, CEO: The venture debt space has over $30 billion in originations annually in North America. With $60 million in assets, we are a small player in this space. However, over the last five years, we've built the infrastructure to grow our business significantly.
Q: What are the key highlights from the financial results for Q2 2024?
A: Alex Baluta, CEO: We reported $2.1 million in total revenue under IFRS for the quarter and $4.11 million for the year. Our book value per share increased to $1.255, and our total assets reached $65.8 million. We generated just under $300,000 in recurring free cash flow for the quarter and $1.4 million over the last four quarters.
Q: How has Flow Capital's profitability trended over recent quarters?
A: Alex Baluta, CEO: We have been profitable for over 17 quarters in a row, demonstrating consistent financial performance and stability.
Q: What is the outlook for Flow Capital's future growth and performance?
A: Alex Baluta, CEO: We feel confident about our future growth prospects. Our portfolio continues to perform well, our team is cohesive, and we have strong internal processes in place. We believe we are well-positioned for continued success in the venture debt space.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
