Earnings call transcript: SuRo Capital Q2 2025 earnings miss, stock rises

SuRo Capital Corp (SSSS) reported its Q2 2025 earnings, revealing a significant miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $2.23 against a forecast of -$0.1716, marking a substantial negative surprise of -1399.53%. Despite this, the stock price rose by 2.36% in aftermarket trading, closing at $8.69, which is near its 52-week high of $9.12. According to InvestingPro data, the company offers an impressive 11.51% dividend yield and has delivered a remarkable 135.28% return over the past year.

Key Takeaways

• SuRo Capital’s EPS and revenue significantly missed forecasts.
• The company’s Net Asset Value (NAV) grew by 38% from the previous quarter.
• Strategic investments in AI and fintech are a focus.
• The stock saw a modest rise, indicating cautious investor optimism.

Company Performance

SuRo Capital’s overall performance in Q2 2025 showed a mixed picture. While the company achieved a 38% increase in its Net Asset Value (NAV) per share to $9.18, it failed to meet earnings and revenue expectations. The company realized gains of $21 million from public holding exits, contributing to a total NAV of $219.4 million. InvestingPro analysis reveals strong financial health indicators, with a current ratio of 10.91 indicating robust liquidity. For deeper insights into SuRo Capital’s financial health and valuation metrics, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Financial Highlights

• Revenue: $167.3 million, compared to a forecast of $1.23 billion.
• Earnings per share: $2.23, against a forecast of -$0.1716.
• Net Asset Value: $9.18 per share, a 38% increase from the prior quarter.

Earnings vs. Forecast

SuRo Capital’s actual EPS of $2.23 was a stark contrast to the forecasted -$0.1716, resulting in a negative earnings surprise of -1399.53%. This significant miss is unusual and suggests challenges in meeting financial expectations.

Market Reaction

Despite the earnings miss, SuRo Capital’s stock increased by 2.36% in aftermarket trading, closing at $8.69. This movement suggests that investors may be focusing on the company’s strategic investments and NAV growth rather than the shortfall in earnings. InvestingPro data shows the stock has been notably volatile, with a beta of 1.74, while maintaining strong momentum with a 57.4% return over the past six months. Additional InvestingPro Tips highlight key factors affecting the company’s performance - unlock these insights and more with an InvestingPro subscription.

Outlook & Guidance

Looking forward, SuRo Capital anticipates 1-2 additional dividend distributions in the coming quarters. The company plans to continue monetizing its public company investments and focus on AI and technology sectors.

Executive Commentary

CEO Mark Klein emphasized the potential of the company’s investments, stating, "We are in the early innings of seeing these investments pay off." He highlighted OpenAI’s transformative role in the private markets and the company’s significant stake in AI infrastructure.

Risks and Challenges

• The large earnings miss raises concerns about financial forecasting accuracy.
• Market volatility in sectors like wearable technology could impact future performance.
• Dependence on AI and technology sectors may expose the company to sector-specific risks.

Q&A

During the earnings call, analyst Brian McKenna from Citi inquired about SuRo Capital’s dividend strategy. CEO Mark Klein responded by indicating potential additional distributions based on the monetization of public holdings, reflecting confidence in their investment strategy.

Full transcript - SuRo Capital Corp (SSSS) Q2 2025:

Alan, Call Coordinator: Welcome to the SURO Capital’s second quarter two thousand twenty five earnings call. My name is Alan, and I will be your coordinator for today’s event. Please note this call is being recorded. And for the duration, your lines will be on listen only. However, you will have the opportunity to ask questions at the end.

This can be done by pressing 1 on your telephone keypad. If you require assistance at any time, please press 0 and you’ll be connected to an operator. I’ll turn you over to your host, Vidi Lee, to begin today’s conference. Thank you.

Vidi Lee, Host/Presenter, SIRO Capital: Awesome. Thank you for joining us today on today’s call. I’m joined today by Chairman and Chief Executive Officer of SIR Capital, Mark Klein and Chief Financial Officer, Alison Green. Please note that a slide presentation corresponding to today’s prepared remarks by management is available on our website at www.surocap.com under Investor Relations, Events and Presentations. Today’s call is being recorded and broadcast live on our website, www.surrogap.com.

Information is included in our press release issued today. This call is the property of SIRU Capital and the unauthorized reproduction of this call in any form is strictly prohibited. I would also like to call your attention to the customary disclosures in today’s earnings press release regarding forward looking information. Statements made in today’s conference call and webcast may constitute forward looking statements, which relate to future events or our future performance or financial condition. These statements are not guarantees of our future performance or future financial condition or results and involve a number of risks, estimates and uncertainties, including the impact of any market volatility that may be detrimental to our business, our portfolio companies, our industry, and the global economy that can cause actual results to differ materially from the plans, intentions, and expectations reflected in or suggested by the forward looking statements.

Actual results may differ materially from those in the forward looking statements as a result of a number of factors, including but not limited to those described from time to time in the company’s filings with the SEC. Management does not undertake to update such forward looking statements unless required to do so by law. To obtain copies of Sura Capital’s latest SEC filings, please visit our website at www.surocap.com or the SEC’s website at sec.gov. Now I’d like to turn the call over to Mark Klein.

Mark Klein, Chairman and Chief Executive Officer, SIRO Capital: Thank you, Willie. The second quarter was a milestone quarter for Suro Capital. As of June 30, we are proud to report a net asset value of $9.18 per share, a 38% increase from the prior quarter and the largest increase since inception. This exceptional growth was fueled by broad market recognition of the value being created by our AI focused investments. We believe this performance reflects the strategic foresight we have maintained in company’s cycle.

For several quarters, we stated our belief that AI capital expenditures would continue to accelerate and that the IPO market would reopen and this quarter our belief in those trends was affirmed. CoreReads IPO coupled with its post IPO performance led the way. Based on news reports, OpenAI recently closed its second tranche of its landmark $40,000,000,000 financing round at a $300,000,000,000 post money valuation, the largest private capital raise ever by a technology company. This second tranche was reportedly oversubscribed by approximately five times. In the last twenty four hours, several publications including the Financial Times, Reuters, Bloomberg, and the information have reported that OpenAI is also in discussions to conduct a secondary sale at a valuation of $500,000,000,000 which would make it the world’s most valuable private technology company.

Additionally, Canva is reportedly preparing for a secondary tender at a $37,000,000,000 valuation, a development that comes as Figma recently completed a highly successful IPO underscoring the growing public market enthusiasm for design software platforms. Columbia Acquisition Corp. II completed its merger with Gravagun further building on our SPAC sponsor strategy success. Now I would like to discuss each of these portfolio companies in more detail starting with CoreWeave. Please turn to Slide four.

CoreWeave is the foundation for our AI thesis and Searle Capital’s largest aggregate investment since inception. In the weeks immediately following its IPO, we consistently publicly stated that CoreWeave was underappreciated in the public markets. Throughout the second quarter, we saw our thesis in CorWeave play out. The stock price climbed over 200% and has remained well above its offering price. CoreWeave’s share performance reflects continued investor conviction, which was powerfully validated by last week’s earnings report from Microsoft and Meta.

Both companies announced staggering capital expenditure plans dedicated to AI with Microsoft forecasting a record $30,000,000,000 in capital expenditures for the current fiscal quarter and Meta raising the bottom end of its full year spending range by $2,660,000,000 and $72,000,000,000 to support its own AI roadmap. Together with Amazon and Alphabet, these four companies are set to spend nearly $400,000,000,000 this year on capital expenditures. This historic wave of investment underscores the immense demand for GPU compute, affirming Corweed’s critical position as a leading provider and the long term value of its differentiated relationship with NVIDIA. As previously stated, it’s our customary practice to begin monetizing our investments once portfolio companies become public and our shares are freely tradable. During the quarter, we sold approximately 40% of our initial Core Lead investment generating $25,300,000 in net proceeds and a $15,300,000 in realized gains.

This partial monetization represents a significant liquidity event for our shareholders. We continue to hold the majority of our position, which we have marked at a material discount to the quarter end trading price due to non registration fees. We remain highly optimistic about the company’s future trajectory. In addition to the sale of a portion of our Core Weave investment, we fully exited our investment in ServiceTitan for a significant realized gain of approximately $6,000,000 In light of these gains and our current liquidity position as previously announced, our Board of Directors declared a cash dividend of $0.25 per share paid on July 31 to shareholders of record as of July 21. Based on current portfolio activity and subject to Board approval, we intend to announce additional distributions throughout the remainder of the year.

Please turn to Slide five. Transitioning to OpenAI. OpenAI has firmly established itself as the most transformative technology company in private markets. As mentioned earlier, based on news reports, OpenAI recently closed the second tranche of its landmark 40,000,000,000 financing round at a $300,000,000,000 post money valuation, the largest private capital raise ever by a technology company. In the last twenty four hours, several publications, including the Financial Times and the Information, have reported that OpenAI is also in discussions to conduct a secondary sale at a valuation of $500,000,000,000 which would make it the world’s most valuable private technology company.

This comes as the company’s traction with users has scaled at an astounding pace. According to the same source, OpenAI is now generating over $13,000,000,000 in ARR with projections pointing towards $20,000,000,000 by year end. To the information, OpenAI now has approximately 700,000,000 weekly active users across its ChatGPT products, up from 500,000,000 in late March. This scale is nearly unprecedented and underscores OpenAI’s unique ability to commercialize cutting edge research at a speed rarely seen in software or platform technology. OpenAI’s remarkable growth has been supported by new enterprise features, ept for business and deep research, as well as continued enhancement to memory capabilities and agentic function functionality.

From both the usage and revenue perspective, OpenAI remains the clear leader in generative AI and we believe SIRO Capital is one of the only ways investors can gain exposure to this revolutionary and transformative technology company in the private markets. Moving to WHOOP. WHOOP continues to reinforce its leadership in performance and health technology. With the recent launch of WHOOP five point zero and the MG variant, there’s long duration battery life enhanced sensing for EKG and blood pressure, and novel software analytics, including health span scoring and WOOP age. These tools are not only used by elite athletes, but by military special operation, fortune 500 wellness programs, fitness enthusiasts, and clinical research alike.

These hardware and software enhancements underscores WHOOP’s differentiated approach, blending hardware, health coaching, and subscription monetization. According to SNS Insider, the wearable fitness technology market is projected to be $7,000,000,000 in 02/1932, up from approximately $15,000,000,000 in 2024, reflecting the powerful tailwinds supporting demand for preventative health tools that combine robust analytics with personalized insights. We remain confident in our position and are excited to continue as long term investors in what we see as a uniquely positioned player in the wearable health space. Please turn to slide six. Turning to Columbia Acquisition Corp.

II. In June, Columbia completed its merger with Metroplex Trading, the parent company of Gravagun. This transaction marks an important milestone in our SPAC sponsored strategy and validates our ability to source and execute unique opportunities outside of traditional investment channels. With the addition of Donald Trump Jr. To the board and strong consumer demand across the platform, company is well positioned to succeed as a newly public company.

This outcome is another testament to the success of our SPAC sponsor strategy, which we established several years ago. As with all our public positions, we will monetize our investment based on market condition and as lockup agreements expire. Moving on to Canva. Canva continues to build on its position as a category defining visual communications platform. It has expanded its visual suite, introduced new AI powered design tools, and maintain strong expertise traction.

According to several industry sources, Canva is exploring a secondary tender offer at a $37,000,000,000 valuation. If completed, this would represent a meaningful uplift from previous private market valuations and reflects continued investor confidence in the company’s long term. According to Capital Brief, Canva’s annual recurring revenue is now $3,300,000,000 up 50% since May 2024, with two forty million monthly active users. These updates come amid a constructive public market environment for design software companies. Last week, Figma’s stock more than tripled in its New York Stock Exchange debut, valuing the company at roughly a $50,000,000,000 valuation.

The blockbuster reception highlights the significant public market appetite for higher growth design software companies like Canva. Please turn to Slide seven. Turning to our recent investment activity, as previously announced during the quarter, we made a $5,000,000 investment in Plaid through a sole limited partnership interest in seventeen eighty nine Capital Nirvana II LP. Plaid remains a foundational pillar of the FinTech ecosystem connecting over 12,000 financial institutions to more than 8,000 digital apps with over 500,000,000 linked accounts and over 110 users globally. Our investment was part of Plaid’s $575,000,000 financing led by Franklin Templeton, Fidelity, NEA, Ribbit, and others.

According to TechCrunch, the round was completed at a $6,100,000,000 post money valuation. According to CNBC, financing is anticipated to be Plaid’s latest private financing before the company lists on the public markets. According to PitchBook, the financing brings the total capital raised to date by Plaid to approximately $1,300,000,000 Plaid is widely regarded as one of the most critical pieces of infrastructure in The U. S. Financial data stack, with an estimated two thirds of U.

S. Fintechs relying on its API network. According to JPMorgan, Plaid generated approximately $300,000,000 in revenue in 2024, supported by consistent double digit growth in its core business, new products that represented over 20% of ARR operating margins. According to the same source, Plaid is pursuing a more than $30,000,000,000 total addressable market across adjacent verticals, including real time payments, alternative credit data, and fraud prevention. Recent product launches such as Plaid Protect, a real time fraud intelligence system, and Plaid Transfer, a platform supporting bank payments across multiple rails, highlight the company’s ability to innovate atop its core infrastructure.

We believe Plaid’s developer centric platform and expanding network effects position it to remain a category defining leader in open finance. Additionally, subsequent to quarter end, we made a $250,000 follow on investment in LiquidDeth. This investment follows reports that LiquidDeth will be entering the energy drink category with their first release anticipated in January. The new beverage will feature no sugar, no artificial sweeteners, added vitamins, and what the company calls an unextreme caffeine level of a 100 milligrams per can, position for you alternative in a market increasingly saturated with high caffeine options. According to Liquid Death, energy drinks are the most common other item in the physical and digital shopping baskets of liquid death buyers.

According to The Wall Street Journal and Mintel Analytics, better for you options will include some low sugar but high caffeine drinks, saw the biggest increase in consumption in the larger estimated $24,000,000,000 energy drink category between January 2324. We’re excited to see Liquid Death continue to expand into new product categories and capitalize on creative collaborations. Is an exciting period for SIRO Capital. At quarter end, nearly a third of our investment portfolio at fair value was directly in AI infrastructure companies, and we believe we are in the early innings of seeing these investments pay off. With meaningful liquidity from our partial CorWheat sale and our full exit of ServiceTitan, accelerating capital expenditures, the reopening of the IPO market and continued progress across key portfolio companies, OpenAI, Whoop, Canva and the successful completion of the Columbia transaction, we believe our portfolio is well positioned to create substantial long term value to our shareholders.

Thank you for your attention. And with that, I’ll hand it over to Alison Green, our Chief Financial Officer.

Alison Green, Chief Financial Officer, SIRO Capital: Thank you, Mark. I would like to follow Mark’s update with a high level review of our investment portfolio as of quarter end and a more detailed review of our second quarter financial results, including our liquidity as of June 30. I’ll begin with a brief highlight of investment activity and portfolio company realizations during the second quarter and subsequent to quarter end and the investment theme breakdown of our investment portfolio at the end of the second quarter, update on the recently declared and paid cash dividend and our intentions related to distributions for the remainder of 2025. Please turn to Slide eight. As Mark mentioned, on April 4, we made an approximately $5,000,000 investment in the Class A common shares of Plaid through seventeen eighty nine Capital Nirvana II LP, an SPV in which Thoreau Capital Corp.

Is the sole limited partner. The $5,000,000 does not include a 7% or $350,000 origination fee paid at the time of investment and other capitalized costs of the transaction. Additionally, we have prepaid and will continue to prepay expenses of the SPV on an annual basis. During the second quarter, we sold the entirety of our two twenty four direct public common shares of CoreWeave for net proceeds of approximately $25,300,000 resulting in a realized gain of approximately $15,300,000 The exited shares represented approximately 40% of our original initial aggregate $25,000,000 investment in CoreWeave alongside our $50,000,000 investment in CW Opportunity II LP. CW Opportunity II LP is an SPV for which the Class A membership interest is solely invested in the Class A common shares of Core Weave.

Sero Capital is invested in the Class A common shares of Core Weave through its investment in the Class A membership interest of CW Opportunity II LP. As of quarter end and to date, we continue to have exposure to CoreWeave through our investment in CW Opportunity II LP. During the quarter, following the lockup release of our common shares in June, we fully exited our position in ServiceTitan by selling the 151,515 common shares for net proceeds of approximately $15,900,000 resulting in a realized gain of approximately $5,900,000 Finally, subsequent to quarter end, we made a $250,000 follow on investment in liquid debt convertible note. The note bears an interest rate of 4.12% and matures in June 2028. This brings our aggregate investment to date in liquid debt to approximately $10,300,000 I would now like to turn to our portfolio as of quarter end.

Please turn to Slide nine. Our top five investments as of June 30 were CoreWeave, OpenAI, WHOOP, Columbia Sponsor2 and Lerneo. These positions accounted for approximately 53% of portfolio at fair value. Additionally, as of June 30, our top 10 positions accounted for approximately 76% of the investment portfolio. Please turn to slide 10.

Segmented by seven general investment themes, the top allocation of our investment portfolio during June 30 was to artificial intelligence infrastructure and applications, representing approximately 33% of the investment portfolio at fair value. Financial technology and services and consumer goods and services were the next two largest categories with approximately 1716% of our portfolio respectively. 14% of our portfolio was invested in software as a service and education technology companies accounted for approximately 10% of Logistics and supply chain category accounted for approximately 8% of the fair value of our portfolio and Sero Capital Sports accounted for approximately 2% as of June 30. Please turn to slide 11. We ended the second quarter twenty twenty five with a net asset value of approximately $219,400,000 or $9.18 per share, which is consistent with our financial reporting.

This compares to an NAV of $6.66 per share as of March 31 and $6.68 per share as of year end twenty twenty four. The increase was driven primarily by valuation appreciation in several of our top positions and realized gains from the sale of a portion of our Core Weave investment. More specifically, the increase in NAV per share from $6.66 at the end of the first quarter was primarily attributable to a $1.88 per share increase driven by the net unrealized appreciation of our investment portfolio during the second quarter and an $0.89 per share increase due to net realized gain on sale of investments during the second quarter. These increases were offset by a $06 per share decrease due to net investment loss and a $09 per share decrease from the impact of stock based compensation during the quarter. At June 30, and currently, there are 23,888,107 shares of the company’s common stock outstanding.

Regarding our liquidity as of quarter end, we ended the quarter with approximately $52,400,000 of liquid assets, including approximately $49,900,000 in cash and approximately $2,500,000 in unrestricted public securities. Not included in our unrestricted public securities are approximately $40,900,000 of public securities subject to lockup or other sales restrictions as of quarter end. This represents our investment in CoreWeave via the Class A interest of CW Opportunity II LP. As I mentioned previously, CW Opportunity II LP is an SPV for which the Class A membership interest is solely invested in the Class A common shares of Core Weave. Sero Capital confirmed as of 06/30/2025, the underlying Class A common shares held by CW

As such, at quarter end, our CW Opportunity II LP position was materially discounted. Finally, I’d like to conclude with additional commentary on our recent dividend declaration and payment. Subsequent to the dividend on July 3, Sero Capital’s Board of Directors declared a cash dividend paid on July 31 to the company’s common stockholders of record as of the close of business on July 21. This dividend is generally attributable to the successful monetizations of certain of Sero Capital’s public securities and other promising developments in our investment portfolio. As Mark mentioned, based on ongoing portfolio activity, we anticipate declaring additional distributions throughout the year.

The date of declaration and amount of any dividends or distributions, including any future distributions, are subject to the sole discretion of SIRO Capital’s Board of Directors. The aggregate amount of distributions declared and paid by SIRO Capital will be fully taxable to stockholders. The tax character of SIRO Capital’s distributions cannot be finally determined until the close of SIRO Capital’s taxable year, which is December 31. Zoro Capital will report the actual tax characteristics of each year’s distributions annually to stockholders and the IRS on Form ten ninety nine CIV subsequent to year end. As a result of the $0.25 per share cash dividend paid on July 31 to stockholders of record as of the close of business on July 21, effective as of July 21, the conversion rate applicable to the 6.5% convertible notes due 2029 was adjusted to $7.53 per share or 132.753 shares of the company’s dollar principal amount of the 6.5% convertible notes due ’29 from the initial conversion price of $7.75 per share or 129.0323 shares of the company’s common stock per 1,000 principal amount of the 6.5% convertible notes due 2029, which has been effective since issuance.

The adjustment to the conversion rate of the 6.5% convertible notes due 2029 was made pursuant to the note purchase agreement governing said notes. That concludes my comments. We would like to thank you for your interest and support of Soro Capital. Now I will turn the call over to the operator to start the Q and A session. Operator?

Alan, Call Coordinator: Thank you. We will take our first question from Brian McKenna, Citi. Your line is open. Please go ahead.

Brian McKenna, Analyst, Citi: Thanks. Good evening, Mark and Allison, and congrats So on all the recent

Alan, Call Coordinator: looking at

Brian McKenna, Analyst, Citi: the public holding exits in the quarter, realized gains totaled $21,000,000 in aggregate. That’s roughly $0.85 per share. You only declared a $0.25 dividend. I know this will continue to move higher in the coming quarters just as you monetize some of your additional investment. The thought process a little bit around the second quarter dividend.

And then is there any way to think about the potential size of dividends in 3Q and 4Q based on the current mark to market of your public positions today?

Mark Klein, Chairman and Chief Executive Officer, SIRO Capital: Thanks, Brian. And again, for your ongoing support and efforts around your coverage with us. As we’ve done in the past, we sort of we project out what we think our dividend cadence will be and sizing. As you remarked, we did take reasonable amount of gains to date. We also did come into the year with unrealized losses, which we overcome.

As we look forward, we expect to have ongoing monetizations of some of our public companies that become freely tradable, Corweave being one of them, the grab a gun, Columbia two parts of that will be others. So we anticipate once we see how those monetization occur to declare at least one and most probably two distributions, targeting one towards the end of Q3 and another as we get towards the end of the year. Thank you.

Alan, Call Coordinator: There are no further questions on the line. So I will now hand you back to your host for closing remarks.

Mark Klein, Chairman and Chief Executive Officer, SIRO Capital: Thank you all for attending our call. This is really an extremely exciting time for Searle. We’re very fortunate to position the portfolio in a way to take advantage of what is transpiring in the AI ecosystem. And we appreciate you joining us and being shareholders. Thank you very much.

Alan, Call Coordinator: Thank you for joining today’s call. You may now disconnect.

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