Gladstone Investment Corporation posted a Q1 2026 quarter with strong gross profitability and a positive net income signal, underpinned by a broad portfolio of debt investments. Revenue of $23.54 million generated a gross profit of $19.64 million and EBITDA of $17.18 million, yielding a robust gross margin of 83.41% and an operating income of $17.18 million. Net income totaled $7.77 million and diluted EPS stood at $0.2106, illustrating material profitability even after substantial interest expense and other income/expense items.
However, the quarter also features meaningful cash-flow headwinds and a high leverage footprint. Operating cash flow was negative by $50.18 million and free cash flow was negative $50.18 million, driven by sizable non-cash items and working capital movements alongside ongoing investment activity. Financing activity provided $40.38 million, contributing to a slight net cash reduction for the period and leaving cash on hand at $5.36 million. The balance sheet displays a heavy debt position (short-term debt of $456.36 million; total debt $456.36 million) against total assets of approximately $1.053 billion and stockholders’ equity of about $485.30 million, with net debt around $451.00 million. In short, the company demonstrates solid quarterly profitability and an attractive margin profile, but faces liquidity and leverage challenges that warrant close monitoring as the portfolio is deployed and exits are pursued in a higher-rate environment.