Gladstone Investment (GAINZ) Q1 2025 Earnings Report

Q1 2025 revenue for Gladstone Investment Corporation 4875 Notes due 2028 (GAINZ) rose to $22.18 million, up 3.38% year-over-year and 146.47% quarter-over-quarter, aided by stronger topline activity within the portfolio. The gross margin remained exceptionally high at approximately 96.8%, reflecting a favorable revenue mix and relatively low cost of revenue (gross profit of $21.471 million on $22.18 million revenue). However, the bottom line was materially negative, as net income came in at $(6.526) million with an EPS of $(0.18). This divergence is driven by non-cash and non-operating items, most notably depreciation and amortization of $(19.525) million and a substantial other income/expense burden, which more than offset the solid gross profit. Operating income was modest at $0.585 million, and EBITDA stood at $0.585 million, yielding an EBITDARatio of roughly 2.64%.

From a cash flow perspective, the company generated positive operating cash flow of $9.919 million and free cash flow of $9.919 million, signaling ongoing cash generation despite the quarterly net loss. The balance sheet shows a liquidity-light position with cash and cash equivalents of $3.19 million, total assets of $914.206 million, and total debt of $395.385 million (net debt approximately $392.195 million). The portfolio is anchored by a large base of long-term investments ($899.138 million), while liabilities include a sizable deferred revenue construct, reported as negative $(331.685) million, and other non-current liabilities totaling $(290.244) million. Leverage remains meaningful with a debt-to-assets ratio of 0.432 and a debt-to-capitalization ratio of 0.453, while interest coverage sits at about 3.01x.

Overall, QQ1 2025 demonstrates meaningful top-line expansion relative to prior periods, but profitability remains under pressure due to high non-cash charges and financing costs. The headline cash flow metrics are supportive, but the sustainability of profitability will hinge on managing D&A, optimizing the investment portfolio, and potential debt refinancings. Investors should monitor credit performance, portfolio yields, and the timing of cash generation versus required debt service.