Trinity Capital (NASDAQ:TRIN) reported a strong finish to 2025 on its fourth-quarter earnings call, highlighting record net investment income, growth in net asset value, and continued expansion of its managed funds business. Management also discussed portfolio positioning amid heightened debate around artificial intelligence’s impact on software, as well as the expected effect of potential interest rate cuts.
Record 2025 results and strong fourth-quarter performance
CEO Kyle Brown called 2025 a “banner year,” pointing to records across major operating categories. Trinity reported full-year net investment income (NII) of $144 million, or $2.08 per share. Brown also emphasized continued momentum in originations, with $1.5 billion of fundings and $2.1 billion of commitments during the year.
CFO Michael Testa added that Trinity produced $83 million in total investment income in the fourth quarter, a 17.5% year-over-year increase. NII was $40 million, or $0.52 per basic share, which management said represented 102% coverage of the quarterly distribution.
Dividend shift to monthly payments and undistributed taxable income
Trinity paid a fourth-quarter cash dividend of $0.51 per share and announced a distribution rate of $0.17 per month for the first quarter. Testa said the company transitioned to a monthly dividend beginning in January 2026, while maintaining the same aggregate quarterly payout, to better align distributions with recurring investment income.
Testa said estimated undistributed taxable income was approximately $69 million, or $0.84 per share, which the company continues to reinvest while maintaining a “consistent and meaningful” distribution. Brown said shareholders have received more than six consecutive years of a consistent or increased dividend.
Portfolio composition, credit quality, and originations mix
COO Gerry Harder said the portfolio remains diversified across 22 industries, with no single borrower representing more than 3.9% of total exposure. The largest industry concentration, finance and insurance, represented 14.6% of the portfolio at cost and was spread across 25 portfolio companies.
Harder said credit quality remained consistent, with over 99% of debt investments performing at fair value. Trinity’s internal credit rating averaged 2.9 on a one-to-five scale (five indicating “very strong” performance), consistent with prior quarters.
Non-accruals remained low, with Harder stating that Trinity ended the quarter with four portfolio companies on non-accrual. During Q4, two relatively small financings were added to non-accrual status while two prior non-accrual investments were realized and rolled off. As of Dec. 31, non-accruals totaled $15.2 million at fair value, representing less than 1% of the total debt portfolio. In Q&A, Chief Credit Officer Ron Kundich said two legacy borrowers (Zoom and 3DEO) were placed on non-accrual after they stopped making payments in the fourth quarter, and that the company was actively working with them.
Harder said 85% of total principal was secured by first-position liens on enterprise value, equipment, or both, and that the weighted average loan-to-value for enterprise-backed loans was 17%. He also said portfolio companies raised more than $7.8 billion in equity during 2025.
Trinity’s Q4 fundings were spread across its five verticals, which management described as providing diversification:
- 27% sponsor finance
- 25% equipment finance
- 20% life sciences
- 15% tech lending
- 13% asset-based lending
Brown said the company entered 2026 with momentum, noting Q4 fundings of $435 million and year-end unfunded commitments of $1.2 billion. He emphasized that 93% of unfunded commitments remain subject to ongoing diligence and investment committee approval, while 7% are unconditional.
AI, software exposure, and approach to market volatility
Brown addressed investor concerns about AI-driven disruption in software, saying the “AI versus SaaS debate is not a zero-sum game.” He said Trinity has dealt with AI-related disruption for more than three years and has diversified its portfolio while investing in adjacent sectors. Brown said enterprise SaaS represents about 9% of the portfolio, and management stated it is not seeing weakness in those software investments.
Brown also described equipment finance opportunities related to AI infrastructure, including financing for data centers, GPUs, CPUs, and power generation equipment. He said Trinity is focused on “the picks and shovels that power the entire ecosystem.”
During Q&A, Brown told analysts Trinity is being “opportunistic” in lower middle-market software, particularly private equity-backed businesses that are AI-enabled, and suggested there could be consolidation opportunities. He also indicated Trinity intends to maintain ample liquidity to take advantage of volatility-driven dislocations, though he cautioned against providing forward-looking detail on potential expansion beyond its current verticals.
Rate-cut sensitivity, capital raises, and managed funds contributions
On interest rates, Brown said cuts so far have had “little impact” and that further reductions would likely have a muted earnings effect because many loans have interest rate floors near original levels. He also said lower rates could accelerate prepayments, potentially generating prepayment or restructuring fees, and reduce the company’s borrowing costs on floating-rate facilities. Brown added that paid-in-kind (PIK) income remains limited, representing less than 2% of income.
Testa said the company’s weighted average effective portfolio yield was 15.2% in the quarter, and the platform generated a 15.3% return on average equity. NAV per share increased to $13.42 from $13.31 at the end of Q3, which Testa attributed to accretive capital raises.
Trinity raised $95 million through its equity ATM program in Q4 at an average premium to NAV of 12%. The company also entered into a new secured term loan, extending maturities and lowering its cost of debt versus its revolving credit facility, and raised $20 million through its debt ATM program at a 1% premium to par. Net leverage was 1.18x at quarter-end.
Testa said co-investment vehicles contributed approximately $3.1 million, or $0.04 per share, of incremental NII benefit in Q4. The company syndicated $47 million to these vehicles during the quarter and, as of Dec. 31, managed $400 million in assets across private vehicles. Management also discussed momentum in fundraising for its third SBIC fund, which Brown said is expected to add more than $260 million of incremental capacity once scaled.
Trinity said it plans to report first-quarter results on May 6.
About Trinity Capital (NASDAQ:TRIN)
Trinity Capital Corporation (NASDAQ: TRIN) is a publicly traded business development company that provides flexible financing solutions to venture-backed and growth-stage companies. As a venture lender, Trinity Capital offers customized capital structures, including secured debt and equity co-investment, designed to support companies that have progressed beyond early-stage funding but still require non-dilutive growth capital.
The company focuses its investments on technology-driven sectors such as software, fintech, healthcare, life sciences and cleantech.
