GSV Capital Corp. Reports First Quarter 2018 Financial Results
Net Asset Value of $9.99 per Share as of March 31, 2018
Board of Directors Approves Additional $5.0 Million for Share Repurchase Program
WOODSIDE, Calif., May 08, 2018 (GLOBE NEWSWIRE) -- GSV Capital Corp. ("GSV Capital" or the "Company") (Nasdaq:GSVC) today announced financial results for the quarter ended March 31, 2018. Net assets totaled approximately $210.5 million, or $9.99 per share, at March 31, 2018, as compared to $9.64 per share at December 31, 2017 and $8.83 per share at March 31, 2017.
"We are pleased to report a strong first quarter for GSV Capital driven by successful public listings from two of our top positions, Dropbox and Spotify," said Michael Moe, Executive Chairman of GSV Capital. "We are encouraged by the outlook for the portfolio, and at the same time, we have continued to execute key initiatives to systematically enhance shareholder value, including notable expense and fee reductions in the first quarter."
"We are also happy to announce today that the GSV Capital Board of Directors has authorized the expansion of our current share repurchase program by $5 million to an aggregate of $15 million," Moe continued. "To date, we have repurchased an aggregate of approximately $6.2 million in shares of GSV Capital common stock under the program, including $1.2 million in the first quarter of 2018."
Investment Portfolio as of March 31, 2018
At March 31, 2018, GSV Capital held positions in 29 portfolio companies with an aggregate fair value of approximately $212.3 million. As a result of the Company's continued strategy to increase the size of its investments in individual portfolio companies, GSV Capital's investment portfolio has consolidated around top positions. For example, the Company's top five portfolio company investments accounted for 58.5% of the total portfolio at fair value as of March 31, 2018, compared to 39.0% as of March 31, 2017.
Top Five Investments at March 31, 2018
| $ in millions (rounded) | Fair Value | % of Total Portfolio | ||||||
| Palantir Technologies, Inc. | $ | 35.9 | 16.9 | % | ||||
| Spotify Technology S.A. | 31.1 | 14.6 | ||||||
| Dropbox, Inc. | 24.1 | 11.3 | ||||||
| Coursera, Inc. | 18.3 | 8.6 | ||||||
| NestGSV, Inc. (d/b/a GSV Labs, Inc.) | 14.8 | 7.0 | ||||||
| Total (rounded) | $ | 124.2 | 58.5 | % | ||||
First Quarter 2018 Portfolio Investment Activity
During the first three months of 2018, GSV Capital made the following new investment:
| Portfolio Company | Investment | Transaction Date | Gross Payments | |||||
| Ozy Media, Inc. | Promissory Note 10% Due 2/12/2018 | 1/12/2018 | $ | 100,000 | ||||
During the quarter ended March 31, 2018, GSV Capital sold investments in the following portfolio companies:
| Portfolio Company | Shares Sold | Average Net Share Price (1) | Net Proceeds (in millions) | Realized Gain/(Loss) (in millions) | ||||||||||||
| Chegg, Inc. (2) | 500,000 | $18.89 | $9.4 | $3.4 | ||||||||||||
| NestGSV, Inc. (d/b/a GSV Labs, Inc.)(3) | N/A | N/A | $0.6 | $0.0 | ||||||||||||
| Avenues Global Holdings, LLC | 10,014,270 | $0.59 | $5.9 | $(4.2 | ) | |||||||||||
| (1) | The average net share price is the net share price realized after deducting all commissions and fees on the sale(s), if applicable. |
| (2) | As of February 22, 2018, all remaining shares of Chegg, Inc. held by the Company had been sold. |
| (3) | Represents repayment of the 12% Unsecured Promissory Note Due 1/15/2018 |
First Quarter 2018 Financial Results
| Quarter Ended March 31, 2018 | Quarter Ended March 31, 2017 | |||||||||||
| $ in millions | per share | $ in millions | per share | |||||||||
| Net investment gain/(loss) | $0.0 | $0.00 | $(4.8 | ) | $(0.22 | ) | ||||||
| Net realized loss on investments | (0.8 | ) | (0.04 | ) | (24.7 | ) | (1.11 | ) | ||||
| Net change in unrealized appreciation of investments | 8.1 | 0.38 | 33.3 | 1.50 | ||||||||
| Realized loss on partial repurchase of 5.25% Convertible Senior Notes due 2018 | (0.4 | ) | (0.02 | ) | - | - | ||||||
| Net increase in net assets resulting from operations - basic | $7.0 | $0.32 | $3.8 | $0.17 | ||||||||
| Dividends distributed | - | - | - | - | ||||||||
| Repurchase of common stock(1) | (1.2 | ) | 0.03 | - | - | |||||||
| Increase/(decrease) in net asset value | $5.7 | $0.35 | $3.8 | $0.17 | ||||||||
| (1) | During the quarter ended March 31, 2018, the Company repurchased 179,807 shares of GSV Capital common stock for approximately $1.2 million in cash. The use of cash in connection with the repurchases decreased net asset value as of period end; however, the reduction in shares outstanding as of period end resulted in an increase in the net asset value per share. |
Weighted-average common basic shares outstanding were approximately 21.2 million and 22.2 million for the quarters ended March 31, 2018 and 2017, respectively.
GSV Capital's liquid assets were $114.4 million as of March 31, 2018, consisting of $90.3 million of cash and $24.1 million of marketable securities subject to sales restrictions.
At quarter-end and as of May 8, 2018 GSV Capital did not have any borrowings outstanding under its $12.0 million credit facility.
Convertible Senior Notes
On December 15, 2017, we announced the commencement of a cash tender offer (the "Tender Offer") to purchase any and all of the $69.0 million aggregate principal amount our outstanding 5.25% Convertible Senior Notes due September 15, 2018 (the "5.25% Convertible Senior Notes due 2018"). As of the expiration of the Tender Offer on January 17, 2018, approximately $4.8 million aggregate principal amount of the 5.25% Convertible Senior Notes due 2018 representing approximately 7.0% of the outstanding 5.25% Convertible Senior Notes due 2018, were validly tendered and not validly withdrawn pursuant to the Tender Offer. On March 27, 2018, we repurchased an additional $14.2 million aggregate principal amount of the outstanding 5.25% Convertible Senior Notes due 2018.
On March 28, 2018, we issued $40.0 million aggregate principal amount of 4.75% Convertible Senior Notes due September 30, 2023 (the "4.75% Convertible Senior Notes due 2023"). The 4.75% Convertible Senior Notes due 2023 are convertible into shares of our common stock based on an initial conversion rate of 93.2836 shares of our common stock per $1,000 of principal amount of the 4.75% Convertible Senior Notes due 2023, which is equivalent to a conversion price of approximately $10.72 per share of common stock.
Share Repurchase Program
Under the publicly announced share repurchase program, as of March 31, 2018 the Company had repurchased 1,114,465 shares of its common stock for approximately $6.2 million. From April 1, 2018 through May 8, 2018, the Company did not repurchase any additional shares of its common stock.
As of May 8, 2018, in light of the Board of Directors' authorization to increase the amount of shares of Company common stock that may be repurchased under the share repurchase program, the dollar value of shares that may yet be purchased by the Company under the program is approximately $8.8 million.
Conference Call and Webcast
Management will hold a conference call and webcast for investors today at 2:00 p.m. PT (5:00 p.m. ET). The conference call access number for U.S. participants is 877-856-1956, and the conference call access number for participants outside the U.S. is 719-325-2428. The conference ID number for both access numbers is 9225552. Additionally, interested parties can listen to a live webcast of the call from the "Investor Relations" section of GSV Capital's website at http://investors.gsvcap.com/. An archived replay of the webcast will also be available for 12 months following the live presentation.
A replay of the conference call may be accessed until 5:00 p.m. PT (8:00 p.m. ET) on May 15, 2018 by dialing 866-375-1919 (U.S.) or 719-457-0820 (International) and using conference ID number 9225552.
About GSV Capital Corp.
GSV Capital Corp. (GSVC) is a publicly traded investment fund that seeks to invest in high-growth, venture-backed private companies. Led by industry veteran Michael Moe and CEO Mark Klein, the fund seeks to create a portfolio of high-growth emerging private companies via a repeatable and disciplined investment approach, as well as to provide investors with access to such companies through its publicly traded common stock. GSV Capital is headquartered in Woodside, CA. www.gsvcap.com
Follow GSV Capital on Twitter: @gsvcap
Forward-Looking Statements
Statements included herein 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, condition or results of operations and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in our filings with the SEC. GSV Capital Corp. undertakes no duty to update any forward-looking statements made herein, unless required to do so by law.
Contact
GSV Capital Corp.
(650) 235-4769
IR@gsvam.com
GSV CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
| | March 31, 2018 | December 31, 2017 | |||||
| ASSETS | | | |||||
| Investments at fair value: | | | |||||
| Non-controlled/non-affiliate investments (cost of $121,367,679 and $137,526,726, respectively) | $ | 173,595,462 | $ | 179,908,234 | |||
| Non-controlled/affiliate investments (cost of $42,197,673 and $41,886,312, respectively) | 9,108,129 | 16,473,098 | |||||
| Controlled investments (cost of $22,568,505 and $23,161,314, respectively) | 29,569,412 | 24,207,161 | |||||
| Total Portfolio Investments | 212,273,003 | 220,588,493 | |||||
| Investments in U.S. Treasury bills (cost of $99,970,444 and $99,985,833, respectively) | 99,987,000 | 99,994,000 | |||||
| Total Investments (cost of $286,104,301 and $302,560,185, respectively) | 312,260,003 | 320,582,493 | |||||
| Cash | 90,319,558 | 59,838,600 | |||||
| Due from controlled investments | — | 840 | |||||
| Escrow proceeds receivable | 208,447 | 603,456 | |||||
| Interest and dividends receivable | 67,042 | 35,141 | |||||
| Prepaid expenses and other assets | 159,272 | 208,983 | |||||
| Deferred financing costs | 31,163 | 413,023 | |||||
| Total Assets | 403,045,485 | 381,682,536 | |||||
| LIABILITIES | | | |||||
| Due to GSV Asset Management(1) | 471,390 | 231,697 | |||||
| Accounts payable and accrued expenses | 788,154 | 458,203 | |||||
| Accrued incentive fees, net of waiver of incentive fees(1) | 5,749,419 | 9,278,085 | |||||
| Accrued management fees, net of waiver of management fees(1) | 374,730 | 424,447 | |||||
| Accrued interest payable | 125,169 | 1,056,563 | |||||
| Payable for securities purchased | 89,470,432 | 89,485,825 | |||||
| Tax payable | 465,775 | — | |||||
| Deferred tax liability | 7,258,786 | 7,602,301 | |||||
| 5.25% Convertible Senior Notes due September 15, 2018(2) | 49,690,992 | 68,382,549 | |||||
| 4.75% Convertible Senior Notes due March 28, 2023(2) | 38,162,904 | — | |||||
| Total Liabilities | 192,557,751 | 176,919,670 | |||||
| Commitments and contingencies (Notes 7 and 10) | | | |||||
| Net Assets | $ | 210,487,734 | $ | 204,762,866 | |||
| NET ASSETS | | | |||||
| Common stock, par value $0.01 per share (100,000,000 authorized; 21,066,538 and 21,246,345 issued and outstanding, respectively) | $ | 210,665 | $ | 212,463 | |||
| Paid-in capital in excess of par | 201,344,382 | 202,584,012 | |||||
| Accumulated net investment loss | (8,586,244 | ) | (8,593,717 | ) | |||
| Accumulated net realized gains/(losses) on investments | (1,034,471 | ) | 140,100 | ||||
| Accumulated net unrealized appreciation of investments | 18,553,402 | 10,420,008 | |||||
| Net Assets | $ | 210,487,734 | $ | 204,762,866 | |||
| Net Asset Value Per Share | $ | 9.99 | $ | 9.64 | |||
| (1) | This balance references a related-party transaction. |
| (2) | As of March 31, 2018 and December 31, 2017, the 5.25% Convertible Senior Notes due September 15, 2018 had a face value of $49,982,000 and $69,000,000, respectively. As of March 31, 2018 and December 31, 2017, the 4.75% Convertible Senior Notes due March 28, 2023 had a face value of $40,000,000 and $0, respectively. |
GSV CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| | Three Months Ended March 31, 2018 | Three Months Ended March 31, 2017 | |||||
| INVESTMENT INCOME | | | |||||
| Non-controlled/non-affiliate investments: | | | |||||
| Interest income | $ | 1,680 | $ | 8,373 | |||
| Non-controlled/affiliate investments: | | | |||||
| Interest income | 234,082 | 95,677 | |||||
| Controlled investments: | | | |||||
| Interest income | 13,573 | 59,409 | |||||
| Dividend income | — | 175,000 | |||||
| Total Investment Income | 249,335 | 338,459 | |||||
| OPERATING EXPENSES | | | |||||
| Management fees(1) | 1,323,576 | 1,454,421 | |||||
| Incentive fees(1) | 1,471,334 | 1,717,308 | |||||
| Costs incurred under Administration Agreement(1) | 424,145 | 531,484 | |||||
| Directors' fees | 86,250 | 82,917 | |||||
| Professional fees | 339,898 | 262,190 | |||||
| Interest expense | 1,140,063 | 1,126,773 | |||||
| Tax expense | 122,270 | 800 | |||||
| Other expenses | 489,270 | 152,581 | |||||
| Total Operating Expenses | 5,396,806 | 5,328,474 | |||||
| Management fee waiver(1) | (154,944 | ) | (181,803 | ) | |||
| Incentive fee waiver(1) | (5,000,000 | ) | — | ||||
| Total operating expenses, net of waiver of management and incentive fees | 241,862 | 5,146,671 | |||||
| Net Investment Gain/(Loss) | 7,473 | (4,808,212 | ) | ||||
| Realized Losses on Investments: | | | |||||
| Non-controlled/non-affiliated investments | (776,045 | ) | (22,785,753 | ) | |||
| Non-controlled/affiliate investments | (680 | ) | (1,903,414 | ) | |||
| Net Realized Losses on Investments | (776,725 | ) | (24,689,167 | ) | |||
| Realized loss on partial repurchase of 5.25% Convertible Senior Notes due 2018 | (397,846 | ) | — | ||||
| Change in Unrealized Appreciation/(Depreciation) of Investments: | | | |||||
| Non-controlled/non-affiliated investments | 9,854,664 | 30,160,950 | |||||
| Non-controlled/affiliate investments | (7,676,330 | ) | 1,426,668 | ||||
| Controlled investments | 5,955,060 | 1,692,647 | |||||
| Net Change in Unrealized Appreciation/(Depreciation) of Investments | 8,133,394 | 33,280,265 | |||||
| Net Increase in Net Assets Resulting from Operations | $ | 6,966,296 | $ | 3,782,886 | |||
| Net Increase in Net Assets Resulting from Operations per Common Share: | | | |||||
| Basic | $ | 0.33 | $ | 0.17 | |||
| Diluted(2) | $ | 0.30 | $ | 0.17 | |||
| Weighted-Average Common Shares Outstanding | | | |||||
| Basic | 21,150,662 | 22,181,003 | |||||
| Diluted(2) | 26,713,656 | 22,181,003 | |||||
| (1) | This balance references a related-party transaction. |
| (2) | For the three months ended March 31, 2017, 5,751,815 potentially dilutive common shares were excluded from the weighted-average common shares outstanding for diluted net increase in net assets resulting from operations per common share because the effect of these shares would have been anti-dilutive. |
GSV CAPITAL CORP. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
| | Three Months Ended March 31, | ||||||
| 2018 | 2017 | ||||||
| Per Basic Share Data | (Unaudited) | (Unaudited) | |||||
| Net asset value at beginning of year | $ | 9.64 | $ | 8.66 | |||
| Net investment gain/(loss)(1) | 0.00 | (0.22 | ) | ||||
| Net realized loss on investments(1) | (0.04 | ) | (1.11 | ) | |||
| Realized loss on partial repurchase of 5.25% Convertible Senior Notes due 2018(1) | (0.02 | ) | — | ||||
| Net change in unrealized appreciation/(depreciation) of investments(1) | 0.38 | 1.50 | |||||
| Repurchase of common stock(1) | 0.03 | — | |||||
| Net asset value at end of period | $ | 9.99 | $ | 8.83 | |||
| Per share market value at end of period | $ | 7.54 | $ | 4.48 | |||
| Total return based on market value(2) | 38.35 | % | (10.93 | )% | |||
| Total return based on net asset value(2) | 3.62 | % | 1.96 | % | |||
| Shares outstanding at end of period | 21,066,538 | 22,181,003 | |||||
| Ratios/Supplemental Data: | |||||||
| Net assets at end of period | $ | 210,487,734 | $ | 195,911,696 | |||
| Average net assets | $ | 204,070,345 | $ | 191,439,679 | |||
| Ratio of gross operating expenses to average net assets(3) | 10.11 | % | 10.90 | % | |||
| Ratio of net income tax provisions to average net assets(3) | (0.24 | )% | — | % | |||
| Ratio of management fee waiver to average net assets(3) | (0.31 | )% | — | % | |||
| Ratio of net operating expenses to average net assets(3) | 9.55 | % | 10.90 | % | |||
| Ratio of net investment loss to average net assets(3) | (10.03 | )% | (10.19 | )% | |||
| Portfolio Turnover Ratio | 0.11 | % | — | % | |||
| (1) | Based on weighted-average number of shares outstanding for the relevant period. |
| (2) | Total return based on market value is based on the change in market price per share between the opening and ending market values per share in the year. Total return based on net asset value is based upon the change in net asset value per share between the opening and ending net asset values per share. |
| (3) | Financial Highlights for periods of less than one year are annualized and the ratios of operating expenses to average net assets and net investment loss to average net assets are adjusted accordingly. Non-recurring expenses are not annualized. For the three months ended March 31, 2018 the Company excluded $352,667 of non-recurring expenses and $5.0 million of incentive fee waivers. For the three months ended March 31, 2017, the Company did not incur any non-recurring expenses. Because the ratios are calculated for the Company's common stock taken as a whole, an individual investor's ratios may vary from these ratios. |
