Fidus Investment Corporation (FDUS) Earnings

Management highlights

- Overall Portfolio Performance & Originations • Q2 2026 total originations reached $98 million, with the vast majority as M&A-driven first lien investments, including $48.1 million invested in four new portfolio companies • Proceeds from repayments and asset realizations totaled $39.2 million for the quarter • Total portfolio fair value ended the quarter at $1.4 billion, with net asset value at $738.5 million ($19.46 per share) • Weighted average portfolio leverage across cash flow investments is 4.1x, with a weighted average loan-to-value of 41% (all target deals are structured for 50% LTV or lower) - Financial Results • Total investment income for Q2 2026 was $43.5 million, a $4 million decrease from Q1 2026, driven by a one-off $6.8 million drop in fee income (from a refinancing fee recognized in Q1), partially offset by higher interest and dividend income • Total expenses (including income tax) were $24.8 million, $1.9 million higher than Q1, driven by higher interest expense from new note refinancing, higher base management fees from growing AUM, and increased G&A from annual meeting proxy costs • Adjusted Net Investment Income (NII) was $0.50 per share, covering the $0.43 per share base dividend; Q2 2026 base dividend plus supplemental dividend totals $0.50 per share, payable September 29, 2026 - Credit Quality • Only one portfolio company (Vertex Enterprises LP) was on non-accrual status at quarter end, representing less than 1% of total portfolio by both cost and fair value • Subsequent to quarter end, FIDUS exited its Vertex investments, realizing an aggregate $11 million loss, and now holds zero non-accrual investments • Overall portfolio company EBITDA grew 6% in the quarter, and the debt portfolio for software/tech-enabled investments is marked at 99% of cost - Liquidity & Capital Structure • Total debt outstanding at quarter end was $738.8 million, with a net debt-to-equity ratio of 1.0x and statutory leverage (excluding exempt SBA debentures) of 0.6x • The weighted average interest rate on outstanding debt increased to 5.8% from 5.2% Q1, after refinancing maturing 3.5% unsecured notes with new 6.625% notes due 2029, pushing the earliest debt maturity to June 2029 • Total available liquidity at quarter end was $170.1 million, including $39.3 million in cash, $112.3 million in line of credit availability, and $18.5 million in available SBA debentures

Guidance

- Management expects overall deal flow and investment activity to increase in the second half of 2026 as pent-up M&A demand is released and geopolitical uncertainties abate, with the strongest pickup anticipated for Q4 2026 - Portfolio company add-on acquisition activity is already active in early Q3 2026, and will continue to be a meaningful source of new investment even if broader new deal growth remains muted - Management expects the portfolio to continue generating adjusted NII that fully covers the base dividend, aligned with long-term goals of capital preservation and attractive risk-adjusted returns - FIDUS will maintain its strict underwriting standards and current investment focus, with the first lien share of the debt portfolio expected to stay at current levels or increase slightly over time - Management confirms it will utilize the existing ATM equity program opportunely in the second half of 2026 to support portfolio growth if needed, to maintain target leverage of ~1.0x net debt to equity (within the 0.9-1.1x target range)

Segment performance

FIDUS operates as a business development company focused on two core investment segments: debt investments and equity investments. As of Q2 2026 end, the total investment portfolio held a fair value of $1.4 billion, with 102% of total cost. Debt investments accounted for $1.3 billion of fair value, representing 92.86% of total portfolio fair value. The weighted average effective yield on debt investments (excluding non-accrual holdings) held steady at 12.5% quarter-over-quarter, and 88% of the debt portfolio is now first lien investments. Equity investments accounted for $147.2 million of fair value, representing 7.14% of total portfolio fair value. FIDUS holds equity stakes in 82.4% of its portfolio companies, with an average fully diluted ownership of 2.1%. Net realized gains from equity monetization totaled $6.4 million in the quarter.

Risks & headwinds

- Ongoing geopolitical uncertainty and broader market volatility continue to suppress deal activity and deal quality in the fragmented lower middle market, with unclear timing of a sustained pickup - Higher oil prices and ongoing stress on lower-income consumers create modest incremental downside risk for some portfolio holdings, though no systemic risk has been observed to date - One idiosyncratic portfolio company was added to the internal credit watch list during Q2 2026, though management expects to resolve most watch list positions within the next 6-9 months - AI disruption could create unforeseen performance pressure for software portfolio companies, though no widespread negative impacts have materialized to date

Analyst Q&A

• Q: An analyst asks when deal activity will strengthen, whether growth will come in H2 2026 or be delayed to 2027, and requests an update on credit quality and AI impacts on the software portfolio. /

  A: Management confirms deal flow is already higher than 60 days ago, with the most significant pickup expected for Q4 2026, while quality of deals has improved from the weak levels seen in Q1 and Q2. Portfolio add-on activity is already ongoing in early Q3, with no systemic credit concerns across the portfolio and 6% portfolio EBITDA growth recorded this quarter. AI has not caused widespread performance issues for software holdings, which are mostly specialized resilient businesses; many are adopting AI to cut costs and improve products, and the software debt portfolio is marked at 99% of cost.

• Q: An analyst asks if the recent pickup in deal flow is driven by private equity sponsors rushing to exit after a long lull, and how terms and conditions for new deals are changing. /

  A: Management notes there is broad pent-up demand for transactions from both private equity sponsors and independent companies, which will drive activity as uncertainties ease. Terms and conditions remain stable in FIDUS' target lower middle market, with conservative maintenance covenants, lower leverage than the broader market, and attractive pricing that align with FIDUS' risk profile, and the 41% weighted average LTV provides significant downside cushion.

• Q: An analyst asks how the internal credit watch list changed in Q2, and what the current opportunity set looks like for junior capital investments relative to senior first lien deals. /

  A: Management reports the watch list grew by one idiosyncratic addition in Q2, but overall the portfolio remains healthy, and several existing watch list positions are expected to be resolved via exit within 6-9 months. The market remains heavily oriented toward first lien deals, so 88% of FIDUS' debt portfolio is now first lien, a share that will likely hold steady or increase slightly. Junior capital opportunities are still reviewed, but require extremely high quality business characteristics to meet underwriting standards.

• Q: An analyst asks if FIDUS will increase ATM equity issuance activity in H2 2026, given the improving deal pipeline and current leverage near the target range. /

  A: Management confirms it will use the ATM program as appropriate to support growth if needed, to maintain leverage around the 1.0x target midpoint of the 0.9-1.1x target range, after expected repayments pick up in H2 2026.