SuRo Capital Corp.

Welcome to the Suro Capital's fourth quarter and fiscal year 2025 earnings call. My name is Alan and I'll be your coordinator for today's event. Please note this call is being recorded and for the duration, your lines will be on listen only. However, you will have the opportunity to ask questions at the end. This can be done by pressing star one on your telephone keypad. If you require assistance at any time, please press star zero and you'll be connected to an operator. I will now have your host, Jackson Stone, to begin today's conference. Thank you.

Thank you for joining us on today's call. I am joined today by the Chairman and Chief Executive Officer of Suro Capital, Mark Klein, and Chief Financial Officer, Alison Green. Please note that a slide presentation corresponding to today's prepared remarks by management is available on our website at www.surocap.com under Investor Relations, Events, and Presentation. Today's call is being recorded and broadcast live on our website, www.sterocap.com. Replay information is included in our press release issued today. This call is the property of Stero Capital, and the unauthorized reproduction of this call in any form is strictly prohibited. I would also like to call your attention to customer disclosures in today's earnings press release regarding forward-looking information. Statements made in today's conference call and webcast 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 or future financial condition or results and involve a number of risks, estimates, and uncertainties, including the impact of any market volatility that may be detrimental to our business, our portfolio companies, our industry, and the global economy that could cause results to differ materially from the plans, intentions, and expectations reflected in or suggested by the forward-looking statements. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors including, but not limited to, those described from time to time in the company's filing to the SEC. In addition, the preliminary financial estimates regarding the company's estimated accretion to current net asset value provided herein have been prepared by and are the responsibility of the management of the company. This information is preliminary and is thus inherently uncertain and subject to change. Actual results relating to the company's net asset value for any period subsequent to December 31st, 2025, including March 31st, 2026, may differ materially. Management does not undertake to update such forward-looking statements unless required to do so by law. To obtain copies of Suro Capital's latest SEC filings, please visit our website at www.surocap.com or the SEC's website at hc.gov. Now, I would like to turn the call over to Marsh Klein. Thank you, Jackson.

Good afternoon, everyone, and thank you for joining us. This is an important moment for Cerro Capital. We are entering 2026 with meaningful momentum across our portfolio, a disciplined investment strategy, substantial embedded value, and what we believe is a highly differentiated position and one of the most consequential technology cycles of our time. Before I review our full year results, I want to begin with what has happened since year end because those developments matter. They matter for our portfolio. They matter for how we see the opportunity ahead. And most importantly, they matter for our shareholders. Since the beginning of 2026, public markets have been mixed. Volatility has remained a feature of the environment. Sentiment has moved back and forth. But beneath the day-to-day noise, one much more important trend has continued to strengthen. The global build-out of AI infrastructure is accelerating. We do not view this as a passing theme. We do not view this as a short cycle. We view it as a structural shift in how the modern economy will be built. Across the largest technology platforms in the world, capital commitments continue to rise. That tells us something important. AI is no longer being treated as an experimental initiative. It is becoming core infrastructure. It is becoming central to how businesses compete, how they invest, and how they grow. And when capital begins moving at that scale, the effects extend far beyond the largest public companies. It benefits foundational infrastructure. It benefits enabling software. It benefits private companies building essential tools, platforms, and systems that support this transition. That is where CERO is positioned. Against that backdrop, we continue to see strong execution across our portfolio. Since the end of the year, several of our portfolio companies have completed or are in the process of finalizing significant financings. Based on indications available today and assuming each of these financings close and the remainder of our portfolio remains as it was at the end of this year, valuation, we believe, at the end of 2025 valuation, we believe these financings could contribute at least $5 and as much as $6.50 per share to our current net asset value. This is highlighted, and I want to underscore one point very clearly. As these developments across arose in 2026, they are not reflected in our fourth quarter 2025 net asset value. While our reported year-end NAV reflects a year of strong underlying performance, it does not yet capture what we believe is a meaningful amount of value creation that has already emerged clearly this year. Now, because several of these transactions have not yet publicly been disclosed, there are limits to what we can share today. But the direction is clear. The progress is real. And as more of these developments become public, we will expect to provide full context in our first quarter pre-release and earnings call. One financing that has been widely reported and one worth highlighting is OpenAI. This transaction was notable not only for its size, but for what it represents. It reflects the extraordinary scale of capital now being committed to AI development and to the infrastructure required to support it. It reflects the capital intensity of this next era of computing, and it reinforces the fact that AI has moved from possibility to priority. Moments like this help define markets. They show where strategic capital is flowing. They show where conviction is building. and they validate a core principle behind our strategy. Some of the most important value creation in technology happens while great businesses are still private. That is where we seek to invest. That is where we seek to build exposure. And that is where we believe CERO offers shareholders something distinct. As noted earlier, This financing occurred in the first quarter of 26 and is therefore not reflected in our year-end NAV. More broadly, we continue to believe AI is a multi-year structural transformation that remains in its early stages. It is moving from research into deployment, from experimentation into integration, and from isolated use cases into broad commercial adoption. As that happens, the opportunity set continues to expand. Some companies will benefit directly by providing the infrastructure, compute, and tooling that make this shift possible. Others will benefit indirectly through increased demand for software, automation, data, and more efficient digital systems. We believe both dynamics matter, and we believe both are increasingly relevant across our portfolio. This is one of the reasons we remain constructive on the road ahead. Public markets offer investors exposure to many of the largest and most established beneficiaries of technological change. But by the time many of those companies are broadly owned, a meaningful share of the early value creation has already taken place. CERO is positioned differently. We provide market, Public market investors access to venture-backed private companies earlier in their life cycles before broad public ownership, and often the full scale of their long-term potential is reflected in market value. That matters because early in a company's life, innovation can be sharper, growth can be faster, strategic advantage can be more pronounced, and when those companies execute, the value creation can be extraordinary. Our responsibility is to identify those businesses carefully, invest with discipline, remain patient where conviction is high, and realize gains thoughtfully when liquidity opportunities emerge. We do not chase noise. We do not allocate capital for appearances. We focus on quality. We focus on asymmetry. And we focus on long-term shareholder value. When we look back on 2025, we believe the results speak clearly. Our stock price increased from $5.88 per share at year end to $9.44 at the end of 2025, an increase of over 60%. Including our $0.50 dividend per share declared and paid during the year, total shareholder return approximated 70%. That is a strong outcome. It reflects performance across the portfolio. It reflects disciplined capital allocation, and we believe it reflects increasing recognition of the value embedded in sero capital. Our net asset value also grew meaningfully. At the end of 24, our NAV was $6.68. By the end of 25, it had increased to $8.09, representing a year-over-year growth of approximately 21%. In addition, during 2025, we declared and paid $0.50 per share in cash dividends. On a dividend-adjusted basis, our December 31, 2025 NAV would have been only $8.59 per share, representing a year-over-year growth of approximately 29%. Again, a reported year in NAV MARC does not include the previously referenced potential increases in value from the 26 financings, which could contribute at least $5 per share and as much as $6.50 per share to our current net asset value. This is important because it reflects how we think about stewardship. We are committed not only to building value, but to realizing value, not only to compounding capital, but to returning capital when appropriate. Our objective is straightforward, to create durable long-term value for shareholders and do so with discipline, transparency, and accountability. At the same time, we continue to invest where conviction is strongest. Our recent commitment to TensorFlow is a good example. We believe TensorFlow is operating in a part of the market that stands to benefit directly from one of the most powerful secular trends in technology. rising demand for AI compute. TentaWave has deployed what the company described at the time as the world's largest liquid cool AMD GPU cluster and has continued to expand the footprint, including through two additional 10 megawatt deployments in Arizona and Pennsylvania. As customers seek performance, scale, and diversification in an increasingly important layer of the technology stack, we believe this company is well positioned. More broadly, we see further evidence of this trend in announcements such as Meta's recent multi-year agreement with AMD to support up to six gigawatts of AI infrastructure. This investment expands our exposure to AI infrastructure and reflects a broader principle that guides us. When the world is changing in a fundamental way, the companies enabling that change can become extraordinarily valuable. We intend to remain disciplined, but we also intend to be decisive when we see this kind of opportunity. So when I look at where Acero stands today, I see a company with momentum in the portfolio, meaningfully embedded upside, a strong liquidity position, and a strategy aligned with some of the most important innovation trends in the global economy. We are confident in what we own. We are disciplined in how we invest. We are thoughtful in how we realize gains. And we are clear about who we work for, our shareholders. Our mission is to give public access to exceptional private companies before they become broadly owned and to convert that access into long-term shareholder value through disciplined execution over time. That is what we are building. That is what we are focused on. And that is why we are excited about the road ahead. With that, I will turn the call over to Allison.

Thank you, Mark. I would like to follow Mark's update with a review of our investment activity and portfolio company realizations during the fourth quarter and subsequent to year end, a high-level review of our investment portfolio as of year end, including the investment theme breakdown, and a more detailed review of our fourth quarter financial results, including our current liquidity as of December 31st. I'll also touch on notable items during the fourth quarter and year end, including our cash dividends, debt repurchases, capital raised and shares issued via the at-the-market offering or ATM program, and recent board-approved updates to the note repurchase program and the share repurchase program. Throughout the fourth quarter, we received distributions from CWO Opportunity to LP following the lifting of sales restrictions on the publicly traded Core Weave stock held by the fund on August 15, 2025. CW Opportunity II LP is an SPV for which the Class A membership interest is solely invested in the Class A common shares of Coral Weaves Inc. Thorough capital is invested in the Class A common shares of Coral Weaves Inc. through its investment in the Class A membership interest of CW Opportunity II LP. We received three distributions during the fourth quarter, totaling approximately $9 million, and were categorized in aggregate as approximately $2.3 million return of capital and $6.7 million gain. The aggregate fourth quarter distribution is approximately 15.3% of our $15 million investment in CW Opportunity 2LP. As of year end, we continue to have exposure to CoreWeave through the remaining 68.1% of our initial investment in CW Opportunity 2LP. On November 6th, we sold our remaining 70,530 public common shares of Forge Global Inc. for net proceeds of approximately $3.1 million resulting in a realized gain of approximately $1.1 million. The total realized gain on this investment is approximately $5 million. On October 16th, Suro Sports portfolio company Rebrick Inc., doing businesses under the name Complyable, approved a plan to dissolve the company. As a result, Suro Capital realized a loss of approximately $1 million on the position. Finally, we received a distribution from True Global Ventures 4 Plus Venture Fund for approximately $137,000. As Mark mentioned, on December 31, Cerro Capital committed up to $20 million to Magnetar Opportunity 2025-4LP, a special purpose vehicle invested in SensorWave Inc. Subsequent to year end, on January 2, Cerro Capital funded $5 million of the $20 million capital commitment. As of March 10, $5 million of the $20 million commitment to Magnetar Opportunity 2025-4LP had been funded. The remaining commitment of up to $15 million is subject to the status of certain conditions. Subsequent to year end, we sold 106,580 common shares of Gravagon Digital Holdings Inc. following the removal of lockup restrictions on January 15th. These sales resulted in net proceeds of approximately $327,000 and a realized gain of approximately $214,000. As of March 10th, we continue to hold 933,420 public common shares or approximately 90% of our original position. Additionally, subsequent to year end, we received a position from True Global Ventures 4 Plus Venture Fund for approximately $246,000. I would now like to turn to our portfolio as of year end. Our top five positions as of December 31st were OpenAI, Whoop, Blink Health, Canva, and Learnio. These positions accounted for approximately 54% of the investment portfolio at fair value. Additionally, as of December 31st, our top 10 positions accounted for approximately 80% of the investment portfolio. Segmented by seven general investment themes, the top allocation of our investment portfolio at December 31st was artificial intelligence, infrastructure, and applications, representing approximately 31% of the investment portfolio at fair value. Consumer goods and services and software as a service were the next largest categories with approximately 21 and 20% of our portfolio respectively. Approximately 11% of our portfolio was invested in education technology companies, and the financial technology and services segment accounted for approximately 8% of the fair value of our portfolio. The logistics and supply chain category accounted for approximately 8% of the fair value of our portfolio, and thorough sports accounted for 2% as of December 31st. We ended the fourth quarter in fiscal year 2025 with a net asset value of approximately $205.3 million, or $8.09 per share, which is consistent with our financial reporting. The increase in NAV per share from $9.23 at the end of Q3 was primarily driven by an $0.84 per share decrease from the net change in unrealized depreciation of our investment, a $0.25 per share decrease from the impact of dividends declared and paid during the quarter, a $0.22 per share decrease due to net investment loss, and a $0.10 per share decrease related to stock-based compensation. The decrease in NAB per share was offset by a 27 cent per share increase resulting from the net realized gain on our investments during the quarter. During Q4, we sold 6,595 shares under the ATM program at a weighted average price of $9.80 per share for gross proceeds of approximately $65,000 and net proceeds of approximately $63,000 after deducting commissions to the agents on shares sold. As of year end, up to approximately $87.9 million in aggregate amount of the shares remain available for sale under the ATM program. On October 29th, Soro Capital's Board of Directors approved an extension of the Discretionary Note Repurchase Program, which allows us to repurchase up to an additional $40 million of the remaining aggregate principal amount of our 6% notes due 2026 through open market purchases including block purchases, in such manner as will comply with the provisions of the Investment Company Act of 1940 as amended and the Securities Exchange Act of 1934 as amended. Subsequent to this approval, during the quarter, we repurchased an additional 153,513 of the 6% notes due 2026 under the note repurchase program. As of December 31st, we have repurchased 1,566,807 or approximately $39.2 million in aggregate principal dollar amount of the 6% notes due 2026 under the Note Repurchase Program for approximately $38.9 million inclusive of broker commissions. This represents approximately 52% of the original total issuance. The aggregate principal dollar amount of 6% notes that may yet be repurchased by Soro Capital under the Note Repurchase Program is approximately $35.8 million. As Mark mentioned earlier, SoCapital is committed to initiatives that enhance shareholder value. As such, on October 29th, our Board of Directors authorized an extension of the company's discretionary share repurchase program until the earlier of October 31st, 2026, for the repurchase of $64.3 million in aggregate amount of the company's common stock, of which $25 million remains available for future repurchases. Additionally, on November 3rd, Thorough Capital's Board of Directors declared a cash dividend of 25 cents per share paid on December 5th to the company's common stockholders of record as of the close of business on November 21st. This dividend was generally attributable to the successful monetizations of public securities and other promising developments in our investment portfolio. The date of declaration and amount of any dividends or distributions, including any future distributions, are subject to the sole discretion of Suro Capital's Board of Directors. The aggregate amount of distributions declared and paid by Suro Capital will be fully taxable to stockholders. The federal income tax classification of Suro Capital's 2025 distributions has been determined to be capital gains. Suro Capital reports the tax characteristics of each year's distributions annually to stockholders and the IRS on Form 1099-DIV, Subsequent to year end. As a result of the $0.25 per share cash dividend paid on December 5th to stockholders of record as of the close of business on November 21st, effective as of November 21st, the conversion rate applicable to the 6.5% convertible notes due 2029 was adjusted to $7.32 per share from the prior conversion price of $7.53 per share, which had been effective since July 21st. The adjustment to the conversion rate of the 6.5% convertible notes through 2029 was made pursuant to the note purchase agreement governing the 6.5% convertible notes through 9. At December 31st, there were 25,377,756 shares of the company's common stock outstanding. Finally, regarding our liquidity as of year end, we ended the year with approximately $50.1 million of liquid assets, including approximately $49 million in cash and approximately $1.1 million in unrestricted public securities. Not included in our unrestricted public securities are approximately $17.8 million of public securities subject to lockup or other sales restrictions as of year end. This represents our remaining investment in CoreWeave via our Class A interest of CW opportunity to LP and the public common shares of Gravagon that became unrestricted subsequent to year end. That concludes my comments. We would like to thank you for your interest and support of Serro Capital. Now, let's turn the call over to the operator to start the Q&A session. Operator?

thank you if you like to ask a question or make a contribution on today's call please press star 1 on your telephone keypad and please limit yourself to one question per person you will be advised when to ask your question we will take our first question from Alex Paris Barrington research your line is open please go ahead hi guys thanks for taking my quote

Strong 2024, 2025, sorry.

Alex, you're kind of cutting in and out.

Oh, I'm sorry. Let me switch.

Can you hear me?

Yeah, all good. Go ahead. Okay, good. My question will be related to the $5 to $6.50 per share expected as a result of financings either completed or being finalized. I know you said in your prepared comments you can't talk which portfolio companies other than OpenAI, which is in the public realm. But my question relates to timeline. How many do you, how much do you expect to be completed in Q1? And then how much do you expect to be completed between the end of Q1 and the end of 2026? Just on the basis of five to 650 a share.

Yeah. So unfortunately, because of, you know, certain restrictions, we can't really discuss it. We believe that they will all be completed certainly by the end of the quarter. That doesn't mean that they'll be necessarily announced by the companies that are completing the financing.

We will take our next question from Brian McKenna, Citizens Bank.

Your line is open.

Please go ahead.

Yeah. Hi, guys. This is Nate Sauer on for Brian. Thanks for taking my question. So I kind of also want to look a little bit at that $5 to $6.50. And I guess speaking a little bit more broadly, what are some of the drivers you guys are seeing there? So I know, you know, you mentioned OpenAI and you mentioned a little bit around that. But I guess more broadly, what are some things that are kind of leading to appreciation that extreme? And are they things you're seeing across your entire portfolio or is it a little bit more concentrated? And then I guess on the other side of that, are there any offsets that we should maybe be aware of? given that we're now already in March? Thank you.

No problem. Thank you. So there's been multiple financings that have either occurred or are occurring and have not necessarily been announced. Obviously, when you have drivers of that type of magnitude, there are significant portfolio positions that are driving that. As to what we're seeing around our other portfolio, I think it's market conditions which drive market multiples will have some impact on other parts of our portfolio.

We will take our next question from Alex Furman, Lucid Capital. Your line is open. Please go ahead.

Great. Thanks very much for taking my question and congratulations on a really strong year in 2025. Can you help us just kind of level set some of the less exciting parts of the model for this year? That's very exciting that, you know, there could be some pretty substantial near-term appreciation in the NAV. What are kind of some base case numbers we should be thinking about given the portfolio you have this year for think investment income and just operating expenses on a quarterly basis, given how much you've grown the portfolio?

Sure, thanks. So to start with, and thank you for your kind words, 2024 was a really good year. 2025, as we've spoken about extensively now over the last 20 minutes, is starting out to be extraordinary. As to the specific questions, we don't really generate income outside of realized capital gains, so we don't have a yield, as you know. And our operating expenses have been pretty static over the last two years, and we wouldn't expect them to be significantly different at all.

We will take our next question from Marvin Phong, BTIT. Your line is open. Please go ahead.

Great. Hi, Mark. Hi, Alton. Let me add my congratulations as well on all the great progress here. My question is on the latest investment in TensorFlow, and not so much on TensorFlow itself, but the $20 million commitment, I believe, is one of your largest ever, more than OpenAI, in fact. I understand that rounds are getting larger, but could you just kind of comment on whether this was sort of a special case, or do you feel like your regular size will be increasing, or is it sort of that appetite focused primarily on AI? Just kind of help us understand the dynamics there. Thank you.

Thanks, Barbara, and thanks for the kind words, and good question. What we saw in TensorFlow is an opportunity to invest on the AMD side of the chipset as opposed to the NVIDIA side. We saw it in a structure that allows us to invest a little bit, and upon certain obligations being fulfilled, that would be extremely valuing to TensorFlow and to the investment. to have a springing effect in our investment. So we got very excited to be able to be in early with a company that is fully aligned with AMD, with AMD's full support, and do it in a way that limits our initial exposure till things prove out in the way that we think, and then make it a significant investment. I don't think it speaks necessarily to all of our investments would be $20 million, obviously, given the size of the portfolio. But it does speak to our, you know, feeling that this is an opportunity that we wanted to lean into more fully.

We will take our next question from John Hickman, Leidenberg.

Your line is open. Please go ahead.

Hey, so, Mark, could you give us some comments about your thoughts on private market valuations versus what's going on in the public side? Like, you know. Do you have like an hour? Well, not an hour, but a few minutes. I mean, some of the public companies that are building out AI stuff are not getting, you know, the kind of valuations that appear to be happening on the public or on the private side.

So, John, I'll zoom out a little bit. And we spent an awful lot of time looking at this internally because, And I think we probably talked about it on our last earnings call. The acceleration and both the acceleration in pricing and the acceleration in rounds that are occurring is pretty unprecedented. We went back and looked at sort of the 2019-2021 time to see the acceleration of valuation and the rapid levels, the rapid different capital raises. And we look back at the effectively public venture market, which was the 1999 to 2001, to sort of see where we sit relative to what's gone on historically. And what is clear is that the rapid nature of the growth of value and the rapid amount of consistent grant raises is more akin to 1999 to 2001. And you are seeing separation now from what the public valuations are versus the private valuations. Clearly, the acceleration in the private markets has exceeded what's going on in the public markets. Thank you.

There are no further questions on the line, so I'll now hand you back to your speaker for closing remarks.

Well, thank you all for taking the time to visit with us today. I hope that you are excited about what's going on in SRO as our team is. This has been an exciting year last year. This year has started out to be even more exciting than last year. There's a lot of things for us to be doing. I think we are taking advantage of it and the whole team is looking forward to 26 and the years to come. Thank you all very much.

Thank you for joining today's call. You may now disconnect.