HgCapital Trust (HGT) Q2 2026 earnings summary

Executive summary

• H1 2026 saw strong trading performance, but NAV and share price were negatively impacted by a contraction in public software multiples, particularly in Q1, before stabilizing in Q2; NAV per share stabilized at 530.7p in Q2 2026.

• Portfolio companies, especially in B2B technology and tech services, delivered robust earnings and EBITDA growth, with LTM revenue up 16%, EBITDA up 19%, and EBITDA margins at 34%, driven by significant adoption of AI-driven solutions.

• Realisation activity remained strong, with eight liquidity events year-to-date and full exits at average uplifts of 31% to carrying value; investments of £146m and realisations of £134m were completed.

• The manager announced an intention to increase its strategic investment in the trust to over 15% ownership.

• Interim dividend of 2.0p per share declared, consistent with prior year.

Financial highlights

• NAV per share declined 5.4% in Q1 and rose 0.5% in Q2, resulting in a H1 2026 NAV performance of -4.9%; NAV per share at 530.7p, net assets £2.4bn.

• Share price fell 22.9% in Q1 and recovered slightly in Q2, with a H1 2026 performance of -24.9%; share price at 378.0p, market capitalisation £1.7bn.

• Portfolio valuation was driven by 11% trading gains, offset by a 13% negative impact from multiple contraction and a 2% impact from increased net debt.

• LTM revenue growth was 16% (11% organic), LTM EBITDA growth 19% (17% organic), and EBITDA margin 34%.

• YTD 2026 realisations totaled £147m, with average uplifts of 31% to carrying value on full exits.

Outlook and guidance

• The outlook is positive, with AI transformation expected to drive further value creation and a new wave of product releases anticipated in 2026; board remains optimistic for H2 2026, citing strong trading, AI leadership, and M&A recovery.

• Ongoing bifurcation expected between AI beneficiaries and those at risk of disruption; investors anticipated to reward companies with demonstrable AI traction.

• Dividend guidance maintained at a 5.0p per share annual floor.

• The manager believes the current share price discount does not reflect the underlying portfolio's value or prospects.