Oxford Square Capital (OXSQ -1.28%), a business development company investing in corporate debt and collateralized loan obligations (CLOs), reported second quarter results on August 7, 2025. The most notable news from the release was that net investment income per share matched analyst expectations at $0.08, but total investment income (GAAP) was $9.5 million, below the $10.0 million forecast. Net asset value per share (GAAP) declined to $2.06 as of June 30, 2025, from $2.43 as of June 30, 2024. The results point to ongoing portfolio pressure, as key metrics declined versus both the prior quarter and prior year. The period showed stability in distributions, but highlighted weaker income, reduced investment activity, and continued portfolio risk.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| Net Investment Income per Share | $0.08 | $0.08 | $0.13 | (38.5%) |
| Total Investment Income | $9.5 million | $10.0 million | $11.4 million | (16.7%) |
| Net Asset Value per Share | $2.06 | $2.43 | (15.2%) | |
| Distributions per Share | $0.11 | $0.105 | 4.8% | |
| Net Increase in Net Assets from Operations per Share | $0.06 | $0.09 | (33.3%) |
Source: Analyst estimates for the quarter provided by FactSet.
Overview of Oxford Square Capital's Business and Focus Areas
Oxford Square Capital is a specialty finance company structured as a business development company (BDC). Its main business is investing in corporate debt securities and CLOs—investment vehicles that pool together loans from various companies. By holding positions in senior secured loans and CLO equity tranches, it aims to generate attractive risk-adjusted returns for shareholders.
The company’s recent focus has been on balancing risk and return in a volatile market, with a strategy centered on portfolio diversification and credit risk management. Success for the company relies on careful selection of corporate debt and CLO assets, active portfolio management, vigilance on credit quality, and compliance with regulatory requirements for BDCs.
Quarterly Highlights: Metrics, Trends, and Events
The company achieved net investment income per share of $0.08, matching analyst estimates but falling from $0.13 (GAAP) in the prior year. Total investment income (GAAP) of $9.5 million came in lower than the $10.0 million expectation and was down significantly from the $11.4 million (GAAP) level in the prior year. Net asset value per share (GAAP) slid to $2.06 from $2.43 in the prior year, reflecting ongoing pressure on portfolio valuations and realized investment losses.
Debt investments generated $5.1 million in interest income, a decline from $7.0 million in the prior year, while CLO equity investment income (GAAP) was flat year over year at $3.9 million. Yields showed mixed movement: the weighted average yield for debt investments improved to 14.5% from 14.3% last quarter, but effective yields from CLO equity edged down to 8.8% from 9.0% last quarter. Cash distribution yields, which detail the cash received from these investments, also weakened, notably in CLO equity, falling to 13.8% from 15.5% last quarter.
With total costs (GAAP) at $4.0 million. Total expenses were approximately $4.0 million, compared with approximately $4.1 million in the previous quarter. Expenses as a percentage of average net assets fell to 10.78% from 11.15% in the prior year. However, net realized losses (GAAP) were $2.4 million, while net unrealized appreciation totaled $1.3 million. Persistent realized losses continue to reduce net asset value and compress the potential for future earnings.
In terms of shareholder payouts, the company declared monthly distributions of $0.035 per share for October, November, and December 2025, maintaining the same payout as previous quarters. The level of distribution per share ($0.105) remains slightly above the amount generated by net investment income per share ($0.08, GAAP). The absence of new investment purchases or portfolio sales—only $233,000 in repayments were recorded—signals a more defensive portfolio stance. This marks a stark contrast to the over $16.0 million in purchases made in the previous quarter. Non-accrual investments, which are preferred equity investments, stood at $5.0 million.
Looking Forward: Outlook and Investor Considerations
The company did not provide explicit financial guidance for the upcoming quarter or fiscal year in its release. Management declared monthly distributions of $0.035 per share for October, November, and December 2025, but it did not include commentary on future investment levels or earnings trends.
With yields on CLO equity and debt investments under pressure, a declining net asset value per share from $2.09 as of March 31, 2025, to $2.06 as of June 30, 2025, and no new portfolio investments during the quarter, investors will likely focus on signs of portfolio turnover and credit quality in upcoming reports. Ongoing net realized losses and persistent non-accruals suggest continued stress in the portfolio. No additional forward-looking guidance was issued by management.
The company pays a regular monthly dividend, with the rate unchanged at $0.035 per share for each of October, November, and December 2025.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
