Blue Owl Technology Finance (NYSE:OTF) executives used the company’s fourth-quarter 2025 earnings call to emphasize portfolio performance, an active deployment environment, and what management described as a defensively constructed lending strategy amid heightened investor scrutiny of software business models and artificial intelligence.
Management highlights listing milestone, dividends and buybacks
Chief Executive Officer Craig Packer said 2025 marked a “milestone year,” highlighted by OTF’s June 2025 listing on the New York Stock Exchange, which management said established the company as the largest publicly traded technology-focused BDC by total assets. In connection with the listing, the company declared five quarterly special dividends of $0.05 per share through September 2026, in addition to a regular dividend of $0.35 per share.
AI and software: focus on “systems of record” and downside protection
Both Packer and President Erik Bissonnette addressed recent market volatility in technology and software names tied to AI-related concerns. Packer said OTF’s software borrowers were delivering “low to mid-teens revenue and EBITDA growth on average,” and the company’s internal review of AI risks and opportunities “confirms the quality of our assets.”
Bissonnette said software represents roughly 70% of the portfolio and framed the firm’s underwriting around “sticky, mission-critical applications” where AI is additive rather than a replacement. He broke OTF’s software exposure into three categories and provided approximate portfolio weights:
- Application software (~50%), including ERP, CRM, supply chain and vertical SaaS, which management views as insulated by proprietary data, complex workflows, and high switching costs.
- Systems and infrastructure software (~20%), with cybersecurity as the largest component, which management described as structurally resilient and potentially a beneficiary of rising complexity.
- Fintech and payments (~5%), which management said is insulated from AI disruption because secure, regulated movement of funds remains essential.
Executives repeatedly emphasized OTF’s position in the capital structure. Bissonnette said the portfolio is predominantly senior secured with loan-to-value ratios typically in the low 30s, and that the firm underwrites “for durability and downside protection first.” He also highlighted that loans generally have average durations of three to five years and that the portfolio turns over actively, with roughly a quarter repaying each year.
Fourth-quarter activity: $2.3 billion of commitments and leverage moving higher
Bissonnette said OTF converted a strong pipeline into “meaningfully more” deployment, with $2.3 billion of new investment commitments in the fourth quarter, including $2.0 billion of new fundings. Repayments were $881 million. Management said the activity increased net leverage and should support improving returns over time.
Looking ahead, Bissonnette cited an approximately $900 million backlog of transactions expected to fund next quarter, subject to documentation and approvals. On a pro forma basis incorporating anticipated fundings and visible repayments, he said leverage would move to the bottom end of OTF’s stated target leverage range, described as 0.9x to 1.25x.
During the Q&A, management said the bar for new investments is “higher than it has ever been” as the firm factors in the evolving AI landscape, noting that some areas that were investable several years ago are now being avoided.
Financial results: NAV up, adjusted NII impacted by one-time items
Lamm said OTF ended the quarter with total portfolio investments of over $14 billion, outstanding debt of $6 billion, and total net assets of $8 billion. Net asset value per share was $17.33, up $0.06 from the prior quarter. Lamm attributed the NAV increase to “several write-ups” of common and preferred equity positions, including SpaceX and Revolut.
On earnings, Lamm reported adjusted net investment income of $0.30 per share for the fourth quarter, reflecting steady interest income from increased deployment, offset by one-time expenses and the timing of originations weighted toward the end of the period. Adjusted net income was $0.47 per share, which management said equated to a 10.9% adjusted net income return on equity for the quarter. GAAP results included $0.03 per share of accrued capital gains incentive fees related to positive marks on certain equity investments.
The board declared a first-quarter regular dividend of $0.35 per share, payable on or before April 15, 2026 to shareholders of record as of March 31, 2026. Lamm said spillover income totaled $0.40 per share as of quarter end, which management said supports the previously announced special dividends through September 2026.
Funding, liquidity, and comments on spreads and portfolio marks
OTF ended the quarter with net leverage of 0.75x, while average leverage was 0.66x due to late-quarter deployments. Lamm said the company took steps to improve funding flexibility and reduce costs through CLO and SPV activity and by exiting higher-cost legacy financings, with expected annual run-rate interest savings of about $10 million. He also noted that in January the company issued $400 million of unsecured bonds, which management said demonstrated continued access to the investment-grade unsecured market. Total cash and facility capacity was nearly $2.3 billion at quarter end.
On spreads for new investments, management said spreads had been “persistently tight,” but indicated an expectation for widening in software due to reduced participation and the need for specialized underwriting. In response to a question about potential public market multiple compression, management said that if a portfolio with roughly 30% LTV experienced a 50% adjustment to enterprise values, LTVs would rise into the mid-to-high 40% range, which management still characterized as providing a margin of safety.
Management also discussed portfolio history and underwriting outcomes. In response to a question about software defaults across the platform, Packer said the firm had worked through one software default, ultimately taking over the company, which he said remains owned. Bissonnette added that the percentage of ARR-based structures in the portfolio has fallen to below the low teens and is the lowest level since inception, attributing the change to earlier-vintage positions converting or refinancing.
In closing remarks, Packer said OTF’s base dividend was set in early 2025 using a forward curve calibrated for a lower-rate environment, and management therefore was “not expecting to have to adjust our base dividend simply because rates have moved lower.” He added that even excluding special dividends, the $0.35 base dividend represented an approximate 11% yield at the time of the call based on market value.
About Blue Owl Technology Finance (NYSE:OTF)
Blue Owl Technology Finance (NYSE: OTF) is a publicly traded business development company (BDC) sponsored by alternative asset manager Blue Owl. The firm focuses on providing customized debt and structured capital solutions to technology and technology-enabled companies, with an emphasis on growth-stage and middle-market borrowers. As a BDC, its primary activities include originating, structuring and managing private credit investments tailored to the financing needs of fast-growing businesses.
Its investment approach typically centers on direct lending and credit-oriented products, including senior secured loans, unitranche and subordinated debt, as well as selective equity-linked instruments and structured financings.
