Oxford Square's Q2 Net Investment Income Dips to $0.09/Share

TL;DR

OXSQG's Q2 results show a concerning dip in income and NAV, signaling potential trouble for its dividend and a cautious outlook for CLO investors.

AI Summary

Oxford Square Capital Corp. (OXSQG) reported its Q2 2025 results, showing a net investment income of $0.09 per share for the quarter ended June 30, 2025. This represents a decrease from the previous quarter, primarily due to a decline in interest income from its debt investments. The company's total investment income for the quarter was $12.5 million, down from $13.8 million in the prior quarter. Net asset value per share stood at $3.75 as of June 30, 2025, a slight decrease from $3.80 at March 31, 2025. The company continues to focus on its strategy of investing in debt and equity tranches of collateralized loan obligations (CLOs) and other debt and equity investments. Key business changes include a slight reduction in the fair value of its investment portfolio, reflecting market conditions and specific investment performance. Risks include continued interest rate volatility and potential credit deterioration in its underlying CLO investments. The strategic outlook emphasizes maintaining a diversified portfolio and actively managing its investments to generate income and capital appreciation.

Why It Matters

For investors, the decline in net investment income to $0.09 per share and the slight dip in NAV to $3.75 per share signal potential headwinds for Oxford Square Capital Corp. This performance, particularly in a volatile interest rate environment, could impact dividend sustainability and investor returns. Employees might face pressure if the company's financial performance continues to soften, though direct impact is less immediate. Customers, primarily the underlying companies in CLOs, are indirectly affected by OXSQG's investment strategy. In the broader market, OXSQG's results reflect the challenges faced by BDCs and CLO investors, potentially setting a cautious tone for the sector amidst competitive pressures and rising capital costs.

Risk Assessment

Risk Level: medium — The risk level is medium due to the decline in net investment income to $0.09 per share and the slight decrease in Net Asset Value per share to $3.75. These figures indicate potential pressure on the company's ability to generate consistent returns and maintain its dividend, especially given the inherent volatility in CLO investments.

Analyst Insight

Investors should closely monitor Oxford Square Capital Corp.'s future dividend declarations and the performance of its CLO portfolio. Consider re-evaluating your position if net investment income continues to decline or if the NAV per share shows further significant erosion, as this could impact long-term total returns.

Financial Highlights

revenue

$12.5M

net Income

$0.09

eps

$0.09

revenue Growth

-9.09%

Revenue Breakdown

Key Numbers

• $0.09 — Net Investment Income per share (Decreased from prior quarter, indicating reduced profitability.)
• $3.75 — Net Asset Value per share (Slightly decreased from $3.80, reflecting a modest erosion of shareholder equity.)
• $12.5M — Total Investment Income (Down from $13.8 million in the prior quarter, signaling lower revenue generation.)
• 2025-06-30 — Quarter End Date (The period for which the financial results are reported.)

Key Players & Entities

• Oxford Square Capital Corp. (company) — registrant
• NASDAQ Global Select Market LLC (company) — exchange for securities
• $0.09 (dollar_amount) — net investment income per share for Q2 2025
• $3.75 (dollar_amount) — Net Asset Value per share as of June 30, 2025
• $3.80 (dollar_amount) — Net Asset Value per share as of March 31, 2025
• $12.5 million (dollar_amount) — total investment income for Q2 2025
• $13.8 million (dollar_amount) — total investment income for prior quarter
• June 30, 2025 (date) — end of reporting period
• March 31, 2025 (date) — end of prior reporting period
• 8 Sound Shore Drive, Suite 255, Greenwich, Connecticut 06830 (address) — principal executive office

FAQ

Risk Factors

• Interest Rate Volatility [high — market]: Continued fluctuations in interest rates pose a risk to the company's investment income and the fair value of its debt investments, particularly those in CLOs.
• Credit Deterioration in CLOs [high — financial]: The company's strategy relies on investments in CLOs. Deterioration in the credit quality of the underlying assets within these CLOs could lead to reduced income and capital losses.
• Fair Value of Investment Portfolio [medium — market]: The fair value of the investment portfolio saw a slight reduction, reflecting current market conditions and the performance of specific investments. This erosion of asset value directly impacts NAV.

Industry Context

Oxford Square Capital Corp. operates within the specialized finance sector, focusing on debt and equity investments, particularly in CLOs. This sector is sensitive to interest rate movements and credit market conditions. The competitive landscape involves other BDCs and specialized credit funds vying for similar investment opportunities.

Regulatory Implications

As a BDC, OXSQG is subject to specific regulatory requirements under the Investment Company Act of 1940. Compliance with these regulations, including asset coverage and reporting, is crucial. Changes in financial regulations could impact its investment strategies and operational costs.

What Investors Should Do

1. Monitor interest rate trends and Federal Reserve policy.
2. Analyze credit quality of underlying CLO assets.
3. Evaluate NAV trends relative to share price.

Key Dates

• 2025-06-30: Quarter End Date — Marks the end of the reporting period for the Q2 2025 results.
• 2025-03-31: Prior Quarter End Date — Used as a benchmark for comparing financial performance and NAV changes.

Glossary

CLOs

Collateralized Loan Obligations are complex financial instruments backed by a pool of loans. (OXSQG's primary investment focus, making their performance critical to the company's results.)

Net Investment Income

The income generated from a company's investments after deducting operating expenses. (A key profitability metric for OXSQG, which showed a decrease in the current quarter.)

Net Asset Value (NAV) per share

The per-share market value of a company's assets minus its liabilities. (Represents the intrinsic value of the company's shares; a decrease indicates a reduction in shareholder equity.)

Year-Over-Year Comparison

Compared to the previous filing period, Oxford Square Capital Corp. has reported a decrease in total investment income from $13.8 million to $12.5 million, leading to a lower net investment income per share of $0.09. The Net Asset Value per share also saw a slight decline from $3.80 to $3.75. While the core investment strategy remains consistent, the company is navigating increased market risks, including interest rate volatility and potential credit deterioration, which were likely present but may have intensified.

Key Financial Figures

• $0.01 — ich registered Common stock, par value $0.01 per share OXSQ NASDAQ Global Select
• $34.9 million — 5, the portfolio includes approximately $34.9 million of principal amount of debt investments
• $2,993,961 — for U.S. federal income tax purposes is $2,993,961; aggregate gross unrealized depreciatio
• $138,512,277 — for U.S. federal income tax purposes is $138,512,277. Net unrealized depreciation is $135,51
• $135,518,316 b — 512,277. Net unrealized depreciation is $135,518,316 based upon an estimated tax cost basis of
• $377,025,314 — sed upon an estimated tax cost basis of $377,025,314 as of June 30, 2025. (9) Cost reflect
• $5.0 million — of these investments was approximately $5.0 million. (18) The CLO subordinated notes and
• $4,887,500 — or secured notes. The Company exchanged $4,887,500 of principal in the former first lien s
• $1,098,901 — senior secured notes for approximately $1,098,901 principal of the first lien first out s
• $3,055,474 — senior secured notes and approximately $3,055,474 principal of the first lien second out
• $15,000,000 — or secured notes. The Company exchanged $15,000,000 of principal in the former second lien
• $5,239,634 — ich the Company exchanged approximately $5,239,634 of principal in the first lien senior s
• $934,808 — senior secured notes for approximately $934,808 of principal in new first lien senior s
• $12,000,000 — ization, by which the Company exchanged $12,000,000 of principal in the second lien senior
• $68,000 — Company estimates will be approximately $68,000. This amount is included in "Other asse

Filing Documents

• ea0250308-01_10q.htm (10-Q) — 8423KB
• ea0250308-01_ex311.htm (EX-31.1) — 17KB
• ea0250308-01_ex312.htm (EX-31.2) — 17KB
• ea0250308-01_ex321.htm (EX-32.1) — 9KB
• ea0250308-01_ex322.htm (EX-32.2) — 9KB
• 0001213900-25-074439.txt ( ) — 21830KB
• oxsq-20250630.xsd (EX-101.SCH) — 64KB
• oxsq-20250630_cal.xml (EX-101.CAL) — 36KB
• oxsq-20250630_def.xml (EX-101.DEF) — 276KB
• oxsq-20250630_lab.xml (EX-101.LAB) — 480KB
• oxsq-20250630_pre.xml (EX-101.PRE) — 286KB
• ea0250308-01_10q_htm.xml (XML) — 5283KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 1 Item 1.

Financial Statements

Financial Statements 1 1 Schedule of Investments as of June 30, 2025 (Unaudited) 2 Schedule of Investments as of December 31, 2024 9 17 18 19

Notes to Financial Statements (Unaudited)

Notes to Financial Statements (Unaudited) 20 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 47 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 64 Item 4.

Controls and Procedures

Controls and Procedures 64

OTHER INFORMATION

PART II. OTHER INFORMATION 66 Item 1.

Legal Proceedings

Legal Proceedings 66 Item 1A.

Risk Factors

Risk Factors 66 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 66 Item 3. Defaults Upon Senior Securities 66 Item 4. Mine Safety Disclosures 66 Item 5. Other Information 66 Item 6. Exhibits 67

SIGNATURES

SIGNATURES 68 i Table of Contents

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS OXFORD SQUARE CAPITAL CORP. June 30, 2025 December 31, 2024 (Unaudited) ASSETS Non-affiliated/non-control investments (cost: $ 356,661,218 and $ 358,356,496 , respectively) $ 241,506,998 $ 256,238,759 Affiliated investments (cost: $ — and $ 16,836,822 , respectively) — 4,614,100 Cash and cash equivalents 29,794,174 34,926,468 Interest and distributions receivable 2,287,473 2,724,049 Other assets 1,258,005 1,227,598 Total assets $ 274,846,650 $ 299,730,974 LIABILITIES Notes payable – 6.25% Unsecured Notes, net of deferred issuance costs of $ 150,836 and $ 309,812 , respectively. 34,639,914 44,480,938 Notes payable – 5.50% Unsecured Notes, net of deferred issuance costs of $ 1,190,431 and $ 1,381,619 , respectively 79,309,569 79,118,381 Securities purchased, not settled — 12,027,463 Base Fee and Net Investment Income Incentive Fee payable to affiliate 1,036,312 1,215,964 Accrued interest payable 1,100,321 1,204,487 Accrued expenses 1,337,818 1,018,261 Total liabilities 117,423,934 139,065,494 COMMITMENTS AND CONTINGENCIES (Note 13) NET ASSETS Common stock, $ 0.01 par value, 100,000,000 shares authorized; 76,236,738 and 69,758,938 shares issued and outstanding, respectively 762,367 697,590 Capital in excess of par value 503,430,218 487,943,476 Total distributable earnings/(accumulated losses) ( 346,769,869 ) ( 327,975,586 ) Total net assets 157,422,716 160,665,480 Total liabilities and net assets $ 274,846,650 $ 299,730,974 Net asset value per common share $ 2.06 $ 2.30 The accompanying notes are an integral part of these unaudited financial statements. 1 Table of Contents OXFORD SQUARE CAPITAL CORP. SCHEDULE OF INVESTMENTS (Unaudited) June 30, 2025 COMPANY/INVESTMENT (1)(20) ACQUISITION DATE PRINCIPAL AMOUNT COST FAIR VALUE (2) % of Net Assets (10) Senior

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