Morgan Stanley Direct Lending Fund (NYSE:MSDL) Reports Mixed Q3 2025 Results, Misses EPS and Revenue Estimates

Morgan Stanley Direct Lending Fund (NYSE:MSDL) reported its financial results for the third quarter ended September 30, 2025, presenting a mixed financial picture characterized by stable core earnings but a slight decline in key valuation metrics. The market's initial reaction reflected this ambiguity, with the stock trading lower in after-hours activity.

Earnings Versus Estimates

The company's performance against analyst expectations reveals a slight underperformance on the top and bottom lines for the quarter.

• Earnings Per Share (EPS): MSDL reported net investment income per share of $0.50. This came in below the analyst consensus estimate of $0.5144.
• Revenue (Total Investment Income): The company posted total investment income of $99.7 million for the quarter. This figure fell short of the estimated $100.8 million.

This dual miss on key profitability metrics appears to be a primary driver behind the negative after-market price movement.

Market Reaction and Financial Performance

Following the earnings release, MSDL shares experienced a decline of approximately 1.93% in after-market trading. This immediate reaction suggests investor disappointment with the earnings miss and several other financial details from the report.

The company maintained its regular quarterly dividend of $0.50 per share, which aligns with the net investment income per share, indicating the dividend remains fully covered by operating earnings. However, other areas showed some softening.

• Net Asset Value (NAV): The NAV per share decreased to $20.41 as of September 30, down from $20.59 at the end of the previous quarter.
• Leverage: The debt-to-equity ratio saw a modest increase to 1.17x, compared to 1.15x at June 30, 2025.
• Portfolio Activity: The quarter saw a net funded deployment of negative $1.9 million, with fundings of $198.0 million nearly offset by sales and repayments of $199.9 million.

Key Highlights from the Quarter

Beyond the earnings figures, the press release outlined several operational and strategic developments.

• Stable Core Earnings: Net investment income remained consistent at $43.7 million, identical to the figure from the second quarter.
• Capital Markets Activity: A significant milestone was the successful pricing and closing of the company's inaugural Collateralized Loan Obligation (CLO). The CLO totaled approximately $401 million in aggregate principal with a blended cost of approximately SOFR + 1.70%.
• Portfolio Composition: The investment portfolio, valued at approximately $3.8 billion, remains heavily concentrated in first-lien debt, which constitutes 96.3% of the total portfolio at fair value.
• Capital Management: The company repurchased 151,417 shares under its authorized program at an average price of $18.78 per share during the quarter.

Looking Ahead

The press release did not provide a specific financial outlook for the coming quarters. This absence of forward guidance means investors will be closely monitoring future announcements and analyst projections. For the next quarter (Q4 2025), the current analyst consensus estimates are an EPS of $0.51 on sales of $100.1 million. For the full 2025 year, analysts are estimating an EPS of $2.07 on sales of $405.2 million.

For a detailed breakdown of future earnings estimates and historical performance, you can review the earnings and estimates page for MSDL.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.