Revenue and profitability remain highly unstable, evidenced by a sharp reversal from a $28.7 million profit in 2025Q4 to a $4.5 million net loss in 2026Q1.
| Sales/Revenue | 299.71M | - | - | - | - | - | - |
| Revenue Growth % | - | - | - | - | - | - | - |
| Cost of Goods Sold | 0 | - | - | - | - | - | - |
| COGS % of Revenue | - | - | - | - | - | - | - |
| Gross Profit | 198.87M | 313.57M | 209.59M | 215.25M | 33.03M | 77.61M | 19.74M |
| Gross Margin % | 66.35% | 81.03% | 63.03% | 65.6% | 32.96% | 78.69% | 84.13% |
| Gross Profit Growth % | - | 49.61% | -2.63% | 551.59% | -57.43% | 293.06% | - |
| Operating Expenses | 46.34M | 55.48M | -8.41M | -17.29M | -15.84M | -5.73M | 1.45M |
| OpEx % of Revenue | - | 14.34% | -2.53% | -5.27% | -15.81% | -5.81% | 6.17% |
| Selling, General & Admin | 7.06M | 8.3M | 7.56M | 5.63M | 4.15M | 4.57M | 2.68M |
| SG&A % of Revenue | - | 2.15% | 2.27% | 1.71% | 4.14% | 4.63% | 11.42% |
| Research & Development | 0 | - | - | - | - | - | - |
| R&D % of Revenue | - | - | - | - | - | - | - |
| Other Operating Expenses | 0 | - | - | - | - | - | - |
| Operating Income | 152.53M | 258.09M | 218M | 232.53M | 48.88M | 83.33M | 18.3M |
| Operating Margin % | 50.89% | 66.69% | 65.56% | 70.87% | 48.77% | 84.5% | 77.96% |
| Operating Income Growth % | - | 18.39% | -6.25% | 375.76% | -41.35% | 355.46% | - |
| EBITDA | 152.53M | 258.23M | 218M | 232.53M | 48.88M | 83.33M | 18.3M |
| EBITDA Margin % | 50.89% | 66.73% | 65.56% | 70.87% | 48.77% | 84.5% | 77.96% |
| EBITDA Growth % | -22.25% | 18.45% | -6.25% | 375.76% | -41.35% | 355.46% | - |
| D&A (Non-Cash Add-back) | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EBIT | 152.53M | 258.23M | 218M | 232.53M | 48.88M | 83.33M | 18.3M |
| Net Interest Income | 239.38M | 235.68M | 284.2M | 246.92M | 157.56M | 88.28M | 16.55M |
| Interest Income | 372M | 371.81M | 407.13M | 359.81M | 224.75M | 109.3M | 20.28M |
| Interest Expense | 132.62M | 136.13M | 122.93M | 112.88M | 67.18M | 21.02M | 3.73M |
| Other Income/Expense | 0 | - | - | - | - | - | - |
| Pretax Income | 88.52M | 122.09M | 218M | 232.53M | 48.88M | 83.33M | 18.3M |
| Pretax Margin % | 29.53% | 31.55% | 65.56% | 70.87% | 48.77% | 84.5% | 77.96% |
| Income Tax | 602K | 0 | 2.44M | 1.52M | 334K | 80K | 0 |
| Effective Tax Rate % | 0.68% | 0% | 1.12% | 0.65% | 0.68% | 0.1% | 0% |
| Net Income | 87.91M | 122.09M | 215.56M | 231.01M | 48.54M | 83.25M | 18.3M |
| Net Margin % | 29.33% | 31.55% | 64.83% | 70.4% | 48.44% | 84.42% | 77.96% |
| Net Income Growth % | -54.58% | -43.36% | -6.69% | 375.91% | -41.69% | 355.02% | - |
| Net Income (Continuing) | 87.91M | 122.09M | 215.56M | 231.01M | 48.54M | 83.25M | 18.3M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | 1.02 | 1.40 | 2.43 | 2.62 | 0.55 | 0.94 | 0.21 |
| EPS Growth % | -53.79% | -42.39% | -7.25% | 376.36% | -41.49% | 347.62% | - |
| EPS (Basic) | - | 1.40 | 2.43 | 2.62 | 0.55 | 0.94 | 0.21 |
| Diluted Shares Outstanding | 85.78M | 87.27M | 89.26M | 88.28M | 88.28M | 88.28M | 88.28M |
| Basic Shares Outstanding | 85.78M | 87.27M | 89.26M | 88.28M | 88.28M | 88.28M | 88.28M |
| Dividend Payout Ratio | - | 150.73% | - | 47.83% | 176.65% | 45.9% | 20.43% |
Portfolio Valuation Volatility
As indicated by the most recent quarterly data, MSDL's gross margin contracted to 79.6% in 2026Q1, reflecting a broader trend of margin instability where quarterly gross margins have fluctuated significantly from a low of 47.6% in 2025Q3 to a peak of 80.5% in 2025Q4.
The wide variance in gross margins suggests that the fund's interest income is subject to significant lumpy adjustments, likely driven by the timing of prepayment fees or non-recurring amendment income. Investors should interpret this volatility as a potential indicator of inconsistent underlying asset performance rather than a stable, predictable yield environment.
Based on the provided income statement, MSDL reported a net loss of $4.5 million in 2026Q1, a sharp reversal from the $28.7 million profit recorded in 2025Q4, highlighting the sensitivity of bottom-line results to unrealized valuation adjustments within the fund's Level 3 asset portfolio.
The transition from a 33.0% net margin in 2025Q4 to a negative 6.0% in 2026Q1 suggests that reported earnings are heavily influenced by mark-to-market accounting rather than pure cash-based interest collection. This volatility warrants further investigation into the specific credit events or valuation shifts that triggered such a rapid deterioration in net income.
According to the historical income statement, MSDL's operating margin has demonstrated significant inconsistency, dropping from a peak of 71.4% in 2025Q4 to 34.9% in 2026Q1, which suggests that the fund's ability to scale operating income relative to gross profit is currently constrained by internal cost structures.
While SG&A expenses remain relatively low, the lack of consistent operating leverage implies that the fund's profitability is highly dependent on the gross yield of its loan book. The inability to maintain a stable operating margin during periods of revenue fluctuation may indicate that the fund lacks the necessary scale to absorb periodic credit-related costs.
As reported in financial statements, the recent shift to a net loss in 2026Q1 challenges the narrative of a stable, income-generating vehicle, raising concerns that the fund's reliance on complex middle-market credit may be masking underlying liquidity distress within the portfolio companies.
Short-term observers may focus on the potential for further mark-to-market write-downs if the broader private equity environment faces a sustained downturn. The current income statement trajectory suggests that investors should be cautious about assuming that historical yield levels are sustainable without a more granular view of the portfolio's non-accrual status.
Quick answers to the most common questions about buying MSDL stock.
Morgan Stanley Direct Lending Fund (MSDL) is profitable, generating $122.1M in net income for the fiscal year ending 2025 with a net profit margin of 31.5%.
Morgan Stanley Direct Lending Fund (MSDL) reported an operating income of $258.1M, resulting in an operating profit margin of 66.7%. This margin reflects the operational efficiency of the business before interest and taxes.
Morgan Stanley Direct Lending Fund (MSDL) generated $313.6M in gross profit for the year, representing a gross profit margin of 81.0%. This demonstrates the company's core pricing power and production efficiency.