In Royce Smaller-Companies Growth Fund, we look for companies that look poised for multi-year periods of robust growth driven by sustainable competitive advantages and/or benefiting from secular growth themes that create favorable conditions for the business. Each of the three companies we discuss in this piece are large holdings in the portfolio that have earned our long-term confidence.

Flotek Industries (NYSE: FTK) is an energy technology company with two distinct businesses: a legacy Chemistry Technology operation that improves oil and gas well performance, and a faster-growing Data Analytics business that provides real-time hydrocarbon measurement and monitoring across custody transfer, emissions, process control, and power-generation applications. While Data Analytics remains a smaller contributor to revenue, it has become the primary driver of profitability given margins that are substantially higher than the legacy chemicals business.

Our investment thesis centers on the continued growth of Flotek’s Data Analytics business and the resulting transformation of the company’s business mix. The legacy chemicals business is inherently cyclical and is tied to completion activity, while the Data Analytics arm generates higher-margin, recurring revenue from a growing installed base of measurement and monitoring solutions. As Data Analytics becomes a larger percentage of the company, we believe Flotek can increasingly transition from a cyclical oilfield services business toward a higher-margin, more recurring, and more predictable earnings model. Importantly, we see the opportunity extending across multiple applications, including custody transfer, emissions monitoring, process optimization, and distributed power generation all providing several avenues for sustained growth.

Flotek Industries (NYSE: FTK)
12/31/25-8/27/26

Source: FactSet.
Past performance is no guarantee of future results.

Hinge Health Cl. A (NYSE: HNGE) is, in our view, the category leader in virtual musculoskeletal care (MSK), moving one of the most common and inconvenient healthcare experiences from the clinic into the home. Through its technology platform, Hinge provides physical therapy, chronic pain treatment, acute injury care, and post-surgical rehabilitation. The model is particularly attractive because AI and automation reduce the time required for clinicians to deliver care, supporting healthy gross margins and creating significant operating leverage as the business scales.

Our investment thesis is built around two primary growth drivers—continued expansion in eligible lives and increasing utilization within that installed base. Hinge continues to add employers and health plan relationships, expanding the number of members eligible for its services. Utilization remains relatively low, providing a meaningful runway to drive greater penetration among members already covered. High client retention and broad health plan and pharmacy benefit management, or “PBM,” distribution reinforce the opportunity. At the same time, products such as HingeSelect and Migraine Care, along with the recently announced plan to acquire Cylinder Health, expand the platform beyond virtual MSK into in-person care, migraine treatment, and digestive health. (Cylinder Health provides virtual-first digestive healthcare, and Hinge plans to integrate it into its platform and launch an integrated GI Care Program in 2027.) We believe this combination of eligible life growth, rising member utilization, and an expanding product portfolio gives Hinge multiple avenues to sustain attractive growth over a long-term period.

Hinge Health Cl. A (NYSE: HNGE)
12/31/25-8/27/26

Source: FactSet.
Past performance is no guarantee of future results.

Magnite (Nasdaq: MGNI) is an advertising technology platform that helps streaming services and other digital publishers monetize their advertising inventory. Our investment thesis centers on the structural shift in advertising dollars from linear television to connected television (CTV), with Magnite positioned as a critical piece of the infrastructure. In 2026, we believe the company reached an important inflection point as CTV surpassed its DV+ business (which encompasses desktop display, mobile web, mobile apps, and online video) to become Magnite’s largest revenue contributor. CTV revenue grew 36% year over year in the second quarter, while the company continued to demonstrate improving operating leverage.

Looking forward, we believe Magnite has several avenues to sustain attractive growth, including continued publisher wins, increasing programmatic penetration of CTV inventory, political advertising (which will increase as the midterms are fast approaching), and the growing adoption of AI across the advertising ecosystem. Ad tech has historically been a volatile industry, but Magnite’s position in the value chain has become increasingly strategic as more premium video inventory moves from traditional television to digital platforms. As AI makes media buying both more automated and more sophisticated, the underlying infrastructure required to connect buyers with premium publisher inventory becomes even more important. Magnite provides those essential “pipes,” giving the company an opportunity to participate in the next evolution of how digital advertising is bought and sold.

Magnite (Nasdaq: MGNI)
12/31/25-8/27/26

Source: FactSet.
Past performance is no guarantee of future results.

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