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PI

P10, Inc. (PX)·Q2 2024 Earnings Summary

Executive Summary

  • Record revenue and solid top-line momentum: Q2 revenue rose 14% YoY to $71.1M on $844M of gross new fee‑paying AUM and $6.0M catch‑up fees; FRR grew 12% YoY to $68.3M, while FRE declined 3% YoY to $33.6M as mix and incentive‑fee timing shifted .
  • Profitability mixed: Adjusted EBITDA increased 2% YoY to $35.4M with a 50% margin (vs. 56% LY), aided by higher‑fee direct strategies; GAAP net income improved to $7.4M; fully diluted ANI/share was $0.24 (vs. $0.22) .
  • Balance sheet and capital return: Credit capacity expanded to $500M (term loan $325M; revolver $175M; accordion $125M); company repurchased 1.53M shares at $8.12 and declared a $0.035 dividend; Board added $12M to the buyback authorization post‑quarter .
  • FY24 framework unchanged: Management reaffirmed 2024 goals of $2.5B+ organic raise/deploy, mid‑40s EBITDA margins for the year, and step‑downs/expirations of ~ $1.5B with ~$0.5B remaining in 2H; fee rate (ex catch‑ups) ~105 bps; potential to exceed $16M catch‑ups given closings .

What Went Well and What Went Wrong

What Went Well

  • Fundraising momentum and platform breadth: “We raised and deployed $844 million in gross new fee‑paying AUM and delivered record revenue of $71 million, representing 14% year‑over‑year growth” (CEO) .
  • Strategy execution and mix: Q2 average fee rate reached 115 bps as higher‑fee direct strategies grew; Adjusted EBITDA margin of 50% came in “a bit higher than expected due to the strength of our direct strategies and product mix” (CFO) .
  • Balance sheet flexibility: Amended and restated credit facility to $500M and extended maturities to Aug‑2028, supporting organic and inorganic growth plans .

What Went Wrong

  • FRE softness: Fee‑Related Earnings declined 3% YoY to $33.6M; FRE margin 49% was below last year (57%) as mix and incentive‑fee timing shifted .
  • Step‑downs/expirations offset inflows: $855M of step‑downs/expirations in Q2 effectively offset $844M of fundraising/deployment; FY step‑downs still ~ $1.5B .
  • Incentive fee volatility: “Other revenue” elevated by incentive fees from a single client at RCP—management emphasized FRR/FRE to strip volatility; not a structural driver .

Financial Results

MetricQ4 2023Q1 2024Q2 2024
Revenue ($M)$63.1 $66.1 $71.1
GAAP Net Income ($M)$(1.9) $5.2 $7.4
Diluted GAAP EPS ($)$(0.01) $0.04 $0.06
Adjusted EBITDA ($M)$30.7 $30.8 $35.4
Adjusted EBITDA Margin (%)48.7% 47% 50%
Fee‑Related Revenue (FRR) ($M)N/A$65.0 $68.3
Fee‑Related Earnings (FRE) ($M)N/A$30.7 $33.6
FRE Margin (%)N/A47% 49%
Adjusted Net Income ($M)$25.5 $25.4 $28.8
Fully Diluted ANI per share ($)$0.21 $0.21 $0.24

KPIs and Operating Drivers

KPIQ4 2023Q1 2024Q2 2024
Fee‑Paying AUM ($B)$23.3 $23.8 $23.8
Gross fundraising & deployment ($M)$860 $667 $844
Step‑downs & expirations ($M)$297 $81 $855
Catch‑up fees ($M)$4.6 (Q4) $7.7 $6.0
Avg fee rate (bps)109 110 115
Cash & cash equivalents ($M)$30.5 $29 $31
Debt outstanding ($M)$273.6 (post YE) $298.3 (as of May 8) $302.7 (6/30); $325.0 term/ $0 revolver post‑refi
Share repurchases (shares, avg px)0.86M @ $9.74 3.68M @ $8.15 1.53M @ $8.12
Dividend per share ($)$0.0325 (declared) $0.035 (declared) $0.035 (declared)

Notes: FRE/FRR introduced in 2024; Q4’23 FRR/FRE not disclosed in press materials. Post‑quarter refi expanded facilities to $500M (term $325M; revolver $175M; accordion $125M) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Update (Q2)Change
Organic gross raise/deployFY 2024≥ $2.5B (Feb/Q4 call) At 61% through H1; “meet or exceed” ≥$2.5B Maintained; confidence increased
Adjusted EBITDA marginFY 2024Mid‑40s% (ex M&A) Still mid‑40s% for FY; Q2 at 50% on mix Maintained
Fee rate (ex catch‑up)FY 2024~105 bps ~105 bps reaffirmed Maintained
Catch‑up feesFY 2024~$16M Could exceed prior ~$16M on 2H closings Raised bias
Step‑downs/expirationsFY 2024~$1.5B; ~$1.0B in Q2 ~$1.5B total; ~$0.5B in 2H Maintained timing/amount
Strategic transactionCY 2024Target at least one deal “On track to announce a strategic transaction in the calendar year” Maintained
Capital allocationOngoingDividend priority; buybacks/M&A Same priorities; buyback authorization ~ $20M post‑Q2 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’23 and Q1’24)Current Period (Q2’24)Trend
Fundraising & pipeline10 funds in market; TrueBridge VIII >$850M pace; Park IV >$500M; WTI fees 2H’24 12 funds in market; TrueBridge VIII closed $880M; Hark IV closed $645M; BCP II at $890M; WTI II FPAUM $321M Improving
M&A strategy“String of pearls,” selective, announce 2024 if accretive “On track to announce a strategic transaction in the calendar year”; areas: bolt‑ons, private credit, real assets, geographic expansion Building
Fee rate & mixGuide ~105 bps; mix shift to direct/credit; catch‑ups significant Avg fee rate 115 bps in Q2; catch‑ups $6.0M; FRR +12% YoY; FRE −3% YoY Positive fee rate; mixed FRE
NAV lending environmentAttractive opportunity; Hark growth “Robust opportunities” in NAV lending (Hark) as buyout funds need flexibility Strengthening
Data/AI & transparencyKPI rollout planned; data advantage emphasized Investor Day to demo proprietary data platform; ongoing KPI disclosure (FRR/FRE) Increasing transparency
Capital allocationDividend, buybacks, M&A; authorization >$50M (Q4) 1.53M shares repurchased; $12M added post‑Q2; dividend $0.035 Ongoing

Management Commentary

  • “Our second quarter performance demonstrates the strong momentum we have in our business… We raised and deployed $844 million in gross new fee‑paying AUM and delivered record revenue of $71 million” — Luke Sarsfield, CEO .
  • “Our margin came in a bit higher than expected due to the strength of our direct strategies and product mix. We still expect margins for the year to be in the mid‑40s” — Amanda Coussens, CFO .
  • “We increased our total borrowing capacity… from $359 million to $500 million… extend maturities to August 2028” — Luke Sarsfield ; details in press release .
  • “Catch‑up fees were $6 million in Q2… based on projected closings in 2H, our catch‑up fees could exceed our previously stated annual guidance of $16 million” — Amanda Coussens .

Q&A Highlights

  • Fundraising target vs. raise: Management reiterated “$2.5B or more,” noting strong back‑half momentum but declined to formally raise the target yet .
  • Deployment backdrop and NAV lending: Hark’s NAV lending sees “really robust opportunities” as sponsors seek portfolio/add‑on financing; paced prudently given credit risk .
  • “Other revenue” composition: Incentive fees from a single RCP client elevated other revenue; not structural; FRR/FRE disclosures help strip volatility .
  • Fee rate outlook: Core fee rate (ex catch‑ups) ~105 bps for 2024 reaffirmed; Q2 average 115 bps benefited from mix and catch‑ups .
  • M&A focus: Evaluating bolt‑ons, private credit (direct lending/ABL), real assets (esp. infrastructure), and international expansion; disciplined on valuation .
  • Capital allocation: Priorities unchanged—dividend, buybacks and M&A (relative emphasis depends on share price and opportunities); revolver undrawn post‑refi .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 2024 and Q1 2024 was unavailable due to a temporary data access cap; we cannot quantify beats/misses vs. Street at this time. We recommend revisiting consensus to update the “vs. estimates” view once access is restored. (S&P Global data unavailable)
  • Directionally, PX delivered record revenue and YoY growth across FRR and ANI, while FRE contracted modestly YoY due to mix and incentive‑fee timing—implying potential model updates around fee‑rate/mix, catch‑ups, and FRE margins .

Key Takeaways for Investors

  • Durable fee base with improving mix: Higher‑fee direct strategies and catch‑ups lifted fee rate to 115 bps; FRR up 12% YoY despite step‑downs/expirations .
  • Scale and product breadth driving closes: TrueBridge VIII ($880M), Hark IV ($645M), and BCP II ($890M raised) underscore multi‑strategy momentum into 2H .
  • Margin trajectory: Q2 EBITDA margin at 50% exceeded the “mid‑40s” annual guide—helped by mix; expect margins to normalize toward guide as investments continue .
  • Capital flexibility enhances M&A option value: $500M facility with an additional $125M accordion positions PX to execute “string of pearls” or targeted expansion transactions .
  • Capital return cadence intact: Ongoing buybacks (~$20M authorization post‑quarter) and $0.035 quarterly dividend support TSR while valuation normalizes .
  • Watch the “step‑down” cadence: ~ $0.5B in step‑downs/expirations expected in 2H; continued fundraising/deployment and catch‑ups should offset .
  • Catalysts: Potential M&A announcement in 2024, continued fund closings (RCP Direct V, Secondaries V), and Investor Day disclosures (data platform, KPIs) .

Appendix – Additional Relevant Press Releases (Q2’24 period)

  • Expanded Credit Agreement: Total capacity to $500M; maturities extended to Aug‑2028; revolver $175M; term $325M; accordion up to $125M .
  • Hark Capital IV Final Close: $645M in commitments, >60% above prior fund; NAV lending demand accelerating .

Potential Data Discrepancy Note: Q2 Class B shares outstanding referenced as 58,207,544 in the 8‑K/presentation vs. 58,270,544 on the call; we anchor to the 8‑K exhibit figure for formal reporting .