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TI

TPG Inc. (TPG)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was resilient: GAAP revenue rose to $1.03B with GAAP net income of $88M; After-tax Distributable Earnings (DE) were $187M ($0.48 per Class A share) and dividend declared at $0.41 per share .
  • Results beat S&P Global consensus on both EPS and revenue: $0.48 vs $0.45 and $1.03B vs $0.454B; prior two quarters also beat on both metrics, indicating consistent estimate outperformance over the last three quarters (values from S&P Global) .
  • AUM reached $250.6B (+12% YoY) and FAUM $142.8B (+4% YoY); net accrued performance exceeded $1.0B for the first time, underscoring embedded earnings power .
  • Strategic catalysts: announced acquisition of Peppertree Capital (digital infrastructure towers) expected to be immediately accretive to FRE and After-tax DE per share upon closing; revolver upsized to $1.65B enhances liquidity .

What Went Well and What Went Wrong

  • What Went Well

    • Strong estimate beats: Q1 2025 EPS $0.48 vs $0.45 and revenue $1.03B vs $0.454B; prior two quarters also beat on both measures (values from S&P Global). Management highlighted continued strength in capital markets fees and positive momentum across platforms .
    • AUM/FAUM growth and performance: AUM hit $250.6B (+12% YoY), FAUM $142.8B (+4% YoY), and firm-wide value creation increased net accrued performance to >$1.0B .
    • Strategic M&A and product expansion: Announced acquisition of Peppertree (largest pure-play US tower specialist) with immediate accretion expected; launched TPG Sports with anchor from Lunate; advanced private wealth with T-POP slated to begin inflows in June .

  • What Went Wrong

    • FRE margin compression: FRE margin declined to 38% in Q1 (from 40% in 1Q24), pressured by seasonally elevated cash comp; management still targets exiting 2025 in the mid-40s .
    • Anticipated near‑term step-down in capital markets revenue in Q2 due to timing of transaction closings before improving in the back half, introducing quarter-to-quarter variability .
    • Fundraising elongation in certain strategies (e.g., climate in the U.S.) amid policy uncertainty; management still expects to raise “significantly more” in 2025 vs 2024 but with extended timelines in some campaigns .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
GAAP Revenue ($USD)$855.4M $1,076.4M $1,034.9M
Revenue Consensus Mean ($USD)$450.1M*$463.2M*$453.7M*
Primary EPS / After-tax DE per Class A ($)$0.45*$0.62 $0.48
EPS Consensus Mean ($)$0.449*$0.521*$0.452*
GAAP Net Income (Loss)$(21.4)M $11.1M $87.8M
After-tax DE ($M)$189.4M$260.6M$186.7M
  • Asterisked items are Values retrieved from S&P Global.
  • Notes: EPS shown reflects After-tax DE per Class A share where disclosed; management and S&P reporting align on $0.48 for Q1 2025 .

Fee Economics and KPIs

MetricQ3 2024Q4 2024Q1 2025
Fee-Related Revenues (FRR) ($M)$459.8$461.4$476.3
Fee-Related Earnings (FRE) ($M)$190.8$189.8$181.6
FRE Margin (%)——38%
AUM ($B)—$245.9 $250.6
FAUM ($B)—$141.3 $142.8
Net Accrued Performance ($B)—$0.974 $1.020
Available Capital ($B)$51.2 (1Q24) $57.6 (4Q24) $57.0 (1Q25)

Segment/Platform Highlights (Q1 2025)

ItemQ1 2025
Realized Performance Allocations, Net – Total ($M)$40
by platform ($M)Capital $27; Impact $5; TPG AG Credit $6; Real Estate $2
GAAP Management Fees ($M)$413.2
Transaction, monitoring and other fees, net ($M)$54.0

Dividend and Capital Structure

ItemQ4 2024Q1 2025
Dividend per Class A$0.53 $0.41
Cash & Equivalents (GAAP)$808.0M $822.0M
Debt Obligations (GAAP)$1.282B $1.483B
Revolver capacity$1.2B (pre-amend) Upsized to $1.65B (May)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
FRE Margin Exit RateFY2025Exit mid-40s by YE’25 Exit mid-40s by YE’25 reiterated Maintained
Capital Markets Revenue2Q25 and H2N/AStep-down in Q2 on timing; momentum continues in H2 New detail
Aggregate FundraisingFY2025Raise “significantly more” than 2024 Reaffirmed; several large mandates and midyear first closes Maintained
T-POP (Private Wealth PE Evergreen)1H25Target Q1 launch; live in Q2 Activation in June; expect inflows to begin then Timeline clarified/slight slippage
Revolver2025$1.2BUpsized to $1.65B; extended 5 years; better pricing Improved liquidity
DividendQ1 2025N/A$0.41 declared Declared

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q4’24; Q-1: n/a or as available)Current Period (Q1’25)Trend
Private Wealth build-out (T-POP, TCAP)Q4’24: T-POP aimed to launch Q1 and go live Q2; private wealth as inflection point T-POP activation in June; $525M raised in 1Q via private wealth; expanding products/teams Improving execution; near-term flows starting
Capital markets revenuesQ4’24: step-function growth in 2024; expanding broker-dealer Q2 step-down on timing; confidence in back-half and multi-year growth Near-term dip; positive medium-term trajectory
Credit platform scale (Twin Brook, structured credit)Q4’24: record originations; credit exceeded targets Lower middle-market direct lending pipeline robust; structural protections; ~3% quarterly appreciation; 12% LTM Strong and broadening
Macro/tariffs exposure—Minimal first-order portfolio risk to tariffs; PE ~90% fair value little/no direct impact Risk managed; limited exposure
Climate/AI power demandQ4’24: TRC Infrastructure launch; Intersect-Google partnership Elongated US climate fundraising timelines; global opportunity strong; grid/power demand acceleration tied to AI Structural tailwind; pacing by region
Digital infrastructure expansion—Acquisition of Peppertree (wireless towers); immediate accretion expected Platform expansion underway
Insurance partnershipsQ4’24: exploring balance-sheet-light hybrids; partnerships under review Ongoing dialogues; focus on partnerships without becoming an insurer Strategic option; selective

Management Commentary

  • “With $57 billion of dry powder across the firm, we’re in a strong position to take advantage of this environment.” – CEO Jon Winkelried .
  • “We reported fee-related earnings of $182 million and an FRE margin of 38%... We continue to expect FRE margin expansion in the back half of the year and… exit the year with a margin in the mid-40s.” – CFO Jack Weingart .
  • “Peppertree… will add an additional source of highly attractive and predictable fee revenue. We expect this transaction to be immediately accretive to fee-related earnings and after-tax distributable earnings per share upon closing.” – CEO Jon Winkelried .
  • “At the end of the quarter, our net accrued performance balance exceeded $1 billion for the first time, driven by continued strong value creation.” – CFO Jack Weingart .

Q&A Highlights

  • Private wealth flows: T-POP activation in June with two major wirehouses; private wealth raised ~$525M in Q1; expanding products (multi-strategy credit, real estate) and distribution; TCAP visibility improving with demand for lower middle-market lending .
  • Capital markets: Capability ~75% built; no unusual one-offs in Q1; expect diversification and upside as integration deepens across businesses .
  • PE fundraising confidence: Differentiated portfolio construction, strong DPI, and client concentration in top managers support midyear first closes (Capital and Healthcare) despite tight PE market .
  • Credit platform: Scaling Twin Brook; pursuing scale in CLOs and Europe; expect further expansion across lending stack; insurance partnerships under evaluation without becoming balance-sheet heavy .
  • Peppertree specifics: $660M consideration ($242M cash/~$418M equity) valued at ~12x 2024 after-tax FRE; immediately accretive; FAUM ~$4.5–$5B; avg fee 1.5%–2%; Fund XI likely in market next year; exploring evergreen structure .
  • Geographic diversification: Clients reassessing exposures; China <2% of firm AUM; growing Asia strategies (PICA); opportunities in Europe and global climate .
  • FRE margin cadence: Some fundraising elongation assumed; mid-40s exit rate reiterated; Peppertree accretive but modest vs base .

Estimates Context

  • Q1 2025 vs S&P Global consensus: EPS $0.48 vs $0.452*; Revenue $1.035B vs $0.454B* – both beats (Values retrieved from S&P Global) .
  • Trend: Last three quarters show beats on both EPS and revenue (Values retrieved from S&P Global). Given capital markets timing (2Q step-down) and FRE margin expansion guided for H2, estimate models may shift towards H2 weighting and higher exit-rate margins .

Key Takeaways for Investors

  • Beat-and-raise cadence on profitability quality: Strong Q1 beats, rising FRR, and guidance to exit 2025 with mid-40s FRE margin underpin medium-term operating leverage despite near-term capital markets timing volatility .
  • Embedded earnings power: Net accrued performance >$1B and diversified realization engines (including credit) support multi-quarter monetization and DE durability .
  • Strategic expansion catalysts: Peppertree adds a durable, fee-rich digital infrastructure sleeve with immediate accretion; TPG Sports expands optionality; both support multiple expansion narratives .
  • Private wealth inflection: T-POP launch in June and broadening product set (credit, real estate) could unlock a steadier flow-based growth channel and diversify distribution .
  • Fundraising trajectory intact albeit elongated in spots: Management reaffirmed raising “significantly more” capital in 2025 vs 2024, with multiple midyear first closes; modeling should incorporate back-half activation and catch-up fee dynamics .
  • Balance sheet strength: Upsized, extended revolver to $1.65B supports inorganic and organic growth while maintaining conservative leverage .
  • Trading implications: Near-term prints may reflect Q2 capital markets step-down; H2 setup is stronger on FRE margin expansion, fundraising activation, and potential Peppertree close—catalysts likely skew to back half .

Footnotes:

  • Asterisked estimate values are Values retrieved from S&P Global.

Sources:

  • Q1 2025 earnings materials and deck: .
  • Q1 2025 press release and dividend: .
  • Q1 2025 earnings call transcript: .
  • Peppertree acquisition press release: .
  • TPG Sports launch: .
  • Q4 2024 press and call for prior-quartile context: .