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TPG Inc. (TPG)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 was a strong quarter: After-tax DE rose to $268M ($0.69 per Class A share), driven by higher fee-related revenues and realized performance allocations; a record quarterly dividend of $0.59 was declared .
  • Revenue outperformed Wall Street consensus materially (actual $920.5M vs. $478.5M estimate*) and EPS beat by a wide margin (actual $0.69 vs. $0.45 estimate*) as fundraising and catch-up fees lifted FRE while realizations accelerated (see tables) .
  • Capital formation was a key catalyst: $11.3B raised (second-highest quarter in firm history) with a record $5.4B in credit; AUM reached $261.3B (+14% YoY) and FAUM $146.4B (+7% YoY) .
  • Management reiterated exiting FY25 with mid-40s FRE margin and mid-to-high single-digit effective corporate DE tax rate; catch-up fees to step down in Q3 then pick up next year .
  • Near-term stock drivers: dividend scale, robust credit/PE fundraising momentum, and accelerating deployments/realizations supporting DPI and fee growth .

What Went Well and What Went Wrong

  • What Went Well

    • “Outstanding results” with After-tax DE up 30% YoY and record dividend; second-highest fundraising quarter ever and strongest credit fundraising quarter to date .
    • FRE held strong at $220M with a 44% margin; fee-related revenues rose to $495M aided by $43M of catch-up fees .
    • Realizations accelerated: $6.5B in Q2 across platforms; realized performance allocations reached $87M, diversified across Growth IV, TPG VII and Credit Solutions II .

  • What Went Wrong

    • Realized investment income and other, net was a drag on DE (non-core expenses), including $10M for unoccupied lease space and $8M for acquisition diligence .
    • Cash-based compensation and operating expenses increased vs. prior-year quarter, tempering drop-through despite higher FRR .
    • Some platform step-downs and timing dynamics (e.g., fee base transitions) continue to create quarter-to-quarter noise in fee metrics (noted earlier in year) .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Total Revenues ($USD Millions)$744.2 $1,034.9 $920.5
After-tax DE ($USD Millions)$206.6 $186.7 $268.3
FRE ($USD Millions)$201.3 $181.6 $219.5
FRE Margin %44% 38% 44%
Realized Performance Allocations ($USD Millions)$26.0 $39.6 $87.0
KPIQ2 2024Q1 2025Q2 2025
AUM ($USD Billions)$229.0 $250.6 $261.3
FAUM ($USD Billions)$137.0 $142.8 $146.4
Capital Raised ($USD Billions)$6.3 $5.9 $11.3
Capital Invested ($USD Billions)$7.6 $7.3 $10.4
Realizations ($USD Billions)$5.4 $4.3 $6.5

EPS and Revenue vs. Estimates (S&P Global):

MetricQ2 2024Q1 2025Q2 2025
EPS – Consensus vs Actual ($)0.427* vs 0.49*0.452* vs 0.48*0.453* vs 0.69*
Revenue – Consensus vs Actual ($USD Millions)452.8* vs 744.2*453.7* vs 1,034.9*478.5* vs 920.5*

Values with asterisks retrieved from S&P Global.

Segment detail (Realized Performance Allocations – Q2 2025):

PlatformQ2 2025 ($USD Millions)
Capital$31
Growth$43
TPG AG Credit$12
TPG AG Real Estate$1
Impact, Real Estate, Market Solutions~$0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
FRE MarginFY2025 exit“Mid-40s” target (Q4 call) Reiterated “mid-40s” exit for FY25 Maintained
Effective corporate tax rate on DEFY2025Mid-to-high single digits (Q4 call) Mid-to-high single digits reiterated Maintained
Catch-up fees cadence2H 2025–2026Expected to step up through 2025/26 (Q4 call) Step down in Q3, pick up next year Clarified timing
Dividend per Class A shareQ2 2025$0.41 in Q1 2025 $0.59 declared for Q2 2025 Raised sequentially
Revolving Credit FacilityNear termUpsized to $1.65B in May; available liquidity $1.1B (Q1 deck context) Upsized to $1.75B; pro forma revolver balance ~$570M; available liquidity >$1.3B Increased capacity

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Credit fundraising & platform scaleExceeded $10B 2024 target; multi-product SMAs in pipeline Record quarterly credit raises ($5.4B); structured credit demand; insurance ~30% of Q2 credit inflows Accelerating
Private wealth (TPOP/TCAP)TPOP to launch; TCAP expanding distribution TPOP raised ~$430M in June/July; TCAP had highest organic fundraising quarter; >30 global partners Expanding
Insurance partnershipsBalance-sheet light preference; strategic partnerships under evaluation Evaluating broader strategic partnerships and inorganic opportunities; maintain FRE-centricity Active exploration
AI/data center power & gridClimate infra launched; Intersect Power partnership with Google Additional grid/backbone investments expected; strong pipeline in EU/Asia Building
Realizations/DPI$7B Q4 realizations; $195M realized performance allocations in FY24 $6.5B Q2 realizations; $87M realized performance allocations; strong public exits Sustained strength

Management Commentary

  • “We delivered outstanding results in the second quarter…Our Distributable Earnings for the quarter increased 26% year-over-year, and we declared a record quarterly dividend.” – Jon Winkelried, CEO .
  • “Our fee-related revenue…included $43M of catch-up fees…FRE margin of 44% in the second quarter…” – Jack Weingart, CFO .
  • “We converted momentum into $11.3B of capital raised, of which $5.4B was from our credit platform…we expect 2025 to be a breakout year.” – CEO .
  • “We expect PepperTree to be immediately accretive to FRE and after-tax DE per share.” – CFO .
  • “We believe Credit Solutions is well positioned as a lender of choice…we anchored an innovative multibillion-dollar debt financing for xAI.” – CEO .

Q&A Highlights

  • Industry positioning and private equity cycle: TPG sees “haves and have-nots” with market share consolidating to top performers; strong re-ups and >20% increases among existing LPs in first closes .
  • Insurance strategy: Prioritizing FRE-centricity and balance-sheet light approaches; exploring hybrid structures and strategic partnering to avoid undue liabilities .
  • Capital markets: Transaction/monitoring fees expected to grow ahead of firm pace as capabilities expand across platforms .
  • Private wealth roadmap: Broadening distribution beyond two wirehouses; RIA-focused product (via iCapital) to mirror TPOP; multi-asset credit and real assets products in design .
  • Near-term outlook: Q3 catch-up fees to step down; compensation to trend up; exit FY25 with mid-40s FRE margin, tax rate mid-high single digits .

Estimates Context

  • EPS beat: Actual $0.69 vs. $0.45 consensus*, aided by catch-up fees ($43M) and diversified realized performance allocations ($87M) .
  • Revenue beat: Actual $920.5M vs. $478.5M consensus*, supported by management fees growth and strong fundraising conversion .
  • Forward estimate implications: With activated TPG Capital X in July and rising credit deployments, Street may need to revise FRE and DE upward for 2H25; near-term Q3 catch-up fee step-down partially offsets . Values retrieved from S&P Global.

Key Takeaways for Investors

  • The quarter delivered broad-based beats vs. estimates; with record credit fundraising and accelerating realizations, the fee and carry flywheel is intact .
  • Dividend scale and payout signal confidence; the $0.59 dividend reflects robust After-tax DE per share ($0.69) .
  • Credit is a major growth vector (insurance channel ~30% of Q2 credit inflows); expect continued scale in structured credit, direct lending, and solutions .
  • Private wealth platform is gaining traction (TPOP/TCAP); incremental retail distribution should smooth fundraising and fee growth .
  • Strategic partnerships (including insurance and cross-asset LP arrangements) can extend duration of capital and accelerate scaling across strategies .
  • Near-term modeling: bake in Q3 catch-up fee dip and higher compensation; maintain FY25 exit FRE margin in mid-40s and corporate DE tax in mid-high single digits .
  • Medium-term thesis: AUM/FAUM growth (261B/146B), activation of flagship funds, and climate/infra adjacency should support expanding FRE margins and sustained DPI .