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TI

TPG Inc. (TPG)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered strong operating momentum (record deployment, robust fundraising) but mixed prints versus Street: EPS (After‑tax DE/share) was $0.53 vs $0.57 consensus, while revenue on a fee basis (FRR) modestly beat; dividend set at $0.45 per share . Primary EPS consensus and revenue estimates from S&P Global; see Estimates Context section for details.*
  • Capital formation and deployment accelerated: $18.1B raised (PE $12.3B; Credit ~$4.8B), and a record $14.9B deployed (Credit $8.3B) underpinning AUM growth to $286.4B (+20% YoY) and FAUM to $163.0B (+15% YoY) .
  • FRE engine expanding: FRR $509M (+11% YoY), FRE $225M (+18% YoY) with 44% margin; management reiterated exiting 2025 in the “mid‑40s” FRE margin, implying continued operating leverage despite investments in wealth and new strategies .
  • Balance sheet/liquidity supportive of growth: net debt ~$1.7B, available liquidity ~$1.8B; Fitch upgraded to A‑; interest expense rose to $23M after $500M senior notes and revolver usage (a headwind to EPS this quarter) .
  • Near‑term stock catalysts: estimate resets around EPS miss vs revenue/FRE strength; further closes for flagship PE funds, continued credit deployment, and updates on private wealth/insurance channel expansion could drive multiple and DE revisions .

What Went Well and What Went Wrong

  • What Went Well
    • Record investment pace and broad-based fundraising: $18.1B raised (PE $12.3B including ~$10.1B first close for TPG Capital X and Healthcare Partners III; Credit $4.8B) and $14.9B deployed (Credit $8.3B), demonstrating robust platform momentum .
    • FRE/FRR strength and margin durability: FRR $509M (+11% YoY), FRE $225M (+18% YoY), FRE margin 44% (+300 bps YoY), supported by higher management fees ($461M) and Peppertree accretion .
    • Portfolio quality and risk management: Credit appreciated 3% QoQ/12% LTM, sub‑2% non‑accruals in MMDL, zero subprime auto exposure; PE appreciated 3% QoQ/11% LTM; RE up 3.5% QoQ/~16% LTM .
    • Representative quote: “TPG delivered strong results… led by robust capital formation across all asset classes and a record quarter for deployment.” — CEO Jon Winkelried .
  • What Went Wrong
    • EPS miss versus consensus: After‑tax DE/share $0.53 vs $0.57 Street, impacted by higher net interest expense ($23M) post debt issuance and revolver draws, and lower ‘catch-up’ fees in Q3 . Primary EPS consensus from S&P Global; see Estimates Context.*
    • PRE translation timing: Despite ~$7.8B realizations, realized performance allocations were $30M (timing early in fund waterfalls), deferring carry recognition despite healthy monetizations .
    • Opex/investment spend: Management flagged continued investment in private wealth distribution and growth initiatives (near‑term margin drag offset by longer‑term expansion) .

Financial Results

  • GAAP and Non‑GAAP summary (quarterly; oldest → newest)
MetricQ1 2025Q2 2025Q3 2025
Total Revenues ($M)1,034.9 920.5 1,223.5
Fee‑Related Revenues, FRR ($M)476.3 495.1 509.4
Fee‑Related Earnings, FRE ($M)181.6 219.5 225.0
FRE Margin (%)38 44 44
After‑tax Distributable Earnings ($M)186.7 268.3 214.4
After‑tax DE per Share ($)0.48 0.69 0.53
Dividend per Share ($)0.41 0.59 0.45
  • GAAP profitability drivers and costs (Q3 detail)
    • Management fees $461M; FRR $509M; FRE $225M; interest expense $32.3M GAAP; net income (GAAP) $199M; net income attributable to TPG Inc. $67M .
  • Platform scale and activity
KPIQ3 2024Q3 2025
AUM ($B)239.1 286.4
FAUM ($B)141.7 163.0
Net Accrued Performance ($B)1.0 1.2
Available Capital ($B)58.4 72.9
Capital Raised ($B, Q3)10.4 18.1
Capital Invested ($B, Q3)8.6 14.9
Realizations ($B, Q3)5.6 7.8
  • Segment/Platform fundraising mix (Q3 2025)
PlatformCapital Raised ($M)
Capital (PE)10,601
Growth855
Impact440
TPG AG Credit4,803
TPG AG Real Estate18
Real Estate (TPG RE)1,028
Market Solutions380
Total18,107

  • Additional operating/credit quality highlights

    • Credit appreciation +3% QoQ; MMDL non‑accruals <2%; avg interest coverage ~2x; zero subprime auto exposure .

  • Supplemental operating metrics (S&P Global; not GAAP, asterisked)

    • Revenues ($M): Q1 $543.46*, Q2 $569.07*, Q3 $596.50* (S&P data aligns with fees/other line; see S&P disclaimer).*
    • EBITDA ($M): Q1 $142.46*, Q2 $86.52*, Q3 $265.55*; EBITDA Margin: Q1 13.77%, Q2 9.40%, Q3 21.70%*.
    • Cash from Operations ($M): Q1 $198.19*, Q2 $385.87*, Q3 $492.04*.
    • Note: Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
FRE Margin (exit)FY 2025 exitMid‑40s% reiterated Mid‑40s% reiterated Maintained
Dividend PolicyOngoingTarget 85% of TPG Inc. After‑tax DE Target 85% maintained Maintained
Fundraising OutlookFY 2026n/aExpect 2026 fundraising to be “robust,” similar to 2025; multiple new/ongoing campaigns (credit, Asia PE, RISE IV, real estate vintages) New qualitative outlook
PE Fund ActivationLate 2025/2026TPG Capital X activated July; HCP III likely early 2026 No change; follow‑on closes expected Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Fundraising cadenceQ1: Expect significantly more capital in 2025 than 2024; multiple campaigns mid‑year . Q2: Second‑highest quarter ever; strong first close pipeline for Capital X/HCP III .$18.1B raised; ~$10.1B first close at flagship PE; credit momentum continues .Accelerating
DeploymentQ1: $7.3B invested; robust pipelines across PE, Credit, RE . Q2: $10.4B invested; Credit $4.3B; structured credit leadership .Record $14.9B invested; Credit $8.3B; MMDL origination strength; structured credit $3.6B .Accelerating
Private wealthQ1: T‑POP launched; scaling TCAP; expand RIA partnerships . Q2: T‑POP ~$430M early inflows; TCAP highest quarter; designing interval/RE products .T‑POP ~$900M first 5 months; >$1B quarterly wealth inflows; expanding platforms globally .Expanding
Insurance channelQ1: Evaluating strategic partnerships; balance‑sheet light preference . Q2: Insurance contributed ~30% of Credit fundraising .Insurance capital >60% growth over 2 years; innovative feeders; continued broad partnerships .Strengthening
AI/Tech exposureQ1: Thematic focus; Tech Adjacencies pipeline . Q2: XAI financing; tech adjacencies growth .Minority stakes in leading LLM developers; continued AI financing; careful underwriting of AI impacts .Deepening
Capital marketsQ1: Structural build; +30% YoY revenue in 2024, more ahead . Q2: Expect growth ahead of firm pace .Continued investment to drive distribution and fee growth .Positive
Real estateQ1: Selective, dislocation creating opportunities . Q2: Value creation; Park Ave South acquisition .TREP acquisition in Palo Alto; TI platform investment in Kinetic; RE AUM growth plans for 2026 .Improving

Management Commentary

  • Strategy and positioning: “Our increased scale and diversification positions us well to deliver accelerated growth and generate long term value for our shareholders.” — CFO remarks summary .
  • Fundraising momentum: “We raised a near record $18B… $10.1B raised in the first close for our flagship buyout funds… We believe we are outperforming in private equity fundraising relative to the broader market and gaining share.” — CEO .
  • Credit quality and risk: “Non‑accruals remain extremely limited at less than 2%… we currently have zero exposure [to subprime auto].” — CFO .
  • Monetizations and carry: “This sets us up for increased performance allocations for the next series of exits in these young funds.” — CFO on PRE timing .
  • Private wealth: “T‑POP… approximately $900M in its first five months… we’re very focused on expanding our distribution… globally in 2026.” — CFO .

Q&A Highlights

  • Realizations pipeline: Management emphasized active monetizations with multiple exit pathways (strategic, IPO, structured relationships); PRE recognition to improve as funds mature .
  • AI impact: Portfolio‑by‑portfolio diligence; opportunities in vertical software, fintech, cybersecurity; selective on horizontal/infrastructure software; AI Center of Excellence to drive adoption across holdings .
  • Credit growth vectors: Multi‑product scale across MMDL, structured credit, Credit Solutions; expanding insurance partnerships; building the “next leg” of lending for graduated borrowers; new strategies in 2026 .
  • FRE margin trajectory: Exiting 2025 mid‑40s remains a waypoint, not end‑state; incremental margins above mid‑40s over time despite reinvestment .
  • Inorganic priorities: Tuck‑ins and geography (Europe) in credit; infrastructure adjacencies; secondaries growth; disciplined M&A with strong integration track record .

Estimates Context

  • Q3 2025 vs S&P Global consensus:
    • Primary EPS (After‑tax DE/share): Actual $0.53 vs Consensus $0.57 → miss of $0.04, driven in part by higher interest expense from $500M senior notes and revolver usage, and lower catch‑up fees in Q3 . Primary EPS consensus and actual from S&P Global.*
    • Revenue: Using Fee‑Related Revenues (more comparable to Street “revenue” for alt managers): Actual FRR $509.4M vs Consensus $505.6M → small beat (~0.8%) . Consensus from S&P Global.*
    • EBITDA: Actual $265.6M (S&P), no consensus provided; focus remains on FRE/DE as primary profitability measures.*
  • Implications: Modest revenue/FRE outperformance with an EPS shortfall suggests Street models will tweak interest expense and catch‑up timing, while likely sustaining medium‑term FRE margin expansion and AUM/FAUM growth assumptions .

Note: All asterisked values retrieved from S&P Global.*

Key Takeaways for Investors

  • Platform momentum is intact: record deployment, strong fundraising, and expanding wealth/insurance channels underpin durable FAUM growth and future FRR/FRE compounding .
  • EPS optics vs underlying strength: The EPS miss stems from funding costs and timing (carry/catch‑ups) rather than core fee engine; FRE margin remains on track and poised to expand over multi‑year horizon .
  • Credit is a multi‑year growth driver: rising dry powder, robust pipelines, high underwriting standards, and new product launches (including “graduated” lending) support sustained AUM and fee growth with controlled risk .
  • PE fundraising share gains: First‑close momentum and strategic partnerships suggest continued above‑market fundraising and future management fee tailwinds as funds activate/step‑up .
  • Wealth channel flywheel: T‑POP early success, TCAP traction, and upcoming interval/RE products broaden access and duration of capital; distribution expansion should support steady inflows .
  • Watchlist catalysts: Subsequent closes for Capital X/HCP III, Credit Solutions III final close, further AI/infra investments, and increased PRE recognition from maturing funds .
  • Risk checks: Monitoring macro/market volatility and credit headlines; management highlighted limited direct exposure to recent stress areas and strong portfolio performance metrics .

Appendices

Additional Selected Tables

  • Balance Sheet & Liquidity (Q3 2025)

    • Net debt ~$1.7B; cash & equivalents (non‑GAAP) $153M; available revolver capacity ~$1.7B; total available liquidity ~$1.8B; Fitch A‑ rating .
    • Interest expense rose to $32.3M GAAP after $500M senior notes; net interest expense $23.2M in non‑GAAP DE table .

  • Platform Performance (select)

    • Net accrued performance rose to $1.193B (from $1.007B in Q2), with appreciation across platforms and Peppertree carry addition .

Citations: All figures and statements are sourced to the referenced company documents and transcripts. Asterisked items are values retrieved from S&P Global.*