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TI

TPG Inc. (TPG)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered record After-tax Distributable Earnings of $0.62 per Class A share on $260.6M After-tax DE, supported by a sharp step-up in realized performance allocations ($105M), while GAAP total revenues rose to $1.076B and FRE margin held at 41% .
  • Fee-related revenues were stable at $461.4M; FRE was $189.8M, down year-over-year on lower catch-up management fees and full-quarter inclusion of TPG Angelo Gordon, but sequentially consistent; dividend increased to $0.53/share for Q4 (vs $0.38 in Q3) .
  • Strategic momentum: $30B raised in 2024, AUM reached $245.9B (+11% YoY), available capital $57.6B; management guided to accelerating FRR/FAUM growth in 2025 and exiting 2025 with FRE margin in the mid‑40s .
  • Catalysts: heightened monetizations across platforms (credit comprised 41% of Q4 realized performance allocations), inaugural Transition Infrastructure (TRC2) fund scaling, private wealth product (TPOP) launch, and data center clean power partnership (Intersect/Google) that underpins multi‑year deployment opportunities .

What Went Well and What Went Wrong

What Went Well

  • Realized performance allocations surged to $105M, the second-highest since IPO, with 41% from credit strategies (structured credit, credit solutions, and middle market direct lending), plus strong contributions from Capital and Growth platforms .
  • After-tax DE reached $261M and $0.62/share, reflecting the monetization uptick and mix shift; dividend raised to $0.53/share (target payout ~85% of TPG Inc. After‑tax DE) .
  • Strategic initiatives advanced: TRC2 first close ($2B anchors, $1.3B closed), hybrid solutions stood up with multiple deals, and Intersect Power partnership with Google targets $20B in clean infrastructure tied to AI/data centers .

What Went Wrong

  • FRE down year-over-year and FRE margin compressed to 41% (from 49% in Q4’23) due to lower catch-up management fees and full-quarter inclusion of Angelo Gordon costs; fee-related expenses rose 14% YoY .
  • GAAP operating profit margin declined to 1.0% (from 4.3% in Q4’23) given higher compensation (including equity-based comp) and performance allocation expense; net income attributable to TPG Inc. was flat vs prior year .
  • FAUM decreased slightly sequentially (141.3B vs 141.7B) on fee-base step downs and timing of credit deployment versus monetizations, with management highlighting quarterly noise and a 2025 ramp .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
GAAP Total Revenues ($USD Millions)983.137 855.403 1,076.414
GAAP Net Income ($USD Millions)42.412 (21.425) 11.094
Net Income Attributable to TPG Inc. ($USD Millions)13.173 8.961 12.980
Basic EPS ($USD)0.16 0.04 0.04
Diluted EPS ($USD)0.04 (0.08) (0.06)
Fee-Related Revenues (FRR) ($USD Millions)464.727 459.842 461.410
Fee-Related Earnings (FRE) ($USD Millions)225.551 190.767 189.825
FRE Margin (%)49% 41% 41%
After-tax Distributable Earnings ($USD Millions)205.647 189.445 260.566
Operating Profit Margin (%)4.3% (2.5%) 1.0%

Segment breakdown – Realized Performance Allocations, Net (Q4 2024):

PlatformQ4 2024 ($USD Millions)
Capital34.507
Growth22.964
Impact0.000
TPG AG Credit43.365
TPG AG Real Estate0.873
Real Estate0.000
Market Solutions3.229
Total104.939

KPIs and flows:

KPIQ4 2023Q3 2024Q4 2024
AUM ($USD Billions)221.6 239.1 245.9
FAUM ($USD Billions)136.8 141.7 141.3
Net Accrued Performance ($USD Billions)0.9 1.0 1.0
Available Capital ($USD Billions)51.3 58.4 57.6
Capital Raised (Quarter, $USD Billions)8.8 —8.8
Capital Invested (Quarter, $USD Billions)11.6 —10.3
Realizations (Quarter, $USD Billions)2.7 —7.1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
FRE Margin trajectoryFY 2025>40% in FY 2024; expansion in 2025 Exit 2025 in mid‑40s; modest decline in Q1 with expansion through year Raised/clarified trajectory
Management fees1H/2H 2025Growth as new funds activate Moderate growth Q1; acceleration in back half with Capital funds activation and climate deployment; catch‑up fees step-up through 2026 Timing specified
Compensation & benefitsQ1 2025—Seasonal step-up (~$15M) from RSU vesting; ongoing investment in private wealth and distribution New disclosure
Capital markets revenueFY 2025Long-term growth expected Continued strength with broker-dealer expansion across platforms Maintained with detail
Dividend policyOngoingTarget ~85% of TPG Inc. After‑tax DE Q4 declared $0.53/share; policy unchanged Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Monetizations/DPIMonetizations slower vs deployment; building pipeline Realized performance allocations hit $105M; more signed monetizations ahead Improving
Credit expansion/integrationAG integration synergies; fundraising skew to credit; deployment pacing Credit drove 41% of Q4 realized performance; bespoke financings (e.g., DISH); broader SMA/client penetration in 2025 Accelerating
Climate & InfrastructureFirst closes for Rise Climate II and TRC; Hassana anchor; Techem acquisition TRC2 anchors ($2B), clean power/data centers via Intersect/Google; multi‑market replication planned Scaling
Private wealth (TPOP)Semiliquid PE vehicle planned for early 2025; TCAP distribution expanding TPOP launch timing affirmed; increased distribution hiring; channel engagement Building
Insurance strategyEvaluating capital-light vs hybrid partnerships; focus on quality platforms Continued exploration; emphasis on credit leverage and hybrid structures Active exploration

Management Commentary

  • “We are entering 2025 with significant momentum and have multiple levers to accelerate our growth throughout the year.” — CEO Jon Winkelried .
  • “After-tax distributable earnings of $261 million… our highest level yet as a public company.” — CFO Jack Weingart .
  • “We expect to exit 2025 with an FRE margin in the mid-40s.” — CFO Jack Weingart .
  • “This disruption is creating opportunity… an absolute explosion of spending around the grid… to build out clean power backbones for what’s happening in AI.” — Executive Chairman Jim Coulter (Rise Climate) .

Q&A Highlights

  • Insurance approach: Preference for balance sheet-light or hybrid structures; focus on quality platforms with organic growth and credit leverage benefits .
  • FRE/FRR outlook: Moderate growth in Q1, accelerating in 2H 2025; catch-up fees expected to step up into 2026; exit 2025 mid‑40s FRE margin .
  • Bespoke credit transactions: DISH financing closed Sep 30; expects management fee pickup in Q4; pipeline of customized financings seen as multi‑year opportunity .
  • Private wealth channel: TPOP launching early 2025; active engagement with major wirehouses; continued hiring to expand distribution .
  • Management fee seasonality/catch-ups: Q4 FRPR seasonally higher; limited rate sensitivity; management fees to increase with fund activations and deployment .

Estimates Context

  • Wall Street consensus via S&P Global for Q4 2024, Q3 2024, and Q2 2024 was unavailable due to daily request limits on our data source today; therefore, we cannot provide vs‑estimate comparisons in this recap. We will update once access is restored.

Key Takeaways for Investors

  • Monetization momentum is real: $105M realized performance allocations in Q4 (with credit at 41%) supports higher After-tax DE and dividend growth; watch for continued performance-related earnings in early 2025 .
  • 2025 setup is strong: First-half management fee growth from climate/credit deployment, with a back-half acceleration as Capital/Healthcare Partners funds activate; exit FRE margin mid‑40s is a meaningful operating leverage signal .
  • Credit differentiation: Ability to originate and syndicate bespoke financings (e.g., DISH) across private equity, credit solutions, and capital markets is a competitive moat in a tight-spread market .
  • Climate/data center adjacency: Intersect–Google partnership anchors a multi‑year clean power build tied to AI demand—expect TRC2 and related strategies to scale rapidly .
  • Private wealth growth vector: TPOP launch and TCAP distribution expansion broaden durable retail channels; expect incremental FRR/FAUM contributions over 2025‑2026 .
  • Near-term noise, longer-term trajectory: Sequential FAUM dip and YoY FRE compression reflect timing (catch-ups, fee base transitions), not structural weakness; AUM/available capital and net accrued performance remain robust .
  • Dividend policy intact: $0.53/share declared (85% of TPG Inc. After-tax DE payout target) aligns distributions to monetization cadence and supports yield appeal .