P10(PX) - 2023 Q4 - Annual Results

Fourth Quarter and Full Year 2023 Results P10 reported strong full-year revenue growth and increased FPAUM, alongside strategic capital management and leadership changes Financial Highlights P10 reported strong Q4 and FY2023 organic growth, with FPAUM up 10% to $23.3 billion and revenue growing 22% - Fee Paying Assets Under Management (FPAUM) reached $23.3 billion as of December 31, 2023, a 10% increase from the previous year[11] Q4 and Full Year 2023 Financial Results ($ in Millions, except EPS) | Financial Metric | Q4 2023 | Q4 2022 | YoY Change | FY 2023 | FY 2022 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $63.1 | $58.3 | 8% | $241.7 | $198.4 | 22% | | GAAP Net (Loss) Income | $(1.9) | $4.8 | -139% | $(7.8) | $29.4 | -126% | | Adjusted EBITDA | $30.7 | $30.8 | 0% | $123.6 | $106.8 | 16% | | Adjusted EBITDA Margin | 49% | 53% | N/A | 51% | 54% | N/A | | Adjusted Net Income (ANI) | $25.5 | $27.3 | -7% | $102.0 | $97.9 | 4% | | Fully Diluted ANI EPS | $0.21 | $0.22 | -5% | $0.82 | $0.80 | 2% | - In Q4 2023, the company generated $860 million from fundraising and capital deployment, partially offset by $297 million in stepdowns and expirations[11] Business, Capital Markets, and Governance Highlights P10 actively managed capital in Q4 2023 through share repurchases and increased buyback authorization, alongside key leadership changes - Key capital market activities in Q4 2023 include: repurchased 859,600 shares at an average price of $9.74, authorized an additional $40 million for the stock buyback program, and declared a quarterly cash dividend of $0.0325 per share[15] - As of the end of 2023, the company had $273.6 million in outstanding debt, with $90.8 million available on its credit facility[15] - Significant corporate governance changes were implemented: Luke Sarsfield was appointed as Chief Executive Officer and a board member, Co-Founder Robert Alpert was elected Executive Chairman, Co-Founder Clark Webb was elected Executive Vice Chairman, and Arjay Jensen was hired as EVP, Head of Strategy and M&A[19] Performance Summary P10's investment teams consistently demonstrate superior performance across diverse fund strategies, achieving strong Net IRRs and Net ROICs Fund Performance Overview P10's investment teams consistently demonstrate a superior track record across diverse fund strategies, showing strong Net IRRs and ROICs - RCP Advisors' funds show consistent performance, with its 2010 vintage Direct I fund achieving a 42.7% Net IRR and 2.9x Net ROIC[20] - TrueBridge's venture capital funds exhibit strong returns, for example, the 2015 vintage Fund IV generated a 26.8% Net IRR and a 3.3x Net ROIC[20] - WTI's credit funds have a long history of performance, with vintages dating back to 1994; more recent funds like the 2018 vintage VLL IX delivered a 13.1% Net IRR and 1.4x Net ROIC[25] - Specialized funds such as Bonaccord's GP Stakes Fund I (2019 vintage) and Hark Capital's NAV Lending Fund III (2021 vintage) also show solid performance with Net IRRs of 16.1% and 12.2% respectively[22][27] Business Overview and Strategy P10 strategically targets the lower middle market, leveraging proprietary data and a diversified platform to gain a competitive edge and serve a broad global investor base Market Position P10 is strategically positioned in the lower middle market, offering significant opportunities due to favorable valuations and less competition - The company focuses on the lower middle market, which comprises 93% of U.S. companies with revenues between $10 million and $250 million, representing a vast pool of opportunities[31] - This target market is less saturated, with only 19% ($141 billion) of available private equity capital targeting this segment, compared to 81% ($774 billion) for funds over $1 billion[31][32] Competitive Differentiators P10 leverages a proprietary analytics database, built over 20+ years, as a key competitive differentiator for informed investment decisions - The company's competitive edge is driven by a powerful proprietary database and business intelligence platform[33][34] Proprietary Analytics Database Metrics | Database Component | Scale | | :--- | :--- | | Individual Financial Metrics | 317K+ | | Investment Transactions | 47K+ | | Private Companies | 6K+ | | Investment Funds | 1K+ | Diversified Platform and Investor Base P10 maintains a highly diversified global investor base across various channels, serving over 3,600 limited partners - The company has a global investor base spanning 6 continents, 50 states, and 60 countries[36] Investor Base by Channel (Q4 2023) | Channel | Percentage of FPAUM | | :--- | :--- | | Family Offices / Wealth Managers | 26% | | Public Pensions | 21% | | Endowments / Foundations | 17% | | Financial Institutions | 15% | | Corporate Pensions | 9% | | Insurance Companies | 7% | | Other | 5% | Fee Paying Assets Under Management (FPAUM) P10 demonstrates robust FPAUM growth driven by new capital and strategic solutions, maintaining a stable fee rate and serving a broad global LP base FPAUM Growth and Fee Rate P10 achieved robust organic FPAUM growth, reaching $23.3 billion in Q4 2023 with a 16% CAGR and a stable 109 basis point fee rate FPAUM Growth ($Bn) | Period | FPAUM ($Bn) | | :--- | :--- | | 2018 PF | 12.0 | | 2022 PF | 21.2 | | Q3 2023 PF | 22.7 | | Q4 2023 PF | 23.3 | - The average fee rate in Q4 2023 was 109 basis points (1.09%), a slight increase from 104 bps in Q3 2023[41] FPAUM Roll Forward P10's FPAUM growth is consistently driven by new capital raised and deployed, offsetting stepdowns and expirations for net expansion Annual FPAUM Roll Forward ($Bn) | Period | Beginning FPAUM | Raised & Deployed | Stepdowns & Expirations | Ending FPAUM | | :--- | :--- | :--- | :--- | :--- | | 2022 | 19.0 | 3.5 | (1.3) | 21.2 | | 2023 | 21.2 | 3.5 | (1.4) | 23.3 | - In the trailing twelve months, stepdowns and expirations totaled $1.7 billion; for the full year 2024, the company estimates $1.5 billion in stepdowns and expirations[12][46] Private Markets Solutions P10 is a premier private markets solutions provider, offering comprehensive primary, direct/co-investment, and secondary strategies to a global LP base FPAUM by Solution Type (as of Dec 31, 2023) | Solution Type | FPAUM ($Bn) | Description | | :--- | :--- | :--- | | Primary Solutions | $3.5 | Invests in a diversified portfolio of funds | | Direct and Co-Investments | $8.3 | Direct investments alongside leading GPs in private equity, credit, and impact | | Secondary Investments | $1.5 | Secondary purchases of LP interests in private equity funds | - The company's position in the private markets ecosystem is reinforced by its synergistic multi-asset class solutions and a vast network of over 270+ General Partners (GPs) that drives sourcing[47][48] Financial Results P10's full-year 2023 financial results show increased revenue but a GAAP net loss due to higher operating expenses, while non-GAAP metrics indicate growth, supported by a stable balance sheet and significant tax assets Consolidated Statements of Operations P10's FY2023 total revenues increased 22% to $241.7 million, but a 43% surge in operating expenses led to a $7.8 million GAAP net loss Full Year 2023 vs 2022 Statement of Operations ($ in Millions) | Line Item | FY 2023 | FY 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenues | $241.7 | $198.4 | 22% | | Total Operating Expenses | $220.8 | $154.9 | 43% | | Compensation and benefits | $154.3 | $94.3 | 64% | | Income From Operations | $20.9 | $43.4 | -52% | | Net (Loss) / Income | $(7.8) | $29.4 | -126% | Non-GAAP Financial Measures P10's FY2023 non-GAAP results show Adjusted EBITDA grew 16% to $123.6 million and ANI increased 4% to $102.0 million Full Year 2023 vs 2022 Non-GAAP Reconciliation ($ in Millions) | Line Item | FY 2023 | FY 2022 | YoY Change | | :--- | :--- | :--- | :--- | | GAAP Net (Loss) / Income | $(7.8) | $29.4 | -126% | | Adjustments | $131.4 | $77.4 | 70% | | Depreciation & Amortization | $31.5 | $28.0 | 12% | | Non-cash stock based compensation | $36.5 | $18.6 | 96% | | Earn out related compensation | $23.0 | $5.6 | 310% | | Adjusted EBITDA | $123.6 | $106.8 | 16% | | Adjusted Net Income (ANI) | $102.0 | $97.9 | 4% | Consolidated Balance Sheet P10's balance sheet remained stable as of Dec 31, 2023, with total assets of $834.1 million and total liabilities of $408.9 million Balance Sheet Summary ($ in Millions) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Assets | $834.1 | $826.4 | | Goodwill | $506.0 | $506.6 | | Intangibles, net | $123.2 | $151.8 | | Total Liabilities | $408.9 | $392.5 | | Debt obligations | $289.8 | $289.2 | | Total Stockholders' Equity | $425.2 | $433.9 | Consolidated Statement of Cash Flows P10 generated $47.7 million in net cash from operating activities in FY2023, ending the year with $32.1 million in cash Statement of Cash Flows Summary ($ in Millions) | Cash Flow Activity | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $47.7 | $61.7 | | Net cash used in investing activities | $(2.3) | $(98.6) | | Net cash provided by/(used in) financing activities | $(42.9) | $22.9 | | Net change in cash | $2.6 | $(14.0) | | Cash, End of Period | $32.1 | $29.5 | Tax Assets P10 holds significant tax assets, including goodwill, intangibles, and federal NOLs, anticipating zero federal taxable income for several years Composition of Tax Assets ($ in Millions) | Asset Type | Amount | | :--- | :--- | | Goodwill & Intangibles (Remaining Tax Amortization) | $364.0 | | Federal NOLs | $160.0 | | Total Tax Assets | $524.0 | - The company anticipates having $0 of federal taxable income for several years due to the annual tax amortization and the utilization of its NOL balance[66][67] Value Proposition P10 offers a compelling value proposition built on its premier market position, unrivaled access, superior performance, data advantage, and deep talent with significant insider ownership Investment Thesis P10's compelling investment thesis is founded on its premier market position, unrivaled access, superior performance, and data advantage - P10's investment thesis is built on the following pillars: Meaningful Partnerships (premier, specialized private markets solutions provider), Unrivaled Access (highly recurring revenue from long-term, contractually locked-up funds), Superior Track Record (attractive, growing, and diversified revenue base with strong margins), Data Advantage (strong investment performance driven by experience and a proprietary data platform), and Deep Talent (experienced management team with significant insider ownership and a proven M&A track record)[69][70][71][72] Appendix The appendix provides essential definitions for non-GAAP financial measures and operational terms, alongside comprehensive performance disclaimers for investment advisors Definitions and Disclaimers The appendix defines key non-GAAP financial measures and operational terms, alongside extensive performance disclaimers for investment advisors - Key non-GAAP and operational terms are defined, including Fee Paying Assets Under Management (FPAUM), Adjusted EBITDA, Adjusted Net Income (ANI), Net IRR, and Net ROIC[74][75][77][78] - The report includes detailed performance disclaimers for its subsidiaries (RCP Advisors, Enhanced Capital, Hark, Bonaccord, WTI), emphasizing that historical returns are not a guarantee of future results and can be influenced by factors like fee structures, leverage, and valuation estimates[82][86][91][93]