P10(PX) - 2024 Q1 - Quarterly Results

Introduction & Corporate Information P10, Inc. provides legal disclaimers, forward-looking statement caveats, non-GAAP measure definitions, and introduces key presenters Legal Disclaimers This section provides standard legal disclaimers, clarifying P10, Inc.'s role as a holding company and that investment advisory services are provided by its registered subsidiaries - P10, Inc. acts as a holding company; investment advisory services are provided by its registered investment adviser subsidiaries[2] - The presentation is for informational purposes only and does not constitute an offer to sell securities or investment advice[2] Forward-Looking Statements & Projections The report contains forward-looking statements and financial/operating projections that are inherently uncertain and based on estimates and assumptions - Forward-looking statements discuss management's current expectations and projections, subject to various risks, uncertainties, and assumptions[3] - Financial and operating projections are speculative and based on estimates, with actual results potentially differing substantially and possibly being materially worse[4] - The company undertakes no obligation to update or revise any forward-looking statements or projections, except as required by law[3][4] Non-GAAP Financial Measures This section defines and explains the use of non-GAAP financial measures such as Adjusted EBITDA, Adjusted Net Income (ANI), and Fee-Paying Assets Under Management (FPAUM) - Non-GAAP financial measures (Adjusted EBITDA, Adjusted EBITDA Margin, Fee-Related Revenue, Fee-Related Earnings, Fee-Related Earnings Margin, Adjusted Net Income, Fully Diluted ANI EPS, and fee-paying assets under management) are used to provide useful additional information and better comparability of ongoing operating performance[6] - These non-GAAP measures should not be considered substitutes for net income or cash flows from operating, investing, or financing activities[6] Presenters The presentation features key executives: Luke Sarsfield as CEO & Director, Amanda Coussens as EVP, CFO & CCO, and Mark Hood as EVP & CAO - Key presenters for the First Quarter 2024 Earnings Presentation include Luke Sarsfield (CEO & Director), Amanda Coussens (EVP, CFO & CCO), and Mark Hood (EVP & CAO)[9] First Quarter 2024 Highlights P10, Inc. reports strong Q1 2024 financial performance, driven by FPAUM growth and fundraising, alongside capital market actions and corporate governance updates Financial Performance Highlights P10, Inc. demonstrated strong financial performance in Q1 2024, with significant year-over-year growth in GAAP Net Income and EPS, driven by a 15% increase in revenue Q1 2024 Financial Highlights (YoY) | Financial Metric ($ in Millions) | March 31, 2024 | March 31, 2023 | Q1'24 vs Q1'23 Change | | :----------------------------- | :------------- | :------------- | :-------------------- | | Actual FPAUM ($ Billions) | $23.8 | $21.6 | 10% | | Revenue | $66.1 | $57.3 | 15% | | Operating Expenses | $54.0 | $52.4 | 3% | | GAAP Net Income | $5.2 | $0.8 | 582% | | Fully Diluted GAAP EPS | $0.04 | $0.01 | 300% | | Adjusted EBITDA | $30.8 | $28.4 | 9% | | Adjusted EBITDA Margin | 47% | 50% | N/A | | Adjusted Net Income | $25.4 | $25.5 | 0% | | Fully Diluted ANI EPS | $0.21 | $0.21 | 0% | | Fee-Related Revenue | $65.0 | $56.1 | 16% | | Fee-Related Earnings | $30.7 | $28.2 | 9% | | Fee-Related Earnings Margin | 47% | 50% | N/A | Key Business Drivers The company's Q1 2024 performance was primarily driven by a 10% increase in Fee-Paying Assets Under Management (FPAUM) to $23.8 billion and a 15% year-over-year revenue growth - Fee-paying assets under management (FPAUM) increased by 10% to $23.8 billion compared to March 31, 2023[13][15] - Year-over-year quarterly revenue growth of 15% was driven by $667 million of fundraising and deployment[15] - Catch-up fees in the first quarter amounted to $7.7 million[15] Capital Markets & Shareholder Actions P10, Inc. approved a 7.7% increase in its annual dividend to $0.14 per share and declared a quarterly cash dividend of $0.035 per share - Approved a 7.7% increase in the annual dividend by $0.01 per share to $0.14 per share, with a quarterly cash dividend of $0.035 per share declared[15] - 3,683,400 shares were repurchased in the quarter at an average price of $8.15 per share, with $20.5 million available under the stock buyback program[15] - Outstanding debt is $298.3 million, with $199.2 million on the term portion and $99.1 million on the revolver, leaving $63.4 million available on the credit facility[15] Corporate Governance Updates P10, Inc. announced several corporate governance changes, including new appointments to its leadership and Board of Directors, and the termination of its stockholder rights plan - Melodie Craft was hired as General Counsel, and Tracey Benford was appointed as an independent Class II director to the Board[16] - Robert Alpert will step down as Executive Chairman on June 14, 2024, and Luke Sarsfield was appointed as Chairman of the Board, effective the same date[18] - The Board of Directors voted to terminate the company's stockholder rights plan, effective May 8, 2024[18] Investment Team Performance Summary This section details the historical investment performance across P10's various advisory firms, including RCP Advisors, TrueBridge, Enhanced Capital, Bonaccord, WTI, Five Points Capital, and Hark Capital RCP Advisors Performance RCP Advisors manages a diverse portfolio of fund-of-funds, secondary funds, co-investment funds, and combination funds, demonstrating strong historical performance RCP Advisors Fund-of-Funds Performance (as of 9/30/23) | Fund | Vintage | Fund Size ($ Millions) | Called Capital | Net IRR | Net ROIC | | :-------- | :------ | :--------------------- | :------------- | :------ | :------- | | Fund I | 2003 | $92 | 105% | 13.6% | 1.8x | | Fund IV | 2007 | $265 | 110% | 14.5% | 2.0x | | Fund VIII | 2012 | $268 | 114% | 20.3% | 2.3x | | Fund X | 2015 | $332 | 112% | 17.6% | 1.9x | | Fund XII | 2018 | $382 | 103% | 17.9% | 1.6x | RCP Advisors Secondary Funds Performance (as of 9/30/23) | Fund | Vintage | Fund Size ($ Millions) | Called Capital | Net IRR | Net ROIC | | :------ | :------ | :--------------------- | :------------- | :------ | :------- | | SOF I | 2009 | $264 | 112% | 21.1% | 1.7x | | SOF III | 2018 | $400 | 102% | 35.8% | 1.7x | RCP Advisors Co-Investment Funds Performance (as of 9/30/23) | Fund | Vintage | Fund Size ($ Millions) | Called Capital | Net IRR | Net ROIC | | :------- | :------ | :--------------------- | :------------- | :------ | :------- | | Direct I | 2010 | $109 | 82% | 42.7% | 2.9x | | Direct II| 2014 | $250 | 88% | 25.9% | 2.5x | TrueBridge Performance TrueBridge manages fund-of-funds, secondary funds, and co-investment funds, primarily focused on venture capital, demonstrating strong returns TrueBridge Fund-of-Funds Performance (as of 12/31/23) | Fund | Vintage | Fund Size ($ Millions) | Called Capital | Net IRR | Net ROIC | | :-------- | :------ | :--------------------- | :------------- | :------ | :------- | | Fund II | 2010 | $342 | 83% | 20.3% | 5.0x | | Fund IV | 2015 | $408 | 91% | 26.1% | 3.4x | | Fund V | 2017 | $460 | 90% | 24.6% | 2.3x | TrueBridge Co-Investment Funds Performance (as of 12/31/23) | Fund | Vintage | Fund Size ($ Millions) | Called Capital | Net IRR | Net ROIC | | :------------ | :------ | :--------------------- | :------------- | :------ | :------- | | Direct Fund I | 2015 | $125 | 96% | 31.4% | 2.9x | Enhanced Capital Performance Enhanced Capital focuses on Impact Funds, including Impact Credit and Impact Equity, showing robust performance in both categories Enhanced Capital Impact Funds Performance (as of 12/31/23) | Fund | Fund Size ($ Millions) | Net IRR | Net ROIC | | :------------ | :--------------------- | :------ | :------- | | Impact Credit | $1,186 | 7.2% | 1.1x | | Impact Equity | $658 | 20%+ | 1.2x | Bonaccord Capital Partners Performance Bonaccord Capital Partners specializes in GP Stakes Funds, with Fund I demonstrating strong performance since its 2019 vintage Bonaccord Capital Partners GP Stakes Funds Performance (as of 12/31/23) | Fund | Vintage | Fund Size ($ Millions) | Called Capital | Net IRR | Net ROIC | | :----- | :------ | :--------------------- | :------------- | :------ | :------- | | Fund I | 2019 | $724 | 77% | 16.1% | 1.4x | WTI Performance WTI manages Credit Funds (VLL series) with a long track record of high returns, including exceptional performance from older vintages WTI Credit Funds Performance (as of 12/31/23) | Fund | Vintage | Fund Size ($ Millions) | Called Capital | Net IRR | Net ROIC | | :----- | :------ | :--------------------- | :------------- | :------ | :------- | | VLL I | 1994 | $47 | 100% | 63.3% | 5.9x | | VLL II | 1997 | $110 | 100% | 61.4% | 2.7x | | VLL IV | 2004 | $250 | 100% | 15.9% | 2.2x | | VLL IX | 2018 | $460 | 100% | 11.5% | 1.4x | | WTI X | 2021 | $500 | 61% | 11.1% | 1.1x | Five Points Capital Performance Five Points Capital manages both Equity and Credit Funds, with both categories showing strong performance across their respective vintages Five Points Capital Equity Funds Performance (as of 12/31/23) | Fund | Vintage | Fund Size ($ Millions) | Called Capital | Net IRR | Net ROIC | | :------- | :------ | :--------------------- | :------------- | :------ | :------- | | Fund III | 2013 | $230 | 94% | 25.3% | 2.6x | Five Points Capital Credit Funds Performance (as of 12/31/23) | Fund | Vintage | Fund Size ($ Millions) | Called Capital | Net IRR | Net ROIC | | :------- | :------ | :--------------------- | :------------- | :------------- | :------- | | Fund III | 2016 | $289 | 74% | 25.9% | 2.8x | Hark Capital Performance Hark Capital specializes in NAV Lending Funds, with Fund III demonstrating consistent performance in this asset class Hark Capital NAV Lending Funds Performance (as of 12/31/23) | Fund | Vintage | Fund Size ($ Millions) | Called Capital | Net IRR | Net ROIC | | :------- | :------ | :--------------------- | :------------- | :------ | :------- | | Fund III | 2021 | $400 | 77% | 12.2% | 1.2x | Business Model & Market Strategy P10's strategy focuses on specialized private markets, leveraging proprietary data, a diversified platform, and a broad investor base to offer multi-asset solutions Market Opportunity & Positioning P10 is strategically positioned in attractive, specialized, and growing private markets, particularly the lower middle market, offering compelling investment opportunities - The lower middle market benefits from a large pool of opportunities (111,371 companies with revenues between $10 million and $250 million), favorable purchase price valuations, and limited alternatives for capital[31] - $774 billion of capital is available to PE Funds, with $141 billion specifically for funds between $10 million and $250 million[31] Data & Analytics Advantage P10 leverages a unique and extensive proprietary analytics database as a competitive differentiator, supporting data-driven underwriting and robust monitoring processes - P10 possesses an extensive proprietary analytics database with over 47,000 private companies, 1,000 investment firms, and 317,000 individual investment transactions[34] - Data capabilities provide a competitive edge for systematic sourcing, diligence, and monitoring, supported by 20+ years of granular data and unique analytical tools[35] Diversified Investment Platform & Investor Base P10 operates a highly diversified, multi-asset investment platform with a broad investor base spanning 60 states and 6 continents - P10 has a diversified investor base across 60 states and 6 continents[37] Investor Base by Channel (As of Q1 '24) | Investor Channel | FPAUM Percentage | | :--------------------------- | :--------------- | | Family Offices / Wealth Managers | 25% | | Public Pensions | 21% | | Financial Institutions | 17% | | Endowments / Foundations | 16% | | Corporate Pensions | 8% | | Insurance Companies | 7% | | Other | 6% | Private Markets Ecosystem & Solutions Overview P10 positions itself as a premier private markets solutions provider, connecting Limited Partners (LPs) with high-performing fund managers through a unified network of 270+ General Partners (GPs) - P10 is a specialized private markets solutions provider, strengthening relationships with high-performing fund managers and attracting new LPs[49] - The company has a global LP base of 3,600+ institutional and HNW investors and a unified private markets solutions network of 270+ GPs[50] FPAUM by Solution Type (As of Q1'24) | Solution Type | FPAUM (Billions) | FPAUM Composition | Organic FPAUM CAGR (Q4'20 PF - Q1'24) | | :---------------------- | :--------------- | :---------------- | :------------------------------------ | | Primary Solutions | $13.8 | 58% | 17% | | Direct & Co-Investments | $8.4 | 35% | 15% | | Secondary Investments | $1.6 | 7% | 22% | | Total FPAUM | $23.8 | 100% | | Fee Paying Assets Under Management (FPAUM) Analysis Analysis of P10's FPAUM growth, average fee rates, and the drivers behind its highly sticky, long-term capital base FPAUM Growth & Average Fee Rate P10 demonstrates robust organic FPAUM growth, reaching $23.8 billion in Q1 2024, with a stable and attractive average fee rate of 110 basis points - Organic FPAUM grew to $23.8 billion in Q1 2024, achieving a 15% CAGR from 2018PF to Q1 2024PF[43] - The average fee rate for Q1 2024 was 110 basis points, indicating stable and attractive fee generation[43] Organic FPAUM Roll Forward & Flow Breakdown P10's FPAUM growth is driven by new capital raised and deployed, which are long-term and contractually locked-up, ensuring a highly sticky FPAUM base - FPAUM increased from $23.3 billion (Dec-23 PF) to $23.8 billion (Mar-24 PF) in Q1 2024[47] - Q1 2024 FPAUM flows included $0.9 billion in capital raised and $0.4 billion in capital deployed, with $0.1 billion in stepdowns and expirations[47] - The FPAUM base is highly sticky due to long-term, contractually locked-up funds, with fees primarily based on committed capital[46][47] Consolidated Financial Statements Overview of P10's Q1 2024 unaudited financial statements, including statements of operations, non-GAAP adjustments, balance sheets, and cash flows Statements of Operations (Unaudited) P10, Inc. reported a significant increase in net income for Q1 2024, reaching $5.2 million, up 582% from Q1 2023, driven by a 12% growth in total revenues Consolidated Statements of Operations (Unaudited) - Q1 2024 vs Q1 2023 | Metric ($ in thousands) | March 31, 2024 | March 31, 2023 | % Change | | :------------------------------ | :------------- | :------------- | :------- | | Management and advisory fees | $65,122 | $56,587 | 15% | | Other revenue | $993 | $666 | 49% | | Total revenues | $66,115 | $57,253 | 12% | | Total operating expenses | $54,016 | $52,382 | 3% | | Income From Operations | $12,099 | $4,871 | 148% | | Net Income | $5,243 | $769 | 582% | | Net Income Attributable to P10 | $5,021 | $605 | 730% | | Basic earnings per share | $0.04 | $0.01 | 300% | | Diluted earnings per share | $0.04 | $0.01 | 300% | | Dividends paid per share | $0.03 | $0.03 | 8% | Non-GAAP Financial Measures & Adjustments (Unaudited) P10's Adjusted EBITDA increased by 9% to $30.8 million in Q1 2024, while Adjusted Net Income (ANI) remained stable at $25.4 million Adjustments to EBITDA (Unaudited) - Q1 2024 | Metric ($ in thousands) | March 31, 2024 (GAAP) | Adjustments to EBITDA | Adjusted Line Item | | :---------------------------------- | :-------------------- | :-------------------- | :----------------- | | Management and advisory fees | $65,122 | $410 | $65,532 | | Total revenues | $66,115 | | $66,525 | | Compensation and benefits (excl. non-cash stock) | $30,393 | ($3,558) | $26,835 | | Non-cash stock based compensation | $6,716 | ($6,716) | $0 | | Professional fees | $3,768 | ($611) | $3,157 | | Depreciation | $236 | ($236) | $0 | | Contingent consideration expense | $30 | ($30) | $0 | | Amortization of intangibles | $6,437 | ($6,437) | $0 | | Total operating expenses | $54,016 | | $36,378 | | Income From Operations | $12,099 | | $30,147 | | Interest expense, net | ($5,776) | $5,776 | $0 | | Adjusted EBITDA | | | $30,825 | Non-GAAP Financial Measures (Unaudited) - Q1 2024 vs Q1 2023 | Metric ($ in thousands) | March 31, 2024 | March 31, 2023 | % Change | | :-------------------------- | :------------- | :------------- | :------- | | Adjusted EBITDA | $30,825 | $28,406 | 9% | | Adjusted Net Income | $25,400 | $25,485 | 0% | | Fully diluted ANI per share | $0.21 | $0.21 | 0% | | Adjusted EBITDA Margin | 47% | 50% | N/A | | Fee-Related Revenue | $65,007 | $56,133 | 16% | | Fee-Related Earnings | $30,741 | $28,190 | 9% | | Fee-Related Earnings Margin | 47% | 50% | N/A | Balance Sheets (Unaudited) As of March 31, 2024, P10 reported total assets of $832.8 million, a slight decrease from $834.1 million at December 31, 2023, with total liabilities increasing to $432.7 million Consolidated Balance Sheets (Unaudited) - March 31, 2024 vs December 31, 2023 | Metric ($ in thousands) | March 31, 2024 | December 31, 2023 | | :------------------------------ | :------------- | :---------------- | | Cash and cash equivalents | $28,996 | $30,467 | | Accounts receivable | $23,293 | $20,620 | | Intangibles, net | $116,758 | $123,195 | | Goodwill | $506,038 | $506,038 | | Total assets | $832,810 | $834,074 | | Accounts payable and accrued expenses | $14,313 | $15,054 | | Debt obligations | $314,036 | $289,844 | | Total liabilities | $432,724 | $408,912 | | Total equity | $400,086 | $425,162 | Statements of Cash Flows (Unaudited) Net cash provided by operating activities decreased significantly to $10.9 million in Q1 2024 from $20.8 million in Q1 2023 Consolidated Statements of Cash Flows (Unaudited) - Q1 2024 vs Q1 2023 | Metric ($ in thousands) | March 31, 2024 | March 31, 2023 | | :------------------------------------------ | :------------- | :------------- | | Net cash provided by operating activities | $10,959 | $20,777 | | Net cash used in investing activities | ($260) | ($701) | | Net cash used in financing activities | ($12,725) | ($13,711) | | Net change in cash, cash equivalents and restricted cash | ($2,026) | $6,365 | | Cash And Cash Equivalents And Restricted Cash, End of Period | $30,031 | $35,857 | - Borrowings on debt obligations increased to $47.5 million in Q1 2024 from $16.0 million in Q1 2023[67] - The company repurchased $30.0 million of Class A common stock in Q1 2024[67] Strategic Financials & Value Proposition P10's strategic financial advantages, including significant tax assets and a compelling value proposition as a premier private markets solutions provider Tax Assets & Long-Term Benefits P10 possesses significant tax assets totaling $504 million, primarily composed of $356 million in goodwill and intangibles and $148 million in federal Net Operating Losses (NOLs) - Total tax assets are $504 million, comprising $356 million in goodwill and intangibles and $148 million in federal NOLs[70] - Tax basis intangible assets and tax-deductible goodwill are available to reduce federal income tax ratably over fifteen years[70] - The company anticipates federal taxable income at $0 for several years due to annual tax amortization and NOL utilization[70] Highly Compelling Value Proposition P10 presents a compelling value proposition characterized by its position as a premier private markets solutions provider, highly recurring revenue, and superior investment performance - P10 is a premier, specialized private markets solutions provider operating in large and growing markets with increasing investor allocations[73] - The company benefits from highly recurring revenue, almost entirely composed of management and advisory fees earned primarily on committed capital from long-term, contractually locked-up funds[74] - P10 boasts an attractive and growing revenue base with strong margins, supported by an experienced management team and superior investment performance driven by a data advantage[75][76] Supplemental Information & Disclosures This section provides definitions for key financial terms and extensive disclaimers regarding historical investment performance data Key Terms & Non-GAAP Definitions This section provides definitions for key financial and operational terms used in the presentation, including FPAUM, Adjusted EBITDA, ANI, and various performance metrics - FPAUM reflects assets from which management and advisory fees are earned, typically based on committed capital and not affected by market appreciation or depreciation[78] - Adjusted EBITDA and Adjusted Net Income (ANI) are non-GAAP measures used to assess performance, with ANI reflecting actual cash flows generated by core operations[81] - Fee-Related Revenues excludes incentive fees, and Fee-Related Earnings monitors baseline earnings excluding incentive fee revenue and related expenses[82] Performance Disclaimers This section provides extensive disclaimers regarding historical performance data, emphasizing that past results are not indicative of future performance - The historical performance of investments should not be considered indicative of future results, as past performance is not a guarantee[87][89] - Performance calculations often include unrealized gains, which may never be realized, and are subject to various factors like market conditions and fund-specific fees[89][92][95][99] - The use of subscription-based credit facilities can impact IRR calculations by delaying capital calls, potentially increasing reported IRRs[94][99][101]