P10(PX) - 2022 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents P10, Inc.'s unaudited financial statements, management's discussion, market risks, and internal controls Item 1. Financial Statements (Unaudited) P10, Inc.'s unaudited consolidated financial statements for Q1 2022, including balance sheets, operations, cash flows, and notes, are presented Consolidated Balance Sheets P10, Inc.'s financial position, including assets, liabilities, and stockholders' equity, as of March 31, 2022, is detailed Consolidated Balance Sheets (in thousands) | ASSETS (in thousands) | March 31, 2022 | December 31, 2021 | Change ($) | Change (%) | | :---------------------- | :------------- | :---------------- | :--------- | :--------- | | Cash and cash equivalents | $23,655 | $40,916 | $(17,261) | (42.19)% | | Restricted cash | $2,017 | $2,566 | $(549) | (21.39)% | | Accounts receivable | $2,602 | $2,087 | $515 | 24.68% | | Due from related parties| $18,871 | $13,124 | $5,747 | 43.79% | | Total assets | $655,528 | $676,217 | $(20,689) | (3.06)% | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | Accounts payable | $742 | $401 | $341 | 85.04% | | Accrued expenses | $10,714 | $12,474 | $(1,760) | (14.11)% | | Other liabilities | $13,727 | $1,808 | $11,919 | 659.24% | | Debt obligations | $187,690 | $212,496 | $(24,806) | (11.67)% | | Total liabilities | $263,593 | $281,053 | $(17,460) | (6.21)% | | Total stockholders' equity| $391,935 | $395,164 | $(3,229) | (0.82)% | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $655,528 | $676,217 | $(20,689) | (3.06)% | Consolidated Statements of Operations P10, Inc.'s revenues, operating expenses, and net income for the three months ended March 31, 2022, are presented Consolidated Statements of Operations (in thousands, except per share amounts) | (in thousands, except per share amounts) | For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | Change ($) | Change (%) | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | :--------- | :--------- | | REVENUES | | | | | | Management and advisory fees | $43,027 | $32,573 | $10,454 | 32.09% | | Other revenue | $254 | $195 | $59 | 30.26% | | Total revenues | $43,281 | $32,768 | $10,513| 32.09% | | OPERATING EXPENSES | | | | | | Compensation and benefits | $18,494 | $11,936 | $6,558 | 54.94% | | Professional fees | $2,612 | $2,731 | $(119) | (4.36)% | | General, administrative and other | $4,112 | $2,037 | $2,075 | 101.87% | | Contingent consideration expense | $127 | $28 | $99 | 353.57% | | Amortization of intangibles | $6,181 | $7,484 | $(1,303) | (17.41)% | | Strategic alliance expense | $152 | — | $152 | N/A | | Total operating expenses | $31,678 | $24,216 | $7,462 | 30.81% | | INCOME FROM OPERATIONS | $11,603 | $8,552 | $3,051 | 35.67% | | OTHER (EXPENSE)/INCOME | | | | | | Interest expense, net | $(1,385) | $(5,255) | $3,870 | (73.65)% | | Net income before income taxes | $10,547 | $3,370 | $7,177 | 213.00%| | Income tax expense | $(2,755) | $(661) | $(2,094) | 316.79% | | NET INCOME | $7,792 | $2,709 | $5,083 | 187.63%| | NET INCOME ATTRIBUTABLE TO P10 | $7,792 | $2,215 | $5,577 | 251.78% | | Earnings per share | | | | | | Basic earnings per share | $0.07 | $0.03 | $0.04 | 133.33% | | Diluted earnings per share | $0.06 | $0.02 | $0.04 | 200.00% | Consolidated Statements of Changes in Stockholders' Equity Changes in P10, Inc.'s stockholders' equity, reflecting net income, stock-based compensation, and option settlements, are outlined - Total stockholders' equity decreased from $395,164 thousand at December 31, 2021, to $391,935 thousand at March 31, 2022. Key changes include a net income attributable to P10 of $7,792 thousand, stock-based compensation of $1,515 thousand, and a significant reduction of $12,466 thousand due to the settlement of stock options[13] Consolidated Statements of Cash Flows P10, Inc.'s cash flows from operating, investing, and financing activities for Q1 2022 are detailed Consolidated Statements of Cash Flows (in thousands) | (in thousands) | For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | Change ($) | Change (%) | | :----------------------------- | :---------------------------------------- | :---------------------------------------- | :--------- | :--------- | | Net cash provided by operating activities | $7,622 | $9,476 | $(1,854) | (19.56)% | | Net cash used in investing activities | $(424) | $(1,183) | $759 | (64.16)% | | Net cash used in financing activities | $(25,008) | $(7,699) | $(17,309) | 224.82% | | Net change in cash, cash equivalents and restricted cash | $(17,810) | $594 | $(18,404) | (3098.32)% | | Cash, cash equivalents and restricted cash, end of period | $25,672 | $13,377 | $12,295 | 91.91% | - Cash paid for interest significantly decreased from $4,624 thousand in Q1 2021 to $398 thousand in Q1 2022[19] - The company also recorded a non-cash accrual for settlement of stock options of $12,466 thousand in Q1 2022[19] Notes to Unaudited Consolidated Financial Statements Detailed disclosures on P10, Inc.'s accounting policies, acquisitions, debt, and other financial information are provided Note 1. Description of Business P10, Inc.'s business as a multi-asset class private market solutions provider and its strategic acquisitions are described - P10, Inc. operates as a multi-asset class private market solutions provider in the alternative asset management industry, offering solutions across private equity, venture capital, private credit, and impact investing[22][23] - The company underwent a reorganization and IPO on October 20, 2021, becoming the parent company with Class A and Class B common stock, where Class B carries ten votes per share[24] - P10 has expanded its portfolio through several acquisitions, including RCP Advisors (2017-2018), Five Points (2020), TrueBridge (2020), Enhanced Capital Group (2020), Bonaccord (2021), and Hark (2021), diversifying its investment strategies and asset classes[27][28][29][30][33] Note 2. Significant Accounting Policies P10, Inc.'s key accounting principles, including consolidation, revenue recognition, and fair value measurements, are outlined - The financial statements are prepared in accordance with U.S. GAAP, consolidating wholly-owned or majority-owned subsidiaries and Variable Interest Entities (VIEs) where P10 is the primary beneficiary[34][39][42][44][45][46][47][49][52][54][55][56][60][63][64][65][67][71][75][77][79][80][82][84] - The company adopted ASU No. 2019-12 on Income Taxes on January 1, 2021, with no material impact[86] - Future pronouncements not yet adopted include ASU No. 2016-13 (CECL model, effective January 1, 2023) and ASU 2021-08 (business combinations, effective after December 15, 2022)[87][88] Note 3. Acquisitions P10, Inc.'s acquisitions of Bonaccord and Hark, including purchase prices, financing, and pro forma results, are detailed - On September 30, 2021, P10 acquired Bonaccord for $56.4 million, including $38.9 million cash and $17.4 million contingent consideration[90][91] - The acquisition was financed partly by a $35.0 million amendment to the term loan[92] - Goodwill of $42.9 million was recorded, expected to be tax-deductible[93][100] - Also on September 30, 2021, Hark was acquired for $7.2 million, comprising $5.0 million cash and $2.2 million estimated contingent consideration, resulting in $4.7 million in goodwill[101][102] - Both acquisitions included Restricted Stock Units (RSUs) for employees, contingent on performance metrics[102] Unaudited Pro Forma Condensed Consolidated Results (Bonaccord acquisition as of Jan 1, 2021) (in thousands) | For the Three Months Ended March 31, | 2022 | 2021 | | :----------------------------------- | :---------- | :---------- | | Revenue | $43,281 | $36,455 | | Net income attributable to P10 | $7,792 | $3,248 | Note 4. Revenue P10, Inc.'s revenue is disaggregated by product offering, primarily management and advisory fees Revenues Disaggregated by Product Offering (in thousands) | Product Offering | For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | | :------------------------ | :---------------------------------------- | :---------------------------------------- | | Management and advisory fees | $43,027 | $32,573 | | Subscriptions | $162 | $177 | | Other revenue | $92 | $18 | | Total revenues | $43,281 | $32,768 | Note 5. Strategic Alliance Expense Strategic alliance agreements assumed with the Bonaccord acquisition and related expenses are explained - In connection with the Bonaccord acquisition, a Strategic Alliance Agreement (SAA) was assumed, granting a third-party 15% of net management fee earnings for Bonaccord Fund I[110] - An additional agreement provides another third-party with 5% of net management fee revenues for Fund I[111] - Strategic alliance expense for the three months ended March 31, 2022, was $0.2 million, with no comparable expense in 2021[111] Note 6. Note Receivable The note receivable from BCP Partners Holdings, LP, including its balance, maturity, and interest income, is detailed - The company has a note receivable from BCP Partners Holdings, LP, for $5.0 million, with $2.8 million drawn as of March 31, 2022[112] - The note matures on September 30, 2031, and accrues interest at the greater of the applicable federal rate or 5.5%[112] - Interest income of $0.1 million was recognized for the three months ended March 31, 2022[112] Note 7. Variable Interest Entities P10, Inc.'s consolidation of Variable Interest Entities (VIEs) and exposure to unconsolidated VIEs are described - P10 consolidates certain Variable Interest Entities (VIEs) where it is the primary beneficiary, including Holdco, RCP 2, RCP 3, TrueBridge, Hark, and Bonaccord[113] - As of March 31, 2022, consolidated VIE assets totaled $398.6 million and liabilities totaled $47.2 million[114] - The company also holds variable interests in unconsolidated VIEs through its subsidiary ECG, with maximum exposure to loss limited to recognized assets[114] Note 8. Investment in Unconsolidated Subsidiaries P10, Inc.'s investments in unconsolidated subsidiaries, primarily related to ECG's tax credit finance activities, are detailed - Investments in unconsolidated subsidiaries, primarily related to ECG's tax credit finance and asset management activities, totaled $2.0 million as of March 31, 2022, up from $1.8 million at December 31, 2021[115][116] - ECG recognized $0.3 million in income from asset management for the three months ended March 31, 2022[118] Note 9. Property and Equipment A breakdown of P10, Inc.'s property and equipment, net of accumulated depreciation, is provided Property and Equipment, Net (in thousands) | Category | As of March 31, 2022 | As of December 31, 2021 | | :--------------------------- | :------------------- | :---------------------- | | Computers and purchased software | $471 | $387 | | Furniture and fixtures | $633 | $461 | | Leasehold improvements | $576 | $601 | | Other | $3 | $3 | | Total gross property and equipment | $1,683 | $1,452 | | Less: accumulated depreciation | $(534) | $(471) | | Total property and equipment, net | $1,149 | $981 | Note 10. Goodwill and Intangibles P10, Inc.'s goodwill and intangible assets, including amortization schedules, are detailed Goodwill (in thousands) | Item | Amount | | :------------------------- | :---------- | | Balance at December 31, 2021 | $418,701 | | Purchase price adjustment | $(11) | | Balance at March 31, 2022 | $418,690 | Intangible Assets, Net (in thousands) | Category | As of March 31, 2022 | As of December 31, 2021 | | :----------------------------- | :------------------- | :---------------------- | | Indefinite-lived intangible assets | $17,380 | $17,380 | | Finite-lived intangible assets | $105,262 | $111,408 | | Total intangible assets | $122,642 | $128,788 | Amortization Expense for Intangible Assets (in thousands) | Period | Amount | | :---------------- | :---------- | | Remainder of 2022 | $18,479 | | 2023 | $21,155 | | 2024 | $17,590 | | 2025 | $13,807 | | 2026 | $10,878 | | Thereafter | $23,353 | | Total amortization | $105,262| Note 11. Fair Value Measurements P10, Inc.'s fair value measurements, focusing on the contingent consideration liability, are described Contingent Consideration Liability (in thousands) | Item | For the Three Months Ended March 31, 2022 | For the Year Ended December 31, 2021 | | :------------------------- | :---------------------------------------- | :----------------------------------- | | Balance, beginning of period | $22,963 | $593 | | Additions | — | $19,625 | | Change in fair value | $127 | $3,472 |\n| Settlements | — | $(727) |\n| Balance, end of period | $23,090 | $22,963 | - The contingent consideration liability, primarily related to the Hark and Bonaccord acquisitions, is measured at fair value using unobservable (Level III) inputs and increased by $127 thousand due to remeasurement during Q1 2022[124][127] Note 12. Debt Obligations P10, Inc.'s debt obligations, including its new credit facility and principal maturities, are detailed Debt Obligations, Net (in thousands) | Category | As of March 31, 2022 | As of December 31, 2021 | | :------------------------------------- | :------------------- | :---------------------- | | Revolving credit facility state tax credits, net | $(4) | $(8) | | Revolver facility, net | $63,098 | $87,737 | | Term loan, net | $124,596 | $124,767 | | Total debt obligations | $187,690 | $212,496 | - P10 refinanced its debt on December 22, 2021, extinguishing the HPS facility and entering a new credit agreement with JP Morgan for a $125 million Revolver Facility and a $125 million Term Loan, with an additional $125 million accordion feature[129][140] - The new facilities bear interest based on the Adjusted Term SOFR Rate (SOFR + 0.10%)[141] - In February 2022, the company repaid $25 million of the Revolver Facility principal, reducing the outstanding balance to $65.9 million as of March 31, 2022[144] - Total debt obligations decreased by $24.8 million from December 31, 2021[241] Future Principal Maturities of Debt (in thousands) | Year | Amount | | :--- | :---------- | | 2022 | $0 | | 2023 | $6,250 | | 2024 | $6,250 | | 2025 | $178,400 | | Total | $190,900| Note 13. Related Party Transactions P10, Inc.'s related party transactions, including subleases, advisory fees, and administrative services, are outlined - P10 has various related party transactions, including a sublease with 210 Capital, LLC ($0.1 million rent paid in Q1 2022), and advisory fees from Enhanced PC ($4.3 million recognized in Q1 2022)[148][150] - Receivables from Funds for management fees and reimbursable expenses totaled $3.1 million as of March 31, 2022[153] - The company paid $2.2 million to Enhanced Capital Holdings, Inc. for administrative services in Q1 2022[154] - P10 recognized $0.4 million in management and advisory fees from a strategic partnership with Crossroads Systems, Inc. in Q1 2022[155] Note 14. Commitments and Contingencies P10, Inc.'s operating lease obligations and involvement in legal claims and proceedings are detailed - Operating lease expenses were approximately $0.8 million for the three months ended March 31, 2022[157] - As of March 31, 2022, operating lease right-of-use assets were $14.2 million, and operating lease liabilities were $15.3 million, with a weighted-average remaining lease term of 7.54 years[158] Future Contractual Lease Payments (in thousands) | Period | Amount | | :---------------- | :---------- | | Remainder of 2022 | $1,599 | | 2023 | $2,937 | | 2024 | $3,184 | | 2025 | $2,028 | | 2026 | $1,690 | | Thereafter | $8,061 | | Total undiscounted lease payments | $19,499 | - The company is involved in various claims and proceedings in the ordinary course of business but does not believe any will result in losses materially in excess of amounts already recognized[161] Note 15. Income Taxes P10, Inc.'s effective income tax rate and valuation allowance against deferred tax assets are explained - The effective income tax rate for the three months ended March 31, 2022, was 25.82%, up from 22.98% in the prior year, primarily due to state and local income taxes[163] - A valuation allowance of $12.8 million was recorded against deferred tax assets as of March 31, 2022[164] Note 16. Stockholders' Equity P10, Inc.'s stock incentive plan, stock option activity, and stock-based compensation expense are detailed - The P10 Holdings, Inc. 2021 Stock Incentive Plan provides for 9,300,000 shares available for grant[166] - On March 15, 2022, the Board approved the settlement of 1.1 million stock options for $12.5 million[168] Stock Option Activity Summary (in thousands) | Item | Number of Shares | Weighted Average Exercise Price | | :--------------------------------- | :--------------- | :------------------------------ | | Outstanding as of December 31, 2021 | 7,095,936 | $3.71 | | Granted | 1,323,733 | $12.28 | | Settled | (1,120,000) | $0.41 | | Outstanding as of March 31, 2022 | 7,299,669 | $5.95 | - Stock-based compensation expense was $1.5 million for the three months ended March 31, 2022, compared to $0.4 million in the prior year[173] - Unrecognized stock-based compensation expense related to outstanding unvested stock options was $7.5 million, to be recognized over a weighted average period of 3.05 years[173] Note 17. Earnings Per Share A reconciliation of P10, Inc.'s basic and diluted earnings per share calculations is provided Basic and Diluted EPS Reconciliation (in thousands, except per share amounts) | Item | For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Numerator for earnings per share assuming dilution | $7,792 | $1,643 | | Denominator for basic calculation—Weighted average shares | 117,193 | 62,465 | | Denominator for earnings per share assuming dilution | 121,537 | 66,577 | | Earnings per share—basic | $0.07 | $0.03 | | Earnings per share—diluted | $0.06 | $0.02 | Note 18. Redeemable Noncontrolling Interest The elimination of P10, Inc.'s redeemable noncontrolling interest following its IPO is explained - Prior to the IPO on October 20, 2021, P10 Intermediate had redeemable convertible preferred shares representing a noncontrolling interest[176] - In connection with the IPO, all preferred shares were contractually converted to Class B common shares, eliminating the redeemable noncontrolling interest[176] Note 19. Subsequent Events Significant events after the reporting period, including dividend declarations and a stock buyback program, are disclosed - On April 4, 2022, the company made a cash payment to settle stock option liability[179] - The Board of Directors declared a quarterly cash dividend of $0.03 per share for Class A and Class B common stock, payable on June 20, 2022[180] - A stock buyback program of up to $20 million of Class A Common Stock was authorized[180] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes P10's financial condition and results for Q1 2022, covering business, revenue, market trends, and liquidity Business Overview An overview of P10's multi-asset class private market solutions, acquisitions, and capital structure post-IPO is provided - P10 is a multi-asset class private market solutions provider, expanding its offerings through acquisitions like Five Points (Private Credit), TrueBridge (Venture Capital), Enhanced Capital Group (Impact Investing), Hark, and Bonaccord (Private Equity)[184][185][186] - Following its October 2021 IPO and reorganization, P10 has Class A and Class B common stock, with Class B carrying ten votes per share[187] - IPO proceeds were used to pay down debt and settle option awards[188] - In December 2021, P10 secured a new $250 million credit agreement with JP Morgan, comprising a $125 million Term Loan and a $125 million Revolver Facility, plus a $125 million accordion feature[189] - $25 million of the Revolver Facility was repaid in Q1 2022[189] FPAUM by Solution as of March 31, 2022 (in billions) | Solution | FPAUM | | :----------------------- | :---------- | | Private Equity Solutions (PES) | $10.0 | | Venture Capital Solutions (VCS) | $4.6 | | Impact Investing Solutions (IIS) | $1.7 | | Private Credit Solutions (PCS) | $1.3 | Sources of Revenue P10's primary revenue sources, mainly long-term, fixed-fee management and advisory contracts, are described - P10's revenue primarily comes from long-term, fixed-fee management and advisory contracts, typically based on committed capital or deployed capital, with fee schedules generally fixed for 10-15 years and often decreasing over the fund's life[192][196][202] - Other revenue sources include subscriptions, consulting agreements, and referral fees[203] Operating Segments P10 operates as a single segment, with financial performance evaluated by its Co-Chief Executive Officers - The company operates as a single operating segment, with financial performance evaluated by its Co-Chief Executive Officers[193] Trends Affecting Our Business Key market trends influencing P10's business, including demand for private markets and regulatory changes, are discussed - Key trends influencing P10's business include accelerating demand for private markets solutions, favorable lower and lower-middle market dynamics, the ability to expand asset class solutions and geographic reach, increasing regulatory requirements and political uncertainty, the ability to raise capital for acquisitions, and increased competition for top private equity fund managers[195][197][198] - The company leverages its proprietary databases and analytical capabilities to maintain a data advantage, driving performance and offering customized solutions to clients[198][199] Key Financial & Operating Metrics P10's revenue, operating expenses, and FPAUM performance for the three months ended March 31, 2022, are analyzed Revenue Performance (in thousands) | Category | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :--------------------------- | :---------- | :---------- | :--------- | :--------- | | Management and advisory fees | $43,027 | $32,573 | $10,454 | 32% | | Other revenue | $254 | $195 | $59 | 30% | | Total revenues | $43,281 | $32,768 | $10,513| 32% | - Total revenues increased by $10.5 million (32%) in Q1 2022, driven by $6.7 million in organic growth from RCP, TrueBridge, and Five Points, and $3.8 million from the acquisitions of Hark and Bonaccord[213][214] Operating Expenses Performance (in thousands) | Category | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :------------------------------- | :---------- | :---------- | :--------- | :--------- | | Compensation and benefits | $18,494 | $11,936 | $6,558 | 55% | | Professional fees | $2,612 | $2,731 | $(119) | (4)% | | General, administrative and other| $4,112 | $2,037 | $2,075 | 102% | | Contingent consideration expense | $127 | $28 | $99 | 354% | | Amortization of intangibles | $6,181 | $7,484 | $(1,303) | (17)% | | Strategic alliance expense | $152 | — | $152 | 100% | | Total operating expenses | $31,678 | $24,216 | $7,462 | 31% | - Total operating expenses increased by $7.5 million (31%) in Q1 2022, primarily due to a $6.6 million increase in compensation and benefits (driven by acquisitions, a one-time payment, stock compensation, and headcount increase) and a $2.1 million increase in general, administrative, and other expenses (D&O insurance, acquisitions, rent)[217][218][220] - Amortization of intangibles decreased by $1.3 million[223] - Other expenses decreased by $4.1 million (80%) in Q1 2022, mainly due to lower interest rates and a reduced principal balance on debt following the December 2021 refinancing[224] - Income tax expense increased by $2.1 million in Q1 2022, driven by higher pre-tax income[225] FPAUM Roll-Forward (Pro Forma, in millions) | Item | Q1 2022 | Q1 2021 | | :--------------------------- | :---------- | :---------- | | Balance, Beginning of Period | $17,263 | $13,351 | | Add: Capital raised | $496 | $476 | | Add: Capital deployed | $224 | $81 | | Add: Net Asset Value Change | $4 | $4 | | Less: Scheduled fee base stepdowns | $(79) | $(32) |\n| Less: Expiration of fee period | $(316) | $(12) |\n| Balance, End of period | $17,592 | $13,868 | - FPAUM increased by $0.3 billion (1.9%) to $17.6 billion in Q1 2022 (pro forma and actual), primarily due to $720 million in capital raised and deployed from private equity and venture capital solutions, offset by $395 million in step-downs and expirations[231] Non-GAAP Financial Measures P10's non-GAAP financial measures, Adjusted Net Income (ANI) and Adjusted EBITDA, are defined and reconciled - P10 uses Adjusted Net Income (ANI) and Adjusted EBITDA as non-GAAP measures to assess profitability and performance[235] - Adjusted EBITDA is calculated by adjusting GAAP net income for non-cash expenses (depreciation, amortization, stock-based compensation), financing costs, debt extinguishment losses, acquisition-related expenses, registration-related expenses, and income tax effects[236] Adjusted EBITDA and Adjusted Net Income (in thousands) | Item | Q1 2022 | Q1 2021 | | :--------------------------- | :---------- | :---------- | | Net income | $7,792 | $2,215 | | Add back (subtract): | | | | Depreciation & amortization | $6,276 | $7,551 | | Interest expense, net | $1,385 | $5,470 | | Income tax expense | $2,755 | $661 | | Non-recurring expenses | $2,730 | $798 | | Non-cash stock based compensation | $1,515 | $424 | | Adjusted EBITDA | $22,453 | $17,119 | | Less: Cash interest expense | $(398) | $(4,624) |\n| Less: Cash income taxes, net of taxes related to acquisitions | $236 | $(407) |\n| Adjusted Net Income | $22,291 | $12,088 | Financial Position, Liquidity and Capital Resources P10's financial position, liquidity, and capital resources, including cash, debt, and cash flow activities, are discussed Selected Statements of Financial Position (in thousands) | Item | March 31, 2022 | December 31, 2021 | Change ($) | Change (%) | | :--------------------------- | :------------- | :---------------- | :--------- | :--------- | | Cash and cash equivalents | $23,655 | $40,916 | $(17,261) | (42)% | | Goodwill and other intangibles | $541,332 | $547,489 | $(6,157) | (1)% | | Total assets | $655,528 | $676,217 | $(20,689) | (3)% | | Debt obligations | $187,690 | $212,496 | $(24,806) | (12)% | | Stockholders' equity | $391,935 | $395,164 | $(3,229) | (1)% | - Cash and cash equivalents decreased by $17.3 million in Q1 2022, primarily due to a $25 million paydown on the revolving credit facility[241] - Debt obligations declined by $24.8 million[241] - P10 relies on management and advisory fee revenues for operations and debt/equity raises for growth[242] - The new $250 million credit facility with JP Morgan provides financing for acquisition activity and working capital[243] Cash Flows (in thousands) | Activity | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :--------------------------- | :---------- | :---------- | :--------- | :--------- | | Net cash provided by operating activities | $7,622 | $9,476 | $(1,855) | (20)% | | Net cash used in investing activities | $(424) | $(1,183) | $759 | (64)% | | Net cash used in financing activities | $(25,008) | $(7,699) | $(17,309) | 225% | - Operating cash flows decreased by $1.9 million (20%) in Q1 2022, mainly due to changes in operating assets and liabilities, despite an increase in net income[247] - Investing cash used decreased by $0.8 million (64%) due to less acquisition activity[248] - Financing cash used increased by $17.3 million (225%) due to the $25 million debt principal paydown[249] Contractual Obligations as of March 31, 2022 (in thousands) | Obligation | Total | 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | | :-------------------------- | :---------- | :---------- | :---------- | :---------- | :---------- | :---------- | :---------- | | Operating lease obligations | $19,499 | $1,599 | $2,937 | $3,184 | $2,028 | $1,690 | $8,061 | | Debt obligations | $190,900 | — | $6,250 | $6,250 | $178,400 | — | — | | Total | $210,399| $1,599 | $9,187 | $9,434 | $180,428| $1,690 | $8,061 | Critical Accounting Policies and Estimates P10's critical accounting policies and estimates, including consolidation, revenue recognition, and income taxes, are outlined - Key accounting policies and estimates include the basis of presentation (U.S. GAAP, consolidation of subsidiaries and VIEs), principles of consolidation (variable interest and voting interest models), revenue recognition for management and advisory fees (over time as services are rendered), and income taxes (deferred tax assets/liabilities, valuation allowances)[255][256][258][261][262][263][266][267][268] Item 3. Quantitative and Qualitative Disclosures About Market Risk P10's exposure to market risks, including price, interest-rate, financing, liquidity, and counterparty risks, is detailed - P10 is exposed to market risks such as price, interest-rate, financing, liquidity, and counterparty risks[270] - While management fees are not significantly impacted by investment value changes, unfavorable asset value changes could affect investor attraction and retention[271] - With $190.9 million in outstanding principal on its Term Loan and Revolving Credit Facility (interest rate of 2.1% + SOFR as of March 31, 2022), a 100-basis point increase in interest rates would result in an estimated $1.4 million increase in interest expense over the next 12 months[273] Item 4. Controls and Procedures The effectiveness of P10's disclosure controls and procedures is confirmed, with no material changes in internal control reported - P10's management, including Co-Chief Executive Officers and Chief Financial Officer, concluded that disclosure controls and procedures were effective as of March 31, 2022, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[275][276] - There have been no material changes in internal control over financial reporting during the quarter ended March 31, 2022[277] PART II - OTHER INFORMATION This section provides additional information, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings Legal proceedings are referenced from the 'Contingencies' note, indicating no material losses beyond recognized amounts - Information on legal proceedings is incorporated by reference from Note 14, 'Commitments and Contingencies,' which states that the company does not believe any ongoing matters will result in losses materially in excess of amounts already recognized[279] Item 1A. Risk Factors No material changes to risk factors previously disclosed in the annual report on Form 10-K are confirmed - No material changes have occurred from the risk factors previously disclosed in the annual report on Form 10-K for the year ended December 31, 2021[280] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable, indicating no unregistered equity sales or specific use of proceeds to report - This item is not applicable[281] Item 3. Defaults Upon Senior Securities This item is not applicable, indicating no defaults upon senior securities to report - This item is not applicable[282] Item 4. Mine Safety Disclosures This item is not applicable, indicating no mine safety disclosures to report - This item is not applicable[283] Item 5. Other Information This item is not applicable, indicating no other information required to be disclosed - This item is not applicable[284] Item 6. Exhibits All exhibits filed with the Form 10-Q, including organizational documents, rights agreements, and certifications, are listed - Exhibits include the Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Rights Agreement, various certifications (Co-Chief Executive Officer, Chief Financial Officer), and Inline XBRL documents[285] Signatures The signatures of the registrant's authorized officers, certifying the report, are contained in this section - The report is signed by Robert Alpert (Co-Chief Executive Officer and Chairman), C. Clark Webb (Co-Chief Executive Officer and Director), and Amanda Coussens (Chief Financial Officer) on May 13, 2022[289]