P10 Reports First Quarter 2024 Earnings Results

Rhea-AI Summary

P10, Inc. (NYSE: PX) reported record quarterly revenue of $66.1 million, a 15% increase year over year. The company also increased its dividend by 8% and saw growth in fee-paying assets under management. Additionally, they announced the appointment of a new General Counsel, Melodie Craft, and increased their share repurchase authorization. The Board of Directors declared an 8% increase in the quarterly dividend.

Positive

• P10 reported record quarterly revenue of $66.1 million, a 15% increase year over year, demonstrating strong growth.

• The company saw a 10% increase in fee-paying assets under management, reaching $23.8 billion, signaling continued market demand for their solutions.

• The appointment of Melodie Craft as General Counsel brings extensive legal expertise to the company, enhancing its legal and regulatory capabilities.

Negative

• Although the adjusted net income remained stable year over year, there was a slight decrease in fully diluted GAAP EPS from $0.01 to $0.04.

• The company's share repurchase program may impact cash reserves and could potentially limit investment opportunities in the future.

Insights

Financial Analyst

P10, Inc.'s announcement of a 15% annual revenue growth to $66.1 million signifies not only a robust operational performance but also an ability to capitalize on market opportunities. The increase in Fee-Paying Assets Under Management (AUM) by 10% to $23.8 billion reflects the company's growing influence in asset management and its capability to attract and manage more significant funds. Notably, the growth in GAAP Net Income from $0.8 million to $5.2 million showcases improved profitability, which could be attributed to operational efficiencies or higher-margin revenue streams. However, a point of interest is the static Adjusted Net Income (ANI), remaining virtually unchanged at $25.4 million. This indicates that despite the revenue growth, cost management or other non-operating expenses/income may have offset the potential growth in net income. The dividend increase by 8% is a positive gesture, reflecting confidence in the company's cash flow sustainability. However, the flat Fully diluted ANI per share suggests that the earnings growth might not be strongly reflected on a per-share basis, potentially due to the increase in share count or other dilutive effects.

Merger & Acquisitions Expert

The strategic expansion of P10's management team, with Melodie Craft's appointment as General Counsel, is pivotal for the company's M&A strategy. With her extensive experience in leading M&A transactions, Craft's appointment could potentially streamline the company’s legal and regulatory M&A infrastructure. This structural strengthening is critical for P10's long-term growth strategy that includes mergers and acquisitions. Additionally, the repurchase of 3.7 million shares at an average price of $8.15, consuming nearly half of the newly authorized $40 million share buyback, indicates management's belief in the company's undervaluation. A stock repurchase program of this magnitude can signal to the market a positive outlook from the company's board, potentially leading to increased investor confidence and a positive impact on the stock's price.

Market Analyst

P10's success in raising $670 million in new fee-paying AUM across ten funds speaks to the diversity of demand and the company's strong market position. This fundraising efficiency is significant because it suggests P10 has a competitive product offering and is effectively capturing market share. The projected trajectory of double-digit annual revenue growth is an ambitious target that will require continued strong performance in fundraising and client expansion. The company's focus on the lower and core middle markets presents a strategic niche, but also comes with specific risks, such as market saturation and the potential for higher competition in these segments. Investors should be aware of these factors when considering the company's long-term growth prospects.

Generated Record Quarterly Revenue of $66.1 Million, a 15% Annual Increase

Increased Quarterly Dividend by 8%

DALLAS, May 08, 2024 (GLOBE NEWSWIRE) -- P10, Inc. (NYSE: PX) (the “Company”), a leading private markets solutions provider, today reported financial results for the first quarter ended March 31, 2024.

First Quarter 2024 Financial Highlights

• Revenue: $66.1 million, a 15% increase year over year.
• Fee-Paying Assets Under Management: $23.8 billion, a 10% increase year over year.
• GAAP Net Income: $5.2 million compared to $0.8 million in the prior year.
• Adjusted EBITDA: $30.8 million compared to $28.4 million in the prior year.
• Adjusted Net Income: $25.4 million, compared to $25.5 million in the prior year.
• Fully diluted GAAP EPS: $0.04 compared to $0.01 in the prior year.
• Fully diluted ANI per share: $0.21, compared to $0.21 in the prior year.
  

A presentation of the quarterly financials may be accessed here and is available on the Company’s website.

“In the first quarter of 2024, P10 delivered record revenues of $66 million and executed against our strategy to generate long-term growth,” said Luke Sarsfield, P10 Chief Executive Officer. “Our organic growth was underpinned by the $670 million in gross new fee-paying AUM our strategies raised across ten funds. These fundraising levels demonstrate the diversity of demand from our client base. We have advanced the operational initiatives we introduced earlier this year, establishing a strong M&A infrastructure and making key appointments that enhance our management team. We are on track to deliver double-digit annual revenue growth, meet our fundraising targets, and further expand our client franchise to provide unrivaled access to opportunities across the lower and core middle markets.”

Strategic Leadership Appointment

On April 29, 2024, P10 named Melodie Craft to General Counsel. Ms. Craft will lead the Company’s legal function, providing strategic guidance on all corporate governance, legal, and regulatory matters. Ms. Craft is a seasoned attorney, General Counsel, compliance officer, and business advisor with over two decades of legal experience and a longstanding track record as a legal leader. She also has extensive experience leading M&A transactions through requisite legal processes and post-close integration activities.

This follows the previously announced appointment of Arjay Jensen to EVP, Head of Strategy and M&A in February.

Stock Repurchase Program

On February 27, 2024, the Board of Directors of the Company increased the share repurchase authorization by $40 million. In the first quarter, the Company repurchased approximately 3.7 million shares at an average price of $8.15 per share. There is now approximately $21 million remaining on the authorization.

Declaration of Dividend

The Board of Directors of the Company has declared a quarterly cash dividend of $0.035 per share on Class A and Class B common stock, an increase of 8%, payable on June 20, 2024, to the holders of record as of the close of business on May 31, 2024.

Conference Call Details

The Company will host a conference call at 5:00 p.m. Eastern Time on Wednesday, May 8, 2024. All participants must register prior to joining the event.

• To join and view the live webcast, please register here.
• To join by telephone, please register here.

For those unable to participate in the live event, a replay will be made available on P10’s investor relations page at www.p10alts.com.

About P10

P10 is a leading multi-asset class private markets solutions provider in the alternative asset management industry. P10’s mission is to provide its investors differentiated access to a broad set of investment solutions that address their diverse investment needs within private markets. As of March 31, 2024, P10 has a global investor base of more than 3,600 investors across 50 states, 60 countries, and six continents, which includes some of the world’s largest pension funds, endowments, foundations, corporate pensions, and financial institutions. Visit www.p10alts.com.

Forward-Looking Statements

Some of the statements in this release may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Words such as “will,” “expect,” “believe,” “estimate,” “continue,” “anticipate,” “intend,” “plan” and similar expressions are intended to identify these forward-looking statements. Forward-looking statements discuss management’s current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance, and business. The inclusion of any forward-looking information in this release should not be regarded as a representation that the future plans, estimates, or expectations contemplated will be achieved. Forward-looking statements reflect management’s current plans, estimates, and expectations, and are inherently uncertain. All forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors that may cause actual results to be materially different; global and domestic market and business conditions; successful execution of business and growth strategies and regulatory factors relevant to our business; changes in our tax status; our ability to maintain our fee structure; our ability to attract and retain key employees; our ability to manage our obligations under our debt agreements; our ability to make acquisitions and successfully integrate the businesses we acquire; assumptions relating to our operations, financial results, financial condition, business prospects and growth strategy; and our ability to manage the effects of events outside of our control. The foregoing list of factors is not exhaustive. For more information regarding these risks and uncertainties as well as additional risks that we face, you should refer to the “Risk Factors” included in our annual report on Form 10-K for the year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 13, 2024, and in our subsequent reports filed from time to time with the SEC. The forward-looking statements included in this release are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information or future events, except as otherwise required by law.

Use of Non-GAAP Financial Measures by P10

The non-GAAP financial measures contained in this press release (including, without limitation, Adjusted EBITDA, Adjusted EBITDA Margin, Fee-Related Revenue (“FRR”), Fee-Related Earnings (“FRE”), Fee-Related Earnings Margin, Adjusted Net Income (“ANI”), Fully Diluted ANI EPS and fee-paying assets under management are not GAAP measures of the Company’s financial performance or liquidity and should not be considered as alternatives to net income (loss) as a measure of financial performance or cash flows from operations as measures of liquidity, or any other performance measure derived in accordance with GAAP. A reconciliation of such non-GAAP measures to their most directly comparable GAAP measure is included later in this press release. The Company believes the presentation of these non-GAAP measures provide useful additional information to investors because it provides better comparability of ongoing operating performance to prior periods. It is reasonable to expect that one or more excluded items will occur in future periods, but the amounts recognized can vary significantly from period to period. These non-GAAP measures should not be considered substitutes for net income or cash flows from operating, investing, or financing activities. You are encouraged to evaluate each adjustment to non-GAAP financial measures and the reasons management considers it appropriate for supplemental analysis. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Key Financial & Operating Metrics

Fee-paying assets under management reflects the assets from which we earn management and advisory fees. Our vehicles typically earn management and advisory fees based on committed capital, and in certain cases, net invested capital, depending on the fee terms. Management and advisory fees based on committed capital are not affected by market appreciation or depreciation.

Ownership Limitations

P10’s Certificate of Incorporation contains certain provisions for the protection of tax benefits relating to P10’s net operating losses. Such provisions generally void transfers of shares that would result in the creation of a new 4.99% shareholder or result in an existing 4.99% shareholder acquiring additional shares of P10.

P10 Investor Contact:
info@p10alts.com

P10 Media Contact:
Josh Clarkson
jclarkson@prosek.com

Reconciliation of Non-GAAP Financial Measures

	Three Months Ended
	March 31, 2024			March 31, 2023				Q1'24 vs Q1'23
(Dollars in thousands except share and per share amounts)
GAAP Net Income	$	5,243		$	769			582%
Adjustments:
Depreciation & amortization		7,083			7,770			-9%
Interest expense, net		5,776			5,172			12%
Income tax expense/(benefit)		1,758			(957	)		-284%
Non-recurring expenses		691			2,159			-68%
Non-cash stock based compensation		5,945			2,598			129%
Non-cash stock based compensation - acquisitions		771			4,501			-83%
Earn out related compensation		3,558			6,394			-44%
Adjusted EBITDA	$	30,825		$	28,406			9%
Less:
Cash interest expense, net		(5,406	)		(2,863	)		89%
Net cash paid on income taxes		(19	)		(58	)		-67%
Adjusted Net Income	$	25,400		$	25,485			-0%
ANI Earnings per Share
Shares outstanding		115,129			115,921			-1%
Fully Diluted Shares outstanding		122,841			123,926			-1%
ANI per share	$	0.22		$	0.22			0%
Fully diluted ANI per share(1)	$	0.21		$	0.21			0%
Adjusted EBITDA Margin
Total Revenues	$	66,115		$	57,253			15%
Adjusted EBITDA		30,825			28,406			9%
Adjusted EBITDA Margin		47	%		50	%		N/A
Total Revenue	$	66,115		$	57,253			15%
Adjustments:
Non-Fee Related Revenue		(1,108	)		(1,120	)		-1%
Fee-Related Revenue	$	65,007		$	56,133			16%
Adjusted EBITDA	$	30,825		$	28,406			9%
Less:
Non-Fee Related Income		(84	)		(216	)		-61%
Fee-Related Earnings	$	30,741		$	28,190			9%
Fee-Related Earnings Margin		47	%		50	%		N/A

 Notes to Reconciliation of Non-GAAP Financial Measures

Above is a calculation of our unaudited non-GAAP financial measures. These are not measures of financial performance under GAAP and should not be construed as a substitute for the most directly comparable GAAP measures, which are reconciled in the table above. These measures have limitations as analytical tools, and when assessing our operating performance, you should not consider these measures in isolation or as a substitute for GAAP measures. Other companies may calculate these measures differently than we do, limiting their usefulness as a comparative measure.

We use Adjusted Net Income, or ANI, as well as Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), Adjusted EBITDA Margin, Fee-Related Revenues, Fee-Related Earnings and Fee-Related Earnings Margin to provide additional measures of profitability. We use the measures to assess our performance relative to our intended strategies, expected patterns of profitability, and budgets, and use the results of that assessment to adjust our future activities to the extent we deem necessary. ANI reflects our actual cash flows generated by our core operations. ANI is calculated as Adjusted EBITDA, less actual cash paid for interest and federal and state income taxes.

In order to compute Adjusted EBITDA, we adjust our GAAP Net Income for the following items:

• Expenses that typically do not require us to pay them in cash in the current period (such as depreciation, amortization and stock-based compensation);
• The cost of financing our business;
• One-time expenses related to restructuring of the management team including placement/search fees;
• Acquisition-related expenses which reflects the actual costs incurred during the period for the acquisition of new businesses, which primarily consists of fees for professional services including legal, accounting, and advisory, as well as bonuses paid to employees directly related to the acquisition; and
• The effects of income taxes.
  

Fee-Related Revenues is calculated as Total Revenues less any incentive fees.

Fee-Related Earnings is a non-GAAP performance measure used to monitor our baseline earnings less any incentive fee revenue and excluding any incentive fee-related expenses.

Fee-Related Earnings Margin is calculated as Fee-Related Earnings divided by Fee-Related Revenues.

Adjusted Net Income reflects net cash paid for federal and state income taxes.

Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total GAAP revenues. We use Adjusted EBITDA Margin to provide an additional measure of profitability.

(1) Fully Diluted ANI EPS calculations include the total of all common shares, stock options under the treasury stock method, restricted stock awards, and the redeemable non-controlling interests of P10 Intermediate converted to Class A stock as of each period presented.

FAQ

What was P10's first quarter 2024 revenue?

P10 reported a record quarterly revenue of $66.1 million in the first quarter of 2024, a 15% increase year over year.

What was the increase in fee-paying assets under management in the first quarter?

P10 saw a 10% increase in fee-paying assets under management, reaching $23.8 billion in the first quarter of 2024.

Who was appointed as the General Counsel of P10?

Melodie Craft was appointed as the General Counsel of P10, bringing over two decades of legal experience and expertise in corporate governance and M&A transactions.

What was the increase in the quarterly dividend declared by the Board of Directors?

The Board of Directors declared an 8% increase in the quarterly cash dividend, now set at $0.035 per share on Class A and Class B common stock.