P10, Inc. Q3 FY2024 earnings call

Luke Sarsfield highlighted record third quarter financial results with $1.4 billion in gross new fee-paying AUM raised and deployed. Revenue was $74 million, up 26% y-o-y. FRR was $73 million, a 26% increase. FRE was $35 million, a 19% increase. The strategic growth plan is progressing: private equity solutions raised $1.1 billion with funds like RCP Direct V, etc. Announced acquisition of Qualitas Funds, a leading European private equity fund of funds manager. Focus on generating operational efficiencies through collaboration and data insights. Hosted inaugural Investor Day, showcasing business attributes and introducing long-term guidance.

In the third quarter, P10 raised and deployed $1.4 billion in gross new fee-paying AUM. The private equity solutions segment raised $1.1 billion. The private credit solutions segment added $220 million to fee-paying assets under management. The venture capital solutions segment raised $105 million in the third quarter. Over $200 million was raised in SMAs. Revenue for the quarter was $74 million, representing a 26% year-over-year growth. Fee-related revenue (FRR) was $73 million, a 26% increase compared to the prior year period. Fee-related earnings (FRE) were approximately $35 million, a 19% increase from Q3 2023, with an FRE margin of 48%.

In 2024, P10 raised and deployed $2.9 billion, exceeding the full-year $2.5 billion guidance. Intends to more than double fee-paying assets under management by 2029 with majority organic growth. Focused on value-creating M&A and expects core organic FRE margins excluding M&A to expand from mid-40s percent range to near 50% in the long term. For the year, expects FRE margin in the mid-40% range. Continues to view the stock as an attractive entry point for buybacks, with buybacks suspended temporarily due to the Qualitas transaction but expected to resume when appropriate.

Forward-looking statements are inherently uncertain, and actual results may differ materially from expectations due to various risks detailed in earnings releases and periodic reports. Risks include market volatility, integration challenges with acquisitions like Qualitas Funds, and potential impacts on stock repurchase activity influenced by strategic transactions.

Q: Double-click on fee rates and asset raising mix.

A: Amanda Coussens stated the majority of fee-paying AUM comes from traditional commingled funds, with fee rates stable due to oversubscribed funds. Luke Sarsfield mentioned success stems from compelling investment strategies, client relationships, and the potential of SMA opportunities.

Q: On FRE margin and buybacks.

A: Amanda Coussens explained the FRE margin for the year is expected to be in the mid-40s, impacted by step-downs and ongoing investments. Luke Sarsfield emphasized the stock is compelling, and buybacks were suspended temporarily during the Qualitas transaction but will resume when favorable.

Q: On M&A and market expectations.

A: Luke Sarsfield expressed excitement about the Qualitas Funds acquisition, seeing opportunities from cross-selling and positive market dynamics.

Q: On SMA opportunities.

A: Luke Sarsfield noted SMA is in the early stages, with lower fee rates but high margins due to leveraging existing expertise within P10.