Executive Summary / Key Takeaways

• P10 is a diversified alternative asset manager specializing in the less competitive North American middle and lower middle markets, executing a strategic plan focused on organic growth, disciplined M&A, and operational efficiency to drive long-term value.
• The company's proprietary data platform provides a unique competitive advantage, enabling faster deal evaluation and potentially higher margins compared to peers, supporting its "category killer" aspiration in its target markets.
• Recent financial performance, including 23% revenue growth in FY 2024 and a 2% increase in Q1 2025, demonstrates resilience, driven by strong fundraising momentum (>$3.8B in 2024, target >$4B in 2025) and a stable core fee rate.
• The strategic acquisition of Qualitas Funds establishes a European foothold, expands the LP base significantly, and adds complementary capabilities, positioning P10 for global expansion and cross-selling opportunities despite modest near-term margin pressure.
• Management's guidance for double-digit revenue growth and FRE margins in the mid-40s% for 2025, with long-term expansion towards 50%, signals confidence in the scalable business model and ongoing strategic investments, supported by a robust capital allocation strategy including dividends and share repurchases.

The Middle Market Advantage: P10's Strategic Foundation

P10, Inc. operates as a multi-asset class private market solutions provider, strategically focused on the North American middle and lower middle markets. This segment of the alternative asset management industry is characterized by less competition compared to the large-cap space, offering P10 a differentiated playing field. The company's journey to this position is rooted in a transformative history, pivoting from an industrial company (Active Power) through bankruptcy and subsequent strategic acquisitions to build a diversified alternative asset platform. Key acquisitions like RCP Advisors (private equity fund-of-funds), Five Points (lower middle market PE/credit), TrueBridge (venture capital), ECG/Enhanced (impact investing), Bonaccord (GP stakes), Hark (NAV lending), and WTI (venture debt) have shaped P10 into its current structure, offering a comprehensive suite of solutions across private equity, venture capital, private credit, and impact investing. This deliberate assembly of specialized strategies allows P10 to provide investors with differentiated access to attractive opportunities often constrained in larger markets.

The core of P10's business model is generating durable fee-related revenue primarily through long-term management and advisory contracts. These fees are typically based on committed or deployed capital, rather than fluctuating asset values, providing a stable revenue stream. While fee rates may step down over the life of a fund, the long-term nature of these contracts (often 10-15 years) contributes significantly to revenue predictability. The company's strategic focus under CEO Luke Sarsfield III, initiated in early 2024, centers on five pillars: optimizing the organizational structure, accelerating organic growth, re-energizing M&A, enhancing operational efficiency, and improving shareholder transparency. This plan aims to institutionalize the platform and leverage its collective strengths.

A critical differentiator for P10, particularly in its target markets, is its proprietary data platform. This technology, including tools like GPScout in the US and complemented by the data brought in by the Qualitas acquisition in Europe, provides deep insights into the fragmented middle and lower middle market landscape. Specific quantifiable benefits of this technology were not detailed with precise percentages, but management emphasizes that these data insights are a "key competitive advantage" that drives performance, supports robust and disciplined sourcing criteria, fuels a highly selective investment process, and enables optimal portfolio construction and monitoring. This technological edge is intended to provide a competitive moat, enhancing deal evaluation speed and potentially contributing to higher margins and better market positioning by allowing P10 to identify and capitalize on opportunities others may miss. The company is also exploring the utilization of data and artificial intelligence to gain further insights across its business, investing, and client interactions, signaling an ongoing commitment to leveraging technology for future growth and efficiency.

P10 positions itself as a "category killer" in the middle and lower middle market, aiming to be a trusted partner for investors seeking access to this space. Compared to larger, more diversified alternative asset managers like Blackstone (BX), KKR (KKR), Apollo (APO), and Carlyle (CG), P10 operates at a significantly smaller scale (AUM ~$20-30B vs. BX ~$1T, KKR ~$500B). While precise, directly comparable market share figures for all niche competitors are not publicly detailed, P10's focus allows it to potentially achieve greater operational efficiency in its specific niches (e.g., potentially lower operating costs per unit in certain credit services or transaction consulting, though specific quantitative comparisons were not provided). However, larger competitors often boast higher overall profitability margins (e.g., BX operating margins 40-45% vs. PX TTM operating margin 20.05%) and greater financial health metrics like ROIC (BX 12-15%, KKR 10-12%, APO 9-11% vs. PX 8-10%), indicating more efficient capital deployment at scale. P10's FRE-centric model, which leaves the majority of carried interest with investment teams, is highlighted as a differentiator that aligns objectives, contrasting with models where carried interest accrues more centrally. This structure, while potentially impacting P10's net income margin (6.11% TTM), is intended to drive investment performance and FPAUM growth.

Performance and Strategic Momentum

P10 has demonstrated solid financial performance, particularly in recent periods, reflecting the execution of its strategy and favorable market dynamics in its target segments. For the full year 2024, the company reported total revenues of $296.45 million, a significant 23% increase over 2023. This growth was primarily driven by strong fundraising and deployed capital across its strategies, resulting in a 10% growth in average FPAUM in Q1 2025 compared to Q1 2024. Q1 2025 revenues were $67.7 million, a more modest 2% increase year-over-year, influenced by the timing of catch-up fees.

Catch-up fees, earned when investors commit to a fund after its initial closing, can provide episodic boosts to revenue. Q4 2024 saw an "outsized" $18.9 million in catch-up fees, largely from the final closing of Bonaccord Fund II, contributing to the strong year-end revenue figure. Q1 2025 catch-up fees were $2.8 million. Management expects catch-up fees to normalize to approximately $4 million to $5 million in 2025, impacting the average fee rate, which is expected to average 103 basis points for the core business in 2025, down from 107 basis points in FY 2024 but in line with historical levels (100-103 bps in 2021-2023).

Operating expenses have seen increases, reflecting investments in the platform and transaction costs. Q1 2025 total operating expenses rose 4% year-over-year to $56.4 million, primarily due to higher professional fees associated with the Qualitas acquisition and increased general, administrative, and other expenses related to marketing, infrastructure, technology, and security enhancements. Compensation and benefits remained relatively flat in Q1 2025 compared to Q1 2024. Amortization of intangibles decreased, reflecting the amortization schedules of acquired assets.

Profitability metrics show a mixed picture, influenced by non-cash items and episodic revenue. GAAP Net Income attributable to P10 was $4.52 million in Q1 2025, compared to $5.02 million in Q1 2024. Adjusted EBITDA in Q1 2025 was $30.8 million, a 9% increase from Q1 2024. Fee-Related Earnings (FRE), a key non-GAAP metric focusing on core operations, was $30.7 million in Q1 2025, flat compared to Q1 2024. The FRE margin was 47% in Q1 2025, consistent with Q1 2024 and within management's near-term target range of mid-40s%. The higher FRE margins seen in Q4 2024 (50.2%) and Q3 2024 (48%) were partly attributed to the impact of higher-margin catch-up fees and product mix.

Cash flow from operations can fluctuate. Q1 2025 saw net cash used in operating activities of $4.73 million, a decrease from $10.96 million provided in Q1 2024. This shift was primarily influenced by changes in operating assets and liabilities, including a purchase of allocable state tax credits and payments of operating expenses. For the full year 2024, operating cash flow was a robust $100.97 million, translating to $96.59 million in free cash flow.

Liquidity is supported by existing cash and credit facilities. As of March 31, 2025, cash and cash equivalents were $74.39 million. Debt obligations totaled $357.15 million, an increase driven by drawing on the revolver in preparation for the Qualitas acquisition. The Amended and Restated Credit Agreement provides significant capacity ($175M revolver, $325M term loan, $125M accordion) and extends maturities to August 2028, providing financial flexibility for acquisitions and general corporate purposes. The company was in compliance with its debt covenants as of March 31, 2025.

P10's capital allocation strategy prioritizes returning value to shareholders. The company pays a quarterly cash dividend, recently increased to $0.04 per share in Q1 2025. Share repurchases are also a key tool; the Board has authorized $132 million since inception, with $28.5 million remaining as of March 31, 2025. Management views the current stock price as a "compelling entry point" and has been opportunistic in repurchasing shares, aligning with employee ownership which constitutes the largest position in the shareholder register. Value-enhancing M&A is co-equal in priority with share repurchases after the dividend.

Looking ahead, P10 has provided concrete guidance signaling continued growth. For 2025, management expects gross fundraising of at least $4 billion, a 60% increase over the 2024 guidance (excluding the ~$1 billion from the Qualitas acquisition). This is supported by a pipeline of 19 commingled funds expected in the market at various times throughout the year, including offerings from RCP (Direct V, Secondary V, Multi-Strat II, Fund XIX, Small and Emerging Fund III), TrueBridge (Blockchain II, Secondaries 2), Five Points (new credit strategy), and Bonaccord (Fund III). Double-digit revenue growth is anticipated for 2025 (excluding direct and secondary catch-up fees but including Qualitas). FRE margins are expected to remain in the mid-40s% in 2025, with the Qualitas acquisition anticipated to exert modest downward pressure, already factored into guidance. Longer term, P10 targets more than doubling FPAUM by 2029, primarily through organic growth, and expects core organic FRE margins to expand towards 50% in the out years, driven by operating leverage and mix shift.

The strategic acquisition of Qualitas Funds, completed on April 4, 2025, is a significant step in executing the M&A pillar. Qualitas, a European lower middle market PE fund-of-funds manager, brings ~$1 billion in FPAUM and expands P10's LP base by ~1,300 relationships (totaling ~5,000). This acquisition establishes a European presence and is highly complementary to existing strategies like RCP (with whom Qualitas had a prior joint venture) and Hark (collaborating on European NAV lending). Management sees significant opportunities for cross-selling and leveraging combined data sets, positioning P10 as a more global multi-strategy firm.

Risks to the investment thesis include potential impacts from the complex regulatory and tax environment, uncertainty around future policy changes, and the inherent market risk in alternative investments, although P10's focus on the middle market and diversified portfolio are seen as mitigating factors. Competition for top fund managers remains, and P10 must maintain its access and relationships. Estimates related to acquisition earnouts (like WTI) and revenue share agreements (like ECG) require judgment and could impact financial results. Interest rate risk on variable debt and credit risk with counterparties are also present. The success of integrating Qualitas and executing on the ambitious fundraising and M&A targets are key factors to monitor.

Conclusion

P10, Inc. has successfully transformed into a specialized multi-asset class alternative asset manager with a clear focus on the attractive North American middle and lower middle markets. Its strategic pivot, executed through a series of deliberate acquisitions, has built a diversified platform capable of generating stable fee-related revenue. Bolstered by a proprietary data advantage and a strategic plan under new leadership, P10 is actively pursuing accelerated organic growth and disciplined inorganic expansion, exemplified by the recent Qualitas Funds acquisition which provides a crucial European foothold and expands its investor reach.

While navigating operational investments and the episodic nature of certain fees, P10 has demonstrated solid financial performance and profitability, particularly in its core FRE. Management's ambitious guidance for fundraising, revenue growth, and margin expansion underscores confidence in the business model's scalability and the potential for long-term value creation. For investors, P10 represents an opportunity to gain exposure to less competitive private market segments through a platform leveraging technology and strategic M&A, with a management team significantly aligned through share ownership. Key areas to watch include the successful integration of Qualitas, continued execution on fundraising targets across its diverse strategies, and the trajectory of core FRE margins as strategic investments mature and operating leverage takes hold.