P10 Q1 2025 Earnings Report

P10 EPS Results

• Actual EPS: $0.20
• Consensus EPS: $0.21
• Beat/Miss: Missed by -$0.01
• One Year Ago EPS: N/A

P10 Revenue Results

• Actual Revenue: $67.67 million
• Expected Revenue: $68.80 million
• Beat/Miss: Missed by -$1.13 million
• YoY Revenue Growth: N/A

P10 Announcement Details

• Quarter: Q1 2025
• Date: 5/8/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 8:30AM ET

Praxair, Inc. produces and distributes industrial gases. It operates through five segments: North America, Europe, South America, Asia, and Surface Technologies. The company offers atmospheric gases, including oxygen, nitrogen, argon, and rare gases; and process gases, such as carbon dioxide, helium, hydrogen, electronic gases, specialty gases, and acetylene. It also supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders to the aircraft, energy, printing, primary metals, petrochemical, textile, and other industries. In addition, the company offers electric arc, plasma and wire spray, and high-velocity oxy-fuel equipment; and distributes hardgoods and welding equipment purchased from independent manufacturers. It serves various industries, such as healthcare, petroleum refining, manufacturing, food, beverage carbonation, fiber-optics, steel making, aerospace, chemicals, and water treatment. Praxair, Inc. was founded in 1907 and is headquartered in Danbury, Connecticut.

P10 Q1 2025 Earnings Call Transcript

Key Takeaways

• In Q1, PTEN achieved a record fundraising quarter, raising and deploying over $1.4 billion in gross new fee-paying assets under management and closing RCP Direct V with nearly $1 billion in commitments.
• PTEN closed the acquisition of Qualitas Funds on April 4, adding $1 billion in fee‐paying AUM, 1,300 high-net-worth LPs, and establishing a stronger European presence.
• While Q1 revenue rose 2% year-over-year to $67.7 million and FRE held flat at $30.7 million, GAAP net income fell to $4.7 million from $5.2 million and adjusted net income declined 8% to $23.5 million largely due to higher interest expense and one-time professional fees.
• The company increased its quarterly dividend by 7% to $3.75 per share and repurchased $15 million of stock in Q1, emphasizing ongoing capital returns with $28.5 million remaining under the repurchase program.
• PTEN introduced a $38 billion AUM metric (nearly $40 billion pro forma including Qualitas) and outlined a cash tax rate expected in the low single digits for 2025, rising to the high single/low double digits in 2026 before settling in the mid-teens thereafter.

Presentation

[Operator]

Hello and welcome to the PTEN First Quarter twenty twenty five Conference Call. My name is Latif and I will be coordinating your call today. Currently, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. As a reminder, today's conference call is being recorded.

[Operator]

I will now hand the call over to your host, Mark Hood, EVP and Chief Administrative Officer. Mark, please go ahead.

[Mark Hood, EVP & Chief Administrative Officer at P10]

Thank you, operator, and thank you all for joining us. On today's call, we will be joined by Luke Sarfield, Chairman and Chief Executive Officer and Amanda Cousins, EVP and Chief Financial Officer. Additionally in the room with us today are RJ Jensen, EVP, Head of Strategy and M and A and Sareeta Jareth, EVP, Global Head of Client Solutions.

[Mark Hood, EVP & Chief Administrative Officer at P10]

Before we begin, I'd like to remind everyone that this conference call as well as the presentation slides may constitute forward looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward looking statements reflect management's current plans, estimates and expectations and are inherently uncertain. Actual results for future periods may differ materially from those expressed or implied by the forward looking statements due to a number of risks and uncertainties that are described in greater detail in our earnings release and in our periodic reports filed from time to time with the SEC. The forward looking statements included are made only as of the date hereof. We undertake no obligation to update or revise any forward looking statements as a result of new information or future events, except as otherwise required by law.

[Mark Hood, EVP & Chief Administrative Officer at P10]

During the call, we will also discuss certain non GAAP measures that we believe could be useful in evaluating the company's performance. A reconciliation of these measures to the most directly comparable GAAP measure is available in our earnings release and our filings with the SEC. I will now turn the call over to Luke.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

Thank you, Mark. Good morning, everyone, and thank you for joining us for our first quarter twenty twenty five earnings call. P10 had an extremely strong start to the year. We raised and deployed over $1,400,000,000 in gross new fee paying AUM, marking a record fundraising quarter for the firm, and generated revenue of $67,700,000 and FRE of $30,700,000 We closed RCP Direct five with nearly $1,000,000,000 in commitments, a record for RCP and an impressive follow-up to December's '1 point '6 billion dollars close of Bonacourt Capital Partners Fund II. During the first quarter, we had 10 funds in the market and saw contributions from private equity, private credit, and our venture capital strategies.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

Over the course of the full calendar year, we expect more than 15 funds in the market at various times. And not only did we have strong demand for our commingled funds, but we also closed several large SMAs, including one with a new global sovereign wealth fund client. We continue to see non commingled vehicles as a secular growth opportunity as we expand our engagement with global clients. Of particular note, on April 4, we closed the Qualitas Funds acquisition, meaningfully expanding our global LP base and establishing a strong European presence with investors and private banks in the process. The acquisition adds 1,300 LPs to our platform, almost all high net worth investors.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

Importantly, the acquisition adds another $1,000,000,000 to our fee paying assets under management. With strong momentum heading into the second quarter, I want to reiterate the guidance we provided on our February call. We continue to expect at least $4,000,000,000 of organic gross fundraising in 2025 and double digit revenue growth, excluding direct and secondary catch up fees and including revenue contribution from Qualitas funds. For 2025, we continue to expect core FRE margins, excluding M and A, to be in the mid-forty percent range. And with the Qualitas transaction closed, we have another $1,000,000,000 in fee paying assets under management coming online in the second quarter, given the closing in early April, as I mentioned.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

P10 delivered an impressive performance to start the year, and we're positioned to navigate the current operating environment through the continued execution of our strategic plan. As a reminder, our strategic plan is focused on optimizing our organizational structure, driving increased organic growth, reaccelerating our M and A engine, generating operational efficiencies, and enhancing our transparency as an enterprise. We maintain a conviction that we have the proper strategic roadmap and requisite experience across numerous economic cycles to navigate the months and quarters ahead despite the potential for near term market volatility. To that end, I want to highlight recent progress in advancing our strategic imperatives. We have continued to optimize our organizational structure through Board refreshment.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

On April 21, we announced the appointments of Jennifer Glassman and Steven Bluett as independent directors. Jennifer is an experienced financial services leader currently serving as the Chief Financial Officer of Power Brook Capital Partners. Steven has previously served as the Chief Investment Officer and Head of Private Markets at Manulife Investment Management and in several other senior leadership positions in the alternative space. We are thrilled to welcome these leaders in the private markets who will deepen our expertise and insights and partner with management to guide P10 through its next phase of growth. Turning to organic growth, our focus and efforts center on deepening and expanding our robust LP base through new investment vehicles and distribution channels.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

We're also institutionalizing specific processes across our platform so that our strategies are more integrated and our investors can benefit from the scale that T10 has to offer. Our focus is on attracting larger institutional investors, such as insurance companies and pension funds, who seek access to attractive strategies in our market segment. We continue to advance our M and A efforts. On that front, I want to touch on the completion of our acquisition of Qualitas Funds in April. When we set out to reinvigorate inorganic growth, we identified specific criteria that we believed represented a compelling strategic fit for PTEN.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

We wanted to find firms that offer natural adjacencies with our existing strategies, expand our geographic footprint, and grow our asset class exposure. Qualitas is perfectly aligned with the investment criteria we sought to achieve. Qualitas is a leading European private equity fund to funds manager based in Madrid. The firm provides fund to funds, direct co investing, and NAV financing opportunities in the European lower middle market. Further, Qualitas has had a long standing collaborative relationship with two other PTEN strategies, RCP Advisors and Heart Capital.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

Integration is underway, and we're already finding ways to drive cross platform collaboration. The firm's founding partners, Eric Halverson and Sergio Garcia, and the entire Qualitas Funds team have built a strong track record that complements PTEN, and we look forward to building on this foundation as we continue to grow internationally together. In the vein of continuing to enhance our investor transparency, Amanda will describe a new metric that we believe will help investors better understand the breadth of our asset base and provide additional clarity on our state and federal cash tax rate. Before I close, I want to acknowledge the volatility we're observing in the macroeconomic environment while also highlighting PTEN's unique defensible market position. In our view, P10 represents a compelling opportunity for investors seeking access to resilient strategies in market segments that are typically more difficult to access.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

From our vantage point, we operate in the best segments of the private market's ecosystem. On average, compared to the larger parts of the market, companies in the middle and lower middle market have much less leverage and lower entry multiples. Furthermore, firms in our part of the market rarely exit via IPO. Instead, we typically see strategic buyers and larger sponsors purchasing our businesses. This is an attractive market dynamic, especially when public IPOs are muted.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

The middle and lower middle market can allow larger sponsors to find attractive bolt on acquisitions as larger firms wait for the IPO window to reopen. In short, PTEN has built a platform of strategies in demand across attractive market segments that we believe are insulated from some of the volatility we have seen year to date. Furthermore, we can take advantage of current market conditions by offering direct and secondary vehicles. For example, RCP is in the market with Secondaries Fund V, and later this year, we expect TruBridge to launch a secondary and direct fund. The underlying strategies that compose P10 have navigated multiple decades of economic cycles, and the teams that manage these strategies have long track records of success.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

Finally, I want to update you on our capital allocation strategy and how we continue to deliver shareholder value. Returning capital to our shareholders remains a priority, and we are pleased to share that since going public, we've increased our quarterly distributions by 25% since inception. With today's announcement, we are raising our quarterly dividend to $3.75 per share. In the first quarter, we repurchased approximately $15,000,000 of stock or about 1,200,000.0 shares, leaving $28,500,000 available on the share repurchase program. We continue to see share repurchases as an essential way to return capital to our shareholders.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

Looking ahead, PTEN has the right team and investment strategies to generate value for our shareholders and underlying LPs. We offer all weather exposure to access constrained elite investment opportunities. Almost all the funds we invest in are oversubscribed, and we will continue to drive fundraising success through a broad and diverse product set. With that, I'll hand the call over to Amanda to provide a deeper look at our financials and provide some additional insights.

[Amanda Coussens, EVP and CFO at P10]

Thank you, Luke. At the end of the quarter, fee paying assets under management was $26,300,000,000 a 10% increase on a year over year basis. In the first quarter, a record $1,430,000,000 of fundraising and capital deployment was offset by $790,000,000 and step downs in expirations. Revenue in the first quarter was $67,700,000 a 2% increase over the first quarter of twenty twenty four. The average fee rate in the first quarter was 102 basis points in total or 99 basis points when excluding the impact of secondary and direct catch up fees.

[Amanda Coussens, EVP and CFO at P10]

We continue to expect the core fee rate this year to average 103 basis points. The lower fee rate this quarter is primarily attributable to the seasonality of our tax credit business, which tends to drive a higher core fee rate in the back half of the year than in the first half of the year, in line with our historical fee rate dynamic. Additionally, step downs and expirations in the quarter were a slight drag on core fee rate. In the first quarter, we had 10 commingled funds in the market and saw broad participation across our investment platform. Our private equity strategies raised and deployed $1,200,000,000 Our venture capital solution raised and deployed $82,000,000 and our private credit strategies added $162,000,000 to fee paying assets under management.

[Amanda Coussens, EVP and CFO at P10]

The performance of P10 strategies reflects our diverse global investor base comprised of family offices and wealth managers, public pensions and sovereign wealth funds, endowments and foundations, and our seasoned deal team to continue to execute on best in class investments and generate durable alpha. Total catch up fees in the quarter were $2,800,000 with direct and secondary catch up fees totaling $2,200,000 The timing of fund closings drives catch up fees, and in the first quarter, they were primarily attributable to the final closing of RCP Direct V. With many of our commingled funds slated to be early in their fundraising lives during 2025, we expect to see catch up fees expand in 2026 and 2027. Operating expenses in the first quarter were $56,400,000 an increase of approximately 4% over a year ago. Professional fees from the Qualitox Funds transaction primarily drove the increase.

[Amanda Coussens, EVP and CFO at P10]

GAAP net income in the first quarter was $4,700,000 a decrease compared to GAAP net income of $5,200,000 for the prior year quarter. For the first quarter, adjusted net income or ANI was $23,500,000 representing a decrease of 8% from the first quarter of twenty twenty four. The reduction in ANI is primarily attributable to increased interest expense driven by higher interest rates. For the quarter, fully diluted ANI EPS was $0.20 marking a decrease of 5% year over year. FRR in the quarter was $67,600,000 representing 4% year over year growth, and FRE was $30,700,000 holding flat year over year.

[Amanda Coussens, EVP and CFO at P10]

In addition, our FRE margin was 45% in the first quarter. As Luke mentioned, we are pleased to increase our dividend by 7%. Today, we declared a quarterly cash dividend of $3.75 per share payable on 06/20/2025 to stockholders of record as of the close of business on 05/30/2025. In the first quarter, we repurchased 1,215,106 shares at an average price of $12.31 leaving $28,500,000 available on the share repurchase program. Cash and cash equivalents at the end of the first quarter were approximately 74,000,000 The elevated ending cash balance reflects the $42,500,000 cash consideration for the Qualitas Funds transaction, which closed on 04/04/2025.

[Amanda Coussens, EVP and CFO at P10]

At the end of the quarter, we had an outstanding debt balance of $362,000,003 25,000,000 on the term loan and 37,000,000 remaining on the revolver. Following the end of the first quarter, we paid 7,000,000 on the revolver. As of today, we have $145,000,000 available on our credit facilities. And finally, some of you may recall that last year we discussed introducing new KPIs as part of our strategic priority to provide investors with additional financial disclosure that is more closely aligned with our industry peers. In 2024, we introduced FRR, FRE, and FRE margin.

[Amanda Coussens, EVP and CFO at P10]

Today, I would like to introduce a new KPI, assets under management, or AUM, and provide additional clarity regarding our expected tax rate. Starting with AUM, it amounted to over $38,000,000,000 across the platform as of 03/31/2025, excluding Qualitas funds, which was officially integrated into our platform after quarter end. Pro form a for the Qualitas transaction, our AUM amounts to nearly $40,000,000,000 Historically, we have focused on fee paying AUM and will continue to do so, as this measure correlates directly to PTEN's economics. However, we believe adding AUM will show the breadth and scale of our business as a leading multi asset class private market solution provider. Our AUM is calculated similarly to our peers and is the sum of NAV, drawn and undrawn debt, uncalled capital commitments, and capital commitments made to the platform since the NAV record date.

[Amanda Coussens, EVP and CFO at P10]

Concerning our tax rate, we have continued to benefit from a low cash tax rate due to our tax assets. As we shared at our Investor Day presentation last year, we anticipate fully utilizing the NOL portion of our tax assets sometime in 2026. Once the NOL is fully utilized, we will become a federal taxpayer. However, we will continue to benefit from significant tax amortization deductions related to goodwill and intangibles from prior acquisitions. We expect our cash tax rate in 2025 to be in the low single digits, which is driven by our state taxes and is in line with our historical rate.

[Amanda Coussens, EVP and CFO at P10]

Since we expect our NOL to be fully utilized in 2026, It will be a hybrid year, and we anticipate the combined federal and state cash tax rate to be in the high single digits to low double digits range as we become a federal taxpayer. Looking ahead to 2027 and beyond, we anticipate that our combined federal and state cash tax rate to be in the mid teens, similar to our peers once our NOL is fully utilized, and we pay both federal and state taxes. As I mentioned, our tax rate benefits from tax amortization related to goodwill and intangibles, but excludes any impact from future m and a. Thank you for your time today. I'll now pass the call over to the operator to begin the q and a session.

[Operator]

Thank you.

[Operator]

Our first question comes from the line of Chris Kotowski of Oppenheimer and Company. Please go ahead,

[Chris Kotowski, Managing Director at Oppenheimer & Co. Inc.]

Yeah, good morning. Just I was wondering, just a point of clarification, Amanda, you said that the catch up fees this quarter were from the closing of the RCP secondaries excuse me, direct fund. But in the press in the earnings release, it says that that closed on April 10. But it was in the first quarter.

[Amanda Coussens, EVP and CFO at P10]

Yes, thank you, Chris for the question. The April 10 date was the announcement date, not the close date. Thank you.

[Chris Kotowski, Managing Director at Oppenheimer & Co. Inc.]

Okay, gotcha.

[Chris Kotowski, Managing Director at Oppenheimer & Co. Inc.]

And then I guess the next question is for Sarita, that she's been in the seat for nearly a year now. And I think there are a few people in your position who have the luxury of having 5,000 LPs to try to cross market. And I'm wondering like if you can share kind of the early results of that and how you're approaching it. It just seems like it would be a big daunting task and kind of what are the steps along the way to the cross marketing?

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

Hey, Chris, thanks. It's Luke and Sarita's here and I'm gonna let her answer it. I'm just gonna observe that I think she's done a tremendous job over the course of the last kind of seven, eight months she's been here coming in, really assessing what we have, reconciling the data, and coming up with a great plan on the forward. And so I'm gonna turn it over to her to give you a little bit more of a wholesome answer to your question.

[Sarita Narson Jairath, EVP, Global Head of Client Solutions at P10]

Yes, thank you Chris for the question. So as Luke mentioned, since I've joined, I've been very focused on client cultivation, re categorizing a lot of our data and looking across the data analytics that we have. We have a very impressive proprietary data analytics database. And so what we've been looking to do is optimize the data that we have, see if there are any overlapping synergies, and more importantly, we can capitalize on these synergies and continue to optimize some of those LP relationships further. Now that Qualitas has officially joined the PTEN family, we'll be working very closely with the Qualitas Fund's team to ensure that the data integration happens seamlessly, transition overall, and then working with them to basically incorporate them as part of our internal data management processes.

[Chris Kotowski, Managing Director at Oppenheimer & Co. Inc.]

Okay. All righty, that's it from me. Thank you.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

Thanks, Chris.

[Operator]

Thank you. Our next question comes from the line of Ken Worthington of JPMorgan. Your question please, Ken.

[Alexander Bernstein, Equity Research Analyst at JP Morgan]

Hi, this is Alex Bernstein on from Ken. Thanks so much for taking our questions. Firstly, maybe to focus a bit on the model in terms of step downs and expirations, looks like it was a bit of a larger number. I know on the prior call, you guided something like 5% to 7% of at that point existing fee paying AUM, which implies something like $1,500,000,000 on the year. And you noted the majority of that would be in the first half.

[Alexander Bernstein, Equity Research Analyst at JP Morgan]

With the number that we saw this quarter being a bit higher than say the run rate, even if you focus in the first half. Just wanted to check if that guidance changes at all for the full number for the year and sort of maybe which were the funds that that that's driven on being higher in Q1?

[Amanda Coussens, EVP and CFO at P10]

Thank you, Alex, for the question. We are not changing our guidance on step downs and expirations at this time.

[Alexander Bernstein, Equity Research Analyst at JP Morgan]

Great. Sticking with model points, just around the fee rate. I do appreciate your point around seasonality, especially with some of the tax related businesses. I know we have seen fee rates ex catch up fees that were lower than the one we saw this quarter and the first quarter does tend to be a bit lower. Just looking at history, there are some quarters like 1Q twenty twenty three when that didn't happen.

[Alexander Bernstein, Equity Research Analyst at JP Morgan]

Just trying to understand what are the business or macro impacts that drive that just for us to think about the future.

[Amanda Coussens, EVP and CFO at P10]

So, just to reiterate, we do continue to expect the core fee rate this year to average 103 basis points. The lower fee rate this quarter is primarily attributable to the seasonality, as you mentioned, particularly with our tax credit business, which tends to drive a higher court fee rate in the back half of the year than in the first half of the year, in line with our historical fee rate dynamic. Additionally, step downs and expirations in the quarter were a slight drag on the core fee rate. We are not currently seeing pressure within our commingled funds, the pressure. We also mentioned at Investor Day that as we grow our SME business, we expect potentially lower fee rates with higher margins on this revenue base, which may impact fee rate when a larger SME is raised in a given in a given quarter.

[Alexander Bernstein, Equity Research Analyst at JP Morgan]

That makes sense. And congrats on the estimate results you noted. Finally, going bigger picture, talking about taxes and M and A and the potential interlay, Just wanted to see if you could point to any potential tax benefits from Qualitas. And then maybe tying those two points together, as we look ahead in the current environment when there is volatility in the market, one would expect that consolidation is more probable. So now that you've established a foothold in Europe, which seems very opportune given lots of headlines we're seeing from Bloomberg and others around excitement about that area, wanted to see what are the next adjacencies or geographies you might be looking to tackle. Appreciate it. Thank you.

[Amanda Coussens, EVP and CFO at P10]

Thank you. I'll take the first question in regards to impact on taxes. So with Qualitas in particular, I'll say that certain acquisitions are structured in a way due to regulatory purposes as a stock purchase rather than an asset purchase, which is the case with Qualitas. So this particular acquisition will not change our tax amortization. I'll turn it over to Luke to answer your second question.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

Yeah, thanks Al. So to your point, I think we are really seeing, and I know there's been a lot of press written in the wider world about the impact on capital markets activity, the slowdown in M and A. I guess I'm happy to report that we're not seeing that at all. We continue to see a very vibrant, very robust M and A market. We continue to see a lot of potential opportunities coming to market.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

Obviously, it's really important to us, as we've always talked about. It's got to be on strategy. It's got to be the right cultural fit. It's got to make sense from our shareholders' perspective, and it's got to generate a compelling return as we fit it with our platform. So we're going to maintain our discipline and our focus.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

But I will tell you we are seeing probably even an increase in potential M and A opportunities. And you're right, now having done Qualitas and really having a meaningful presence in Europe gives us a real foothold to look at more opportunities. We always talked about how we would make one move on the chessboard moves, not two moves on the chessboard. And now that we're in Europe, I think that opens up a lot of opportunities in Europe. We obviously think we have a great team and a great beachhead there, and we can really build and execute on top of that platform.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

So we are, I would say, looking at a number of things in Europe or that have meaningful European characteristics that could augment. And then just back to your question about areas of strategic focus, that really hasn't changed since what we laid out at Investor Day and what we've talked about on previous calls. It's all around finding things that we think will be additive to our current platform. International continues to be something like that, and I just referenced that. Obviously, opportunities within the broad based realm of private credit continue to be very attractive for us, and we continue to look at those.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

And then things within kind of that real assets ecosystem, in addition, obviously, to bolt ons within our existing strategies. And so those are all the things that we have been, we continue to evaluate, and we think we're going to see and continue to see a very robust opportunity set. But obviously, we're focused on doing things in the right and disciplined way.

[Alexander Bernstein, Equity Research Analyst at JP Morgan]

Really appreciate all the answers. Thanks so much.

[Operator]

Thank you. Our next question comes from the line of Stephanie Ma of Morgan Stanley. Please go ahead, Stephanie.

[Stephanie Ma, Analyst at Morgan Stanley]

Hey, good morning. See in your slide deck you have 20% skewed to endowments and foundations. Just curious what you're hearing from that LP base given recent headlines around large endowment and friction with the new administration. How do you see this impacting your growth outlook? Perhaps could there be an opportunity on the other side to provide liquidity solutions? Just wanted to get your perspective. Thanks.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

Great. So answer to I'll give you the answer to the first question. The answer to the second question around opportunity to provide liquidity solutions is absolutely yes. We have many areas of our business that we're really excited about, but one is kind of our broader ability to provide liquidity solutions, whether it be in our GP stakes business, whether it be in our NAV lending business. And obviously, as we talked about, and you heard from Amanda, we have both of our secondary funds, both on the private equity side and the venture side, going to be in the market this year.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

And we think, to your point, given some of the news and potentially the noise, and again, not knowing if any of it is certainly true, but we do think that there are going to be really created opportunities in that space of the market. And obviously, we're gonna be positioned with ample capital to really capitalize on those opportunities as we see them. And so we do think there are gonna be meaningful opportunities there. I would say to your point on endowments and foundations, we have seen, I would tell you, little to no impact to date in that part of our LP base. In fairness, except for some very narrow and what I would call idiosyncratic pockets, we've seen little impact of the volatility in any parts of our LP base to date.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

We'll obviously continue to monitor that, but I think we feel really good about the outlook and really good about the forward. I would note, as we talk about kind of our E and F footprint, our E and F footprint probably skews a little bit smaller than the E and F footprint that we've seen the headlines on around some of the larger institutions. And so within our neck of the woods, or the companies and the sort of endowments and foundations that we've targeted, we've seen them kind of in what I would say business as usual mode, we're obviously engaged closely with them, and we expect to continue to have them as a large and loyal part of our LP base in the quarters and years to come.

[Stephanie Ma, Analyst at Morgan Stanley]

That's very helpful. Thank you. And maybe just a follow-up. I think I heard you have more 15 funds or so active in the market through this year. So do you mind just double clicking into that?

[Stephanie Ma, Analyst at Morgan Stanley]

Which ones do you think could be some of largest contributors that underpins the $4,000,000,000 or more target for the year? Which ones are you most excited about with perhaps the greatest opportunity to scale?

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

Yes. Well, I'll say a few things. The first is we're excited about a lot of them, we really think that this is, given the dislocations in the market, we think this is an attractive time to be deploying capital. So we're excited about that opportunity generally. But even peeling back a layer, there's a lot of things that I think we're really, really excited about.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

And we've actually already talked, Stephanie, about some of those in my last answer. Areas like NAV lending, areas like secondaries, areas like GP stakes. And so I think we're going to have a number of funds in the market through the year. As we mentioned, we think 15, and that obviously includes some of the offering from Qualitas. But as I mentioned, I think we'll be in the market with our RCP secondaries, or SOF as we call it, five fund.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

We are actually in the market right now. We'll be in the market later this year with a few offerings from TruBridge, as was mentioned. We're in the market with a number of funds from Qualitas, and I think it's useful to note that we think Qualitas is another very attractive opportunity. We're seeing a lot of interest and engagement from European LPs, and we expect that to persist. And then obviously, I mentioned NAV lending, and we're going to be back in the market with our HARC Fund V later this year.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

So we think all of those are really attractive opportunities that we're focused on.

[Stephanie Ma, Analyst at Morgan Stanley]

Okay. Maybe just last one for me on your last point. With Qualitas now, you have a more expanded geographic footprint. Just curious if you observed differences in sentiment or preference between US based or European investors, or an inclination now maybe from LPs to add more non US exposure versus history?

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

Yeah, look, I think it's probably too soon to call that. I would say, remember, the dislocation was happened just over a month ago. And so I think I wouldn't say that we've seen much in the way of radical change in LP behavior to date. Obviously, I think that's an open question as to what will happen over time. But I think one of the hallmarks that we've always had has been our ability to really meet the clients where they are, to offer them a broad spectrum of product offerings.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

I could certainly see a world, Stephanie, to your question, where you see more traditional US LPs who have been engaged with us, very focused the opportunity set we afford them in the middle and lower middle market, who now say, look, I'd like to diversify some of that US exposure and get some global exposure from that. And so I do think having now executed and closed on the Qualitas funds transaction, it's a really potential timely opportunity. We also mentioned in the call some of the work that's going on collectively, and one of the things that, you know, is really interesting, I think, is some of the work that's going on in our European that Qualitas is doing in Europe, along with the team from HARC around NAV lending. We think that that can be a real opportunity, and a real opportunity to continue to build some sort of broader global product. And so one of the things that's, I think, always been a hallmark of ours is really trying to meet the clients where they are.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

And we think by broadening out the product suite, the toolbox, the offering set, we're able to do that. And so to your point, I could see a world where it happens that some US traditional LP allocators want to get more exposure to Europe, and now we're in a position to meet them where they are there.

[Stephanie Ma, Analyst at Morgan Stanley]

Great. Thanks for taking all my questions.

[Operator]

Thank you. Our next question comes from the line of Ben Rubin of UBS. Please go ahead, Ben.

[Benjamin Rubin, Director, Equity Research at UBS Group]

Hi. Great. Thanks. Thank you for taking my questions. You referenced several large SMA closings and in your prepared remarks, you mentioned closing on a global sovereign wealth fund, which is certainly encouraging given your strategic focus there.

[Benjamin Rubin, Director, Equity Research at UBS Group]

So we're just hoping you could help frame the contribution from SMAs on this quarter's fundraising numbers and maybe if it was more significant than past quarters. Lastly, if you could just speak to how your SMA pipeline looks today and maybe how those client conversations are trending, that would be great. Thank you.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

Yeah. So a couple observations. So look, as I said, we closed on a large global sovereign wealth fund. We obviously need to be careful for a lot of reasons. One is what we want to disclose, but the other is client confidentiality.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

And so I'm going be a little careful around saying too much, other than to say, I I think we had a strong contribution from, you know, kinda the SMA pipeline in this quarter. I would say, as we talked about, one of the many ways we're focused on and the work that Sarita is doing to expand our LP base is to partner with more large allocators. They may be sovereign wealth funds, they may be corporate and public pensions, they may be insurance companies. And I think as you work with those larger clients, they often want more customized, more bespoke solutions. And the really good news is, given the breadth of our offering, given the breadth of our capabilities, given our insights in the middle and lower middle market, I think we're uniquely positioned to provide that for them.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

The other dynamic that I really think is going on here that's an important one is I think that there is an increasing focus from a lot of allocators to get access to the middle and lower middle market. I think historically, obviously, focus their efforts in the upper parts of the market, But I think they really see kind of the return attributes that we see in this middle and lower middle market. They really see the differentiation. And I think increasingly, they realize they need a partner to do it because I think you know, contrary to places of the market where, you know, it's it's very open, there's a lot of data, there's a lot of insight, there's a lot of analytics, it's very public what's going on, this is a very opaque part of the market. This is a part of the market where you really need experts to help you navigate the journey.

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

And that's what we can do. And so those are the kind of dialogues that we're having. I hope to have more to report on them over the quarters and years to come. But I think we're really, really excited about this opportunity, frankly, to put our capabilities to use in customized and bespoke ways on behalf of larger clients. We think it's a big opportunity for us on the forward bend.

[Benjamin Rubin, Director, Equity Research at UBS Group]

Oh, that's great. Thanks for the color. A question here for Amanda. You mentioned you still expect core FRE margins in the mid 40% this year, and that Qualitas will put some downward pressure on that. So at 45% in the first quarter, how should we think about the expense uplift in 2Q as Qualitas comes online? Thank you.

[Amanda Coussens, EVP and CFO at P10]

Thank you for the question. We do still expect our core organic FRE margin to be in the mid-40s as we continue to make key investments this year, and that is including Qualitas. As mentioned at our Investor Day, we expect our core organic FRE margins to expand from the mid-40s and the near to intermediate term to near 50% long term, and we are not changing that guidance.

[Benjamin Rubin, Director, Equity Research at UBS Group]

Okay, great. Thanks for taking my questions.

[Operator]

Thank you. I would now like to turn the conference back to Luke Sarceld for closing remarks. Sir?

[Luke Sarsfield, Chairman of Board, Director & CEO at P10]

Thanks, Latif. As I mentioned, coming off a record fundraising in the first quarter, PTEN is attractively and defensively positioned to navigate the current market environment. We believe we have the right team and the right investment strategies to generate value for our shareholders and for our underlying LPs. We very much look forward to connecting with you in the weeks ahead and offering an overview of the second quarter later this summer. Thank you, and good morning.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

• Mark Hood, EVP & Chief Administrative Officer
• Luke Sarsfield, Chairman of Board, Director & CEO
• Amanda Coussens, EVP and CFO
• Sarita Narson Jairath, EVP, Global Head of Client Solutions

Analysts

• Chris Kotowski, Managing Director at Oppenheimer & Co. Inc.
• Alexander Bernstein, Equity Research Analyst at JP Morgan
• Stephanie Ma, Analyst at Morgan Stanley
• Benjamin Rubin, Director, Equity Research at UBS Group