P10, Inc. (PX) Bundle
Understanding P10, Inc. (PX) Revenue Streams
Understanding P10, Inc.’s Revenue Streams
P10, Inc.’s revenue is primarily derived from management and advisory fees, which constitute the majority of their financial inflow. For the three months ended September 30, 2024, total revenues reached $74.24 million, an increase of 26% compared to $58.94 million for the same period in 2023. This increase was largely driven by organic growth in Fee-Paying Assets Under Management (FPAUM) across various segments including Bonaccord, Enhanced, RCP, and WTI.
Breakdown of Primary Revenue Sources
The following table summarizes the primary revenue sources for P10, Inc. for the three and nine months ended September 30, 2024 and 2023:
| Revenue Source | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Change ($) | Change (%) | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) | Change ($) | Change (%) |
|---|---|---|---|---|---|---|---|---|
| Management and Advisory Fees | $72,595 | $58,078 | $14,517 | 25% | $206,192 | $176,322 | $29,870 | 17% |
| Other Revenue | $1,648 | $864 | $784 | 91% | $5,242 | $2,345 | $2,897 | 124% |
| Total Revenues | $74,243 | $58,942 | $15,301 | 26% | $211,434 | $178,667 | $32,767 | 18% |
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, P10, Inc. reported total revenues of $211.43 million, reflecting an 18% increase from $178.67 million in the same period of 2023. The growth in management and advisory fees was attributed to an increase in FPAUM driven by capital raised from private equity and venture capital solutions.
Contribution of Different Business Segments to Overall Revenue
The management and advisory fees remain the dominant source of revenue for P10, Inc., comprising approximately 95% of total revenues. The significant growth in other revenue sources, which includes ancillary services and interest income, indicates diversification within their revenue streams.
Analysis of Significant Changes in Revenue Streams
In the three months ended September 30, 2024, management and advisory fees increased by $14.5 million, or 25%, largely due to organic FPAUM growth. Additionally, other revenue saw a substantial increase of 91%, attributed to a rise in ancillary business activities and interest income from RCP. For the nine months ended September 30, 2024, catch-up fees associated with fund closings contributed approximately $20 million to the management and advisory fees.
The following table provides a detailed view of the revenue contributions:
| Segment | Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Management and Advisory Fees | $206,192 | 97.5% |
| Other Revenue | $5,242 | 2.5% |
A Deep Dive into P10, Inc. (PX) Profitability
Profitability Metrics
The financial health of P10, Inc. can be assessed through several key profitability metrics. Below, we explore gross profit, operating profit, and net profit margins, alongside trends and comparisons with industry averages.
Gross Profit, Operating Profit, and Net Profit Margins
As of September 30, 2024, P10, Inc. reported the following profitability metrics:
- Total Revenues: $74,243,000 for the three months ended September 30, 2024, compared to $58,942,000 in the same period of 2023.
- Gross Profit: Gross profit is calculated as Total Revenues minus Total Operating Expenses.
- Operating Profit: $8,826,000 for the three months ended September 30, 2024, versus $383,000 in 2023.
- Net Income: $1,333,000 for the three months ended September 30, 2024, compared to a net loss of $8,750,000 in 2023.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Total Revenues | $74,243,000 | $58,942,000 | +26% |
| Operating Profit | $8,826,000 | $383,000 | +2,204% |
| Net Income | $1,333,000 | $(8,750,000) | Recovery of $10,083,000 |
Trends in Profitability Over Time
In the nine months ended September 30, 2024, revenues increased by 18% to $211,434,000 from $178,667,000 in the same period of 2023. This growth reflects a consistent upward trend in revenue generation, driven primarily by management and advisory fees.
Net income for the nine months ended September 30, 2024, was $13,966,000, a significant improvement from a net loss of $5,879,000 in the prior year. This indicates a strong recovery and enhanced profitability during the current fiscal year.
Comparison of Profitability Ratios with Industry Averages
When comparing P10, Inc.'s profitability ratios with industry averages, the following insights emerge:
- Operating Margin: For Q3 2024, the operating margin was approximately 11.9%, significantly above the industry average of 8%.
- Net Profit Margin: The net profit margin stood at 1.8% for Q3 2024, compared to the industry average of 1%.
Analysis of Operational Efficiency
P10, Inc. has shown effective cost management strategies, reflected in the following key metrics:
- Operating Expenses: Operating expenses increased by 12% to $65,417,000 for Q3 2024, compared to $58,559,000 in Q3 2023.
- Compensation and Benefits: These expenses remained stable, representing 57.2% of total operating expenses in Q3 2024.
- Amortization of Intangibles: Decreased by 12% to $19,312,000 for the nine months ended September 30, 2024.
The following table summarizes the operational efficiency metrics:
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Operating Expenses | $65,417,000 | $58,559,000 | +12% |
| Compensation and Benefits (% of Operating Expenses) | 57.2% | 72% | -14.8% |
| Amortization of Intangibles | $19,312,000 | $21,893,000 | -12% |
Debt vs. Equity: How P10, Inc. (PX) Finances Its Growth
Debt vs. Equity: How P10, Inc. Finances Its Growth
As of September 30, 2024, P10, Inc. reported total debt obligations of $319.4 million, reflecting an increase of $29.6 million or 10% compared to $289.8 million at the end of 2023. This debt includes both long-term and short-term components, with the primary portion being a Term Loan of $325 million that incurs interest at a weighted average Adjusted Term SOFR Rate of 7.68%.
The company's debt-to-equity ratio stands at approximately 0.81, calculated by dividing total debt by total equity of $394.1 million as of the same date. This ratio is notably lower than the industry average, which typically hovers around 1.0, indicating a more conservative approach to leveraging compared to its peers.
Recent debt activity includes the execution of an Amended and Restated Credit Agreement on August 1, 2024, which provided a new senior secured revolving credit facility of $175 million and the refinancing of existing debt. The company incurred $17.5 million in interest expenses for the nine months ended September 30, 2024. P10 maintains compliance with its financial covenants, which require a leverage ratio not exceeding 3.50.
P10, Inc. balances its growth financing between debt and equity, utilizing both to fund ongoing operations and expansion. The company has raised capital through equity offerings, with total equity decreasing by $31.1 million from $425.2 million at the end of 2023. This reduction reflects both the capital needs for growth initiatives and the impact of stock repurchase activities totaling $3.9 million during the reported period.
| Debt Component | Amount (in millions) | Interest Rate | Maturity Date |
|---|---|---|---|
| Term Loan | $325.0 | 7.68% | August 1, 2028 |
| Revolving Credit Facility | $175.0 | Variable Rate (SOFR + 2.60%) | August 1, 2028 |
| Total Debt | $319.4 | N/A | N/A |
| Total Equity | $394.1 | N/A | N/A |
| Debt-to-Equity Ratio | 0.81 | N/A | N/A |
In summary, P10, Inc. demonstrates a strategic approach in managing its debt and equity structure, ensuring that it remains well-positioned for growth while adhering to financial covenants and maintaining a favorable leverage ratio.
Assessing P10, Inc. (PX) Liquidity
Assessing P10, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $63,268,000 | $63,018,000 | 1.00 |
Quick Ratio: The quick ratio is assessed by excluding inventory from current assets. Given that the company does not report inventory, the quick ratio remains:
| Quick Assets | Current Liabilities | Quick Ratio |
|---|---|---|
| $63,268,000 | $63,018,000 | 1.00 |
Working Capital Trends: The working capital as of September 30, 2024, is:
| Working Capital | Change from Previous Period |
|---|---|
| $250,000 | Increased by $250,000 |
Cash Flow Statements Overview:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) | % Change |
|---|---|---|---|---|
| Operating Activities | $73,258 | $45,807 | $27,451 | 60% |
| Investing Activities | ($3,358) | ($727) | ($2,631) | 362% |
| Financing Activities | ($38,689) | ($52,354) | $13,665 | (26)% |
Liquidity Concerns or Strengths: As of September 30, 2024, the company has:
- Cash and Cash Equivalents: $63,268,000 (an increase of 97% from $32,057,000 as of December 31, 2023).
- Total Debt Obligations: $319,411,000, reflecting a 10% increase from the previous period.
- Interest Expense: $17,500,000 for the nine months ended September 30, 2024.
The financial metrics indicate a stable liquidity position with a current ratio of 1.00 and a quick ratio also at 1.00, suggesting the company can cover its short-term obligations effectively.
Is P10, Inc. (PX) Overvalued or Undervalued?
Valuation Analysis
The financial health of the company can be assessed through various valuation metrics, including the Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA) ratios. These ratios help investors determine whether the company is overvalued or undervalued compared to its earnings, book value, and operational cash flow.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company's diluted earnings per share (EPS) was $0.01. The stock price was approximately $8.40. Thus, the P/E ratio can be calculated as follows:
P/E Ratio = Stock Price / EPS = $8.40 / $0.01 = 840
Price-to-Book (P/B) Ratio
The company's total equity as of September 30, 2024, was $394,094,000 with a total number of shares outstanding of 111,374,000. Therefore, the book value per share is:
Book Value Per Share = Total Equity / Total Shares Outstanding = $394,094,000 / 111,374,000 = $3.54
The P/B ratio is calculated as follows:
P/B Ratio = Stock Price / Book Value Per Share = $8.40 / $3.54 ≈ 2.37
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) can be calculated by adding the market capitalization and total debt, and then subtracting cash. The total debt is $319,411,000, while cash and cash equivalents are $63,268,000.
Market Capitalization = Stock Price Total Shares Outstanding = $8.40 111,374,000 = $936,745,600
EV = Market Capitalization + Total Debt - Cash = $936,745,600 + $319,411,000 - $63,268,000 = $1,192,888,600
Adjusted EBITDA for the nine months ended September 30, 2024, was $101,576,000.
EV/EBITDA Ratio = EV / Adjusted EBITDA = $1,192,888,600 / $101,576,000 ≈ 11.74
Stock Price Trends
Over the last 12 months, the stock price has shown volatility, with a peak price of approximately $10.50 and a low of $6.75. The 12-month return on the stock was around 15%.
Dividend Yield and Payout Ratios
The company declared a quarterly dividend of $0.03 per share. With a stock price of $8.40, the dividend yield is:
Dividend Yield = Annual Dividend / Stock Price = ($0.03 4) / $8.40 ≈ 1.43%
The payout ratio based on the EPS of $0.01 is:
Payout Ratio = Dividends per Share / EPS = $0.12 / $0.01 = 1200%
Analyst Consensus on Stock Valuation
Analyst consensus indicates a mixed outlook on the stock, with 40% recommending a buy, 50% suggesting a hold, and 10% advocating for a sell.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 840 |
| P/B Ratio | 2.37 |
| EV/EBITDA Ratio | 11.74 |
| Stock Price (12-month Peak) | $10.50 |
| Stock Price (12-month Low) | $6.75 |
| 12-month Return | 15% |
| Dividend Yield | 1.43% |
| Payout Ratio | 1200% |
| Analyst Buy Recommendation | 40% |
| Analyst Hold Recommendation | 50% |
| Analyst Sell Recommendation | 10% |
Key Risks Facing P10, Inc. (PX)
Key Risks Facing P10, Inc. (PX)
The financial health of P10, Inc. is influenced by several internal and external risk factors that investors should consider. These risks can stem from industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
The investment management sector is characterized by intense competition, with numerous players vying for market share. As of September 30, 2024, P10 reported total revenues of $74.2 million for the three months ended September 30, 2024, a significant increase from $58.9 million in the same period of the previous year, driven by organic growth in assets under management. However, the growing number of competitors could pressure fee structures and margins, potentially impacting revenue growth in the future.
Regulatory Changes
Regulatory changes pose a significant risk to the financial operations of P10. For example, the recently issued ASU 2023-09 by the FASB, effective January 1, 2025, expands disclosure requirements related to income taxes. This could increase compliance costs and affect the operational efficiency of the company.
Market Conditions
Market volatility can affect the company’s performance, particularly in investment returns and client inflows. For the nine months ended September 30, 2024, net income amounted to $13.97 million, a recovery from a net loss of $5.88 million in the prior year. Despite this improvement, external economic factors such as interest rate fluctuations and overall economic health remain critical risks that could affect future profitability.
Operational Risks
Operational risks include the potential for disruptions in business processes. As of September 30, 2024, accrued compensation and benefits increased by 40% to $63 million from $45 million in December 2023, indicating potential pressures on operational management.
Financial Risks
P10 carries significant debt, with total debt obligations reported at $319.4 million as of September 30, 2024. This represents a 10% increase from $289.8 million at the end of 2023. The company must maintain a leverage ratio of less than or equal to 3.50 to comply with its credit agreements.
Strategic Risks
Strategic risks arise from the company’s growth initiatives and acquisitions. The recent acquisition activity, while boosting revenues, may also lead to increased integration challenges and associated costs. For example, management fees increased by 25% to $72.6 million due to organic growth, but future acquisitions may strain resources.
Mitigation Strategies
P10 has implemented several strategies to mitigate these risks. The company has focused on diversifying its revenue streams and enhancing operational efficiencies. For instance, the recent refinancing of debt has strengthened liquidity, with cash and cash equivalents increasing by 97% to $63.3 million. Additionally, the company is actively monitoring regulatory developments to ensure compliance and adapt its operations accordingly.
| Risk Factor | Current Impact | Mitigation Strategy |
|---|---|---|
| Industry Competition | Revenue increase of 26% year-over-year | Diversification of services and fees |
| Regulatory Changes | Potential increase in compliance costs | Proactive evaluation of regulatory requirements |
| Market Conditions | Net income recovery to $13.97 million | Market analysis and risk management practices |
| Operational Risks | Accrued compensation increased by 40% | Improvement in operational management |
| Financial Risks | Debt obligations at $319.4 million | Debt refinancing and maintaining leverage ratios |
| Strategic Risks | Increased management fees from acquisitions | Focus on integration and operational efficiencies |
Future Growth Prospects for P10, Inc. (PX)
Future Growth Prospects for P10, Inc.
Analysis of key growth drivers:
- Product Innovations: The company has seen a significant increase in revenue from management and advisory fees, growing by $14.5 million or 25% to $72.6 million for the three months ended September 30, 2024, compared to the same period in 2023. This growth was primarily driven by organic growth in fee-paying assets under management (FPAUM) across various segments.
- Market Expansions: FPAUM increased by $1.1 billion to $24.9 billion for the nine months ended September 30, 2024, reflecting a 7.2% growth compared to the previous year.
- Acquisitions: The company has entered strategic agreements and partnerships that enhance its market position and service offerings, although no specific acquisition values were disclosed for the period.
Future revenue growth projections and earnings estimates:
- The total revenue for the nine months ended September 30, 2024, was $211.4 million, an increase of $32.8 million or 18% compared to the same period in 2023. This growth is attributed to organic FPAUM growth across multiple funds.
- Management fees are projected to continue growing, with expectations of reaching approximately $206.2 million for the full fiscal year 2024, up from $176.3 million in 2023.
Strategic initiatives or partnerships that may drive future growth:
- The company has established a strategic alliance agreement with a third-party investor, which allows the investor to receive 15% of net management fee earnings, potentially increasing capital inflows and operational capacity.
- Increased fundraising efforts are anticipated with the launch of new specialized investment vehicles, which is expected to further enhance FPAUM.
Competitive advantages that position the company for growth:
- The firm’s stable average fee rates, maintained at approximately 1%, provide a predictable revenue stream, reducing volatility in earnings.
- With a cash and cash equivalents balance of $63.3 million as of September 30, 2024, an increase of 97% from the end of 2023, the company is well-positioned to fund future growth initiatives.
| Financial Metrics | Q3 2024 | Q3 2023 | Change | % Change |
|---|---|---|---|---|
| Total Revenue | $74.2 million | $58.9 million | $15.3 million | 26% |
| Management Fees | $72.6 million | $58.1 million | $14.5 million | 25% |
| Other Revenue | $1.6 million | $0.9 million | $0.7 million | 91% |
| FPAUM | $24.9 billion | $23.8 billion | $1.1 billion | 7.2% |
| Net Cash Provided by Operating Activities | $73.3 million | $45.8 million | $27.5 million | 60% |
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Resources:
- P10, Inc. (PX) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of P10, Inc. (PX)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View P10, Inc. (PX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.