P10's Q1 Miss Sparks Concern, But Strategic Moves Offer Glimmer of Hope

P10 Inc’s stock took a hit after its Q1 2025 earnings report revealed a stark divergence between its performance and Wall Street’s expectations. The miss, particularly in earnings per share (EPS), sent shares tumbling, but the company’s strategic initiatives—such as its expanding asset management footprint and disciplined capital returns—suggest there’s more to the story than the short-term disappointment.

The Numbers That Drove the Drop

P10 reported revenue of $67.7 million, a modest 2% year-over-year increase but a $2.4 million shortfall compared to forecasts. The bigger blow came in EPS: the company’s fully diluted adjusted net income per share was just $0.04, a staggering 81% below the $0.21 analysts had anticipated. The miss was attributed to rising interest expenses and a higher tax rate, with the stock falling 2.15% in pre-market trading.

Yet, beneath the headline numbers, P10 highlighted progress in key areas. Its fee-paying assets under management (AUM) surged 10% year-over-year to $26.3 billion, fueled by strategic acquisitions like Qualitas Funds—which added $1 billion in AUM—and robust fundraising. CEO Luke Sarfield emphasized the company’s focus on resilient market segments, such as middle-market acquisitions, which he described as “insulated from volatility.”

The Long Game: Growth and Dividends

P10’s management remains bullish on its 2025 outlook, projecting double-digit revenue growth backed by $4 billion in organic fundraising and 15 funds in the market. The introduction of a new KPI—total AUM of $38 billion (or $40 billion pro forma)—underscores its ambition to leverage its multi-asset class platform. CFO Amanda Cousins noted that the company’s tax rate is expected to stay in the low single digits this year, rising to mid-teens by 2027 as tax benefits like net operating losses are exhausted.

Investors also received a near-term comfort: P10 hiked its dividend by 7% to $3.75 per share and retains $28.5 million in remaining buyback capacity. These moves signal confidence in the company’s liquidity and long-term prospects, even as macroeconomic headwinds loom.

Risks and the Road Ahead

The company isn’t without challenges. Sarfield acknowledged risks like macroeconomic volatility and competition in asset management, particularly as fundraising becomes harder in a rising-rate environment. Integration of Qualitas and other acquisitions remains critical, with Global Head of Client Solutions Sarita Jareth touting cross-selling opportunities to blend P10’s 5,000+ LP database with Qualitas’ 1,300 European investors.

Conclusion: A Mixed Picture, But Fundamentals Matter

P10’s Q1 miss is undeniably concerning, especially given the EPS shortfall of 81%. However, the company’s AUM growth, strategic acquisitions, and dividend discipline suggest it’s positioned to weather near-term headwinds. The stock’s dip to $11.41—below InvestingPro’s “Fair Value” estimate—could present a buying opportunity for investors willing to look past the quarterly stumble.

Key data points reinforce this cautious optimism:
- AUM has grown 10% YoY to $26.3 billion, a tangible sign of scalability.
- The dividend hike and buyback program reflect confidence in cash flow.
- The 2025 revenue guidance of double-digit growth aligns with P10’s track record of leveraging acquisitions to fuel expansion.

While the stock’s 52-week range ($7.44–$14.28) shows volatility, the company’s execution on its multi-asset strategy—and its focus on less leveraged, stable markets—could position it to outperform peers in a slowing economy. For now, P10’s story is one of short-term pain and long-term promise. The question for investors is whether they’re willing to bet on the latter.