P10, Inc.

After the speaker presentation, there will be a question and answer session. As a reminder, today's conference call is being recorded. I will now hand the call over to your host, Mark Hood, EVP and Chief Administrative Officer. Mark, please go ahead.

Thank you, Operator, and thank you all for joining us. On today's call, we will be joined by Luke Starsfield, Chairman and Chief Executive Officer, and Amanda Cousins, EVP and Chief Financial Officer. Additionally in the room with us today are R.J. Jensen, EVP, Head of Strategy and M&A, and Sarita Jarrath, EVP, Global Head of Client Solutions. 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 those otherwise required by law. During the call, we will also discuss certain non-GAT measures that we believe could be useful in evaluating the company's performance. A reconciliation of these measures to the most directly comparable GAT measure is available in our earnings release and our filings with the SEC. I will now turn the call over to Luke.

Thank you, Mark. Good morning, everyone, and thank you for joining us for our first quarter 2025 earnings call. P10 had an extremely strong start to the year. We raised and deployed over $1.4 billion in gross new fee-paying AUM, marking a record fundraising quarter for the firm, and generated revenue of $67.7 million, and FRE of $30.7 million. We closed RCP Direct 5 with nearly $1 billion in commitments, a record for RCP, and an impressive follow-up to December's $1.6 billion close of Bonnicourt Capital Partners Fund 2. During the first quarter, we had P10 funds in the market and saw contributions from private equity, private credit, and our venture capital strategies. 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 4th, 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. Importantly, the acquisition adds another $1 billion 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 4th quarter call. We continue to expect at least $4 billion 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&A, to be in the mid 40% range. And with the Qualitas transaction closed, we have another $1 billion in fee-paying assets under management coming online in the second quarter, given the closing in early April, as I mentioned. 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, re-accelerating our M&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 and on April 21st, we announced the appointments of Jennifer Glassman and Stephen Bluett as independent directors. Jennifer is an experienced financial services leader currently serving as the chief financial officer of Powerbrook Capital Partners. Stephen has previously served as the chief investment officer and head of private markets and menu life 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. 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 P10 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&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 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 -to-funds manager based in Madrid. The firm provides -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 P10 strategies, RCP advisors and HART Capital. 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 P10, 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 P10'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. 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. 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, P10 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 Secondary Fund 5, and later this year, we expect Trougridge 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. 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 cents per share. In the first quarter, we repurchased approximately $15 million of stock or about 1.2 million shares, leaving $28.5 million available on the share repurchase program. We continue to see share repurchases as an essential way to return capital to our shareholders. Looking ahead, P10 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 for 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.

Thank you, Luke. At the end of the quarter, fee-paying assets and remanagement was $26.3 billion, a 10% increase on a -over-year basis. In the first quarter, a record $1.43 billion of fundraising and capital deployment was offset by $790 million in step-downs and expirations. Revenue in the first quarter was $67.7 million, a 2% increase over the first quarter of 2024. 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. 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 $1.2 billion. Our venture capital solution raised and deployed $82 million. And our private credit strategies added $162 million to fee-paying assets under management. 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 season deal team to continue to execute on -in-class investments and generate durable alpha. Total catch-up fees in the quarter were $2.8 million, with direct and secondary catch-up fees totaling $2.2 million. The timing of fund closing strives catch-up fees. And in the first quarter, they were primarily attributable to the final closing of RCP Direct 5. 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 $56.4 million, an increase of approximately 4% over a year ago. Professional fees from the Qualitas Funds transaction primarily drove the increase. Gap net income in the first quarter was $4.7 million, a decrease compared to gap net income of $5.2 million for the prior year quarter. For the first quarter, adjusted net income, or ANI, was $23.5 million, representing a decrease of 8% from the first quarter of 2024. 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 $67.6 million, representing 4% year over year growth, and FRE was $30.7 million, holding flat year over year. 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 $0.75 per share, payable on June 20, 2025, to stockholders of record as of the close of business on May 30, 2025. In the first quarter, we repurchased ,215,106 shares at an average price of $12.31, leaving $28.5 million available on the share repurchase program. Cash and cash equivalents at the end of the first quarter were approximately $74 million. The elevated ending cash balance reflects the $42.5 million cash consideration for the Qualitas Funds Transaction, which closed on April 4, 2025. At the end of the quarter, we had an outstanding debt balance of $362 million, $325 million on the term loan, and $37 million remaining on the revolver. Following the end of the first quarter, we paid $7 million on the revolver. As of today, we have $145 million available at 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. Today, I would like to introduce a new KPI, Asset Center Management, or AUM, and provide additional clarity regarding our expected tax rates. Starting with AUM, it amounted to over $38 billion across the platform as of March 31, 2025, excluding Qualitas Funds, which was officially integrated into our platform after quarter end. Pro forma for the Qualitas Transaction, our AUM amounts to nearly $40 billion. Historically, we have focused on fee-paying AUM and will continue to do so, as this measure correlates directly to P10'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. 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. 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, the 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&A. Thank you for your time today. I'll now pass the call over to the operator to begin the Q&A session.

Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Chris Katowsky of Oppenheimer & Company. Please go ahead, Chris.

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, in the press, in the earnings release, it says that that closed on April 10th. But it was in the first quarter?

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

you.

Okay, gotcha.

And then I guess the next question is for Sarita. She's been in the seat for, you know, nearly a year now. And, you know, I think there are a few people in your position who have the luxury of having, you know, 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?

Hey, Chris, thanks. It's Luke and Sarita's here, and I'm going to let her answer it. I'm just going to 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 going to turn it over to her to give you a little bit more of a fulsome answer to your question.

Yes, thank you, Chris, for the question. So as Luke mentioned, since I've joined, I've been very focused on client cultivation, recategorizing 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, where we can capitalize on these synergies and continue to optimize some of those LP relationships further. Now that Qualitas has officially joined the P10 family, we'll be working very closely with the Qualitas Fund's team to ensure that the data integration happens seamlessly, a very easy transition overall, and then working with them to basically incorporate them as part of our internal data management processes.

Okay. Alrighty, that's it from me. Thank you.

Thanks, Chris. Thank you. Our next question comes from the line of Ken Worthington of JP Morgan. Your question, please, Ken.

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 in the prior call, you guided to something like 5 to 7 percent of at that point existing fee paying AUM, which implies something like 1.5 billion on the year, and you noted the majority of that would be in the first half. With the number that we saw this quarter being a bit higher than, say, the rent rate, even if you focus on 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 drove it with the rent being higher in Q1.

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

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-catchup fees, that were lower than what we saw in Q1, but this quarter and the first quarter does tend to be a bit lower. Just looking at history, there are some quarters, like 1Q23, when that didn't happen. Just trying to understand, you know, what are the business or macro impacts that drive that just for us to think about the future.

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 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 the core fee rate. We are not currently seeing pressure within our commingled funds, see pressure. But we also mentioned at Invest Today that as we grow our SMA business, we expect potentially lower fee rates with higher margins on this revenue base, which may impact fee rate when a larger SMA is raised in a given quarter.

That makes sense and congrats on the SMA results you noted. Finally, going bigger picture, talking about taxes and M&A and the potential interlay, just wanted to see if you could point to any potential tax benefits from quality toss 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. 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, I wanted to see what are the next adjacencies or geographies you might be looking to tackle. I appreciate it. Thank you.

Thank you. I'll take the first question in regards to an impact on taxes. So with quality toss 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 quality toss. So this particular acquisition will not change our tax amortization. And I'll turn it over to Luke to answer your second question.

Yeah, thanks, Al. So to your point, I think we are really seeing, you know, and I know there's been a lot of press written in the wider world about, you know, the impact on capital markets activity, the slowdown in M&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&A market. We continue to see a lot of, you know, potential opportunities coming to market. 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, you know, generate a compelling return as we fit it with our platform. So we're going to maintain our discipline and our focus. But I will tell you, we are seeing, you know, probably even an increase in potential M&A opportunities. And you're right. Now, having done Qualitas and really having, you know, a meaningful presence in Europe gives us a real foothold to look at more opportunities. We always talked about how, you know, 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, you know, a lot of opportunities in Europe. You know, 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. And so, you know, 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, you know, 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. 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.

I really appreciate all the answers. Thanks so much. Thank you. Our next question. Comes from the line of Stephanie Ma of Morgan Stanley. Please go ahead, Stephanie.

Hey, good morning. I've seen your slide that you have 20 percent skewed to endowments and foundations. Just cheers for your 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? And perhaps could there be an opportunity on the other side to provide liquidity solutions? Just wanted to get your perspective.

Thanks. Great. So the answer to I'll give you the answer to the first question. The answer to the second question around the 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. 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 going to be positioned with ample capital to really capitalize on those opportunities as we see them. And so we do think there are going to 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 of our LP base to date. 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 ENF footprint, our ENF footprint probably skews a little bit smaller than the ENF footprint that, you know, 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, you know, sort of endowments and foundations that we targeted, we've seen them kind of in in what I would say business as usual mode. And 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.

That's very helpful. Thank you. And maybe just to follow up, I think I heard you have more 15 funds are still active in the market through this year. So do you mind just double clicking into that? Which ones do you think could be some of the largest contributors that underpins the four billion dollars or more target for the year? Which ones are you most excited about with perhaps the greatest opportunity to scale?

Yeah, well, I'll say a few things. The first is we're excited about a lot of them because we really think that this is given the dislocations in the market, we think this is, you know, an attractive time to be deploying capital. And so we're excited about that opportunity generally. But even kind of peeling back a layer, there's a lot of things that I think we're really, really excited about. And we've actually already talked, Stephanie, about some of those in my last answer. Right. Areas like NAV lending, areas like secondaries, areas like GP stakes. And so I think we're going to have, you know, a number of funds in the market through the year, as we mentioned, we think 15 kind of. And that obviously includes some of the offering from Qualitas. But, you know, as I mentioned, I think we'll be in the market with our RCP secondaries or SOF, as we call it, five fund. You know, 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. You know, 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 HART fund five later this year. And so we think all of those are really attractive opportunities that we're focused on.

OK, just last one from me on your last point, with Qualitas now, you have a more expanded geographic footprint. It's curious if you observe 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?

Yeah, look, I think it's probably too soon to call that. I would say, you know, remember this, whatever the dislocation was happened, you know, just over a month ago. And so I think, you know, 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. I could certainly see a world, Stephanie, to your question, where you see, you know, more traditional US LPs who have been engaged with us, very focused on, you know, the opportunities that 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, you know, 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 Hark around NAV lending. And we think that that can be a real opportunity and a real opportunity to continue to build some sort of, you know, 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. 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.

Great. Thanks for taking all my questions.

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

Hi, great. 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. 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.

Yep. 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. And so I'm going to be a little careful around saying too much, other than to say, I think we had a strong contribution from kind of 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. 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, they've focused 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 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. 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 floor, Ben.

Oh, that's great. Thanks for the color. 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.

Thank you for the question. We do still expect our core organic FRE margins 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.

Okay, great. Thanks for taking my questions.

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

Sir? Thanks, Latif. As I mentioned, coming off a record fundraising in the first quarter, P10 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.

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