Ridgepost Capital, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm (Auditor Firm ID: 185 ) 73 Consolidated Balance Sheets as of December 31, 2024 and 2023 74 Consolidated Statements of Operations for the Years ended December 31, 2024, 2023, and 2022 76 Consolidated Statements of Changes in Equity for the Years ended December 31, 2024, 2023, and 2022 77 Consolidated Statements of Cash Flows for the Years ended December 31, 2024, 2023, and 2022 78 Notes to Consolidated Financial Statements 80 72 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors P10, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of P10, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ KPMG LLP We have served as the Company’s auditor since 2017. Chicago, Illinois February 28 , 2025 73 P10, Inc. Consolidated Balance Sheets (in thousands, except share amounts) As of As of December 31, December 31, 2024 2023 ASSETS Cash and cash equivalents $ 67,455 $ 30,467 Restricted cash 660 1,590 Accounts receivable 32,313 20,620 Notes receivable 7,534 5,755 Due from related parties 81,909 57,696 Investment in unconsolidated subsidiaries 2,781 1,738 Prepaid expenses and other assets 5,108 15,011 Property and equipment, net 6,760 3,325 Right-of-use assets 17,555 17,087 Contingent payments to customers 10,028 14,034 Deferred tax assets, net 33,545 37,518 Intangibles, net 97,589 123,195 Goodwill 506,038 506,038 Total assets $ 869,275 $ 834,074 LIABILITIES AND EQUITY LIABILITIES: Accounts payable and accrued expenses $ 30,208 $ 15,054 Accrued compensation and benefits 69,544 45,081 Due to related parties 3,374 2,116 Other liabilities 184 854 Contingent consideration 2,214 6,693 Accrued contingent liabilities 23,878 16,222 Deferred revenues 12,609 12,770 Lease liabilities 20,591 20,278 Debt obligations 319,783 289,844 Total liabilities 482,385 408,912 COMMITMENTS AND CONTINGENCIES (NOTE 13) EQUITY: Class A common stock, $ 0.001 par value; 510,000,000 shares authorized; 75,974,076 issued and 67,614,875 outstanding as of December 31, 2024, and 59,340,269 issued and 57,622,895 outstanding as of December 31, 2023, respectively 68 58 Class B common stock, $ 0.001 par value; 180,000,000 shares authorized; 43,584,893 shares issued and 43,461,442 shares outstanding as of December 31, 2024, and 58,597,718 shares issued and 58,474,267 shares outstanding as of December 31, 2023, respectively 43 58 Treasury stock ( 76,648 ) ( 17,588 ) Additional paid-in-capital 637,848 636,073 Accumulated deficit ( 214,312 ) ( 233,012 ) Noncontrolling interests 39,891 39,573 Total equity 386,890 425,162 TOTAL LIABILITIES AND EQUITY $ 869,275 $ 834,074 74 The Notes to Consolidated Financial Statements are an integral part of these statements. P10, Inc. Consolidated VIE Balance Sheets (in thousands, except per share amounts) As of As of December 31, December 31, 2024 2023 ASSETS Cash and cash equivalents $ 49,653 $ 20,407 Restricted cash 500 756 Accounts receivable 12,823 1,421 Notes receivable 7,478 5,697 Due from related parties 19,252 20,610 Investment in unconsolidated subsidiaries 812 - Prepaid expenses and other assets 4,642 18,912 Property and equipment, net 5,700 2,012 Right-of-use assets 16,863 16,290 Contingent payments to customers 10,029 14,034 Intangibles, net 77,336 96,404 Goodwill 382,844 382,844 Total assets $ 587,932 $ 579,387 LIABILITIES Accounts payable and accrued expenses $ 21,163 $ 10,709 Accrued compensation and benefits 65,583 43,614 Other liabilities 19 19 Contingent consideration 2,214 6,693 Accrued contingent liabilities 23,878 16,222 Deferred revenues 11,473 11,848 Lease liabilities 19,188 18,663 Debt obligations 319,783 289,844 Total liabilities $ 463,301 $ 397,612 75 The Notes to Consolidated Financial Statements are an integral part of these statements. P10, Inc. Consolidated Statements of Operations (in thousands, except per share amounts) For the Year Ended December 31, 2024 2023 2022 REVENUES Management and advisory fees $ 290,218 $ 238,729 $ 196,546 Other revenue 6,230 3,005 1,814 Total revenues 296,448 241,734 198,360 OPERATING EXPENSES Compensation and benefits 155,316 154,286 94,297 Professional fees 21,464 12,668 12,856 General, administrative and other 28,780 22,584 18,522 Contingent consideration expense 160 560 1,717 Amortization of intangibles 25,612 29,221 26,867 Strategic alliance expense 4,496 1,494 678 Total operating expenses 235,828 220,813 154,937 INCOME FROM OPERATIONS 60,620 20,921 43,423 OTHER (EXPENSE)/ INCOME Interest expense, net ( 25,510 ) ( 21,872 ) ( 9,505 ) Other (losses)/income ( 6,747 ) ( 2,189 ) 1,545 Total other (expense) ( 32,257 ) ( 24,061 ) ( 7,960 ) Net income/(loss) before income taxes 28,363 ( 3,140 ) 35,463 Income tax (expense) ( 8,696 ) ( 4,632 ) ( 6,064 ) NET INCOME/(LOSS) $ 19,667 $ ( 7,772 ) $ 29,399 Less: net (income)/loss attributable to noncontrolling interests in P10 Intermediate ( 967 ) 639 ( 193 ) NET INCOME/(LOSS) ATTRIBUTABLE TO P10 $ 18,700 $ ( 7,133 ) $ 29,206 Earnings/(loss) per share Basic earnings/(loss) per share $ 0.17 $ ( 0.06 ) $ 0.25 Diluted earnings/(loss) per share $ 0.16 $ ( 0.06 ) $ 0.24 Weighted average shares outstanding, basic 112,549 116,104 116,751 Weighted average shares outstanding, diluted 120,375 116,104 121,655 76 The Notes to Consolidated Financial Statements are an integral part of these statements. P10, Inc. Consolidated Statements of Changes in Equity (in thousands) Common Stock - Class A Common Stock - Class B Treasury stock Additional Accumulated Non Controlling Total Shares Amount Shares Amount Shares Amount Paid-in-capital Deficit Interests Equity Balance at December 31, 2021 34,464 $ 34 82,727 $ 83 123 $ ( 273 ) $ 650,405 $ ( 255,085 ) $ - $ 395,164 Net income — — — — — — — 29,206 193 29,399 Stock-based compensation — — — — — — 10,361 — — 10,361 Deferred offering costs — — — — — — ( 80 ) — — ( 80 ) Issuance of restricted stock awards 33 — — — — — — — — — Issuance of restricted stock units 405 — — — — — 3,833 — — 3,833 Exchange of Class B common stock for Class A common stock 8,422 9 ( 8,422 ) ( 9 ) — — — — — — Exercise of stock options (net of tax) 14 — — — — — — — — — Repurchase of common stock for employee tax withholding ( 35 ) — — — — — ( 454 ) — — ( 454 ) Stock repurchase ( 938 ) ( 1 ) ( 1,297 ) ( 1 ) 938 ( 9,653 ) ( 12,248 ) — — ( 21,903 ) Settlement of stock options — — — — — — ( 12,466 ) — — ( 12,466 ) Capital contributions from non-controlling interests — — — — — — — — 40,733 40,733 Distributions to non-controlling interests — — — — — — — — ( 181 ) ( 181 ) Dividends declared — — — — — — ( 1 ) — — ( 1 ) Dividends paid per share $ 0.09 — — — — — — ( 10,522 ) — — ( 10,522 ) Balance at December 31, 2022 42,365 $ 42 73,008 $ 73 1,061 $ ( 9,926 ) $ 628,828 $ ( 225,879 ) $ 40,745 $ 433,883 Net loss — — — — — — — ( 7,133 ) ( 639 ) ( 7,772 ) Stock-based compensation — — — — — — 20,988 — — 20,988 Issuance of restricted stock awards 33 — — — — — — — — — Issuance of restricted stock units 1,265 1 — — — — 12,085 — — 12,086 Exchange of Class B common stock for Class A common stock 14,354 15 ( 14,354 ) ( 15 ) — — — — — — Exercise of stock options (net of tax) 386 — — — — — — — — — Repurchase of common stock for employee tax withholding — — — — — — ( 9,482 ) — — ( 9,482 ) Stock repurchase ( 780 ) — ( 180 ) — 780 ( 7,662 ) ( 1,501 ) — — ( 9,163 ) Distributions to non-controlling interests, net — — — — — — — — ( 533 ) ( 533 ) Dividends declared — — — — — — ( 13 ) — — ( 13 ) Dividends paid per share $ 0.13 — — — — — — ( 14,832 ) — — ( 14,832 ) Balance at December 31, 2023 57,623 $ 58 58,474 $ 58 1,841 $ ( 17,588 ) $ 636,073 $ ( 233,012 ) $ 39,573 $ 425,162 Net income — — — — — — — 18,700 967 19,667 Stock-based compensation — — — — — — 25,551 — — 25,551 Issuance of restricted stock awards 93 — — — — — — — — — Issuance of restricted stock units 1,438 1 — — — — — — — 1 Exchange of Class B common stock for Class A common stock 15,013 15 ( 15,013 ) ( 15 ) — — — — — — Exercise of stock options 1,081 1 — — — — 898 — — 899 Repurchase of common stock for employee tax witholding ( 991 ) ( 1 ) — — — — ( 8,748 ) — — ( 8,749 ) Stock repurchase ( 6,642 ) ( 6 ) — — 6,642 ( 59,060 ) — — — ( 59,066 ) Accrual for excise tax associated with stock repurchases — — — — — — ( 451 ) — — ( 451 ) Distributions to non-controlling interests, net — — — — — — — — ( 649 ) ( 649 ) Dividends declared — — — — — — 14 — — 14 Dividends paid per share $ 0.14 — — — — — — ( 15,489 ) — — ( 15,489 ) Balance at December 31, 2024 67,615 $ 68 43,461 $ 43 8,483 $ ( 76,648 ) $ 637,848 $ ( 214,312 ) $ 39,891 $ 386,890 77 The Notes to Consolidated Financial Statements are an integral part of these statements. P10, Inc. Consolidated Statements of Cash Flows (in thousands) For the Year Ended December 31, 2024 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net income/(loss) $ 19,667 $ ( 7,772 ) $ 29,399 Adjustments to reconcile net income/(loss) to net cash provided by operating activities: Stock-based compensation 30,451 34,653 18,616 Depreciation expense 944 738 485 Amortization of intangibles 25,612 29,221 26,867 Amortization of debt issuance costs and debt discount 1,436 1,445 1,116 Income from unconsolidated subsidiaries ( 905 ) ( 161 ) ( 1,532 ) Deferred tax expense 3,973 3,757 3,693 Loss on extinguishment of debt 132 — — Measurement of contra-revenue put option 10,130 — — Amortization of contingent payment to customers 1,532 1,512 676 Remeasurement of contingent consideration 160 560 1,717 Post close purchase price adjustment — — 11 Change in operating assets and liabilities: Accounts receivable ( 11,693 ) ( 4,069 ) ( 1,066 ) Due from related parties ( 24,213 ) ( 21,158 ) ( 24,181 ) Prepaid expenses and other assets 9,405 ( 9,658 ) 2,871 Right-of-use assets 3,500 2,700 2,912 Accounts payable and accrued expenses 15,641 4,453 ( 9,333 ) Accrued compensation and benefits 18,777 24,601 8,014 Due to related parties 1,258 ( 41 ) ( 101 ) Other liabilities ( 670 ) ( 7,861 ) 3,950 Contingent consideration ( 351 ) ( 3,210 ) — Deferred revenues ( 161 ) 119 ( 302 ) Lease liabilities ( 3,655 ) ( 2,144 ) ( 2,137 ) Net cash provided by operating activities 100,970 47,685 61,675 CASH FLOWS USED IN INVESTING ACTIVITIES Acquisitions, net of cash acquired — — ( 96,455 ) Purchase of intangible assets — ( 14 ) ( 36 ) Funding of notes receivable ( 1,832 ) ( 1,539 ) ( 1,687 ) Proceeds from notes receivable 53 15 7 Investments in unconsolidated subsidiaries ( 45 ) ( 3 ) — Distributions from investments in unconsolidated subsidiaries 757 747 1,014 Software capitalization ( 358 ) ( 271 ) ( 138 ) Purchases of property and equipment ( 4,379 ) ( 1,185 ) ( 1,295 ) Net cash used in investing activities ( 5,804 ) ( 2,250 ) ( 98,590 ) CASH FLOWS USED IN FINANCING ACTIVITIES Borrowings on debt obligations 386,804 62,200 120,662 Repayments on debt obligations ( 356,575 ) ( 63,025 ) ( 43,162 ) Cash exercise of stock options 898 — — Repurchase of Class A common stock ( 59,066 ) ( 7,662 ) ( 9,653 ) Repurchase of Class A common stock for employee tax withholding ( 8,748 ) ( 9,482 ) ( 454 ) Repurchase of Class B common stock — ( 1,501 ) ( 12,248 ) Payment of contingent consideration ( 4,288 ) ( 7,994 ) ( 7,344 ) Cash settlement of stock options — — ( 12,466 ) Dividends paid ( 15,489 ) ( 14,832 ) ( 10,522 ) Distributions to non-controlling interests ( 786 ) ( 574 ) — Debt issuance costs ( 1,858 ) — ( 1,888 ) Net cash (used in)/provided by financing activities ( 59,108 ) ( 42,870 ) 22,925 Net change in cash, cash equivalents and restricted cash 36,058 2,565 ( 13,990 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period 32,057 29,492 43,482 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ 68,115 $ 32,057 $ 29,492 78 The Notes to Consolidated Financial Statements are an integral part of these statements. P10, Inc. Consolidated Statements of Cash Flows (in thousands) For the Year Ended December 31, 2024 2023 2022 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest $ 21,727 $ 20,100 $ 6,784 Net cash paid for income taxes $ 2,538 $ 1,539 $ 2,480 NON-CASH INVESTING AND FINANCING ACTIVITIES Additions to right-of-use assets $ 3,968 $ 3,864 4,046 Additions to lease liabilities 3,968 3,864 4,995 RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH Cash and cash equivalents $ 67,455 $ 30,467 $ 20,021 Restricted cash 660 1,590 9,471 Total cash, cash equivalents and restricted cash $ 68,115 $ 32,057 $ 29,492 79 The Notes to Consolidated Financial Statements are an integral part of these statements. P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) Note 1. Description of Business Description of Business On October 20, 2021, P10 Holdings, Inc. ("P10 Holdings"), in connection with its Initial Public Offering ("IPO"), completed a reorganization and restructure. In connection with the reorganization, P10, Inc. ("P10") became the parent company and all of the existing equity of P10 Holdings, and its consolidated subsidiaries. The offering and reorganization included a reverse stock split of P10 Holdings common stock on a 0.7-for-1 basis pursuant to which every outstanding share of common stock decreased to 0.7 shares. Following the reorganization and IPO, P10 has two classes of common stock, Class A common stock and Class B common stock. Each share of Class B common stock is entitled to ten votes while each share of Class A common stock is entitled to one vote. P10, Inc. and its consolidated subsidiaries (the “Company”) operate as a multi-asset class private market solutions provider in the alternative asset management industry. Our mission is to provide our investors differentiated access to a broad set of solutions and investment vehicles across a multitude of asset classes and geographies. Our existing portfolio of solutions across private equity, venture capital, private credit and impact investing support our mission by offering a comprehensive set of investment vehicles to our investors, including primary fund of funds, secondary investment, direct investment and co-investments, alongside separate accounts (collectively the “Funds”). The direct and indirect subsidiaries of the Company include P10 Holdings, P10 Intermediate Holdings, LLC (“P10 Intermediate”), which owns the subsidiaries P10 RCP Holdco, LLC (“Holdco”), Five Points Capital, Inc. (“Five Points”), TrueBridge Capital Partners, LLC (“TrueBridge”), Enhanced Capital Group, LLC (“ECG”), Bonaccord Capital Advisors, LLC ("Bonaccord"), Hark Capital Advisors, LLC ("Hark"), P10 Advisors, LLC ("P10 Advisors"), and Western Technology Investment Advisors LLC ("WTI"). Prior to November 19, 2016, P10, formerly Active Power, Inc. designed, manufactured, sold, and serviced flywheel-based uninterruptible power supply products and serviced modular infrastructure solutions. On November 19, 2016, we completed the sale of substantially all our assets and liabilities and operations to Langley Holdings plc, a United Kingdom public limited company. Following the sale, we changed our name from Active Power, Inc. to P10 Industries, Inc. and became a non-operating company focused on monetizing our retained intellectual property and acquiring profitable businesses. For the period from December 2016 through September 2017, our business primarily consisted of cash, certain retained intellectual property assets and our net operating losses ("NOLs") and other tax benefits. On March 22, 2017, we filed for reorganization under Chapter 11 of the Federal Bankruptcy Code, using a prepackaged plan of reorganization. The Company emerged from bankruptcy on May 3, 2017. On December 1, 2017, the Company changed its name from P10 Industries, Inc. to P10 Holdings, Inc. We were founded as a Texas corporation in 1992 and reincorporated in Delaware in 2000. Our headquarters are in Dallas, Texas. On October 5, 2017, we closed on the acquisition of RCP Advisors 2, LLC ("RCP 2") and entered into a purchase agreement to acquire RCP Advisors 3, LLC ("RCP 3", and collectively with RCP 2, "RCP") in January 2018. On January 3, 2018, we closed on the acquisition of RCP 3. RCP 2 and RCP 3 are registered investment advisors with the United States Securities and Exchange Commission. On April 1, 2020, the Company completed the acquisition of Five Points. Five Points is a leading lower middle market alternative investment manager focused on providing both equity and debt capital to private, growth-oriented companies and limited partner capital to other private equity funds, with all strategies focused exclusively in the U.S. lower middle market. In 2022, Five Points established the Reynolda brand that specializes in direct equity funds. Five Points is a registered investment advisor with the United States Securities and Exchange Commission. On October 2, 2020, the Company completed the acquisition of TrueBridge. TrueBridge is an investment firm focused on investing in venture capital through fund-of-funds, co-investments, and separate accounts. TrueBridge is a registered investment advisor with the United States Securities and Exchange Commission. 80 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) On December 14, 2020, the Company completed the acquisition of 100 % of the equity interest in ECG, and a noncontrolling interest in Enhanced Capital Partners, LLC (“ECP”, and collectively with ECG, “Enhanced”). Enhanced undertakes and manages equity and debt investments in impact initiatives across North America, targeting underserved areas and other socially responsible end markets including renewable energy, historic building renovations, and affordable housing. ECP is a registered investment advisor with the United States Securities and Exchange Commission. On September 30, 2021, the Company completed acquisitions of Bonaccord and Hark. Bonaccord is an alternative asset manager focusing on acquiring minority equity interests in alternative asset management companies focused on private market strategies which may include private equity, private credit, real estate, and real asset strategies. Hark is engaged in the business of making loans to portfolio companies that are owned or controlled by financial sponsors, such as private equity funds or venture capital funds, and which do not meet traditional direct lending underwriting criteria but where the repayment of the loan by the portfolio company is guaranteed by its financial sponsor. In June 2022, the Company formed P10 Advisors, a wholly-owned consolidated subsidiary, to manage investment opportunities that are sourced across the P10 platform but do not fit within an existing investment mandate. On October 13, 2022, the Company completed the acquisition of all of the issued and outstanding membership interests of WTI. WTI provides senior secured financing to early-stage and emerging stage life sciences and technology companies. WTI is a registered investment advisor with the United States Securities and Exchange Commission. Simultaneously with the acquisition of WTI, the Company completed a restructuring of P10 Intermediate and subsidiaries to LLC entities that are considered disregarded entities for federal income tax purposes. This allowed the WTI sellers to obtain a partnership interest in P10 Intermediate and all of its subsidiaries. As a result of the acquisition, the WTI sellers obtained 3,916,666 membership units of P10 Intermediate, which can be exchanged into 3,916,666 shares of P10 Class A common stock. As of December 31, 2024 , no units have been exchanged into shares of P10 Class A common stock. The results of WTI’s operations have been included in the consolidated financial statements effective October 13, 2022. The Company reports noncontrolling interests related to the partnership interests which are owned by the WTI sellers. This is recorded as noncontrolling interests on the Consolidated Balance Sheets. Noncontrolling interests is allocated a share of income or loss in the respective consolidated subsidiaries in proportion to their relative ownership interest. Additionally, the Company makes periodic distributions to the WTI sellers for tax related and other agreed upon expenses in accordance with the terms of the P10 Intermediate operating agreement. The Board approved a program to repurchase shares of our Class A and Class B common stock. As of December 31, 2024 , the Board has approved $ 92.0 million, of which $ 52.0 million was approved during the year ending December 31, 2024, for repurchase under the Share Repurchase Program. These shares may be repurchased from time to time in the open market at prevailing market prices, in privately negotiated transactions, in block trades, in accordance with Rule 10b5-1 trading plans and/or through other legally permissible means. As of December 31, 2024, $ 88.5 million has been spent to buy back shares and there is $ 3.5 million remaining for authorized repurchases under this program. On October 20, 2023, the Company had a transition of executives ("Executive Transition") and entered into an executive transition agreement with each of Mr. Alpert and Mr. Webb (each, a "Transition Agreement"). Pursuant to the Transition Agreements, Mr. Alpert and Mr. Webb ceased to serve as Co-Chief Executive Officer, and Mr. Alpert and Mr. Webb were appointed as Executive Chairman and Executive Vice Chairman, respectively, for a one-year period. Additionally, Mr. Webb's Transition Agreement provided for a one-year transition period to continue serving the Company in a transitional capacity. Effective October 23, 2023, the board of the Company appointed Luke A. Sarsfield III as Chief Executive Officer ("CEO") of the Company. In connection with his appointment as CEO, the Company entered into an employment agreement with Mr. Sarsfield (the "Employment Agreement") setting forth the terms of his employment and compensation. In connection with both the Transition Agreements and the Employment Agreement, provisions were made for severance and sign-on compensation, respectively. Effective June 14, 2024, Mr. Alpert resigned as Executive Chairman and Chairman of the Board and the Board of the Company appointed CEO, Mr. Sarsfield, to Chairman of the Board. In connection with Mr. Alpert's resignation as Executive Chairman, the Company and Mr. Alpert agreed to the early termination of Mr. Alpert's Transition Agreement. Mr. Webb's Transition Agreement terminated in accordance with its terms on October 23, 2024. Effective November 7, 2024, each of Mr. Alpert and Mr. Webb resigned as members of the board of directors of 81 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) the Company. See Note 15 for further information. The associated expenses were recorded in compensation and benefits on the Consolidated Statements of Operations in the period incurred. Note 2. Significant Accounting Policies Basis of Presentation The accompanying Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Management believes it has made all necessary adjustments so that the Consolidated Financial Statements are presented fairly and that estimates made in preparing the Consolidated Financial Statements are reasonable and prudent. The Consolidated Financial Statements include the accounts of the Company, its wholly owned or majority-owned subsidiaries and entities in which the Company is deemed to have a direct or indirect controlling financial interest based on either a variable interest model or voting interest model. All intercompany transactions and balances have been eliminated upon consolidation. Principles of Consolidation The Company performs the variable interest analysis for all entities in which it has a potential variable interest. If the Company has a variable interest in the entity and the entity is a variable interest entity (“VIE”), we will also analyze whether the Company is the primary beneficiary of this entity and if consolidation is required. Generally, VIEs are entities that lack sufficient equity to finance their activities without additional financial support from other parties, or whose equity holders, as a group, lack one or more of the following characteristics: (a) direct or indirect ability to make decisions, (b) obligation to absorb expected losses or (c) right to receive expected residual returns. A VIE must be evaluated quantitatively and qualitatively to determine the primary beneficiary, which is the reporting entity that has (a) the power to direct activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. To determine a VIE's primary beneficiary, we perform a qualitative assessment to determine which party, if any, has the power to direct activities of the VIE and the obligation to absorb losses and/or receive its benefits. This assessment involves identifying the activities that most significantly impact the VIE's economic performance and determining whether we, or another party, has the power to direct those activities. When evaluating whether we are the primary beneficiary of a VIE, we perform a qualitative analysis that considers the design of the VIE, the nature of our involvement and the variable interests held by other parties. See Note 6 for further information. Primarily due to the governance structure at subsidiaries, the Company has determined that certain of its subsidiaries are VIEs, and that the Company is the primary beneficiary of the entities, because it has the power to direct activities of the entities that most significantly impact the VIE’s economic performance and has a controlling financial interest in each entity. Accordingly, the Company consolidates these entities, which includes P10 Intermediate, Holdco, RCP 2, RCP 3, TrueBridge, Bonaccord, Hark, and WTI. The assets and liabilities of the consolidated VIEs are presented on a gross basis in the Consolidated Balance Sheets. See Note 6 for more information on both consolidated and unconsolidated VIEs. Entities that do not qualify as VIEs are assessed for consolidation under the voting interest model. Under the voting interest model, the Company consolidates those entities it controls through a majority voting interest or other means. P10 Holdings, Five Points, P10 Advisors, and ECG are concluded to be consolidated subsidiaries of P10 under the voting interest model. Reclassifications Certain reclassifications have been made within the Consolidated Financial Statements to conform prior periods with current period presentation. 82 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) Use of Estimates The preparation of the Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid instruments with original maturities of three months or less to be cash equivalents. As of December 31, 2024, and December 31, 2023, cash equivalents include money market funds of $ 41.3 million and $ 11.1 million, respectively, which approximates fair value. The Company maintains its cash balances at various financial institutions among multiple accounts, which may periodically exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limits. The Company's credit risk in the event of failure of these financial institutions is represented by the difference between the FDIC limit and the total amounts on deposit. Management monitors the financial institutions' credit worthiness in conjunction with balances on deposit to minimize risk. The Company from time to time may have amounts on deposit in excess of the insured limits. Restricted Cash Restricted cash as of December 31, 2024 and December 31, 2023 was primarily cash on deposit related to RCP's lease and cash on deposit from third parties related to pending tax credit projects. There are deposit liabilities associated with restricted cash related to the pending tax credit projects reported in other liabilities on the Consolidated Balance Sheets. Accounts Receivable and Due from Related Parties Accounts receivable is equal to contractual amounts reduced for allowances, if applicable. Management fees are collected on a quarterly basis. Certain subsidiaries management fee contracts are collected at the beginning of the quarter, while others are collected in arrears. The management fees reflected in accounts receivable at period end are those that are collected in arrears. Due from related parties represents receivables from the Funds for reimbursable expenses and management fees collected by a related party of RCP 2 that are owed to RCP 2. Additionally, fees owed to the Company for the advisory agreement entered into upon the closing of the acquisitions of ECG and ECP and any supplemental agreements entered into after acquisition ("Advisory Agreements"), where ECG provides advisory services to Enhanced Permanent Capital, LLC ("Enhanced PC") are reflected in due from related parties on the Consolidated Balance Sheets. Notes Receivable Notes receivable is related to contractual amounts owed from signed, secured promissory notes with BCP Partners Holdings, LP ("BCP") as well as certain employees. In addition to contractual amounts, borrowers are obligated to pay interest on outstanding amounts. Refer to Note 5 for further information. Current Expected Credit Losses The Company evaluates accounts receivable, due from related parties, and notes receivable using the current expected credit loss model. The Company determines a current estimate of all expected credit losses over the life of each financial instrument, which may result in recognition of credit losses on loans and receivables before an actual event of default. The Company establishes reserves for any estimated credit losses with a corresponding charge in the Consolidated Statements of Operations. The Company estimates that accounts receivable, due from related parties, and notes receivable are fully collectible based on actual historical losses, current conditions, and reasonable and supportable forecasts; accordingly, no allowances have been established as of December 31, 2024 and December 31, 2023 . If accounts are subsequently determined to be uncollectible, they will be expensed in the period that determination is made. 83 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) Prepaid Expenses and Other Assets Prepaid expenses and other assets consist primarily of prepaid expenses related to technology, insurance and professional fees. From time to time, there are also investments in allocable state tax credits on the Consolidated Balance Sheets due to timing differences associated with the purchase and sale of state tax credits in the tax credit finance business. As of December 31, 2024 and December 31, 2023, respectively, there is $ 0 and $ 9.6 million within prepaid expenses and other assets on the Consolidated Balance Sheets associated with allocable state tax credit purchases. Investment in Unconsolidated Subsidiaries For equity investments in entities that we do not control, but over which we exercise significant influence, we use the equity method of accounting. The equity method investments are initially recorded at cost, and their carrying amount is adjusted for the Company’s share in the earnings or losses of each investee, and for distributions received. The Company discontinues applying the equity method if the investment (and net advances) is reduced to zero and shall not record additional losses unless the Company has guaranteed obligations of the investee or is otherwise committed to provide further financial support for the investee. The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. The Company accounts for its investment in ECP, Enhanced PC, and the ECG's asset management businesses using the equity method of accounting. For certain entities in which the Company does not have significant influence and fair value is not readily determinable, these investments are not accounted for on the equity method, but instead as equity securities and we value these investments under the measurement alternative. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 825, Financial Instruments, requires equity securities to be recorded at cost and adjusted to fair value at each reporting period. However, the guidance allows for a measurement alternative, which is to record the investments at cost, less impairment, if any, and subsequently adjust for observable price changes of identical or similar investments of the same issuer. All other investments in unconsolidated subsidiaries are accounted for under the measurement alternative. Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the terms of the respective leases or service lives of the improvements, whichever is shorter, using the straight-line method. Expenditures for major renewals and betterments that extend the useful lives of the property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. The estimated useful lives of the various assets are as follows: Computers and purchased software 3 - 5 years Furniture and fixtures 7 - 10 years Long-lived Assets Long-lived assets including property and equipment, lease right-of-use assets, and definite lived intangibles are evaluated for impairment under FASB ASC 360, Property, Plant, and Equipment . Long-lived assets are reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The carrying value of long-lived assets are determined to not be recoverable if the undiscounted estimated future net operating cash flows directly related to the asset or asset group, including any disposal value, is less than the carrying amount of the asset. If the carrying value of an asset is determined to not be recoverable, the impairment loss is measured as the amount by which the carrying value of the asset exceeds its fair value on the measurement date. Fair value is based on the best information available, including prices for similar assets and estimated discounted cash flows. Leases The Company recognizes a lease liability and right-of-use asset in our Consolidated Balance Sheets for contracts that it determines are leases or contain a lease. The Company’s leases primarily consist of operating leases for various office spaces. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent 84 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) the Company’s obligation to make lease payments arising from the leases. The Company’s right-of-use assets and lease liabilities are recognized at lease commencement, which is when the Company obtains control of the asset, based on the present value of lease payments over the lease term. Lease right-of-use assets include initial direct costs incurred by the Company and are presented net of deferred rent, lease incentives and certain other existing lease liabilities. Absent an implicit interest rate in the lease, the Company uses its incremental borrowing rate, adjusted for the effects of collateralization, based on the information available at commencement in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease, and the Company would account for this when it is reasonably certain that the Company will exercise those options. Lease expense is recognized on a straight-line basis over the lease term. Additionally, upon amendments or other events, the Company may be required to remeasure our lease liability and right-of-use asset. The Company does not recognize a lease liability or right-of-use asset on our Consolidated Balance Sheets for short-term leases. Instead, the Company recognizes short-term lease payments as an expense when incurred. A short-term lease is defined as a lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. When determining whether a lease qualifies as a short-term lease, the Company evaluates the lease term and the purchase option in the same manner as all other leases. Revenue Share and Repurchase Arrangement The Company recognizes accrued contingent liabilities and contingent payments to customers asset in our Consolidated Balance Sheets for an agreement between ECG and various third parties. The agreement requires ECG to share in certain revenues earned with the third parties and also includes an option for the third parties to sell back the revenue share to ECG at a set multiple. Additionally, ECG holds the option to buy back 50% of the revenue share at a set multiple. The options to repurchase the revenue share are exercisable starting in July 2025. The Company believes it is probable that the third parties will exercise its option to sell back the revenue share and has recognized a liability on the Consolidated Balance Sheets. The Company has also recognized a contingent payment to customers associated with the agreement and will amortize the asset against revenue over the estimated term of the management contract. The amortization is reported in management and advisory fees on the Consolidated Statements of Operations. On December 23, 2024, the Company became a guarantor for a related party on a related put option and call option with the same third party customers and terms. The Company would be required to settle either the put or call options if either are exercised and the related party does not have the means to settle themselves. The Company’s accrued contingent liabilities are recognized once determined that it is probable the Company would need to settle as guarantor and estimable and would record a loss at the same time. The Company will reassess at each reporting period and recognize all changes. Refer to Note 13 for further information. Goodwill and Intangible Assets Goodwill is initially measured as the excess of the cost of the acquired business over the sum of the amounts assigned to identifiable assets acquired, less the liabilities assumed. As of December 31, 2024, goodwill recorded on our Consolidated Balance Sheets relates to the acquisitions of RCP 2, RCP 3, Five Points, TrueBridge, Enhanced, Bonaccord, Hark, and WTI. As of December 31, 2024, the intangible assets are comprised of indefinite-lived intangible assets and finite-lived intangible assets related to the acquisitions of RCP 2, RCP 3, Five Points, TrueBridge, Enhanced, Bonaccord, Hark, and WTI. Indefinite-lived intangible assets and goodwill are not amortized. Finite-lived technology is amortized using the straight-line method over its estimated useful life of 4 years . Finite-lived management and advisory contracts, which relate to acquired separate accounts and funds and investor/customer relationships with a specified termination date, are amortized in line with contractual revenue to be received, which range between 7 and 16 years . Certain of our trade names are considered to have finite-lives. Finite-lived trade names are amortized over 10 years in line with the pattern in which the economic benefits are expected to occur. Goodwill and indefinite lived intangibles are reviewed for impairment at least annually as of September 30 utilizing a qualitative or quantitative approach and more frequently if circumstances indicate impairment may have occurred. The impairment testing for goodwill and indefinite lived intangibles under the qualitative approach is based first on a qualitative assessment to determine if it is more likely than not that the fair value of the Company’s reporting unit or asset is less than the respective carrying value. The reporting unit is the reporting level for testing the impairment of goodwill and indefinite lived intangibles. If it is determined that it is more likely than not that an asset's or reporting unit’s fair value is less than its 85 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) carrying value, then the Company will determine the fair value of the reporting unit or asset and record an impairment charge for the difference between fair value and carrying value (not to exceed the carrying amount of goodwill or indefinite lived intangible). At December 31, 2024 and December 31, 2023 and for the years then ended, the Company determined that there was no impairment to goodwill and indefinite lived intangibles. Contingent Consideration Contingent consideration is initially measured at fair value on the date of the acquisition. The liabilities are remeasured at fair value on each reporting date, with changes in the fair value reflected in operating expenses on our Consolidated Statements of Operations. As of December 31, 2024 and December 31, 2023, the con tingent consideration on the Consolidated Balance Sheets is related to the acquisition of Bonaccord on the Consolidated Balance Sheets. Accrued Compensation and Benefits Accrued compensation and benefits consists of employee salaries, bonuses, management profit shares, benefits, severance, and acquisition-related earnouts (contingent on employment) that has not yet been paid. Refer to Note 13 for further information. Debt Issuance Costs Costs incurred which are directly related to the issuance of debt are deferred and amortized using the effective interest method and are presented as a reduction to the carrying value of the associated debt on our Consolidated Balance Sheets. As these costs are amortized, they are included in interest expense, net within our Consolidated Statements of Operations. Noncontrolling Interests Noncontrolling interests ("NCI") reflect the portion of income or loss and the corresponding equity attributable to third-party equity holders and employees in certain consolidated subsidiaries that are not 100% owned by the Company. Noncontrolling interests is presented as a separate component in our Consolidated Statements of Operations to clearly distinguish between our interests and the economic interest of third parties in those entities. Net income attributable to P10, as reported in the Consolidated Statements of Operations, is presented net of the portion of net income/(loss) attributable to holders of non-controlling interest. NCI is allocated a share of income or loss in the respective consolidated subsidiaries in proportion to their relative ownership interest. Treasury Stock The Company records common stock purchased for treasury at cost. At the date of subsequent reissuance, the treasury stock account is reduced by the cost of such stock using the average cost method. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable parties who are willing and able to transact for an asset or liability at the measurement date. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs used following the fair value hierarchy set forth by the FASB. As of December 31, 2024 and December 31, 2023, we used the following valuation techniques to measure fair value for assets and there were no changes to these methodologies during the periods presented: Level 1—Assets were valued using the closing price reported in the active market in which the individual security was traded. Level 2—Assets were valued using quoted prices in markets that are not active, broker dealer quotations, and other methods by which all significant inputs were observable at the measurement date. 86 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) Level 3—Assets were valued using unobservable inputs in which little or no market data exists as reported by the respective institutions at the measurement date. The carrying values of financial instruments comprising cash and cash equivalents, restricted cash, prepaid assets, accounts payable, accounts receivable and due from related parties receivables excluding the receivables from the Advisory Agreements approximate fair values due to the short-term maturities of these instruments. The Company estimates the fair value of the credit facility using level two inputs. The Company discounts the future cash flows using current interest rates which the Company could obtain similar borrowings. The Company estimates the fair value of the due from related parties associated with the Advisory Agreements based on the current expectation of payments. If the payments are not expected to be made on a short-term basis, the fair value is estimated using level three inputs and a discounted cash flow model. See Note 12 for further details. The Company has a contingent consideration liability related to the acquisition of Bonaccord that was measured at fair value using level three inputs and a discounted cash flow model. As of December 31, 2024 , the contingent consideration is considered fully earned and was paid on January 24, 2025 so the value is carried at the full balance of unpaid contingent consideration and is no longer subject to fair value measurements. The Company also had a contingent consideration liability related to the acquisition of Hark, that was valued using level three inputs and a discounted cash flows model, which was paid in full on July 27, 2023. As a result of the settlement of the contingent consideration, no value is recorded as of December 31, 2024 and December 31, 2023 . See Note 10 for additional information. Revenue Recognition Revenue is recognized when, or as, the Company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those goods or services. While the determination of who the customer is in a contractual arrangement will be made on a contract-by-contract basis, the customer will generally be the investment fund for the Company’s significant management and advisory contracts. Management and Advisory Fees The Company earns management fees for asset management services provided to the Funds where the Company has discretion over investment decisions. The Company primarily earns fees for advisory services provided to clients where the Company does not have discretion over investment decisions. Management and advisory fees received in advance reflects the amount of fees that have been received prior to the period the fees are earned. These fees are recorded as deferred revenues on the Consolidated Balance Sheets due to the performance obligation not being satisfied at the time of collection. For asset management and advisory services, the Company typically satisfies its performance obligations over time as the services are provided as a distinct series of daily performance obligations that the customer simultaneously benefits from as they are performed. Asset management fees are based on the contractual terms of each contract which differ, such as fees calculated based on committed capital or deployed capital, fees initially calculated based on committed capital during the investment period and on net invested capital through the remainder of the fund's term, fees that step down during specified periods of the fund's term, or in limited instances, fees based on assets under management. At contract inception, no revenue is estimated as the fees are dependent variable amounts which are susceptible to factors outside of our control. Fees are recognized for services provided during the period, which are distinct from services provided in other periods. In certain asset management and advisory agreements progress is measured using the practical expedient under the output method resulting in the recognition of revenue in the amount for which the Company has a right to invoice. Advisory service fees are determined using fixed-rate fees and are recognized over time as the related services are delivered. Other advisory services include transaction and management fees associated with managing the origination and ongoing compliance of certain investments. The Company allocates a portion of consideration received under an arrangement to a financing component when it determines that a significant financing component exists. The Company does not adjust the promised amount of consideration for the effects of a significant financing component if, at each contract inception the Company expects that the period between services being provided and cash collection would be less than one year. To the extent the Company determines that there is a significant financing component in a contract with a customer, it determines the impact of the time value of money in adjusting the transaction price to account for the income associated with the financing component by 87 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) estimating the discount rate that would be reflected in a separate financing transaction between the customer and the Company at contract inception, based upon the credit characteristics of the customer receiving financing in the contract. The Company is applying the optional disclosure exemption for variable consideration for unsatisfied performance obligations, as the variable consideration relates to these unsatisfied performance obligations being fulfilled as a series. The performance obligations related to these contracts are expected to be satisfied over the next 1 - 10 years as services are provided to the customer. Catch-up fees are earned from investors that make commitments to previously launched fund after the first fund closing occurs, but during the fundraising period. Contractual terms require the investors to pay a catch-up fee as if they had committed to the fund at the first closing. Catch-up fees are recorded as revenue when such commitments are made as variable consideration. During 2023, one fund managed by the Company experienced a change in management at one of the underlying portfolio company's it invested it. The fund’s investment thesis and documents required the original manager to continue managing the underlying portfolio company. The change in management caused the fund to be non-compliant with its investment mandate. The Company agreed to modify the terms of the management fee for the fund with the investors, which was not a provision in the original fund agreement and the Company has no history of making similar modifications. As a result, a $ 3 million reduction in the revenue transaction price was recorded for the year ended December 31, 2023 to reflect the consideration which the Company is entitled to after this concession was provided. Other Revenue Other revenue on our Consolidated Statements of Operations primarily consists of subscriptions, consulting agreements, interest income, and referral fees. Interest income is from interest bearing fund bank accounts managed by the Company and is additional consideration per the Limited Partner Agreements. Interest income is recognized as it is earned. The subscription and consulting agreements typically have renewable one-year lives, and revenue is recognized ratably over the current term of the subscription or the agreement. If subscriptions or fees have been paid in advance, these fees are recorded as deferred revenues on our Consolidated Balance Sheets. Referral fee revenue is recognized upon closing of certain opportunities. Income Taxes Current income tax expense represents our estimated taxes to be paid or refunded for the current period. In accordance with ASC 740, Income Taxes ("ASC 740"), we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets to the amount we believe is more likely than not to be realized. Uncertain tax positions are recognized only when we believe it is more likely than not that the tax position will be upheld on examination by the taxing authorities based on the merits of the position. We recognize interest and penalties, if any, related to uncertain tax positions in income tax expense. We file various federal and state and local tax returns based on federal and state local consolidation and stand-alone tax rules as applicable. Earnings (Loss) Per Share Basic earnings (loss) per share (“EPS”) is calculated by dividing net income/(loss) attributable to common stockholders by the weighted-average number of common shares. Diluted EPS includes the determinants of basic EPS and common stock equivalents outstanding during the period adjusted to give effect to potentially dilutive securities, if the Company is in a net income position. Because the impact of these items is generally anti-dilutive during periods of net loss, there is no difference between basic and diluted loss per common share for periods with net losses. See Note 16 for additional information. 88 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) When the Company is in a net income position, the denominator in the computation of diluted EPS is impacted by additional common shares that would have been outstanding if dilutive potential shares of common stock had been issued. Potential shares of common stock that may be issued by the Company include shares of common stock that may be issued upon exercise of outstanding stock options as well as the vesting of restricted stock units. Also included in the diluted EPS denominator are the units of P10 Intermediate owned by the sellers of WTI, assuming the option to exchange the units for shares of Class A common stock of the Company is exercised in full. Under the treasury stock method, the unexercised options are assumed to be exercised at the beginning of the period or at issuance, if later. The assumed proceeds are then used to purchase shares of common stock at the average market price during the period. Stock-Based Compensation Expense Stock-based compensation relates to grants for shares of P10 awarded to our employees through stock options as well as RSUs awarded to employees and RSAs issued to non-employee directors as compensation for service on the Company's board. Stock compensation expense for awards that cliff-vest after a service period is recorded ratably over the vesting period at the fair market value on the grant date. For awards with graded vesting, and vesting only requires a service condition, the Company elected, in accordance with ASC 718, Compensation - Stock Compensation ("ASC 718"), to treat these awards as single awards for recognition purposes and recognize compensation on a straight-line basis over the requisite service period of the entire award. For awards with graded vesting and require a market condition to vest, the Company treats each expected vesting tranche as an individual award and recognizes expense ratably over the vesting period at the fair market value on the grant date. Certain acquisition-related RSUs vest after meeting certain performance metrics. For these, the Company uses the tranche method and recognizes expense for each tranche of RSUs deemed probable of vesting on a straight-line basis over the expected vesting period. The Company evaluates the probability of vesting at each reporting period. Unvested units are remeasured quarterly against performance metrics as a liability on the Consolidated Balance Sheets. Refer to Note 15 for further discussion. Forfeitures are recognized as they occur. Segment Reporting According to ASC 280, Segment Reporting , operating segments are defined as components of a company that engage in business activities from which they may earn revenues and incur expenses, and for which discrete financial information is available and is evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. The Company operates our business as a single operating segment, which is how our CODM evaluates financial performance and makes decisions regarding the allocation of resources. The CODM, who is responsible for allocating resources and assessing performance of the reportable segment, has been identified as the Chief Executive Officer. The CODM assesses performance for the single segment and decides how to allocate resources based on consolidated net income that also is reported on the Consolidated Statements of Operations as net income/(loss). The measure of segment assets is reported on the Consolidated Balance Sheets as total assets. The CODM uses these metrics for purposes of making operating decisions and assessing financial performance. The CODM considers forecast to actual variances when making decisions about allocation capital and personnel. Business Acquisitions In accordance with ASC 805, Business Combinations (“ASC 805”), the Company identifies a business to have three key elements; inputs, processes, and outputs. While an integrated set of assets and activities that is a business usually has outputs, outputs are not required to be present. In addition, all the inputs and processes that a seller uses in operating a set of assets and activities are not required if market participants can acquire the set of assets and activities and continue to produce outputs. In addition, the Company also performs a screen test to determine when a set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set of assets is not a business. If the set of assets and activities is not considered a business, it is accounted for as an asset acquisition using a cost accumulation model. In the cost accumulation model, the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired on the basis of relative fair values. The Company includes the results of operations of acquired businesses beginning on the respective acquisition dates. In accordance with ASC 805, the Company allocates the purchase price of an acquired business to its identifiable assets and 89 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) liabilities based on the estimated fair values using the acquisition method. The excess of the purchase price over the amount allocated to the assets and liabilities, if any, is recorded as goodwill. The excess value of the net identifiable assets and liabilities acquired over the purchase price of an acquired business is recorded as a bargain purchase gain. The Company uses all available information to estimate fair values of identifiable intangible assets and property acquired. In making these determinations, the Company may engage an independent third-party valuation specialist to assist with the valuation of certain intangible assets, notes payable, and tax amortization benefits. The consideration for certain of our acquisitions may include liability classified contingent consideration, which is determined based on formulas stated in the applicable purchase agreements. The amount to be paid under these arrangements is based on certain financial performance measures subsequent to the acquisitions. The contingent consideration included in the purchase price is measured at fair value on the date of the acquisition. The liabilities are remeasured at fair value on each reporting date, with changes in the fair value reflected in operating expenses on our Consolidated Statements of Operations. For business acquisitions, the Company recognizes the fair value of goodwill and other acquired intangible assets, and estimated contingent consideration at the acquisition date as part of purchase price. This fair value measurement is based on unobservable (Level 3) inputs. Dividends Dividends are reflected in the consolidated financial statements when declared. Recent Accounting Pronouncements Pronouncements Recently Adopted Effective January 1, 2023, the Company adopted ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 provides amendments to ASC 326, Financial Instruments - Credit Losses , which replaces the incurred loss impairment model with a current expected credit loss (“CECL”) model. CECL requires a company to estimate lifetime expected credit losses based on relevant information about historical events, current conditions and reasonable and supportable forecasts. The guidance was applied using the modified retrospective adoption method on January 1, 2023, with early adoption permitted. The adoption of ASU 2016-13 did not have a material impact on the Company's Consolidated Financial Statements. Effective January 1, 2023, the Company adopted ASU 2021-08, which amends ASC 805 to “require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.” Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date. The adoption of ASU 2021-08 did not have a material impact on the Company's Consolidated Financial Statements. Effective January 1, 2024, the Company adopted ASU 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ("ASU 2022-03"). The amendments in this update affect all entities that have investments in equity securities measured at fair value that are subject to a contractual sale restriction. The amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amen d ments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The adoption of ASU 2022-03 did not have a material impact on the Company's Consolidated Financial Statements. On November 27, 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosure ("ASU 2023-07"), which requires incremental disclosures related to a public entity's reportable segments. Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard also permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted ASU 90 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) 2023-07 for the year ended December 31, 2024 with the additional disclosures above included in our Consolidated Financial Statements. Pronouncements Not Yet Adopted On December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures ("ASU 2023-09") to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual periods beginning January 1, 2025. The Company is evaluating the effects of these amendments on its financial reporting. On November 4, 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses ("DISE") ("ASU 2024-03"), which requires additional disclosure of the nature of expenses included in the Consolidated Statements of Operations. The standard requires disclosures about specific type of expenses included in the expense captions presented on the face of the Consolidated Statements of Operations as well as disclosures about selling expenses. ASU 2024-03 is effective for our fiscal year beginning on January 1, 2027, and interim periods beginning on January 1, 2028. Entities should apply the guidance prospectively although retrospective application is permitted. The Company is evaluating the effects of these amendments on our financial reporting. Note 3. Revenue The following presents revenues disaggregated by nature: For the Year Ended December 31, 2024 2023 2022 Management fees $ 284,505 233,780 $ 192,769 Advisory fees 5,713 4,949 3,777 Subscriptions 650 523 642 Other revenue 5,580 2,482 1,172 Total revenues $ 296,448 $ 241,734 $ 198,360 Contract Liabilities Our contract liabilities represent deferred revenue. We record contract liabilities when cash payments are received or due in advance of our performance. The contract liabilities balance had a net decrease of $ 0.2 million from $ 12.8 million as of December 31, 2023 to $ 12.6 million as of December 31, 2024 primarily driven by satisfying performance obligations for cash payments received in advance. We recognized $ 12.7 million of revenue in 2024 that was included in the contract liabilities balance as of December 31, 2023 . Note 4. Strategic Alliance Expense In connection with the Bonaccord acquisition, Bonaccord entered into a Strategic Alliance Agreement ("SAA") with a third-party investor. This SAA provides the third-party the right to receive 15 % of the net management fee earnings, which includes the management fees minus applicable expenses, for Bonaccord Fund I and subsequent funds, paid quarterly, in exchange for funding certain amounts of capital commitments to the fund. Net management fee earnings the third-party has the right to receive is based on the total capital committed. For the years ended December 31, 2024, 2023, and 2022 , the strategic alliance expense reported was $ 4.5 million, $ 1.5 million, and $ 0.7 million, respectively. This is reported on the Consolidated Statements of Operations as strategic alliance expense in operating expenses. Within 60 days following the final closing of Bonaccord Fund II ("Fund II"), the third-party has the opportunity to acquire, at the price at the time of the original acquisition, equity interests in Bonaccord based on the amount of commitment made. For each $ 5.0 million, up to a maximum of $ 250.0 million in irrevocable capital commitments to Fund II, the third-party can acquire 10 basis points up to a maximum of 5 % equity in Bonaccord. The third party would be entitled to receive distributions of net management fee earnings by the percentage acquired, retroactive to the date of the first close in Fund II. The maximum commitment requirement has been met as of December 31, 2024 . Fund II has reached the final close, and the 91 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) Company believes it is probable that the third-party will exercise the option to acquire equity in Bonaccord and accrues an additional 5 % of net management fee earnings, which is included in the strategic alliance expense. If executed, the purchase price shall be reduced by the amount of management fee distributions which the third-party would have been paid as of the initial closing of Fund II. Similar terms apply for Bonaccord Fund III ("Fund III") with the exception that the third-party can acquire 9.8 basis points for every $ 5.0 million committed up to 4.9 %. This commitment has not yet been met as of December 31, 2024 as Fund III has not yet started raising capital and as such, there is no impact to the consolidated financial statements. If commitment conditions to funds subsequent to Funds II and III are not satisfied, then within 60 days of the final closing of such subsequent fund giving rise to the condition not being satisfied, the Company may elect to repurchase the equity granted to the third-party. The repurchase shall be at the fair market value of such equi ty at that point in time. Note 5. Notes Receivable The Company has three significant types of notes receivable. The first is an Advance Agreement and Secured Promissory Note that was executed on September 30, 2021 between the Company and BCP to lend funds to certain employees to be used to pay general partner commitments to certain funds managed by Bonaccord. This agreement provides for a note to BCP for $ 5.0 million. The note will earn interest at the greater of (i) the applicable federal rate that must be charged to avoid imputation of interest under Section 1274(d) of the U.S. Internal Revenue Code and (ii) 5.5 %. The stated interest rate is the effective rate. Interest will be paid on December 31st of each year commencing December 31, 2021, with any unpaid accrued interest being capitalized and added to the outstanding principal balance. Principal payments will be made periodically from mandatorily required payments from available cash flows at BCP. As of December 31, 2024 , the full $ 5.0 million has been drawn and the balance outstanding is $ 5.2 million, which includes unpaid accrued interest added to the outstanding principal balance. The maturity date of the note receivable is September 30, 2031 . The second consists of Secured Promissory Notes that were executed on October 13, 2023 between the Company and certain employees of Bonaccord to lend funds to be used to pay general partner commitments to certain funds managed by Bonaccord. The notes provided $ 1.0 million of cash, in aggregate, to certain employees and are collateralized by such employees' privately owned shares of the Company. The term of the additional notes is five years , maturing on October 13, 2028 with all principal due at maturity. The notes accrue interest at SOFR plus 2.10% and are payable annually on October 13th in arrears, with any unpaid accrued interest being capitalized and added to the outstanding principal balance. As of December 31, 2024 , the balance outstanding is $ 1.1 million, which includes unpaid accrued interest added to the outstanding principal balance. The third consists of a Loan Agreement and Secured Promissory Notes that were executed on September 26, 2024 between Bonaccord Capital Advisors and certain general partners to lend funds to pay general partners commitments to a certain fund managed by Bonaccord. The notes provides an aggregate maximum facility of $ 4.0 million, of which $ 1.1 million of cash, was an initial draw in aggregate to certain general partners on December 20, 2024 and are collateralized by such general partners' interest in a certain fund as of December 31, 2024 with a maturity date of September 26, 2034 . The notes accrue interest at SOFR plus 2.10% and are payable quarterly in arrears , with any unpaid accrued interest being capitalized and added to the outstanding principal balance. SOFR is determined on the first day of each quarter. As of December 31, 2024 , the balance outstanding is $ 1.1 million, which includes unpaid accrued interest added to the outstanding principal balance. As of December 31, 2024 and December 31, 2023, the total notes receivable balance associated with these notes was $ 7.5 million and $ 5.8 million, respectively. The Company recognized interest income associated with these notes of $ 0.4 million, $ 0.3 million and $ 0.1 million for the years ended December 31, 2024, 2023 and 2022 , respectively. Note 6. Variable Interest Entities Consolidated VIEs VIEs consist of certain operating entities not wholly owned by the Company and include P10 Intermediate, Holdco, RCP 2, RCP 3, TrueBridge, Hark, Bonaccord, and WTI. The assets of the consolidated VIEs totaled $ 587.9 million and $ 579.4 million as of December 31, 2024 and December 31, 2023 , respectively. The liabilities of the consolidated VIEs 92 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) totaled $ 463.3 million and $ 397.6 million as of December 31, 2024 and December 31, 2023, respectively. The assets of our consolidated VIEs are owned by those entities and not generally available to satisfy P10’s obligations. With the exception of the Credit Facility, the liabilities of our consolidated VIEs are obligations of those entities and their creditors do not generally have recourse to the assets of P10. Unconsolidated VIEs Through its subsidiary, ECG, the Company holds variable interests in the form of direct equity interests in certain VIEs that are not consolidated because the Company is not the primary beneficiary. The Company's maximum exposure to loss is limited to the potential loss of assets recognized relating to these unconsolidated entities. These variable interests are included in investment in unconsolidated subsidiaries on the accompanying Consolidated Balance Sheets. Note 7. Investment in Unconsolidated Subsidiaries The Company’s investment in unconsolidated subsidiaries consist of unconsolidated equity method investments primarily related to ECG’s tax credit finance and asset management activities. Additionally, the investment in Enhanced Capital Partners and Enhanced PC is recorded at zero . The Company, therefore, suspended the use of the equity method of accounting because the Company has no guaranteed obligations or commitments to provide financial support to the investee. As of December 31, 2024, investment in unconsolidated subsidiaries totaled $ 2.8 million, of which $ 0.8 million related to RCP's investment in a privately held investment manager, $ 1.9 million related to ECG’s asset management businesses and $ 0.1 million related to ECG’s tax credit finance businesses. As of December 31, 2023 , investment in unconsolidated subsidiaries totaled $ 1.7 million, of which $ 0 million related to RCP's investment in a privately held investment manager, $ 1.7 million related to ECG’s asset management businesses and $ 0 related to ECG’s tax credit finance businesses. Note 8. Property and Equipment Property and equipment consist of the following: As of December 31, As of December 31, 2024 2023 Computers and purchased software $ 1,945 $ 1,528 Furniture and fixtures 2,229 1,666 Leasehold improvements 6,217 2,894 10,391 6,088 Less: accumulated depreciation ( 3,631 ) ( 2,763 ) Total property and equipment, net $ 6,760 $ 3,325 Note 9. Goodwill and Intangibles Changes in goodwill for the years ended December 31, 2024 and December 31, 2023 are as follows: Balance at December 31, 2022 $ 506,638 Purchase price adjustment ( 600 ) Increase from acquisitions - Balance at December 31, 2023 $ 506,038 Purchase price adjustment - Increase from acquisitions - Balance at December 31, 2024 $ 506,038 During the year ended December 31, 2023, there was a revision to the provisional fair value of the WTI tradenames as a result of obtaining new information that was not available at acquisition. This revision resulted in a purchase price adjustment of $ 0.6 million to goodwill and intangible assets. 93 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) Intangibles consists of the following: As of December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived intangible assets: Trade names $ 17,375 $ — $ 17,375 Technology 30 — 30 Total indefinite-lived intangible assets 17,405 — 17,405 Finite-lived intangible assets: Trade names 28,240 ( 8,322 ) 19,918 Management and advisory contracts 194,666 ( 134,494 ) 60,172 Technology 2,386 ( 2,292 ) 94 Total finite-lived intangible assets 225,292 ( 145,108 ) 80,184 Total intangible assets $ 242,697 $ ( 145,108 ) $ 97,589 As of December 31, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived intangible assets: Trade names $ 17,375 $ — $ 17,375 Technology 30 — 30 Total indefinite-lived intangible assets 17,405 — 17,405 Finite-lived intangible assets: Trade names 28,240 ( 5,789 ) 22,451 Management and advisory contracts 194,666 ( 111,873 ) 82,793 Technology 2,380 ( 1,834 ) 546 Total finite-lived intangible assets 225,286 ( 119,496 ) 105,790 Total intangible assets $ 242,691 $ ( 119,496 ) $ 123,195 Management and advisory contracts and finite lived trade names are amortized over 7 - 16 years and are being amortized in line with the economic benefits that are expected to occur. Technology is amortized on a straight-line basis over 4 years. The amortization expense for each of the next five years and thereafter are as follows: 2025 $ 21,271 2026 16,642 2027 13,309 2028 9,986 2029 7,743 Thereafter 11,233 Total amortization $ 80,184 94 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) Note 10. Fair Value Measurements Financial Instruments not recognized at Fair Value The Company measures certain assets and liabilities at fair value on a recurring basis which are discussed below. Our financial instruments not recognized at fair value were as follows: As of December 31, 2024 As of December 31, 2023 Carrying Value Fair Value Carrying Value Fair Value Fair Value Level Reference Assets Due from related party - Advisory Agreements $ 68,010 $ 42,529 $ 49,572 $ 49,572 3 Note 12 Liabilities Debt Obligations $ 319,783 $ 319,783 $ 289,844 $ 289,844 2 Note 11 As of December 31, 2024 and December 31, 2023, debt obligations' carrying value approximates fair value due to the recent market transaction executed and the variable rate feature of these obligations. Earnouts associated with the acquisitions of Bonaccord and Hark Included in total consideration of the acquisition of Bonaccord is an earnout payment not to exceed $ 20 million. The amount ultimately owed to the sellers is based on achieving specific fundraising targets and any amounts paid to the sellers is required to be paid by October 2027, at which point the earnout expires. Payments are made after each close. As of December 31, 2024 , the full $ 20.0 million earnout payment has been earned. The Company has paid $ 17.8 million since inception, of which $ 4.7 million was paid in the year ended December 31, 2024 and $ 5.8 million was paid in the year ended December 31, 2023 . The remaining $ 2.2 million was paid on January 24, 2025. Total remeasurement expense recognized for the years ended December 31, 2024, 2023, and 2022 was $ 0.2 million , $ 0.5 million and $ 0.3 million, respectively. This is included in contingent consideration expense on the Consolidated Statements of Operations. As of December 31, 2024, with all contingent consideration for the acquisition of Bonaccord considered fully earned, the liability transfers out of Level 3 fair value measurement as the liability is recorded at cost at the known payment amount. Until considered fully earned, the Company's contingent consideration was considered to be a Level 3 fair value measurement as the significant inputs are unobservable and require significant judgment or estimation. Included in the total consideration of the acquisition of Hark is an earnout not to exceed $ 5.4 million. Total remeasurement expense recognized for the years ended December 31, 2024, 2023, and 2022 totaled $ 0 , $ 0.1 million, and $ 1.5 million, respectively. This is included in contingent consideration expense on the Consolidated Statements of Operations. The entirety of the Hark contingent consideration of $ 5.4 million was paid during the year ended December 31, 2023. The following table provides details regarding the classification of these liabilities within the fair value hierarchy as of the dates presented: As of December 31, 2023 Level I Level II Level III Total Liabilities Contingent consideration obligation $ - $ - $ 6,693 $ 6,693 Total liabilities $ - $ - $ 6,693 $ 6,693 For the liabilities presented in the table above, there were no changes in fair value hierarchy levels during the year ended December 31, 2023. 95 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) The changes in the fair value of Level III financial instruments are set forth below: Contingent Consideration Liability For the Year Ended December 31, 2024 2023 Balance, beginning of year: $ 6,693 $ 17,337 Change in fair value 160 560 Settlements ( 2,565 ) ( 11,204 ) Transfers out of level 3 measurement ( 4,288 ) - Balance, end of period: $ - $ 6,693 Until transferred out of Level 3 fair value measurement, the fair value of the contingent consideration liability represents the fair value of future payments upon satisfaction of performance targets. The assumptions used in the analysis are inherently subjective; therefore, the ultimate amount of the contingent consideration liability primarily relate to the expected future payments of obligations with a discount rate applied. The contingent consideration liability is included in contingent consideration on the Consolidated Balance Sheets. Changes in the fair value of the liability are included in contingent consideration expense on the Consolidated Statements of Operations. Note 11. Debt Obligations Debt obligations consists of the following: As of As of December 31, December 31, 2024 2023 Revolver facility $ — $ 90,700 Debt issuance costs ( 3,308 ) ( 1,848 ) Revolver facility, net $ ( 3,308 ) $ 88,852 Term Loan $ 325,000 $ 201,875 Debt issuance costs ( 1,909 ) ( 883 ) Term loan, net $ 323,091 $ 200,992 Total debt obligations, net $ 319,783 $ 289,844 Revolving Credit Facility and Term Loan On December 22, 2021, the Company entered into a credit agreement (the "Credit Agreement") with JPMorgan, in its capacity as administrative agent and collateral agent, and Texas Capital Bank, as joint lead arrangers and joint bookrunners, and the other loan parties party thereto. The Credit Agreement consists of two facilities. The first is a revolving credit facility with an available balance of $ 125 million (the "Revolver Facility"). The second is a term loan for $ 125 million (the "Term Loan"). In addition to the Term Loan and Revolver Facility, the Credit Agreement also includes a $ 125 million accordion feature. In October 2022, the accordion feature was exercised split into $ 87.5 million worth of term loan and $ 37.5 million of revolver. On August 1, 2024, the Company entered into a restatement agreement, which amends and restates the Credit Agreement (the "Amended and Restated Credit Agreement"). The Amended and Restated Credit Agreement provides for a new senior secured revolving credit facility in the amount of $ 175 million, with a $ 10 million sublimit for the issuance of letters of credit (the "New Revolving Facility"), and a new senior term loan facility in the amount of $ 325 million (the "New Term Loan" and, together with the New Revolving Facility, the "New Credit Facilities"). The New Credit Facilities were used to refinance and replace the credit facilities under the Credit Agreement and for general corporate purposes, including acquisitions. The New Credit Facilities are "Term SOFR Loans" meaning loans bearing interest based upon the "Adjusted Term SOFR Rate". The Adjusted Term SOFR Rate is the Secured Overnight Financing Rate ("SOFR") at the date of election, plus 2.60 %. The Company can elect one or three months for the New Revolver Facility and one, three, or six months for the New 96 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) Term Loan, which the Company elected a six-month SOFR rate on the New Term Loan. Principal for the New Term Loan is contractually repaid at a rate of 1.25 % on the New Term Loan quarterly effective December 31, 2025. The New Revolving Credit Facility has no contractual principal repayments until maturity, which is August 1, 2028 for both facilities. The New Credit Facilities are guaranteed by the Company's subsidiaries, subject to customary exceptions, and are secured by liens on substantially all assets of the Company, P10 Intermediate and the Company's guarantor subsidiaries, subject to customary exceptions. The Amended and Restated Credit Agreement contains affirmative and negative covenants typical of such financing transactions, and specific financial covenants which require P10 to maintain a minimum leverage ratio. As of December 31, 2024, P10 was in compliance with its financial and other covenants required under the facility. For the years ended December 31, 2024, 2023, and 2022, $ 24.1 million, $ 20.4 million, and $ 8.4 million of interest expense was incurred, respectively. Debt Payable Future principal maturities of debt as of December 31, 2024 are as follows: 2025 $ 4,063 2026 16,250 2027 16,250 2028 288,437 $ 325,000 Note 12. Related Party Transactions Effective January 1, 2021, the Company entered into a sublease with 210 Capital, LLC, a related party, for office space serving as our corporate headquarters. The monthly rent expense is $ 20.3 thousand, and the lease expires December 31, 2029 . In the fourth quarter of 2022, the Company sublet an additional amount of office space in the corporate headquarters. This contributed an additional $ 3.4 thousand monthly. P10 has paid $ 0.3 million, $ 0.3 million and $ 0.3 million in rent to 210 Capital, LL C for the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024, this is no longer a related party transaction. As described in Note 1, through its subsidiaries, the Company serves as the investment manager to the Funds. Certain expenses incurred by the Funds are paid upfront and are reimbursed from the Funds as permissible per fund agreements. As of December 31, 2024, the total accounts receivable from the Funds totaled $ 42.5 million , of which $ 12.1 million related to reimbursable expenses and $ 30.4 million related to fees earned but not yet received. As of December 31, 2023 , the total accounts receivable from the Funds totaled $ 18.9 million, of which $ 5.5 million related to reimbursable expenses and $ 13.4 million related to fees earned but not yet received. Reimbursable expenses and fees earned but not yet received are included in due from related parties and accounts receivable on the Consolidated Balance Sheets, respectively. In certain instances, the Company may incur expenses related to specific products that never materialize and therefore would not be reimbursed and expensed at that time. Upon the closing of the Company’s acquisition of ECG and ECP, the Advisory Agreement between ECG and Enhanced PC immediately became effective. Under this agreement, ECG provides advisory services to Enhanced PC related to the assets and operations of the permanent capital subsidiaries owned by Enhanced PC, as contributed by both ECG and ECP. ECG provides advisory services relating to new projects undertaken by Enhanced PC under additional arrangements governed by the terms of the Advisory Agreement. In exchange for those services, which commenced on January 1, 2021, ECG receives advisory fees from Enhanced PC based on a declining fixed fee schedule, that is commensurate with the level of services being performed. The Company allocates a portion of the consideration received under this arrangement to a financing component when it determines that a significant financing component exists. As of December 31, 2024, certain of the Company's contracts with Enhanced PC contained a significant financing component, as a result of the Company's expectation that the period between services being provided and cash collection will exceed one year. Interest income related to the identified significant financing component was insignificant for the year ended December 31, 2024 . No significant financing components were identified for the years ended December 31, 2023 and 2022. As of December 31, 2024, the total contractual advisory fees are $ 115.1 million ove r ten years . These agreements are subject to customary termination 97 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) provisions. Since inception, $ 79.4 million of the total $ 115.1 million advisory fees have been recognized as revenue. There was $ 35.7 million in remaining performance obligations related to these agreements, which will be recognized between January 1, 2025 and December 31, 2031. For the years ended December 31, 2024, 2023, and 2022 , advisory fees earned or recognized under this agreement were $ 17.3 million, $ 20.9 million and $ 22.2 million, respectively, and is reported in management and advisory fees on the Consolidated Statements of Operations. The Company invoices Enhanced PC quarterly in arrears and earns interest on balances not paid within 30 days. Revenues from interest were $ 1.1 million, $ 0.7 million, and $ 0.3 million for the years ended December 31, 2024, 2023, and 2022, respectively, which is included in management and advisory fees on the Consolidated Statements of Operations. As of December 31, 2024 and December 31, 2023 , the associated receivable was $ 65.8 million and $ 48.5 million and is included in due from related parties on the Consolidated Balance Sheets. As of December 31, 2024 and December 31, 2023 , the associated interest receivable was $ 2.2 million and $ 1.1 million and is included in due from related parties on the Consolidated Balance Sheets. Payment is expected to be collected as the permanent capital subsidiaries complete and liquidate multi-year projects covered under this agreement. Upon the closing of the Company’s acquisition of ECG and ECP, the Administrative Services Agreement between ECG and Enhanced Capital Holdings, Inc. (“ECH”), the entity which holds a controlling equity interest in ECP, immediately became effective. Under th is agreement, ECG pays ECH for the use of their employees to provide services at the direction of ECG. The Company recognized $ 13.6 million, $ 13.2 million and $ 11.5 million for the years ended December 31, 2024, 2023 and 2022, respectively, related to this agreement within compensation and benefits on our Consolidated Statements of Operations. As of December 31, 2024 and December 31, 2023 , the associated accrual was $ 3.4 million and $ 2.1 million, respectively, and is included in due to related parties on the Consolidated Balance Sheets. On September 10, 2021, Enhanced entered into a strategic partnership with Crossroads Impact Corp ("Crossroads"), the parent company of Capital Plus Financial ("CPF"), a leading certified development financial institution. Under the terms of the agreement, Enhanced was to originate and manage loans across its diverse lines of business including small business loans to women and minority owned businesses, and loans to renewable energy and community development projects. The loans were to be held by CPF and CPF will pay an advisory fee to Enhanced. On July 6, 2022, Crossroads entered into the Advisory Agreement (the "Crossroads Advisory Agreement") with ECG. The Crossroads Advisory Agreement provides for ECG to receive a services fee of approximately 1.5 % per year of the capital deployed by Crossroads under the Crossroads Advisory Agreement ( 0.375 % quarterly) and an incentive fee of 15 % over a 7 % hurdle rate. In relation to the strategic partnership with Crossroads effective September 10, 2021 and the Crossroads Advisory Agreement, the Company recognized $ 6.1 million, $ 8.9 million, and $ 4.4 million of fees for the years ended December 31, 2024, 2023, and 2022, respectively, which is included in management and advisory fees on the Consolidated Statements of Operations. On July 6, 2022, certain funds managed by the Company purchased 4,646,840 shares of Crossroads common stock at $ 10.76 per share, for an aggregate amount of approximately $ 50 million. On August 1, 2022, an additional purchase of 1,394,052 shares of Crossroads common stock at $ 10.76 per share occurred. The funds managed by the Company do not have the ability to change the investment strategy of Crossroads. Two former members of the Board of Directors of the Company are directors of Crossroads and have recused themselves from any decisions related to Crossroads or CPF. The Company recognizes an annual fee from the funds of $ 20 thousand of which $ 20 thousand, $ 20 thousand, and $ 10 thousand have been recognized for the years ended December 31, 2024, 2023, and 2022, respectively, which is included in management and advisory fees on the Consolidated Statements of Operations. On December 23, 2024, Crossroads and ECG terminated the Crossroads Advisory Agreement. Additionally, the impact credit asset portfolio managed by the Company was contributed to two new limited liability companies ("Clifford") and the funds managed by the Company redeemed their interest in Crossroads in exchange for membership interests in Clifford in proportion to the fair value of the net assets contributed. At the same time, ECG entered into an Advisory Agreement with Clifford ("Clifford Advisory Agreement") to manage the impact credit asset portfolio, which has a term ending on the disposal date for all of Clifford's underlying investments. The Clifford Advisory Agreement provides for ECG to receive a services fee of approximately 1.5 % per year of the capital deployed by Clifford under the Clifford Advisory Agreement. Clifford is not considered a related party to the Company. 98 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) As part of the Clifford arrangement, Enhanced Clifford (GP) LLC ("Clifford GP"), a direct subsidiary of ECH, was formed. Clifford GP receives incremental fees from Clifford as part of the Clifford Advisory Agreement. The Company is a guarantor on a put option and call option with third party customers. Refer to Note 13 for further details. Upon the closing of the Bonaccord acquisition on September 30, 2021, an Advance Agreement and Secured Promissory Note was signed with BCP, an entity that was formed by employees of the Company. Additional Secured Promissory Notes were signed with certain Bonaccord employees on October 13, 2023. For details, see Note 5. Note 13. Commitments and Contingencies Operating Leases The Company leases office space and various equipment under non-cancelable operating leases, with the longest lease expiring in 2032. These lease agreements provide for various renewal options. Rent expense for the various leased office space and equipment was approximately $ 4.3 million, $ 3.9 million, and $ 3.5 million for the years ended December 31, 2024, 2023, and 2022, respectively. The Company leases an insignificant amount of office equipment under non-cancelable financing leases, with the longest lease expiring in 2028. The finance lease right-of-use asset is included in right-of-use assets and the finance lease liability is included in lease liabilities in the Consolidated Balance Sheets. Amortization and interest expense for the finance leased equipment is included in general, administrative and other in the Consolidated Statements of Operations. The following table presents information regarding the Company’s operating leases as of December 31, 2024: Operating lease right-of-use assets $ 17,497 Operating lease liabilities $ 20,432 Cash paid during the year ended December 31, 2024 for operating lease liabilities $ 3,810 Weighted-average remaining lease term (in years) 6.25 Weighted-average discount rate 5.00 % The future contractual lease payments as of December 31, 2024 are as follows: 2025 $ 2,444 2026 3,909 2027 3,829 2028 3,549 2029 4,202 Thereafter 6,543 Total undiscounted lease payments 24,476 Less imputed interest ( 4,044 ) Total operating lease liabilities $ 20,432 Earnout Payment With the acquisition of WTI, an earnout payment of up to $ 70.0 million of cash and common stock may be earned upon meeting certain performance metrics. Upon the achievement of $ 20.0 million, $ 22.5 million, and $ 25.0 million of EBTIDA, $ 35.0 million, $ 17.5 million, and $ 17.5 million are earned, respectively. Of the total amount, $ 50.0 million can be earned by the sellers and the remaining $ 20.0 million would be allocated to employees of the Company at the time the earnout is earned. Payment to both sellers and employees is contingent on continued employment and, therefore, these earnout payments are recorded as compensation and benefits expense on the Consolidated Statements of Operations. Payments will be made in cash, with the option to pay up to 50.0 % in units of P10 Intermediate, no later than 90 days following the last day of the calendar quarter in which a milestone payment is achieved. Total payments will not exceed $ 70.0 million and any amounts paid will be paid by October 2027. The Company will evaluate whether each earn-out hurdle is probable of occurring and recognize an expense over the period the hurdle is expected to be achieved. As of December 31, 2024, the Company has determined that only the first two EBITDA hurdles are probable of being achieved. For the years 99 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) ended December 31, 2024, 2023, and 2022, $ 12.3 million, $ 21.0 million, and $ 5.2 million of expense was recognized, respectively, which is included in compensation and benefits in the Consolidated Statements of Operations. As of December 31, 2024 and December 31, 2023, the balance was $ 38.5 million and $ 26.2 million, respectively, which is included in accrued compensation and benefits in the Consolidated Balance Sheets. No payments have been made on the earnout. Bonus Payment In connection with the acquisition of WTI, certain employees entered into employment agreements. As part of these employment agreements, certain employees may receive a one-time bonus payment if the employee is employed by the Company as of the fifth anniversary of the effective date and the trailing-twelve month EBITDA of WTI at that time is equal to or greater than $ 20.0 million. Payment can be made in cash or stock of P10, provided that no more than $ 5.0 million will be payable in cash. Total payment will not exceed $ 10.0 million and any amounts will be paid in October 2027, the fifth anniversary of the effective date. For the years ended December 31, 2024, 2023, and 2022, the Company recognized $ 2.0 million , $ 2.0 million, and $ 0.4 million of expense, respectively, which is included in compensation and benefits on the Consolidated Statements of Operations. As of December 31, 2024 and December 31, 2023, the balance was $ 4.4 million and $ 2.4 million, respectively, and is included in accrued compensation and benefits on the Consolidated Balance Sheets. Revenue Share Arrangement The Company recognizes accrued contingent liabilities and contingent payments to customers assets in the Consolidated Balance Sheets for agreements that exist between ECG and third party customers. The agreements require ECG to share in certain revenues earned with the third parties and also include an option for the third parties to sell back the revenue share to ECG at a set multiple. Additionally, ECG holds the option to buy back 50% of the revenue share at a set multiple. Both options are not exercisable until a certain period of time has lapsed per the agreements. The Company’s contingent liabilities and corresponding contingent payments to customers are recognized once determined to be probable and estimable. The contingent payments to customers are amortized and recorded within management and advisory fees on the Consolidated Statements of Operations over the estimated term of the revenue share agreements. As of December 31, 2024, the Company has determined that the put options are probable of being exercised and have accrued estimated contingent liabilities and contingent payments to customers. As of December 31, 2024 and December 31, 2023, the associated liabilities were $ 13.8 million and $ 16.2 million, respectively, and are included in accrued contingent liabilities on the Consolidated Balance Sheets. The associated contingent payments to customers assets were $ 10.0 million and $ 14.0 million as of December 31, 2024 and December 31, 2023, respectively. The Company recognized $ 1.4 million , $ 1.5 million, and $ 0.7 million of amortization of contingent payments to customers for the years ended December 31, 2024, December 31, 2023, and December 31, 2022, respectively, which is included in management and advisory fees on the Consolidated Statements of Operations. The Company will reassess each period and recognize all changes. On December 23, 2024, the Company became a guarantor for Clifford GP on a related put option and call option with the same third party party customers and terms. The Company would be required to settle either the put or call options if either are exercised and Clifford GP does not have the means to settle themselves. The Company's accrued contingent liabilities are recognized once determined that it is probable the Company would need to settle as guarantor and estimable and would record a loss at the same time. As of December 31, 2024 and December 31, 2023 , the associated liabilities were $ 10.1 million and $ 0 , respectively, and are included in accrued contingent liabilities on the Consolidated Balance Sheets. The Company recognized a loss of $ 10.1 million for the year ended December 31, 2024, which is included in other (loss)/income on the Consolidated Statements of Operations. T here was no expense recognized f or the years ended December 31, 2023, and December 31, 2022. The Company will reassess each period and recognize all changes. Dispute Resolutions In 2024, the Company resolved a business dispute with a service provider for $ 1.2 million, which was recognized in other (expense)/income on the Consolidated Statements of Operations. On January 2, 2025, the Company received the $ 1.2 million payment. 100 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) Departure of Chief Operating Officer William "Fritz" Souder, the Company's Chief Operating Officer ("COO"), retired from P10 in May of 2024. Associated with his retirement, the COO received $ 1.2 million of severance payments. As of December 31, 2024 and December 31, 2023 , the Company has $ 0 and $ 1.2 million of severance payable related to the retirement, which is included in accrued compensation and benefits in the Consolidated Balance Sheets. The Company recognized $ 0 , $ 1.2 million, and $ 0 of severance expense related to the retirement for the years ended December 31, 2024, 2023, and 2022, respectively, which is included in compensation and benefits in the Consolidated Statements of Operations. Purchase Agreement On September 16, 2024, the Company ("Buyer") entered into an equity purchase agreement (the "Purchase Agreement") with Qualitas Equity Funds SGEIC, S.A. ("Qualitas"), Qualitas Funds Holdco, S.L. ("Seller"), Sergio Garcia Huertas and Eric Todd Halverson, pursuant to which, subject to the satisfaction or waiver of specified conditions, Buyer would acquire all of the issued and outstanding equity interests of Qualitas (the "Transaction"). The consideration payable to complete the transaction consists of $ 42.3 million in cash and 2,068,794 shares of the Company's Class A Common Stock. Of this amount of Class A Common Stock, 1,669,990 shares will be delivered at closing, with 398,804 shares being subject to a five-year holdback to cover certain indemnification obligations of the Seller during the holdback period. The number of shares to be delivered was calculated based on the daily volume weighted averages of the Class A common Stock for the 20 consecutive trading days ending on September 11, 2024 which was $ 10.03 per share. Up to an additional € 31.7 million in consideration (an Earn-Out Payment") may be payable based on the run-rate net revenue as of December 31, 2027 from new funds for Qualitas raised after closing. Any Earn-Out Payment will be paid in a mix of cash and Class A Common Stock at Seller's election, with no more than 65 % payable in cash. The Transaction is expected to close in the first quarter of 2025, subject to customary closing conditions. Contingencies We may be involved, either as plaintiff or defendant, in a variety of ongoing claims, demands, suits, investigations, tax matters and proceedings that arise from time to time in the ordinary course of our business. We evaluated all potentially significant litigation, government investigations, claims or assessments in which we are involved and disclosed anything more likely than not to be recognized below. We do not believe that any of these matters, individually or in the aggregate, will result in losses that are materially in excess of amounts already recognized, if any. In 2021, the Civil Enforcement Division of the Oregon Department of Justice ("Oregon DOJ") initiated an investigation of certain transactions involving the Oregon Low Income Community Jobs Initiative, also known as the Oregon New Markets Tax Credit ("NMTC") program, to which a subsidiary of Enhanced Capital, among others, was a party. The Oregon DOJ contended that the subsidiary of Enhanced Capital omitted from the NMTC application information regarding the application of leveraged financing in the transaction and the sources and uses of funds in the proposed transactions. The subsidiary of Enhanced Capital completed non-binding mediation in July 2023 and a settlement was negotiated which was paid in the fourth quarter of 2023. The total settlement was $ 3.6 million of which the insurance carrier contributed $ 1.5 million, and the Company continues to explore additional recovery. For the year ended December 31, 2023, the total expense associated with the litigation was $ 2.1 million in other (expense)/income on the Consolidated Statements of Operations. 101 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) Note 14. Income Taxes The Company is subject to income taxes in the United States. The components of the provision for (benefit from) income taxes for the years ended December 31, 2024, 2023, and 2022 are as follows (in thousands): For the Years Ended December 31, 2024 2023 2022 Current Federal $ - $ ( 66 ) $ 193 State 4,723 941 2,178 Total Current $ 4,723 $ 875 $ 2,371 Deferred Federal $ 6,593 $ 3,752 3,995 State ( 2,620 ) 5 ( 302 ) Total Deferred $ 3,973 $ 3,757 $ 3,693 Income tax expense $ 8,696 $ 4,632 $ 6,064 The following is a reconciliation of the statutory federal income tax rate to the Company's effective tax rate for the years ended December 31, 2024, 2023, and 2022 are as follows: For the Years Ended December 31, 2024 2023 2022 Federal statutory rate 21.0 % 21.0 % 21.0 % Noncontrolling interest ( 0.7 %) ( 3.0 %) ( 0.1 %) State taxes, net of federal benefit 4.4 % ( 25.1 %) 4.0 % Nondeductible expenses 7.2 % ( 134.8 %) 0.6 % Expiration of net operating losses and tax credits 0.0 % 0.2 % ( 7.3 %) Valuation allowance increase/decrease 0.0 % ( 1.8 %) ( 0.3 %) Uncertain tax positions 0.0 % 12.0 % ( 0.8 %) Return to provision adjustments and change in tax rates ( 1.2 %) ( 16.1 %) ( 0.4 %) Other 0.0 % 0.0 % 0.4 % Effective rate 30.7 % ( 147.6 %) 17.1 % Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. 102 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) The components of deferred tax assets as of December 31, 2024 and December 31, 2023 are as follows: As of As of December 31, December 31, 2024 2023 Deferred tax assets: Stock compensation $ 7,206 $ 5,760 Interest expense - - Passthrough activity—investment in partnerships 25,543 9,932 Intangibles - - Net operating losses and credit carryforwards 13,614 34,644 Total deferred tax assets 46,363 50,336 Valuation allowance for deferred tax assets ( 12,818 ) ( 12,818 ) Deferred tax assets, net of valuation allowance $ 33,545 $ 37,518 Valuation allowances are established when necessary to reduce deferred tax assets to the amount that are more-likely-than-not expected to be realized based on the weighing of positive and negative evidence. Future realization of the deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character (for example, ordinary income or capital gain) within the carryback or carryforward periods available under the applicable tax law. The Company regularly reviews the deferred tax assets for recoverability based on the historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. This may change due to many factors, including future market conditions and the ability to successfully execute the business plan and/or tax planning strategies. The Company had a valuation allowance against net deferred tax asset of $ 12.8 million as of December 31, 2024. The components of the existing valuation allowance primarily include a valuation allowance recorded in 2020 against its net deferred tax asset of $ 11.4 million due to the write-off of an intercompany debt which is capital in nature. Management believes that it is not more-likely-than-not that future operations will generate sufficient taxable capital gain income to realize the deferred tax asset. This assessment remains valid for 2024, and no adjustments have been made to this valuation allowance. The remaining $ 1.4 million valuation allowance is against the NOLs that are expected to expire without being used. However, should there be a change in the ability to recover deferred tax assets, the income tax provision would either increase or decrease in the period when the assessment is modified. As of December 31, 2024, the Company had federal carryforwards of approximately $ 60.2 million (net of $ 4.1 million uncertain tax reserve). The federal NOL carryforward may expire beginning in 2033, if not utilized. This includes $ 64.3 million that may expire between 2033-2039. The Company is expected to use the majority of the federal NOLs before expiration based on historical taxable income, projected future taxable income, and the expected timing of the reversals of existing temporary differences. The Company had post-rate effected state NOLs (net of valuation allowance on expected expire unused) of approximately $ 0.6 million as of December 31, 2024. Utilization of the NOLs and tax credits may be subject to substantial annual limitation due to the “change of ownership” provisions of the Internal Revenue Code of 1986. The annual limitation may result in the expiration of net operating losses and credit carryforwards before utilization. The Company accounts for uncertainty in tax positions recognized in the consolidated financial statements by recognizing a tax benefit from an uncertain tax position when it is more-likely-than-not that the position will be sustained upon examination based on the technical merits. Recording an uncertain tax position is inherently uncertain and requires making judgments, assumptions, and estimates. The Company believes the judgments, assumptions and estimates made are reasonable and appropriate, no assurance can be given that the final tax outcome of these matters will not be different. To the extent that the final tax outcome of these matters is different than the amount recorded, such difference will affect the provision for income taxes and the effective tax rate in the period in which such determination is made. 103 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) The reconciliation of the Company's unrecognized tax benefits, which is included in deferred tax assets, net on the Consolidated Balance Sheets, at the beginning and end of the year is as follows: For the Years Ended December 31, 2024 2023 Balance at January 1 $ 6,192 $ 6,742 Additions based on tax positions related to the current year - - Additions for tax positions of prior years - - Reductions for tax positions of prior years - ( 550 ) Settlements - - Balance at December 31 $ 6,192 $ 6,192 The uncertain tax position is primarily related to imputed interest, and research and development credits. The 2023 decrease of $ 0.5 million resulted from the release of the state exposure related to the intercompany interest expense. This release was due to the statute of the limitation expired in the states where the uncertain tax positions existed. The Company does not anticipate any significant changes to the unrecognized tax benefits within the next twelve months. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2024, the Company has $ 0.1 million of accrued interest and penalties related to uncertain tax positions. The Company is subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. The Company is not currently under audit in any other income tax jurisdictions. We are generally subject to U.S. federal and state tax examinations for all tax years since 1999 due to our net operating loss carryforwards and the utilization of the carryforwards in years still open under statute. Note 15. Stockholders' Equity Equity-Based Compensation On July 20, 2021, the Board of Directors approved the P10 Holdings, Inc. 2021 Stock Incentive Plan (the "Plan"), which replaced the 2018 Incentive Plan ("2018 Plan"), our previously existing equity compensation plan. The Compensation Committee of the Board of Directors may issue equity-based awards including stock options, stock appreciation rights, restricted stock units, and restricted stock awards. Starting with options granted in 2024 under the Plan, vesting generally occurs on a graded schedule with 25 % vesting on each of the second, third, fourth, and fifth anniversary of the grant date, but only if the grantee is continuously employed by the Company or a subsidiary through each such date. Options granted prior to 2024 under both the Plan and the 2018 Plan cliff vest over a period of four or five year s. The term of each option is no more than ten year s from the date of grant. When the options are exercised, the Board of Directors has the option of issuing shares of common stock or paying a lump sum cash payment on the exercise date equal to the difference between the common stock’s fair market value on the exercise date and the option price. Terms of all future awards will be granted under the Plan, and no additional awards will be granted under the 2018 Plan. Awards granted under the 2018 Plan continue to follow the 2018 Plan. The 2018 Plan provided for an initial 6,300,000 shares (adjusted for the reverse stock split). The Plan provided for the issuance of 3,000,000 shares available for grant, in addition to those approved in the 2018 Plan for a total of 9,300,000 shares. On June 17, 2022, at the Annual Meeting of Stockholders, the shareholders authorized an increase of 5,000,000 shares that may be issued under the Plan. On December 9, 2022, a special meeting of stockholders was held to increase the number of shares issuable under the Plan by 4,000,000 shares. On June 14, 2024, at the Annual Meeting of Stockholders, the shareholders authorized an increase of 11,000,000 shares that may be issued under the Plan, resulting in a total of 29,300,000 shares available for grant under the Plan and the 2018 Plan. As of December 31, 2024 , there are 10,532,611 shares available for grant under the Plan. 104 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) A summary of stock option activity for the years ended December 31, 2024 and December 31, 2023 is as follows: Weighted Average Contractual Life Aggregate Number of Weighted Average Remaining Intrinsic Value Shares Exercise Price (in years) (whole dollars) Outstanding as of December 31, 2022 10,612,231 $ 7.25 8.09 $ 39,004,141 Granted 3,825,842 10.12 Exercised ( 721,222 ) 1.97 Expired/Forfeited ( 1,001,470 ) 10.20 Outstanding as of December 31, 2023 12,715,381 $ 8.15 7.82 $ 30,872,113 Exercisable as of December 31, 2023 1,683,231 $ 6.05 7.30 $ 7,019,738 Outstanding as of December 31, 2023 12,715,381 $ 8.15 7.82 $ 30,872,113 Granted 2,541,289 8.01 Exercised ( 1,080,527 ) 1.57 Expired/Forfeited ( 1,210,246 ) 8.48 Outstanding as of December 31, 2024 12,965,897 $ 8.58 7.38 $ 52,343,412 Exercisable as of December 31, 2024 1,787,695 $ 5.79 6.04 $ 12,199,062 Compensation expense equal to the grant date fair value is recognized for these awards over the vesting period and is included in compensation and benefits in the Consolidated Statements of Operations. When stock options exercise, the awards are generally settled in equity net of employee tax withholdings and strike price. Stock option compensation cost is estimated at the grant date based on the fair-value of the award, which is determined using the Black Scholes option valuation model and is recognized as expense ratably over the requisite service period of the award, generally five years. The share price used in the Black Scholes model is based on the trading price of our shares on the public markets. Expected life is based on the vesting period and expiration date of the option. Until October 2023, stock price volatility was estimated based on a group of similar publicly traded companies determined to be most reflective of the expected volatility of the Company due to the nature of operations of these entities. Since October 2023, stock price volatility is estimated using a weighted average of P10 and a group of similar publicly traded companies determined to be most reflective of the expected volatility of the Company due to the nature of operations of these entities. The risk-free rates are based on the U.S. Treasury yield in effect at the time of grant. The dividend yield is based on the quarterly dividend as of the grant date. The stock-based compensation expense for stock options was $ 9.1 million , $ 10.3 million, and $ 3.9 million for the years ended December 31, 2024, 2023, and 2022, respectively, which is included in compensation and benefits on the Consolidated Statements of Operations. The total associated income tax benefit was $ 9.9 million, $ 6.1 million, and $ 0.2 million for the years ended December 31, 2024, 2023, and 2022, respectively. Unrecognized stock-based compensation expense related to outstanding unvested stock options as of December 31, 2024 was $ 23.0 million and is expected to be recognized over a weighted average period of 2.59 years . Any future forfeitures will impact this amount. The weighted average assumptions used in calculating the fair value of stock options granted during the years ended December 31, 2024 and December 31, 2023 were as follows: For the Year Ended December 31, 2024 2023 Expected life (in years) 6.75 7.5 Expected volatility 37.50 % 38.28 % Risk-free interest rate 4.23 % 4.11 % Expected dividend yield 1.63 % 1.19 % The Company has granted restricted stock awards ("RSAs") to certain non-employee directors. Holders of RSAs have no voting rights and accrue dividends until vesting with payment being made once they vest. When RSAs vest, the awards 105 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) are generally settled in equity. All of the shares currently vest one year from the grant date. Compensation expense equal to the grant date fair value is recognized for these awards over the vesting period and is included in compensation and benefits in the Consolidated Statements of Operations. RSA compensation cost is estimated at the grant date based on the fair value of the award, which is based on the closing market price on the day of grant, and is recognized as expense ratably over the requisite service period of the awards. The stock-based compensation expense for RSAs was $ 0.7 million , $ 0.4 million, and $ 0.5 million for the years ended December 31, 2024, 2023, and 2022, respectively, which is included in compensation and benefits on the Consolidated Statements of Operations. The total associated income tax benefit was $ 0.6 million, $ 0.4 million, and $ 0.5 million for the years ended December 31, 2024, 2023, and 2022, respectively. Unrecognized stock-based compensation expense related to outstanding unvested stock options as of December 31, 2024 was $ 0.4 million and is expected to be recognized over a weighted average period of 0.45 years . Any future forfeitures will impact this amount. Number of Weighted-Average Grant RSAs Date Fair Value Per RSA Outstanding as of December 31, 2022 33,346 $ 12.37 Granted 32,722 11.46 Vested ( 33,346 ) 12.37 Forfeited - - Outstanding as of December 31, 2023 32,722 11.46 Outstanding as of December 31, 2023 32,722 $ 11.46 Granted 93,473 8.02 Vested ( 32,722 ) 11.46 Forfeited — — Outstanding as of December 31, 2024 93,473 $ 8.02 The Company has granted restricted stock units ("RSUs") to certain employees. Holders of RSUs have no voting rights and generally are not eligible to receive dividends or other distributions paid with respect to any RSUs that have not vested. When RSUs vest, the awards are generally settled in equity net of employee tax withholdings. Compensation expense equal to the grant date fair value is recognized for these awards over the vesting period and is included in compensation and benefits in the Consolidated Statements of Operations. RSU compensation cost is estimated at the grant date based on the fair value of the award, which is based on one of the following methods: (1) the closing market price on the day of the grant, (2) the closing market price on the day prior to grant, or (3) a 30-day volume weighted average price (VWAP) is recognized as expense ratably over the requisite service period of the awards. Most of the shares currently vest one year from the grant date excluding certain executive RSUs, the Hark, Bonaccord, and Executive Market Units, which are discussed in more detail below. The stock-based compensation expense for RSUs excluding the Hark, Bonaccord, Executive Transition, and Executive Market Units, which are discussed in more detail below, was $ 9.6 million , $ 17.1 million, and $ 6.0 million for the years ended December 31, 2024, 2023, and 2022, respectively, which is included in compensation and benefits on the Consolidated Statements of Operations. The total associated income tax benefit was $ 8.8 million, $ 16.0 million, and $ 0.6 million for the years ended December 31, 2024, 2023, and 2022, respectively. Unrecognized stock-based compensation expense related to outstanding unvested stock options as of December 31, 2024 was $ 7.3 million and is expected to be recognized over a weighted average period of 1.01 years . Any future forfeitures will impact this amount. At the time of the Bonaccord acquisition, the Company entered into a Notice of Restricted Stock Units with certain employees of Bonaccord for grants of Restricted Stock Units ("Bonaccord Units") to be allocated to employees at a later date for meeting certain performance metrics. The Bonaccord Units may not be transferred, sold, pledged, exchanged, assigned or otherwise encumbered or disposed of by any grantee until it has become vested. On August 16, 2022, allocations were finalized pursuant to which an aggregate value of $ 17.5 million of units may vest at each future achievement of performance metrics . The Company evaluates whether it is probable that the Bonaccord Units will vest and applies the tranche method to determine the amount of expense to recognize during the period. As of December 31, 2024 , certain performance metrics have been met and specific employees have earned $ 17.5 million in value, of which $ 6.6 million was issued in shares and $ 6.9 million was issued in cash. As of December 31, 2024, the remaining amount of $ 4.0 million is included in accrued compensation and benefits on the Consolidated Balance Sheets and was settled in cash on February 19, 2025. An expense of $ 4.9 million, $ 5.6 million, and $ 7.0 million has been recorded for the years ended December 31, 2024, 2023, and 2022, respectively, which is included in compensation and benefits on the Consolidated Statements of Operations. The associated income tax benefit was $ 5.7 million, $ 4.0 million, and $ 3.8 million for the years ended December 31, 2024, 2023, and 2022, respectively. 106 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) At the time of the Hark acquisition, the Company entered into a Notice of Restricted Stock Units with an employee, which grants Restricted Stock Units ("Hark Units") for meeting a certain performance metric. The Hark Units may not be transferred, s old, pledged, exchanged, assigned or otherwise encumbered or disposed of by any grantee until they have become vested. All Hark Units have vested and been issued. An expense of $ 0 , $ 0.3 million and $ 1.3 million have been recorded for the years ended December 31, 2024, 2023, and 2022, respectively, which is included in compensation and benefits on the Consolidated Statements of Operations. The associated income tax benefit was $ 0 , $ 1.0 million, and $ 0 for the years ended December 31, 2024, 2023, and 2022, respectively. At the time of Executive Transition, the Company entered into an Executive Transition Agreement with a certain former executive, which granted Restricted Stock Units ("Executive Transition Units") for meeting a service requirement. The Executive Transition Units may not be transferred, s old, pledged, exchanged, assigned or otherwise encumbered or disposed of by any grantee until they have become vested. The award has a stated value of $ 4.0 million and will be issued in $ 1.0 million increments quarterly beginning on October 20, 2023 and at the start of each of the following three quarters. Each $ 1.0 million increment will vest one year following issuance. Attributes of this award include graded vesting and service conditions, therefore, the expense recognition of this award is recognized on straight-line basis over the requisite service period of the award in line with the policy election discussed in Note 2. As of December 31, 2024, all Executive Transition Units have vested and been issued. For the years ended December 31, 2024 and December 31, 2023 , $ 3.5 million and $ 0.5 million, respectively, of stock compensation expense was recognized on the Consolidated Statements of Operations. No stock compensation expense for these units was incurred for the year ended December 31, 2022. The associated income tax benefit was $ 5.0 million for the year ended December 31, 2024 . There was no associated income tax benefit for the years ended December 31, 2023 and December 31, 2022. At the time of Executive Transition, the Company entered into an Employment Agreement with a certain executive, which granted Restricted Stock Units ("Executive Market Units") for meeting a service requirement and achieving certain share price performance hurdles based on the thirty-day VWAP. The executive is entitled to receive RSUs upon the thirty day VWAP of the Company's common stock reaching certain per share prices at any time prior to the fifth anniversary of the start date. There are five price per share performance hurdles for the executive to meet with each hurdle achievement allowing for the issuance of $ 8.0 million of units, with the number of shares determined by dividing $ 8.0 million by the applicable stock price performance hurdle, for a total of up to $ 40.0 million of units or approximately 2 million shares. The Executive Market Units may not be transferred, sold, pledged, exchanged, assigned or otherwise encumbered or disposed of by any grantee until they have become vested. The RSUs shall vest ratably on the third, fourth, and fifth anniversaries of the executive's start date, provided that no such units shall vest earlier than the first anniversary of the applicable issuance date of such units. The fair value was determined using a Monte Carlo simulation as of the executive's start date of October 23, 2023, and was determined to be $ 10.8 million. As of December 31, 2024 , no ne of the Executive Market Units have vested. For the years ended December 31, 2024 and December 31, 2023 , $ 2.7 million and $ 0.5 million, respectively, of stock compensation was recognized on the Consolidated Statements of Operations. No stock compensation expense for these units was incurred for the year ended December 31, 2022 . There was no associated income tax benefit for the years ended December 31, 2024, 2023, and 2022 . The unrecognized expense associated with the Executive Market Units was $ 7.6 million as of December 31, 2024. The below table shows the assumptions used in the Monte Carlo simulation for the Executive Market Units' fair value. As of October 23, 2023 Expected life 5.0 (yrs) Expected volatility 40.00 % Risk-free interest rate 4.81 % Expected dividend yield 1.42 % 107 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) The below table excludes Executive Market Units that the market conditions have not been satisfied, and Bonaccord or Hark Units that were issued outside of the Plan, that have not vested and are recorded as a liability or vested and settled in cash. Number of Weighted-Average Grant RSUs Date Fair Value Per RSU Outstanding as of December 31, 2022 508,135 $ 11.34 Granted 2,911,391 9.54 Vested ( 2,001,432 ) 10.27 Forfeited - - Outstanding as of December 31, 2023 1,418,094 9.15 Outstanding as of December 31, 2023 1,418,094 $ 9.15 Granted 1,445,758 8.89 Vested ( 1,437,764 ) 9.35 Forfeited ( 3,819 ) 9.30 Outstanding as of December 31, 2024 1,422,269 $ 8.68 Note 16. Earnings (Loss) Per Share The Company presents basic EPS and diluted EPS for our common stock. Basic EPS excludes potential dilution and is computed by dividing net income/(loss) by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if shares of common stock were issued pursuant to our stock-based compensation awards. For the years ended December 31, 2024 and December 31, 2022, diluted EPS also reflects the potential dilution that could occur assuming that all units in P10 Intermediate that were granted as a result of the WTI acquisition are converted to shares of Class A common stock. Because the impact of these items is generally anti-dilutive during periods of net loss, there is no difference between basic and diluted loss per common share for periods with net losses. The Company has Class A and Class B shares outstanding, therefore follows the two-class method. However, the shares are entitled to the same amount of the Company's earnings therefore the earnings per share calculation for Class A and Class B shares will always be equivalent. 108 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) The following table presents a reconciliation of the numerators and denominators used in the computation of basic and diluted EPS: For the Year Ended December 31, 2024 2023 2022 Numerator: Numerator for basic calculation—Net income/(loss) Numerator for basic calculation—Net income/(loss) attributable to P10 $ 18,700 $ ( 7,133 ) $ 29,206 Adjustment for: Net income/(loss) attributable to noncontrolling interests in P10 Intermediate 967 ( 639 ) 193 Numerator for earnings/(loss) per share Numerator for earnings/(loss) per share assuming dilution $ 19,667 $ ( 7,772 ) $ 29,399 Denominator: Denominator for basic calculation—Weighted- average shares outstanding, basic attributable to P10 112,549 116,104 116,751 Weighted shares assumed upon exercise of partnership units 3,917 - 979 Weighted shares assumed upon exercise of stock options and vesting of restricted stock units 3,909 - 3,924 Denominator for earnings/(loss) per share assuming dilution 120,375 116,104 121,655 Earnings/(loss) per Class A share—basic $ 0.17 $ ( 0.06 ) $ 0.25 Earnings/(loss) per Class A share—diluted $ 0.16 $ ( 0.06 ) $ 0.24 Earnings/(loss) per Class B share—basic $ 0.17 $ ( 0.06 ) $ 0.25 Earnings/(loss) per Class B share—diluted $ 0.16 $ ( 0.06 ) $ 0.24 The computations of diluted earnings per share on a weighted average basis would exclude 8.8 million options for the year ended December 31, 2024 and 6.7 million shares of common stock for the year ended December 31, 2022 , respectively, because the options were anti-dilutive. If the Company was in a net income position, the computations of diluted earnings per share excluded options to purchase 7.0 million shares of common stock for the year ended December 31, 2023 . Note 17. Segment Reporting The accounting policies of the Company's single operating segment are the same as those described in the summary of significant accounting policies in Note 2. Customer Information The Company derived 6.2%, 9.0%,and 11.2% of its total revenues from Enhanced P.C. for the years ended December 31, 2024, 2023, and 2022 , respectively. See Note 12 for further discussion. From time to time, a fund managed by the Company will constitute more than 10 % of the Company's total revenue due to catch-up fees, which are described in Note 2. Catch-up fees are non-recurring in nature and as such these funds do not represent a concentration risk for the Company's revenue. No other individual client constituted more than 10% of the Company's total revenues for the years ended December 31, 2024, 2023, and 2022 , respectively. Refer to Note 3 for further details provided on the Company's source of revenues. Geographic Information The primary geographic region in which the Company invests is in the United States and the majority of its revenues are generated in the United States. For the years ended December 31, 2024, 2023, and 2022 , most of the Company's revenues were generated in the United States. No individual foreign country constituted more than 10 % of the Company's revenues for the years ended December 31, 2024, 2023, and 2022. 109 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) The Company's long-lived assets consist of property and equipment, lease right-of-use assets, and finite-lived intangibles. As of December 31, 2024 and December 31, 2023 , most of the Company's long-lived assets were in the United States. No individual foreign country constituted more than 10 % of the Company's long-lived assets as of December 31, 2024 and December 31, 2023. Significant Segment Expense The following table presents information about reported segment revenue, segment profit or loss, and significant segment expenses for the years ended December 31, 2024, 2023, and 2022: For the Year Ended December 31, 2024 2023 2022 Total Revenues $ 296,448 $ 241,734 $ 198,360 Less: cash compensation and benefits, net of one-time expenses ( 99,520 ) ( 88,471 ) ( 68,344 ) Less: stock based compensation ( 30,451 ) ( 34,653 ) ( 18,616 ) Less: management profit share (2) ( 11,033 ) ( 2,058 ) - Less: professional fees, net of one-time expenses ( 13,408 ) ( 8,482 ) ( 6,989 ) Less: general, administrative and other, net of one-time expenses ( 21,354 ) ( 16,610 ) ( 15,453 ) Less: placement agent expenses ( 6,039 ) ( 3,422 ) ( 2,306 ) Less: other segment items (1) ( 94,976 ) ( 95,810 ) ( 57,253 ) Net income/(loss) $ 19,667 $( 7,772 ) $ 29,399 (1) Other segment items included in net income/(loss) includes (i) contingent consideration expense, amortization of intangibles, strategic alliance expense, income tax expense, interest expense, net, as well as other (losses)/income, and (ii) one-time expenses excluded from the significant segment expenses. (2) Management profit share represents compensation expense attributable to variable compensation structures tied to the profitability of our business, paid to senior employees. The following table reconciles the components of cash compensation and benefits, net of one-time expenses to their equivalent GAAP measures, reported in the Consolidated Statement of Operations for the years ended December 31, 2024, 2023, and 2022: For the Year Ended December 31, 2024 2023 2022 Compensation and benefits $ 155,316 $ 154,286 $ 94,297 Adjustments: Stock based compensation ( 30,451 ) ( 34,653 ) ( 18,616 ) Management profit share (2) ( 11,033 ) ( 2,058 ) - One-time expenses (1) ( 14,312 ) ( 29,104 ) ( 7,337 ) Cash compensation and benefits, net of one-time expenses $ 99,520 $ 88,471 $ 68,344 (1) The adjustments for one-time expenses relate primarily to (i) restructuring of the management team including signing bonus and severance; and (ii) acquisition-related expenses which reflects the actual costs incurred during the period for the acquisition of new businesses, which primarily consists of bonuses not paid to employees directly related to the WTI acquisition. (2) Management profit share represents compensation expense attributable to variable compensation structures tied to the profitability of our business, paid to senior employees. 110 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) The following table reconciles the components of professional fees, net of one-time expenses to their equivalent GAAP measures, reported in the Consolidated Statement of Operations for the years ended December 31, 2024, 2023, and 2022: For the Year Ended December 31, 2024 2023 2022 Professional fees $ 21,464 $ 12,668 $ 12,856 Adjustments: One-time expenses (1) ( 8,056 ) ( 4,186 ) ( 5,867 ) Professional fees, net of one-time expenses $ 13,408 $ 8,482 $ 6,989 (1) The adjustments for one-time expenses relate primarily to (i) restructuring of the management team including placement/search fees; (ii) acquisition-related expenses which reflects the actual costs incurred during the period for the acquisition of new businesses, which primarily consists of fees for professional services including legal, accounting, and advisory related to the acquisition; (iii) the cost of financing our business and (iv) expenses related to debt refinancing. The following table reconciles the components of general, administrative and other, net of one-time expenses to their equivalent GAAP measures, reported in the Consolidated Statement of Operations for the years ended December 31, 2024, 2023, and 2022: For the Year Ended December 31, 2024 2023 2022 General, administrative and other $ 28,780 $ 22,584 $ 18,522 Adjustments: Placement agent expenses ( 6,039 ) ( 3,422 ) ( 2,306 ) One-time expenses (1) ( 1,387 ) ( 2,552 ) ( 763 ) General, administrative and other, net of one-time expenses $ 21,354 $ 16,610 $ 15,453 (1) The adjustments for one-time expenses relate primarily to (i) expenses that typically do not require us to pay them in cash in the current period (such as depreciation and amortization); (ii) the cost of financing our business; and (iii) acquisition-related expenses which reflects the actual costs incurred during the period for the acquisition of new businesses. Other Segment Information Interest expense is reported on the Consolidated Statements of Operations as interest expense, net. Interest income is reported on the Consolidated Statements of Operations within other (losses) and was $ 1.3 million for the year ended December 31, 2024 . Interest income was insignificant for the years ended December 31, 2023 and December 31, 2022. Note 18. Subsequent Events The Board of Directors of the Company has declared a quarterly cash dividend of $ 0.035 per share of Class A and Class B common stock, payable on March 20, 2025, to the holders of record as of the close of business on February 28, 2025. On February 11, 2025, the Board of Directors authorized an additional $ 40.0 million of outstanding Class A and B shares of the Company's stock under the Stock Repurchase Program. On February 14, 2025, the Company granted to employees 2,271,044 options under the 2021 Incentive Plan. The options generally vest 25 % a year starting with the second anniversary of the date of grant and expire ten years from the grant date. 111 P10, Inc. Notes to Consolidated Financial Statements (dollar amounts in tables stated in thousands,except per share amounts) On February 14, 2025, the Company granted to employees 828,116 restricted stock units under the 2021 Incentive Plan. The RSUs generally vest on the first anniversary of the date of grant with a certain employee's RSU vest 25 % a year starting with the first anniversary of the date of grant. In accordance with ASC 855, Subsequent Events, the Company evaluated all material events or transactions that occurred after December 31, 2024, the Consolidated Balance Sheets date, through the date the Consolidated Financial Statements were issued, and determined there have been no additional events or transactions that would materially impact the Consolidated Financial Statements. 112 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Not applicable.