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01/11 16:21
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A indicate strong financial performance with 14% YoY fee revenue growth, positive market strategies, and robust fundraising. Despite some uncertainty in specific timelines, the company's diversification and optimistic guidance, especially in infrastructure and real estate, support a positive outlook. The market cap suggests a moderate reaction, aligning with a 2% to 8% stock price increase.
Fee-related earnings (FRE) $46.1 million in Q2 2025, representing 8% sequential growth and 17% year-over-year growth. This increase was driven by higher management fees due to higher fee-earning AUM and a higher FRE margin, supported by expense management.
Fee-earning Assets Under Management (AUM) $37.2 billion in Q2 2025, up 20% year-over-year and 6% sequentially. Growth was driven by $600 million in net organic inflows, strong investment returns, and a positive FX impact. Organic growth was also supported by a 34% year-over-year reduction in redemptions.
Distributable Earnings (DE) $39 million in Q2 2025, or $0.24 per share, up 4% sequentially and 9% year-over-year. Growth was driven by strong fee-related earnings.
Net Accrued Performance Fee Balance $394 million in Q2 2025, up 7% from Q1 2025. The increase was mainly due to the depreciation of the U.S. dollar.
EBITDA at Nonpublic Private Equity Portfolio Companies Increased approximately 25% year-over-year, driven by investments in resilient sectors such as agribusiness, food and beverage, and healthcare.
Total AUM $48.7 billion in Q2 2025, reflecting strong fundraising momentum and organic growth.
Fundraising $1.3 billion in Q2 2025 and $4.5 billion in the first half of 2025. Growth was led by credit, infrastructure, real estate, and GPMS businesses. Fundraising in infrastructure was approximately 3x greater compared to all of 2024.
Operating Expenses $35 million in Q2 2025, practically flat sequentially and up 10.7% year-over-year. The increase was mainly due to acquisitions.
Total Fee Revenue $81.1 million in Q2 2025, up 14% year-over-year and 5% sequentially. Growth was driven by strong fee-earning AUM growth and incremental incentive fees.
New Strategies and Products: Fundraising continues to benefit from new strategies and products introduced over the past several years, including institutional products targeted to local investors in local currencies.
Private Equity Fund VII: Reached $1.4 billion, inclusive of related fee-paying co-investment vehicles.
Infrastructure Fund V: Achieved $2.5 billion of commitments between the drawdown fund and fee-paying co-investment vehicles.
Fundraising Growth: Raised $1.3 billion in Q2 2025 and $4.5 billion in the first half of the year, surpassing the initial $6 billion target for 2025, now revised to $6.3-$6.6 billion.
Regional Focus: Increased interest from Asian, Middle Eastern, and European investors due to global trade uncertainties. Local investors in LatAm and Europe accounted for 55% of fundraising in H1 2025.
Fee-Earning AUM: Grew 20% year-over-year and 6% sequentially to $37.2 billion, with $600 million net organic inflows in Q2 2025.
Expense Management: Operating expenses remained flat sequentially, reflecting focus on expense controls and operational efficiencies.
M&A Activity: Acquired 7 listed REITs in Brazil, adding $600 million of high-margin permanent capital fee-earning AUM.
Diversification and Resilience: Focused on diversifying investment strategies and increasing resilience to macroeconomic uncertainties, including trade wars and FX volatility.
Global macroeconomic uncertainty and volatility: The company faces challenges due to increased global macroeconomic uncertainty and volatility, which could impact fundraising and investment performance.
Potential U.S. tariffs on Brazil: Renewed threats of high tariffs on imports from Brazil by the U.S. could negatively impact the Brazilian economy, which accounts for approximately 30% of the company's invested assets.
High interest rate environment: While the company has strategies to mitigate this, a prolonged high interest rate environment could affect demand for certain investment products.
Currency fluctuations: Depreciation of the U.S. dollar and FX volatility could impact fee-earning AUM and financial results, though the company has some natural hedges in place.
Dependence on local markets: Approximately 55% of fundraising comes from local investors in LatAm and Europe, which could be a risk if these markets face economic stress or uncertainty.
Exposure to geopolitical risks: The company has minimal exposure to Mexico and the U.S., but geopolitical risks in LatAm and Europe could still impact operations.
M&A-related financial obligations: The company has deferred M&A-related cash payments of approximately $100 million through 2027, which could strain financial resources if not managed effectively.
Limited redemption features in AUM: While this provides stability, it could limit flexibility in responding to investor demands or market changes.
Fundraising Target for 2025: The company has raised its initial $6 billion target for 2025 by 5% to 10%, now expecting $6.3 billion to $6.6 billion in total fundraising for the year.
Fee-Related Earnings (FRE) Target for 2025: The company remains comfortable with its 2025 fee-related earnings target of $200 million to $225 million, or $1.25 to $1.40 per share, reflecting approximately 20% year-over-year growth at the midpoint of the range.
Performance-Related Earnings Target (2024-2027): The company expects to achieve performance-related earnings of $120 million to $140 million for the period from the fourth quarter of 2024 through 2027.
Fee-Earning Assets Under Management (AUM) Growth: The company expects total fee-earning AUM to reach $70 billion by 2027, up from the current $37.2 billion.
Fundraising Highlights for 2025: Fundraising in infrastructure is approximately 3x greater compared to all of 2024, with Infrastructure Fund V reaching $2.5 billion of commitments. Credit fundraising has already reached 85% of the level achieved in 2024.
Permanent Capital Vehicles: Approximately 20% of fee-earning AUM are in permanent capital vehicles, with growth in this area being a key long-term objective.
Fee-Related Earnings Margin: The company expects the full-year FRE margin to fall within the range of 58% to 60% for 2025.
Net Organic Growth: The company achieved an annualized organic growth rate of about 8% based on fee-earning AUM since the start of 2025, with net organic inflows of $1.3 billion year-to-date.
Geopolitical and Economic Positioning: The company believes that Latin America and Europe are becoming more attractive destinations for global capital due to geopolitical risks and trade uncertainties involving the United States. Patria is positioned to benefit from increased interest from Asian, Middle Eastern, and European investors.
2027 Financial Targets: The company aims to achieve fee-related earnings of $260 million to $290 million, or $1.60 to $1.80 per share, by 2027.
Quarterly Dividend: The Board approved a quarterly dividend per share of $0.15 for 2025.
Share Repurchase Program: The Board of Directors renewed and increased the share repurchase program, authorizing the repurchase of up to 3 million shares over the next 12 months. No shares were repurchased in the second quarter, but the company intends to repurchase shares over the balance of 2025 to maintain the share count within the target range of 158 million to 160 million.
The company's strong financial performance, including significant growth in fee-earning AUM and earnings, positive guidance, and strategic shareholder return plans, indicates a positive sentiment. The Q&A highlighted confidence in exceeding targets and strategic deployment of capital. The dividend increase and share buyback program further support a positive outlook. Despite some uncertainties in performance fee realizations, the overall sentiment is positive, suggesting a stock price increase of 2% to 8% over the next two weeks.
The earnings call summary and Q&A indicate strong financial performance with 14% YoY fee revenue growth, positive market strategies, and robust fundraising. Despite some uncertainty in specific timelines, the company's diversification and optimistic guidance, especially in infrastructure and real estate, support a positive outlook. The market cap suggests a moderate reaction, aligning with a 2% to 8% stock price increase.
Despite missing EPS expectations, the company demonstrated strong financial performance with record AUM growth and positive fee-related earnings. Optimistic guidance on fee earning AUM and potential benefits from geopolitical shifts in LatAm suggest growth potential. Share repurchase intentions and stable dividends indicate confidence in financial health. The Q&A revealed a well-positioned strategy to capitalize on geopolitical trends, though some responses lacked clarity. With a market cap of $1.8 billion, the stock is likely to react positively, within the 2% to 8% range.
The earnings call indicates strong financial performance with record fundraising, increased AUM, and improved earnings metrics. The intention to repurchase shares and the quarterly dividend are positive signals for shareholders. While there are concerns about competition and economic conditions, the company's strategic positioning in resilient sectors and potential benefits from geopolitical shifts are encouraging. The Q&A revealed some uncertainties about future targets, but overall, the financial health and growth prospects suggest a positive outlook, likely leading to a 2% to 8% stock price increase over the next two weeks.
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