TPG Inc.

Non-GAAP Financial Measures

Distributable Earnings. Distributable Earnings (“DE”) is used to assess performance and amounts potentially available for distributions to partners. DE is derived from and reconciled to, but not equivalent to, its most directly comparable U.S. GAAP measure of net income. DE differs from U.S. GAAP net income computed in accordance with U.S. GAAP in that it does not include (i) unrealized performance allocations and related compensation expense, (ii) unrealized investment income, (iii) equity-based compensation expense, (iv) amortization, (v) net income (loss) attributable to non-controlling interests in consolidated entities, or (vi) certain other items, such as contingent reserves.

While we believe that the inclusion or exclusion of the aforementioned U.S. GAAP income statement items provides investors with a meaningful indication of our core operating performance, the use of DE without consideration of the related U.S. GAAP measures is not adequate due to the adjustments described herein. This measure supplements U.S. GAAP net income and should be considered in addition to and not in lieu of the results of operations presented in accordance with U.S. GAAP discussed further under “—Key Components of our Results of Operations—Results of Operations” prepared in accordance with U.S. GAAP.

After-Tax Distributable Earnings. After-tax Distributable Earnings (“After-tax DE”) is a non-GAAP performance measure of our distributable earnings after reflecting the impact of income taxes. We use it to assess how income tax expense affects amounts available to be distributed to our Class A common stockholders and Common Unit holders. After-tax DE differs from U.S. GAAP net income computed in accordance with U.S. GAAP in that it does not include the items described in the definition of DE herein; however, unlike DE, it does reflect the impact of income taxes. Income taxes, for purposes of determining After-tax DE, represent the total U.S. GAAP income tax expense adjusted to include only the current tax expense (benefit) calculated on U.S. GAAP net income before income tax and includes the current payable under our Tax Receivable Agreement, which is recorded within due to affiliates and other liabilities in our Condensed Consolidated Statements of Financial Condition. Further, the current tax expense (benefit) utilized when determining After-tax DE reflects the benefit of deductions available to the Company on certain expense items that are excluded from the underlying calculation of DE, such as equity-based compensation charges. We believe that including the amount currently payable under the Tax Receivable Agreement and utilizing the current income tax expense (benefit), as described above, when determining After-tax DE is meaningful as it increases comparability between periods and more accurately reflects earnings that are available for distribution to shareholders.

We believe that while the inclusion or exclusion of the aforementioned U.S. GAAP income statement items provides investors with a meaningful indication of our core operating performance, the use of After-tax DE without consideration of the related U.S. GAAP measures is not adequate due to the adjustments described herein. This measure supplements U.S. GAAP net income and should be considered in addition to and not in lieu of the results of operations presented in accordance with U.S. GAAP discussed further under “—Key Components of our Results of Operations—Results of Operations.”

Fee-Related Earnings. Fee-Related Earnings (“FRE”) is a supplemental performance measure and is used to evaluate our business and make resource deployment and other operational decisions. FRE differs from net income computed in accordance with U.S. GAAP in that it adjusts for the items included in the calculation of DE and also adjusts to exclude (i) realized performance allocations and related compensation expense, (ii) realized investment income from investments and financial instruments, (iii) net interest (interest expense less interest income), (iv) depreciation, and (v) certain non-core income and expenses. We use FRE to measure the ability of our business to cover compensation and operating expenses from fee revenues other than capital allocation-based income. The use of FRE without consideration of the related U.S. GAAP measures is not adequate due to the adjustments described herein.

Fee-Related Revenues. Fee-related revenues (“FRR”) is a component of FRE. Fee-related revenues is comprised of (i) management fees, (ii) fee-related performance revenues, (iii) transaction, monitoring and other fees, net, and (iv) other income. Fee-related performance revenues refers to incentive fees from perpetual capital vehicles that are: (i) measured and expected to be received on a recurring basis and (ii) not dependent on realization events from the underlying investments. Fee-related revenues differs from revenue computed in accordance with U.S. GAAP in that it excludes certain reimbursement expense arrangements. Refer to “—Reconciliation to U.S. GAAP Measures” to the comparable line items on the Condensed Consolidated Statements of Operations.

Fee-Related Expenses. Fee-related expenses is a component of FRE. Fee-related expenses differs from expenses computed in accordance with U.S. GAAP in that it is net of certain reimbursement arrangements and does not include performance allocation compensation. Fee-related expenses is used in management’s review of the business. Refer to “—Reconciliation to U.S. GAAP Measures” to the comparable line items on the Condensed Consolidated Statements of Operations.

Fee-related revenues and fee-related expenses are presented separately in our calculation of non-GAAP measures in order to better illustrate the profitability of our FRE. The use of fee-related revenues and FRE without consideration of the related U.S. GAAP measures is not adequate due to the adjustments described herein.

Our calculations of DE, FRE, fee-related revenues and fee-related expenses may differ from the calculations of other investment managers. As a result, these measures may not be comparable to similar measures presented by other investment managers.

The following table sets forth our total FRE and DE for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Fee-Related Revenues

Fee-related revenues increased $25.1 million, or 6%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The change was primarily due to a $19.8 million increase in transaction, monitoring and other fees, net, additional management fees of $10.5 million, and a $2.3 million increase in fee-related performance revenues, offset by a decrease of other income of $7.6 million.

Management Fees

The following table presents management fees in our platforms for the three months ended March 31, 2025 and 2024:

Management fees increased $10.5 million, or 3%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This change was primarily driven by higher management fees from our Growth, Impact, TPG AG Credit, TPG AG Real Estate and Real Estate platforms, offset by lower management fees from our Capital and Market Solutions platforms.

Management fees from our Capital platform decreased $23.4 million during the three months ended March 31, 2025 primarily due to catch-up fees earned as a result of additional capital commitments from limited partners in Asia VIII during the three months ended March 31, 2024 and a decrease in the fee basis of TPG VII resulting from the realization of portfolio investments.

Management fees from our Growth platform increased $4.9 million primarily due to catch-up fees earned from subsequent closings during the three months ended March 31, 2025 from Growth VI.

Management fees from our Impact platform increased $15.3 million during the three months ended March 31, 2025 compared to three months ended March 31, 2024, primarily due to fees earned from Rise Climate II during the three months ended March 31, 2025, which was activated during the third quarter of 2024, partially offset by a step-down in fee basis of Rise Climate I from committed capital to actively invested capital during the fourth quarter of 2024.

Management fees from TPG AG Credit increased $8.0 million during the three months ended March 31, 2025 compared to three months ended March 31, 2024, primarily due to fees earned from Credit Solutions III, which was activated during the second quarter of 2024, and an increase in fee basis from MMDL V as a result of new investments. These were partially offset by a decrease in fee basis from Credit Solutions II Dislocation A as a result of lower fee earning AUM.

Management fees from TPG AG Real Estate increased $7.9 million during the three months ended March 31, 2025 compared to three months ended March 31, 2024 primarily due to catch-up fees earned from Europe Realty IV during the three months ended March 31, 2025. This was partially offset by Asia Realty V, which had higher fees in the prior period as a result of catch-up fees recognized during the three months ended March 31, 2024.

Management fees from our Real Estate platform increased $0.6 million during the three months ended March 31, 2025 compared to three months ended March 31, 2024.

Management fees from our Market Solutions platform decreased $2.7 million primarily from TPEP as a result of a decrease in fee earning AUM.

Certain management fees totaling $16.5 million earned during the three months ended March 31, 2025 were considered catch-up fees as a result of additional capital commitments from limited partners. Catch-up fees primarily consisted of $8.9 million for Europe Realty IV, $3.0 million for Growth VI and $2.8 million from Rise Climate II.

Fee-Related Performance Revenues

The following table presents fee-related performance revenues for the three months ended March 31, 2025 and 2024:

Fee-related performance revenues increased $2.3 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 due to higher fees from TCAP.

Transaction, Monitoring and Other Fees, Net

The following table presents transaction, monitoring and other fees, net in our platforms for the three months ended March 31, 2025 and 2024:

Transaction, monitoring and other fees, net increased $19.8 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This change was primarily driven by a $17.9 million increase in our Market Solutions platform as a result of capital markets activity among our portfolio companies involving our broker-dealer.

Other Income

Total other income decreased $7.6 million, or 72%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to lower income from our former affiliate. As of April 2024, the contracts to provide services to such party have ended.

Fee-Related Expenses

Fee-related expenses increased $25.9 million, or 10%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This change was primarily due to an increase in operating expenses, net of $12.8 million and cash-based compensation and benefits, net of $11.9 million.

Cash-Based Compensation and Benefits, Net

The following table presents cash-based compensation and benefits, net for the three months ended March 31, 2025 and 2024:

Cash-based compensation and benefits, net increased $11.9 million, or 7%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This change was primarily due to higher salaries and benefits resulting from an overall increase in headcount, partially offset by an increase in reimbursements.

Fee-Related Performance Compensation

The following table presents fee-related performance compensation for the three months ended March 31, 2025 and 2024:

Total fee-related performance compensation increased $1.2 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This was primarily attributable to the increase in fee-related performance revenues from TCAP that drives compensation attributable to our partners and professionals.

Operating Expenses, Net

Operating expenses, net includes general and administrative expenses as well as reimbursements for professional services and travel expenses related to investment management and advisory services provided to TPG funds and monitoring services provided to our portfolio companies. Operating expenses, net increased $12.8 million, or 15%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This change was primarily due to an increase in professional fees and travel expenses.

Realized Performance Allocations, Net

The following table presents realized performance allocations, net from our platforms for the three months ended March 31, 2025 and 2024:

Realized performance allocations, net of $39.6 million for the three months ended March 31, 2025 were generated primarily from realizations of $16.9 million from TPG VII and $9.8 million from TPG VIII in the Capital platform, $4.5 million from Rise Climate I in the Impact platform and $2.5 million from MMDL IV in TPG AG Credit. The activity consisted of realizations sourced from portfolio companies including Viking Cruises and DirecTV.

Realized performance allocations, net of $31.6 million for the three months ended March 31, 2024 were generated primarily from realizations of $13.9 million from TPG VIII and $3.9 million from Asia VII in the Capital platform and $11.6 million from Rise Climate I in the Impact platform. The activity consisted of realizations sourced from portfolio companies, including DirecTV, Singlife and Nextracker.

Realized Investment Income and Other, Net

The following table presents realized investment income and other, net for the three months ended March 31, 2025 and 2024:

The change in realized investment income and other, net of $5.4 million during the three months ended March 31, 2025 compared to the three months ended March 31, 2024 resulted primarily from an increase in realizations from certain investments in our funds, partially offset by an increase in our non-core expense. Our non-core activity primarily relates to expenses on our unoccupied lease space and pre-signing diligence costs for our proposed acquisition of the Peppertree business.

Depreciation

Depreciation expense decreased $0.7 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Interest Expense, Net

The following table presents interest expense, net for the three months ended March 31, 2025 and 2024:

Interest expense, net increased $4.5 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to an increase in outstanding principal balances on our debt obligations.

Distributable Earnings

The increase in DE for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily due to an increase in realized performance allocations, net, partially offset by an increase in interest expense, net.

Income Taxes

Income taxes increased $2.7 million, or 32%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to an increase in our Tax Receivable Agreement liability in the three months ended March 31, 2025.

Reconciliation to U.S. GAAP Measures

The following tables reconcile the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP to non-GAAP financial measures for the three months ended March 31, 2025 and 2024:

Revenue

Net Income

Net Accrued Performance