Pershing Square

The following discussion should be read in conjunction with the Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Such factors are discussed in the section entitled “Cautionary Note Regarding Forward-Looking Statements” in this Quarterly Report and the section entitled “Risk Factors” in our IPO Prospectus, as updated by Part II. Item 1A. Risk Factors in this Quarterly Report.

Except as disclosed herein, the historical Consolidated Financial Statements and the discussion of our historical financial results of operations and condition discussed herein are those of Pershing Square Holdco, L.P. (“PS Holdco”), our predecessor prior to the Corporate Conversion, and do not give effect to the Corporate Conversion and the Combined Transaction described below. Certain amounts, percentages and other figures included in this Quarterly Report have been subject to rounding adjustments. Percentage amounts included in this Quarterly Report have been calculated, in some cases, not on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Quarterly Report may vary from those obtained by performing the same calculations using the figures on the face of our Consolidated Financial Statements included elsewhere in this Quarterly Report. Certain other amounts that appear in this Quarterly Report may not sum due to rounding.

Business Overview

We are a leading alternative asset manager with approximately $26.6 billion in total AUM and $17.0 billion in Fee-Paying AUM, of which 96% is permanent capital, as of March 31, 2026. We believe our business model is simple and highly scalable. We employ a disciplined, research-intensive approach to fundamental value investing to preserve and grow our permanent capital at high rates of return using a set of core investment principles and opportunistic asymmetric hedges. We complement our organic growth from time to time with innovations like the Howard Hughes Transaction (described below) and by selectively launching other investment funds and completing other corporate transactions that create permanent capital, in each case, that leverage our core competencies to create large ‘overnight’ (after the completion of a new offering or corporate transaction) increases in our capital base without the requirement for significant new investment in personnel, infrastructure, and operating costs. We believe that we have a distinctive business approach as compared to other alternative asset managers and are well positioned to continue to compound our permanent capital at high rates of return, while continuing to explore opportunities that leverage our core competencies.

We conduct our business and generate substantially all of our revenues primarily in the United States through one operating and reportable segment. Our single reportable segment reflects the allocation of our resources, operational decision-making and assessment of our financial performance by our chief operating decision makers using a consolidated, “one-firm approach,” with a single expense pool.

Trends Affecting Our Business

We benefit from AUM that principally consists of “permanent capital” defined as capital that is not subject to withdrawal or redemption at the option of the fund investor or stockholder. Our organic AUM growth relies primarily on compounding our permanent capital at high rates of return. As a result, unlike alternative asset managers who rely in large part on frequent fundraising to replace capital from traditional fixed-term drawdown funds and/or open-ended funds, our results are less sensitive to the market for raising investment capital, and we do not require the headcount and other costs required of a large fundraising operation enabling us to achieve greater operating leverage. Our permanent capital also enables us to invest with a long-term ownership horizon because we are not beholden to short-term investor capital flows.

We generate substantially all of our revenue from management fees and performance fees. We retain all of the management fees earned from our funds. With respect to performance fees, we are entitled to “Preferred Performance Fees,” which are the performance fees earned on the first five percentage points of fund returns, net of management fees, above the applicable high-water mark from certain core funds and subject to certain other offsettable fees.

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Any realized performance fees in excess of the Preferred Performance Fees, which we refer to as the “Subordinated Performance Fees,” are paid to CompCo and used to compensate our investment professionals and certain other employees. To the extent realized performance fees are insufficient to pay some or all of the Preferred Performance Fee, the unpaid portion accrues to subsequent crystallization periods until paid in full. We believe this arrangement results in recurring revenue that is less volatile and more predictable than conventional performance fee arrangements, with the result that effectively all of our earnings are stable, recurring fee-related earnings. See “—Key Components of Our Results of Operations—Income—Performance Fees—Allocation of Performance Fee Revenue” for an illustration of our Preferred Performance Fee arrangement for the allocation of performance fee revenue, as well as the relevant high-water marks, over the six-year period ending December 31, 2025 and the three months ended March 31, 2026.

Because the management fees we earn are a function of the Fee-Paying AUM of our funds and the market capitalization of HHH, and the Preferred Performance Fees we receive depend on appreciation in Net Asset Value above a fund’s high-water mark, our results are correlated with the performance of our funds and HHH. Our results and the performance of our funds and HHH, in turn, may be influenced by the following factors:

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Howard Hughes Transaction

On May 5, 2025, we completed the Howard Hughes Transaction. Upon completion of the transaction, we along with our core funds owned 46.9% of outstanding shares of HHH common stock, although we have agreed generally to limit our voting power to 40.0% and our beneficial ownership to 47.0% of which currently 15.1% is owned by the Company and 31.0% is owned by the core funds. The compensation earned under the terms of the HHH Services Agreement is described below under “Management Fees – HHH Fees.” We intend to transform HHH, a long-term holding of our core funds, into a diversified holding company. On December 17, 2025, HHH entered into an agreement to acquire Vantage Group Holdings, Ltd. (“Vantage” and such acquisition, the “Vantage Acquisition”), a privately held specialty insurance and reinsurance holding company, for approximately $2.1 billion in cash. The Vantage Acquisition closed on June 4, 2026, and in connection with the closing, PSCM became the investment manager for Vantage and its insurance company subsidiaries for no incremental fee pursuant to investment management agreements.

Combined Transaction

On April 30, 2026, we and PSUS closed the Combined IPO of our common stock and PSUS Shares. In connection with the closing of the Combined IPO, we and PSUS also closed the Combined Private Placement of shares of our common stock and PSUS Shares. Gross proceeds to PSUS from the Combined Transaction, before deducting sales loads, placement fees and other offering expenses, were $5.0 billion, comprised of $2.026 billion raised in the PSUS IPO and $2.974 billion raised in the PSUS Private Placement (which includes our $200 million common shares investment in the PSUS Private Placement as part of the Anchor Investment (described below)). We delivered to each initial investor in the PSUS IPO, for no additional consideration, 1 share of our common stock for every 5 PSUS Shares purchased in the PSUS IPO. Similarly, we delivered to each private placement investor (but not to us in connection with our $200 million private placement investment) in the PSUS Private Placement, for no additional consideration, 1.5 shares of our common stock for every 5 PSUS Shares purchased in the PSUS Private Placement. Shares of our common stock and PSUS Shares began trading on the New York Stock Exchange under the trading symbols "PS" and "PSUS", respectively, on April 29, 2026.

In connection with the PSUS IPO and PSUS Private Placement, we (i) invested $250 million comprising (a) $200 million of common shares in the PSUS Private Placement and (b) $50 million of preferred shares in another private placement completed in connection with and upon completion of the PSUS IPO and (ii) agreed to maintain $100 million of our investment in PSUS common shares (or substantially equivalent economic position) for at least 25 years following the consummation of the Combined Transaction, subject to certain exceptions and unless prohibited by applicable law (the “Anchor Investment”). We financed this additional investment using borrowings under the Senior Credit Facilities described under " — Liquidity and Capital Resources."

For periods following the completion of the PSUS IPO, as investment manager, PSCM provides management services to PSUS and earns a quarterly management fee equal to 0.5% (2.0% on an annual basis) of the NAV of PSUS, payable in advance at the beginning of each quarter. A portion of these management fees from PSUS, or the “offsettable management fees,” will reduce the performance fees we receive from PSH. We are not entitled to any type of performance fee or incentive allocation from PSUS. We have not and do not expect to incur material incremental recurring general and administrative expense as a result of the PSUS IPO, although we incurred one-time transaction costs.

As a result of the Combined Transaction, we will recognize a deferred asset for the fair value (the “Share Value”) of the shares of our common stock delivered, for no additional consideration, to each initial investor in the PSUS IPO and each investor in the PSUS Private Placement (each, a “private placement investor”). The Share Value will be amortized as contra-revenue in management fees on a straight-line basis over a period of 10 years beginning on April 30, 2026, the closing date of the Combined Transaction.

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Corporate Conversion

We have historically been treated as a partnership for U.S. tax purposes and have not been subject to U.S. federal income taxes, although we are subject to certain state and local taxes as discussed in Note 2, “Significant Accounting Policies—Income Taxes” of the Consolidated Financial Statements included elsewhere in this Quarterly Report. In connection with the Combined Transaction, PS Holdco converted into Pershing Square Inc., a Nevada corporation by means of a statutory conversion, effective April 28, 2026. We refer to this conversion throughout this Quarterly Report as the “Corporate Conversion.” See “Summary—Reorganization Transactions—Corporate Conversion” in the IPO Prospectus for more information on the Corporate Conversion. Accordingly, we will be taxed as a corporation for U.S. federal and state income tax purposes and, as a result, we will be subject to U.S. federal income taxes, in addition to state and local taxes, with respect to our allocable share of any taxable income generated by us.

Key Components of Our Results of Operations

Income

We generate substantially all of our revenue from management fees and performance fees under the terms of the investment management agreements with the funds we manage. We also earn revenue from management fees under the terms of the HHH Services Agreement.

The simplified diagram below depicts the management fees and performance fees we earn from HHH and our core funds as of March 31, 2026. The diagram below is presented for illustrative purposes only to facilitate an understanding of our revenue streams prior to the completion of the Corporate Conversion and Combined Transaction.

* Management fee presented on an annual basis.

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Management Fees

Management fees consist of fees earned by PSCM for providing management and administrative services to our funds and other investment vehicles. PSCM acts as an investment manager providing management and administrative services to PSH, our private funds and other investment vehicles and, for periods following the completion of the Combined Transaction, PSUS, in accordance with each of their investment management agreements. As compensation for services to PSH and our private funds, PSCM receives a quarterly management fee equal to 0.375% (1.5% on an annual basis) of the Net Asset Value, before any accrued performance fees or allocation, (i) with respect to PSH, of its fee-paying shares, (ii) with respect to PSLP, of the capital accounts relating to each of its fee-paying limited partners, and (iii) with respect to PSINTL, of each series of its fee-paying shares of PSINTL. For periods following the completion of the Combined Transaction, PSCM also receives a quarterly management fee equal to 0.5% (2.0% on an annual basis) of the NAV of PSUS.

In connection with the Howard Hughes Transaction, we reduced the management fees paid to PSCM by each of the core funds by an amount, which was calculated as the HHH Fees multiplied by the percentage of HHH’s shares outstanding held by each such fund attributable to its fee-paying capital. Management fees from our funds are recognized over the period during which the related services are performed. See “Business—Advisory Fees and Compensation” in the IPO Prospectus for more information.

Management fees earned from our funds are generally calculated and paid to us quarterly in advance, based on the amount of fee-paying assets under management at the beginning of the quarter. Management fees are prorated for capital contributions in our private funds received during the quarter. Accordingly, changes in our management fee revenue from quarter to quarter are driven by changes in the quarterly balances of fee-paying assets under management and the relative magnitude and timing of contributions and withdrawals in our Private Funds in a given quarter.

Management Fees – HHH Fees

Management fees also consist of the quarterly HHH Fees earned by PSCM for providing investment advisory and other services to HHH pursuant to the terms of the HHH Services Agreement. Pursuant to the HHH Services Agreement, we support HHH’s new diversified holding company strategy by providing services to HHH, such as (i) investment advisory services, (ii) making recommendations with respect to hedging, balance sheet optimization and capital allocation, (iii) executing transactions, (iv) assisting HHH with business and corporate development functions, (v) making voting recommendations for HHH’s investments, (vi) assisting with and advising on fundraising, (vii) monitoring operations of HHH and its investments, subject to the day-to-day authority and responsibility of HHH’s management, (viii) providing recommendations for persons to serve as designees or deputies of HHH’s Chief Investment Officer, (ix) engaging and supervising HHH’s third-party service providers, (x) making dividend payment recommendations, and (xi) providing other services as may be agreed upon.

As compensation for providing services to HHH, we earn (i) a quarterly base fee (the “HHH Base Management Fee”) of $3,750,000 ($15,000,000 on an annual basis) and (ii) a quarterly variable fee (the “HHH Variable Management Fee” and together with the HHH Base Management Fee, the “HHH Fees”) equal to 0.375% of the excess value of the quarter-end stock price of shares of HHH common stock over an initial reference share price of $66.1453, multiplied by a reference share count of 59,393,938 shares. The HHH Base Management Fee and reference share price are subject to annual adjustment for inflation, based on the Core PCE Price Index, and the reference share price and reference share count are subject to adjustment for stock splits, reclassifications or similar capital changes.

The HHH Base Management Fee is calculated and paid to us quarterly in advance at the beginning of each quarter. The HHH Variable Management Fee is calculated and paid to us quarterly no later than fifteen days following the end of each quarter, based on the volume-weighted average trading price of shares of HHH common stock for the fifteen trading days ending on the last trading day of such quarter. Accordingly, changes in our revenue from the HHH Variable Management Fee will be driven by changes in the stock price of shares of HHH common stock from quarter to quarter. As of March 31, 2026, the reference share price was $67.6695 and the volume-weighted average trading price of shares of HHH common stock for the fifteen trading days ending on March 31, 2026 was $63.0229.

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Management Fees – Contra-Revenue

We recognized a $292.8 million deferred asset for the premium paid above HHH’s publicly traded share price (the “HHH Premium”), which is deemed for accounting purposes to represent the amount paid to obtain the HHH Services Agreement, when we completed the Howard Hughes Transaction. The HHH Premium is amortized as contra-revenue in management fees on a straight-line basis over a period of 20 years beginning May 5, 2025.

In addition, in periods following the completion of the Combined Transaction, we will recognize a deferred asset for the relative fair value (the “Share Value”) of the shares of our common stock delivered, for no additional consideration, to each initial investor in the PSUS IPO and each private placement investor. The Share Value will be amortized as contra-revenue in management fees on a straight-line basis over a period of 10 years beginning on April 30, 2026, the closing date of the Combined Transaction.

The following table presents a summary of all sources of management fees:

Performance Fees

Performance fees consist of fees and allocations earned by PSCM, as investment manager, from certain of our funds and other investment vehicles generally based on the NAV appreciation of such funds above a high-water mark. We recognize performance fees from PSH on a “net” basis giving effect to the “fee offset arrangement” as described below.

Performance fees or allocation, if earned, are payable upon the occurrence of crystallization events, which include, but are not limited to, December 31 of each year, withdrawals from our private funds and PSH’s payment of a dividend. Any crystallized or accrued performance fees for PSINTL and PSH earned during the year and outstanding at year-end are reported within performance fees receivable.

PSCM receives a “Variable Performance Fee” from PSH in an amount equal to 16% of the NAV appreciation (before giving effect to accrued performance fees) attributable to the fee-paying shares of PSH above a high-water mark minus a fee reduction of (i) 20% of the performance fees earned by PSCM from non-PSH funds (currently including PSLP and PSINTL) and (ii) 20% of management fees earned from any non-PSH funds that invest in public securities and do not charge performance fees (none as of March 31, 2026 but following the PSUS IPO, PSUS). We refer to this arrangement as the “fee offset arrangement.” In the event the offsettable fees in respect of a previous calculation period were not fully utilized in reducing the PSH performance fee for that period, the amount not utilized is carried forward. See Note 4, “Performance Fees / Allocations” to our Consolidated Financial Statements included in this Quarterly Report for more information.

We consolidate the results of PSGP, which earns a performance allocation from PSLP. However, because we did not have any direct equity interests in PSGP, 100% of these performance allocations are reflected in non-controlling interest on our Consolidated Statements of Operations included in this Quarterly Report. See “—Net (Income) Loss Attributable to Non-Controlling Interest” for more information.

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Allocation of Performance Fee Revenue

For the periods presented in this Quarterly Report, our Consolidated Statements of Operations reflect an arrangement for the allocation of performance fee revenue from our funds and other investment vehicles pursuant to the Variable Compensation Agreement, dated as of May 31, 2024, by and among PS Holdco, PSCM, and CompCo (as amended and restated on March 3, 2026, the “VCA”) that was entered into in connection with the Strategic Investment.

The VCA had two primary purposes: (1) to provide PS Holdco with a preferred return-like entitlement of performance fees, which we refer to as the ‘‘Preferred Performance Fees,’’ received by our principal operating subsidiary, PSCM, and (2) to provide an important source of compensation for certain of our personnel, including our investment professionals, consistent with our historical practice of tying a significant portion of the compensation earned by such personnel, including our named executive officers, directly to the performance of the funds we manage. For additional information about the terms of the VCA, see “Executive Compensation—Narrative Disclosure to Summary Compensation Table—Variable Compensation Agreement” in the IPO Prospectus.

The table below presents the allocation of realized performance fees, as adjusted for offsettable fees pursuant to the fee offset arrangement and VCA, as between PS Holdco, PSCM and CompCo that would have been required by the VCA and the arrangement terminating and replacing the VCA implemented in connection with the Combined Transaction using our actual results for the periods presented. As illustrated below, the Preferred Performance Fee that PS Holdco is entitled to receive for a given period is a function of the applicable high-water mark of the fee-paying investors in the fund, as calculated as of January 1 for such period, as adjusted for capital activity and share buybacks. Preferred Performance Fees are earned from the first five percentage points of fund returns, net of management fees, above the applicable high-water mark from certain core funds and subject to certain other offsettable fees. The amount of the Preferred Performance Fees that is paid in any period depends on our realized performance fees. As a result, variability in our fund performance, which impacts both the high-water mark for a period (and accordingly the corresponding Preferred Performance Fee) and our realized performance fees, can result in variability in the amounts paid to us in any period in respect of the accrued Preferred Performance Fees. Any portion of the Preferred Performance Fee that we are entitled to receive from a fund that is not paid in a given period will accrue to the next period’s Preferred Performance Fee for such fund until paid by such fund.

While our Preferred Performance Fee arrangement for the allocation of performance fee revenue may result in variability in the amounts paid to us and CompCo from year to year, particularly if realized performance fees are not sufficient to satisfy the accrued Preferred Performance Fees, we believe it creates a more stable stream of recurring fee-related earnings over the long-term because of the consistency in the calculation of the Preferred Performance Fee that we are entitled to receive.

The table below has not been prepared in accordance with Article 11 of Regulation S-X and is presented for illustrative purposes only to facilitate an understanding of how the VCA and the successor arrangement operate.