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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 reflects strong financial performance with record fundraising, high returns, and increased dividends. The Q&A indicates recurring revenue streams and optimism about future fund obligations, despite some uncertainty in timing of carry realizations. While ARS flows are slightly positive, the company's guidance remains cautious. Overall, the financial metrics and shareholder returns are positive, indicating a likely stock price increase.
Fee-related earnings Increased by 18% year-over-year for the quarter, driven by strong investment performance, fundraising, and financial results.
Adjusted EBITDA Increased by 16% year-over-year for the quarter, attributed to strong financial performance.
Adjusted net income Increased by 18% year-over-year for the quarter, reflecting strong financial results.
Fee-related earnings margin Reached 45% for the quarter, approximately 350 basis points higher than the third quarter of last year, due to improved operational efficiency.
Assets Under Management (AUM) Reached a record $87 billion, a 9% increase compared to the end of the third quarter of 2024, driven by strong fundraising and investment performance.
Absolute Return Strategies (ARS) performance Generated a 14.2% gross rate of return over the last 12 months, reflecting strong investment performance.
Fundraising Raised $7.2 billion year-to-date, surpassing the total fundraising for the full year of 2024. Over the last 12 months, raised $9.5 billion, the highest trailing 12-month fundraising period on record, driven by Infrastructure and Credit strategies.
Transaction fees Generated $2 million in transaction fees from a $490 million collateralized fund obligation in private Credit secondaries, recognized in the third quarter.
Gross unrealized carried interest balance Reached an all-time high of $941 million, up $32 million or 4% from the end of the second quarter, with approximately 50% belonging to the firm.
Realized carried interest More than $24 million realized during the quarter, the highest level of quarterly realized carried interest in the last 2 years.
Fee-paying AUM Grew to $70 billion, a 10% increase year-over-year, supported by strong fundraising and conversion of contracted not yet fee-paying AUM.
Contracted not yet fee-paying AUM Grew 17% year-over-year to $9.2 billion, providing a foundation for future growth.
Private Markets management fees Grew 10% year-to-date and 7% for the quarter year-over-year, driven by solid fundraising and conversion of contracted not yet fee-paying AUM.
Absolute Return Strategies (ARS) management fees Grew 6% year-over-year for the quarter, supported by strong investment performance.
Total management fees Increased to $101.4 million for the quarter, a 7% year-over-year growth, driven by strong business performance.
Fee-related revenue (FRR) Grew 9% year-over-year for the third quarter, supported by strong business performance and $2 million in transaction fees from a Credit collateralized fund obligation.
Non-GAAP general, administrative, and other expenses Declined from last quarter to $20 million, reflecting disciplined expense management.
Dividend Increased to $0.12 per share, reflecting consistent and growing cash flow generation.
Fundraising and Pipeline: Year-to-date fundraising reached $7.2 billion, surpassing the total for 2024. Over the last 12 months, $9.5 billion was raised, a record for the company. Infrastructure and Credit accounted for nearly two-thirds of the capital raised, driven by market demand and tailored strategies. Absolute Return Strategies raised $1.5 billion, with a strong pipeline ahead. Insurance clients contributed 14% of the capital raised in the last 12 months.
Separate Accounts and Specialized Funds: Separate Accounts from existing and new investors remain a predictable source of capital. First closes were held for the Private Equity Secondary fund (GSF IV) and the inaugural Real Estate fund (REV). The fourth vintage of the diversified Infrastructure fund (CIS IV) is set to launch soon.
Individual Investor Channel: The distribution joint venture, Grove Lane, has sourced dozens of new relationships, with 40 contributing to investment products. Infrastructure interval fund flows are increasing, and a new Private Equity fund is set to launch soon.
Assets Under Management (AUM): AUM reached a record $87 billion, a 9% year-over-year increase. Fee-paying AUM grew to $70 billion, a 10% increase. Contracted not-yet-fee-paying AUM grew 17% to $9.2 billion.
Fee-Related Earnings (FRE): FRE grew 18% year-over-year, with a margin of 45%, up 350 basis points from the prior year. Total management fees for the quarter were $101.4 million, a 7% increase year-over-year.
Incentive Fees and Carried Interest: Gross unrealized carried interest reached an all-time high of $941 million, with $24 million realized in the quarter. Unrealized performance fees totaled $33 million as of quarter-end.
Growth Outlook: The company aims to double 2023 fee-related earnings to over $280 million by 2028 and increase adjusted net income per share to over $1.20. The dividend was raised to $0.12 per share, reflecting confidence in growth.
Scalability and Investment Platform: The investment platform is highly scalable, capable of deploying multiples of the current capital base. The firm has a rigorous and repeatable investment process delivering strong risk-adjusted returns.
Client-First Culture: The company emphasizes a client-first culture rooted in teamwork and alignment, leading to high re-up rates and significant growth.
Market Conditions: Potential risks from economic uncertainties and market volatility that could impact fundraising and investment performance.
Competitive Pressures: Challenges in maintaining a competitive edge in the alternatives ecosystem, especially with increasing competition in Infrastructure and Credit strategies.
Regulatory Hurdles: Possible regulatory changes that could affect operations, particularly in the financial and investment sectors.
Strategic Execution Risks: Dependence on successful execution of growth plans, including doubling fee-related earnings by 2028 and launching new funds.
Supply Chain Disruptions: No explicit mention of supply chain disruptions in the transcript.
Economic Uncertainties: General economic conditions and their potential impact on client investments and fundraising activities.
Operational Risks: Risks associated with managing a growing and diversified portfolio, including maintaining high performance across multiple investment verticals.
Future Fee-Related Earnings (FRE) Growth: The company aims to double its 2023 fee-related earnings to more than $280 million by 2028.
Adjusted Net Income Per Share: The company plans to drive adjusted net income per share to more than $1.20 by 2028.
Dividend Increase: Quarterly dividend increased to $0.12 per share, reflecting confidence in growth trajectory and strong free cash flow generation.
Assets Under Management (AUM) Growth: The company projects substantial AUM growth across all verticals, including Credit, Infrastructure, Real Estate, Private Equity, and Absolute Return Strategies, over the next five years.
Pipeline and Fundraising: The company has a strong fundraising pipeline, including the launch of new funds such as the fourth vintage of the diversified Infrastructure fund and a new Private Equity fund. Separate Accounts and re-ups from existing investors are expected to be significant sources of new capital.
Infrastructure and Credit Strategies: These strategies are expected to continue driving growth, benefiting from market demand and tailored investment solutions.
Individual Investor Channel: The company is expanding its individual investor channel through its distribution joint venture, Grove Lane, which has sourced dozens of new relationships and is preparing to launch new funds.
Structured Solutions: The company plans to launch additional structured solutions in the future, building on the success of the Credit collateralized fund obligation.
Management Fees: Total management fees for the fourth quarter are expected to be approximately $1 million higher than the third quarter.
Carried Interest Realizations: The company is optimistic about carried interest realizations heading into 2026, with improving trends noted in 2025.
Quarterly Dividend Increase: The company announced an increase in its quarterly dividend to $0.12 per share, reflecting confidence in its growth trajectory and strong free cash flow generation.
Share Buyback Authorization: As of the quarter end, the company had $86 million remaining in its share buyback authorization. However, the primary focus remains on strategically investing for long-term growth.
The earnings call reflects strong financial performance with record fundraising, high returns, and increased dividends. The Q&A indicates recurring revenue streams and optimism about future fund obligations, despite some uncertainty in timing of carry realizations. While ARS flows are slightly positive, the company's guidance remains cautious. Overall, the financial metrics and shareholder returns are positive, indicating a likely stock price increase.
The earnings call summary shows strong financial performance, with significant growth in unrealized carried interest and fee-paying AUM. The Q&A section revealed positive sentiments towards strategic initiatives, strong re-ups, and no significant fee pressures, although some uncertainties in AI's financial impact were noted. The overall positive outlook, including robust fundraising expectations and consistent fee growth guidance, suggests a likely positive stock price movement.
The earnings call highlights strong financial performance, including record fundraising, increased management fees, and robust earnings growth. Optimistic guidance for future fundraising and fee-related earnings, along with a stable dividend and share repurchase plan, further boosts sentiment. Although management was vague on some specifics, the overall tone remains positive, especially with international opportunities and partnerships. The absence of major negative factors and strong financial metrics suggest a positive stock price movement over the next two weeks.
The earnings call reveals strong financial performance with significant growth in fundraising, AUM, and earnings. Additionally, the company maintains a steady dividend and share repurchase program, both positive indicators. While some questions in the Q&A highlighted uncertainties, such as market volatility and fee growth dynamics, management's responses indicated resilience and strategic opportunities. The overall sentiment leans positive due to robust financial metrics and optimistic future fundraising expectations, suggesting a likely 2% to 8% stock price increase over the next two weeks.
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