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01/11 03:19
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance with record fundraising and investment, significant embedded gains, and a robust insurance segment. The Q&A section supports this with positive growth prospects in Asia, strong ROE projections, and confidence in achieving future targets. Despite some uncertainties in management responses, the overall sentiment remains positive, supported by optimistic guidance and strategic growth plans.
Fee Related Earnings $1.15 per share, a record figure for the company.
Total Operating Earnings $1.55 per share, 17% higher than the previous quarter.
Adjusted Net Income $1.41 per share, an 8% increase year-over-year.
Management Fees $1.1 billion, up 19% year-over-year, driven by fundraising success and capital deployment. Excluding catch-up fees, growth was 16%.
Fee-Related Performance Revenues $73 million, up nearly 30% year-over-year, driven by performance and scaling at K-INFRA vehicle.
Insurance Segment Operating Earnings $305 million, with a $41 million benefit from GA's actuarial assumption review process.
Strategic Holdings Operating Earnings $58 million, significantly ahead year-to-date compared to the previous year.
Realized Performance and Investment Income $935 million within Asset Management, with $70 million of net realized investment income in Strategic Holdings.
Capital Raised $43 billion in Q3, the second-highest fundraising quarter in company history. Organic new capital raised across the credit platform comprised 60% of this.
Capital Invested $26 billion in Q3, with $85 billion invested over the last 12 months, up 12% compared to the prior period.
Embedded Gains $17 billion of embedded gains on the balance sheet, at or near record levels.
Total Insurance Economics $1.4 billion year-to-date, net of compensation, up 16% compared to the same period last year.
Capital Raising: Raised $43 billion in Q3, the second-highest fundraising quarter in KKR's history. Organic new capital raised across the credit platform comprised 60% of the total, with strong contributions from asset-based finance and insurance businesses. Private equity and real asset business lines raised $16 billion, and private wealth efforts brought in $4.1 billion, up 80% year-over-year.
Global Expansion: Aggressively expanding outside the U.S. to align with global investment management footprint. Strategic partnerships, such as with Japan Post Insurance, contributed significantly to inflows.
Management Fees: Management fees grew 19% year-over-year to $1.1 billion, driven by fundraising success and capital deployment. Excluding catch-up fees, growth was 16%.
Insurance Business Evolution: Focused on originating longer-duration liabilities and assets, expanding globally, and raising third-party capital through Ivy sidecar strategy. Total insurance-related economics increased 16% year-over-year to $1.4 billion net of compensation.
Investment Deployment: Invested $26 billion in Q3 across geographies and asset classes. Over the last 12 months, $85 billion was invested, up 12% year-over-year.
Private Wealth Growth: K-Series vehicles now manage $32 billion, up from $15 billion a year ago. Strategic partnership with Capital Group launched new public-private credit solutions and filed for a public-private equity solution.
Monetization Strategy: Realized carry is up over 50% year-to-date, with $800 million in monetizations expected over the next two quarters. Unrealized carry balance has grown 14% year-to-date.
Asia II Fund Underperformance: The second Asia private equity fund has underperformed, raised 12-13 years ago, and stopped investing 8 years ago. It is expected to roughly return its cost, leading to a $350 million clawback charge in Q4. This impacts net realized performance income and ANI per share.
Private Equity Deployment Risks: Some firms in the private equity industry deployed capital too aggressively in 2021-2022, leading to potential overexposure to high valuations before interest rate hikes. This could result in underperformance and delayed monetizations.
Private Credit Default Risks: Default rates in private credit are ticking up, signaling a return to a more normal default environment. However, this could pose risks to performance if defaults increase further.
Insurance Segment Reporting Challenges: The insurance segment's operating earnings do not fully capture the total economics of the business. The conservative cash-based reporting approach understates profitability, potentially leading to misinterpretation of the segment's performance.
Monetization Environment Uncertainty: While the monetization environment is currently constructive, any deterioration could delay monetization activities, impacting earnings in 2026 and beyond.
2026 Financial Guidance: The company remains confident in achieving its 2026 guidance of $4.50+ in FRE per share and $7-$8 in after-tax ANI per share. This is supported by strong fundraising momentum, management fee growth, and a constructive monetization environment. However, if the monetization environment deteriorates, some activities may be delayed, potentially impacting 2026 earnings but benefiting 2027 and beyond.
Capital Raising Outlook: 2025 is on track to be a record year for capital raising, with $55 billion raised year-to-date in the credit business, surpassing the $56 billion raised in all of 2024. The company expects continued strong momentum in capital raising across various platforms, including private equity, real assets, and private wealth.
Insurance Business Evolution: The company is evolving its insurance business to originate longer-duration liabilities and assets, expand globally, and raise more third-party capital. These changes are expected to enhance competitive advantage and generate higher, more durable returns over the long term.
Private Wealth Growth: The K-Series suite of products has grown significantly, with $32 billion in assets under management as of November 1, 2025, compared to $15 billion a year ago. The company expects continued strong performance, deployment, and capital raising activity in this segment.
Monetization Pipeline: The company has a strong monetization pipeline, with approximately $800 million expected over the next two quarters from transactions already closed or announced. The monetization environment is constructive and expected to remain so into 2026.
Embedded Gains and Future Monetizations: The company has $17 billion in embedded gains across the firm, the second-highest level in its history. This provides a strong foundation for future monetizations and earnings growth.
Net Dividends: Tracking nicely towards our expected $350-plus million of net dividends for 2026.
The earnings call highlights strong financial performance with record fundraising and investment, significant embedded gains, and a robust insurance segment. The Q&A section supports this with positive growth prospects in Asia, strong ROE projections, and confidence in achieving future targets. Despite some uncertainties in management responses, the overall sentiment remains positive, supported by optimistic guidance and strategic growth plans.
KKR's earnings call highlights strategic growth, strong investment management fees, and expanding global partnerships. Despite some management vagueness, the overall sentiment is positive, with robust financial metrics, optimistic guidance, and strategic positioning in emerging markets and technologies. The Q&A section reinforced confidence in asset-based finance and long-term opportunities in private markets. These factors suggest a positive stock price movement.
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