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01/11 04:26
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlighted strong financial performance with record fee-related earnings and a significant increase in dividends, suggesting positive sentiment. Despite a GAAP net loss, adjusted net income and fee revenues showed substantial growth, indicating robust core operations. The Q&A section revealed a positive outlook on new business pipelines and maintained investor confidence. Although there are some risks and uncertainties, the overall sentiment is bolstered by strong earnings, optimistic future guidance, and increased shareholder returns, likely leading to a positive stock price movement over the next two weeks.
GAAP Net Loss $18.5 million, no year-over-year change mentioned.
Fee Related Earnings (FRE) $94.1 million, up 85% from the prior year quarter, driven by retroactive fees from Special Situations Real Estate Secondaries Fund and multi-strategy growth equity fund.
FRE Margin 44%, up more than 1,000 basis points year-over-year, with a core FRE margin of 37% after normalizing for retroactive fees.
Adjusted Net Income $80.6 million or $0.68 per share, up from $37.7 million or $0.33 per share in the fourth quarter of last fiscal year, driven by higher fee related earnings and performance related earnings.
Dividends Declared $1.36 per share for the fiscal year, up from $0.99 last year, representing a 37% increase.
Fee Revenues $215 million, up 40% from the prior year quarter, driven by growth in fee earning AUM and a higher blended average fee rate.
Gross Realized Performance Fees $81 million for the quarter, best gross quarter ever, driven by realizations from previously announced deals.
Net Accrued Carry $738 million, down 1% from last quarter but up 16% over the last 12 months, reflecting strong realizations.
Cash-Based Compensation $86 million, flat to last quarter, with a favorable adjustment to the bonus accrual offsetting headcount growth.
General and Administrative Expenses $32 million, up $2 million sequentially and up about $5 million from a year ago.
New Products: Added CRDEX to private wealth suite, offering evergreen funds across credit, infrastructure, venture, and growth equity.
Market Expansion: Private wealth platform grew from $3.4 billion to over $8 billion in assets, with distribution partners increasing from 300 to nearly 500.
Commingled Funds Growth: Closed three commingled funds over $3 billion, with the largest real estate secondaries fund raised at $3.75 billion.
Operational Efficiencies: Fee related earnings increased by 85% to $94.1 million, with an FRE margin of 44%.
Investment in Human Capital: Organization grew to over 1,100 professionals, a 20% increase from the previous year.
Strategic Shifts: Focus on scenario planning to assess impacts of market volatility and trade policy changes.
Market Volatility: The company noted a shift in the capital market backdrop in April, leading to volatility in public markets and widening bid-ask spreads in private markets. This uncertainty may impact future performance.
Regulatory Risks: The company mentioned the need for scenario planning to assess impacts by asset class, strategy, region, and sector due to rapidly evolving global trade policy.
Investment Risks: The CEO emphasized the importance of a long-term disciplined approach to investing in private markets, highlighting the challenges of avoiding poor investments during market cycles.
Macroeconomic Downturns: While the company has proven resilience during economic downturns, it acknowledged that it is not immune to macroeconomic challenges, which could affect performance.
Competition: The company faces competitive pressures in the private market asset management space, necessitating a focus on maintaining an information advantage and capitalizing on market dislocations.
Fee Related Earnings (FRE) Growth: Generated fee related earnings of $94.1 million, up 85% from the prior year quarter, with an FRE margin of 44%.
Assets Under Management (AUM) Growth: Raised over $31 billion of assets under management in fiscal 2025, translating to a fee earning asset growth of over 29%.
Private Wealth Platform Expansion: Private wealth platform increased from $3.4 billion to over $8 billion in assets, driven by new products and expanded distribution.
Commingled Funds Growth: Closed on three commingled funds of over $3 billion, contributing to record growth.
Infrastructure Co-investment Fund: Closed on a debut infrastructure co-investment fund of over $1 billion.
Distribution Partners Expansion: Expanded distribution partners from 300 to nearly 500 unique platforms.
Future Revenue Expectations: Expect to remain active in fiscal 2026 with multiple funds in the market.
Cash Distribution to Shareholders: Declared a $0.40 supplemental dividend, totaling $1.36 per share for the fiscal year, up 37% from last year.
Capital Deployment Strategy: Focus on scenario planning to assess impacts by asset class, strategy, region, and sector.
Long-term Growth Strategy: Aiming to double fee related earnings over five years and expand FRE margin to the mid-30s.
Cash Compensation Ratio: Expect fiscal 2026 cash compensation ratio to remain around 46% of fee-related revenues.
Base Quarterly Dividend: $0.24 per share, payable on June 30, 2025.
Supplemental Dividend: $0.40 per share, payable on June 30, 2025.
Total Dividend for Fiscal Year: $1.36 per share, up from $0.99 last year.
Buy-in of Non-controlling Interest: Second tranche expected in Q1 FY 2026, utilizing $10 million cash and $161 million equity.
Shares Issued for Buy-in: 3.2 million shares effective as of April 1, 2025.
Discount on Buy-in: Executed at a greater than 15% discount to the STEP public PE multiple.
The earnings call highlights strong financial performance, with significant growth in adjusted net income and fee revenues. The introduction of STPEX and expansion in institutional fundraising are positive indicators. Despite concerns about increased G&A expenses, the partnership with Aviva and international expansion present growth opportunities. The Q&A reveals some uncertainties, but overall sentiment remains positive. Given the company's market cap, the stock price is likely to experience a moderate positive movement.
The earnings call highlights record high fee-related earnings, strong dividend growth, and a robust share buyback program, indicating positive financial health and shareholder returns. Despite some operational risks and competition, the growth in AUM and positive pipeline outlook suggest optimism. The Q&A section revealed confidence in future margins and business opportunities, with no major concerns from analysts. The market cap suggests moderate sensitivity, leading to a prediction of a positive stock price movement.
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