Apollo Management(APO) - 2025 Q1 - Quarterly Results

Financial and Business Highlights First Quarter 2025 Financial Highlights Apollo reported strong first-quarter 2025 results with GAAP Net Income of $418 million ($0.68 per share) and Adjusted Net Income (ANI) of $1.1 billion ($1.82 per share), driven by robust Fee Related Earnings (FRE) of $559 million and Spread Related Earnings (SRE) of $804 million, with Total Assets Under Management (AUM) reaching $785 billion fueled by significant inflows of $43 billion for the quarter Q1 2025 Key Financial Metrics | Metric | 1Q'25 (in millions) | Per Share (in dollars) | LTM 1Q'25 (in millions) | Per Share (in dollars) | | :--- | :--- | :--- | :--- | :--- | | GAAP Net Income | $418 million | $0.68 | - | - | | Fee Related Earnings (FRE) | $559 million | $0.91 | $2,160 million | $3.52 | | Spread Related Earnings (SRE) | $804 million | $1.31 | $3,211 million | $5.23 | | Adjusted Net Income (ANI) | $1,119 million | $1.82 | $4,620 million | $7.53 | Q1 2025 Key Business Drivers | Driver | 1Q'25 (in billions) | LTM 1Q'25 (in billions) | | :--- | :--- | :--- | | Total AUM | $785 billion | - | | Fee-Generating AUM | $595 billion | - | | Inflows | $43 billion | $157 billion | | Origination | $56 billion | $235 billion | First Quarter 2025 Business Highlights The company achieved record Fee Related Earnings (FRE) and strong Spread Related Earnings (SRE), totaling $1.4 billion combined for the quarter, with AUM grew 17% year-over-year, driven by $157 billion in inflows over the last twelve months, and Apollo demonstrated robust capital allocation, repurchasing $722 million of common stock and announcing the pending acquisition of Bridge Investment Group - Total AUM reached $785 billion, a 17% year-over-year increase, driven by inflows of $43 billion in Q1 and $157 billion over the last twelve months[10] - Achieved record FRE of $559 million and SRE of $804 million, showcasing the strength of combined earnings streams[10] - Global Wealth saw record quarterly inflows of nearly $5 billion, driven by new product launches and strategic partnerships[10] - Returned significant capital to shareholders, repurchasing $722 million of common stock in Q1 and distributing over $1 billion in dividends over the last twelve months[10] - Announced the pending acquisition of Bridge Investment Group for approximately $1.5 billion, funded by strategic capital[10] Total Segment Earnings Total segment earnings for Q1 2025 were strong, with Fee and Spread Related Earnings reaching $1.36 billion, as Fee Related Earnings (FRE) grew to $559 million from $462 million in Q1 2024, while Spread Related Earnings (SRE) were $804 million, slightly down from $817 million in the prior year quarter, and Adjusted Net Income (ANI) for the quarter was $1.12 billion, or $1.82 per share Segment Earnings Summary (in millions) | Metric | 1Q'24 (in millions) | 4Q'24 (in millions) | 1Q'25 (in millions) | LTM 1Q'25 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Fee Related Earnings (FRE) | $462 | $554 | $559 | $2,160 | | Spread Related Earnings (SRE) | $817 | $841 | $804 | $3,211 | | Principal Investing Income (PII) | $21 | $139 | $14 | $264 | | Adjusted Net Income (ANI) | $1,064 | $1,360 | $1,119 | $4,620 | - Excluding notable items, Spread Related Earnings were $826 million in Q1 2025, and Adjusted Net Income was $1.14 billion, or $1.85 per share[12] Segment Details Asset Management Segment The Asset Management segment delivered a record FRE of $559 million, up 21% year-over-year, with an FRE margin of 57.2%, driven by an 18% increase in management fees, primarily from Retirement Services clients and third-party inflows, as Total AUM grew 17% YoY to $785 billion, supported by $43 billion of inflows in the quarter, with perpetual capital now comprising 60% of total AUM Segment Performance Asset Management Performance (in millions) | Metric | 1Q'24 (in millions) | 1Q'25 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Total management fees | $652 | $770 | 18.1% | | Fee Related Revenues | $839 | $978 | 16.6% | | Fee Related Earnings (FRE) | $462 | $559 | 21.0% | | FRE Margin | 55.1% | 57.2% | +210 bps | - Management fees increased 18% YoY, driven by record growth from Retirement Services clients and strong third-party inflows[16] - Fee-related expenses grew a disciplined 11% YoY, leading to approximately 200 basis points of margin expansion[16] Assets Under Management (AUM) AUM Growth (in billions) | AUM Type | 1Q'24 (in billions) | 1Q'25 (in billions) | % Change | | :--- | :--- | :--- | :--- | | Total AUM | $671 billion | $785 billion | 17% | | Fee-Generating AUM | $506 billion | $595 billion | 18% | | Perpetual Capital AUM | $445 billion | $470 billion | 6% | - Total AUM increased by $114 billion YoY, driven by $80 billion of inflows from Asset Management and $77 billion from Retirement Services[20] - Perpetual capital represents 60% of total AUM and 75% of total Fee-Generating AUM, providing a highly scalable and stable capital base[20] Inflows - Achieved record gross organic inflows of $43 billion in Q1 and $157 billion over the last twelve months[23] - Asset Management inflows of $18 billion in Q1 were driven by credit-focused strategies (ADS, TRF, ADCF) and equity-focused strategies (S3, AAA, HVF III)[23] - Retirement Services (Athene) contributed record quarterly organic inflows of $26 billion, driven by record funding agreement issuance and flow reinsurance[23] Retirement Services Segment The Retirement Services segment generated Spread Related Earnings (SRE) of $804 million in Q1 2025, with SRE excluding notable items at $826 million, and the Net Spread was 1.26% for the quarter, impacted by lower rates on floating assets and conservative positioning of new business, while the segment's portfolio remains high-quality, with 97% of fixed income assets rated investment grade, and Athene's gross organic inflows were a record $26 billion for the quarter, demonstrating a strong growth profile Segment Performance Retirement Services Performance (in millions) | Metric | 1Q'24 (in millions) | 1Q'25 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Net Investment Spread | $1,022 | $1,048 | 2.5% | | Spread Related Earnings (SRE) | $817 | $804 | (1.6)% | | SRE, Excluding Notable Items | $817 | $826 | 1.1% | - SRE, excluding notable items, increased slightly over the last twelve months as record organic growth was mostly offset by a lower net spread[25] - Athene's alternative investment portfolio returned 10.1% in Q1, slightly below the long-term expectation of 11%[25] Return on Asset and Portfolio Highlights Return on Asset View | Metric (% of avg. net invested assets) | 1Q'24 | 1Q'25 | Change (in bps) | | :--- | :--- | :--- | :--- | | Net Investment Earnings | 4.89% | 5.06% | +17 bps | | Cost of funds | (3.10)% | (3.46)% | +36 bps | | Net Spread | 1.47% | 1.26% | (21) bps | - The sequential decrease in the fixed income earned rate was driven by lower floating rates, conservative investment of new business, and asset prepayments[27] - The portfolio is well-positioned with 97% of fixed income assets in investment grade and a focus on directly originated, senior secured loans[30] Growth Profile - Athene achieved record quarterly gross organic inflows of $26 billion in Q1 2025[31][35] - Growth was driven by strong retail annuity sales, record flow reinsurance activity, and record funding agreement issuance[31][32] - There is a greater than 95% correlation between Spread Related Earnings (SRE) and Fee Related Earnings (FRE), highlighting the symbiotic relationship between the segments[33][34] Principal Investing Segment The Principal Investing segment reported Principal Investing Income (PII) of $14 million for Q1 2025, down from $21 million in Q1 2024, with Realized performance fees at $190 million, described as 'cyclically light' due to a challenging exit environment that has prudently delayed monetization activity, while Performance Fee-Eligible AUM grew 12% year-over-year to $235 billion, and Dry Powder stood at $64 billion Segment Performance Principal Investing Performance (in millions) | Metric | 1Q'24 (in millions) | 1Q'25 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Realized performance fees | $94 | $190 | 102.1% | | Principal Investing Income (PII) | $21 | $14 | (33.3)% | - Realized performance fees of $190 million were considered cyclically light as monetization from flagship funds was prudently delayed amid a challenging exit environment[39] Performance Fee AUM and Dry Powder - Performance Fee-Eligible AUM increased 12% year-over-year to $235 billion, driven by growth in credit strategies[41][42] - Performance Fee-Generating AUM grew 18% year-over-year to $163 billion as funds moved into carry[41][42] - Dry Powder available for investment was $64 billion at quarter-end, with approximately 75% in Credit strategies[41][42] Investment Performance LTM Investment Performance Highlights | Strategy | LTM 1Q'25 Appreciation (%) | | :--- | :--- | | Direct Origination | 11.8% | | Opportunistic Credit | 9.1% | | Flagship Private Equity | 6.6% | | Hybrid Value | 19.3% | - The Net Accrued Performance Fee Receivable decreased from $1.68 billion in Q4'24 to $1.59 billion in Q1'25[44] Capital Strength Apollo maintains a strong capital position with high-grade financial strength ratings across its entities (A2/A/A for Apollo Global Management and A1/A+/A+ for Athene), and the company actively managed its capital, deploying $722 million for share repurchases in Q1 and returning a total of $1.7 billion to stockholders over the last twelve months through dividends and opportunistic buybacks, with Net Balance Sheet Value per share standing at $4.51 Financial Strength Ratings | Entity | Moody's | S&P | Fitch | AM Best | | :--- | :--- | :--- | :--- | :--- | | Apollo Global Management | A2 | A | A | - | | Apollo Asset Management | A2 | A | A | - | | Athene | A1 | A+ | A+ | A+ | - Deployed $722 million for share repurchases in Q1, including $131 million for opportunistic repurchases[48] - Returned a total of $1.7 billion to stockholders over the last twelve months via dividends and opportunistic share repurchases[48] - Announced the acquisition of Bridge Investment Group in an all-stock transaction for approximately $1.5 billion, expected to close in 3Q25[48] Supplemental Details and Reconciliations AUM Rollforward Total AUM increased from $751.0 billion at the beginning of Q1 2025 to $785.2 billion at the end, a net increase of $34.2 billion, with growth driven by $46.7 billion in inflows, offset by $20.3 billion in outflows and $3.5 billion in realizations, with a positive market activity impact of $11.1 billion, and Fee-Generating AUM saw a net increase of $26.5 billion during the quarter to reach $595.2 billion Q1 2025 Total AUM Rollforward (in millions) | Component | Credit (in millions) | Equity (in millions) | Total (in millions) | | :--- | :--- | :--- | :--- | | Beginning Balance | $616,387 | $134,650 | $751,037 | | Inflows | $37,577 | $9,122 | $46,699 | | Outflows | ($19,941) | ($315) | ($20,256) | | Realizations | ($1,350) | ($2,100) | ($3,450) | | Market Activity | $8,672 | $2,456 | $11,128 | | Ending Balance | $641,345 | $143,813 | $785,158 | Retirement Services Flows & Invested Assets In Q1 2025, Athene generated total gross inflows of $25.6 billion, with net flows of $17.2 billion after accounting for outflows, and the inflows were primarily driven by funding agreements ($11.1 billion) and retail ($9.5 billion), while Third-party capital from ADIP and other reinsurers supported 21% of the new business volume, and Core outflows as an annualized rate of average net invested assets were 11.0% Q1 2025 Athene Flows by Channel (in millions) | Channel | Gross Inflows (in millions) | | :--- | :--- | | Retail | $9,482 | | Flow reinsurance | $4,933 | | Funding agreements | $11,144 | | Pension group annuities | $4 | | Total Gross Organic Inflows | $25,563 | - Third-party capital supported 21% of Athene's record organic new business volume in the first quarter[51] Sharecount Reconciliation As of Q1 2025, the Adjusted Net Income Shares Outstanding stood at 613.8 million, and during the quarter, the company repurchased 4.6 million shares for $721.5 million at an average cost of $157.58 per share, with $1.05 billion remaining under the share repurchase plan authorization following these repurchases Q1 2025 Share Activity | Activity | Amount (in millions) | | :--- | :--- | | Shares Issued to Employees | 4,293,251 | | Shares Repurchased | 4,578,770 | | Capital Utilized for Repurchases | $721.5 million | | Average Repurchase Cost | $157.58 | | Repurchase Authorization Remaining | $1.05 billion | - Adjusted Net Income Shares Outstanding, the primary non-GAAP measure, was 613.8 million at the end of Q1 2025[52]