Ares(ARES) - 2025 Q2 - Quarterly Results

Cover Page & Notices Financial Highlights and Statements Second Quarter 2025 Highlights Ares Management reported strong Q2 2025 results, with GAAP net income of $137.1 million and Fee Related Earnings (FRE) of $409.1 million, while Assets Under Management (AUM) grew to $572.4 billion | Metric | Value | | :--- | :--- | | Financial Results | | | GAAP Net Income (attributable to ARES) | $137.1 million | | GAAP Diluted EPS | $0.46 | | Fee Related Earnings (FRE) | $409.1 million | | Realized Income (RI) | $397.8 million | | After-tax RI per Share | $1.03 | | Assets Under Management | | | Total AUM | $572.4 billion | | Total Fee Paying AUM (FPAUM) | $349.6 billion | | Available Capital | $150.8 billion | | Capital Activity | | | Gross Capital Raised | $26.2 billion | | Capital Deployment | $26.9 billion | | Corporate Actions | | | Quarterly Dividend per Class A Share | $1.12 | GAAP Statements of Operations For Q2 2025, Ares reported total GAAP revenues of $1.35 billion, a significant increase from $788.7 million in Q2 2024, primarily driven by higher management fees and a positive swing in carried interest allocation | GAAP Metric ($ in thousands) | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenues | $1,350,128 | $788,682 | +71.2% | | Management Fees | $900,622 | $721,681 | +24.8% | | Carried Interest Allocation | $323,901 | $(51,167) | Favorable | | Total Expenses | $1,137,578 | $564,544 | +101.5% | | Net Income Attributable to Ares | $137,062 | $94,938 | +44.4% | | Diluted EPS | $0.46 | $0.43 | +7.0% | RI and Other Measures Financial Summary On a non-GAAP basis, Fee Related Earnings (FRE) for Q2 2025 grew 26% year-over-year to $409.1 million, while Realized Income (RI) increased by 10% to $397.8 million | Non-GAAP Metric ($ in thousands, except per share) | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Management Fees | $900,285 | $726,111 | +24% | | Fee Related Earnings (FRE) | $409,111 | $324,516 | +26% | | Realized Income (RI) | $397,814 | $363,158 | +10% | | After-tax RI per share | $1.03 | $0.99 | +4% | | FRE Margin | 41.2% | 42.1% | -90 bps | Capital Activity Gross New Capital Commitments In Q2 2025, Ares raised $26.2 billion in gross new capital commitments, with the Credit Group contributing the largest share at $18.1 billion - Total gross new capital commitments for Q2 2025 were $26.2 billion[14] | Group | Q2 2025 Gross Commitments ($B) | Key Activities | | :--- | :--- | :--- | | Credit Group | $18.1 | U.S. Direct Lending ($4.6B), BDCs ($5.7B), Opportunistic Credit ($2.8B) | | Real Assets Group | $3.7 | Real Estate debt funds ($1.1B), Japan DC Partners ($0.8B) | | Secondaries Group | $2.5 | Credit Secondaries ($1.2B), Private Equity Secondaries ($1.1B) | | Other Businesses | $1.9 | Additional managed assets from Insurance | | Total | $26.2 | | Assets Under Management (AUM) Analysis As of June 30, 2025, AUM reached $572.4 billion, up 28% YoY, while Fee Paying AUM (FPAUM) grew 27% to $349.6 billion, driven by strong fundraising, deployment, and the acquisition of GCP International | Metric ($ in billions) | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total AUM | $572.4 | $447.2 | +28% | | Total FPAUM | $349.6 | $275.8 | +27% | - Perpetual Capital AUM increased by 43% year-over-year to $166.6 billion, driven by perpetual wealth vehicles (BDCs, APMF), the GCP International acquisition, and insurance assets[28][29] - AUM Not Yet Paying Fees available for future deployment stands at $86.8 billion, which could generate approximately $822.7 million in potential incremental annual management fees[42][44] - Incentive Eligible AUM grew 17% YoY to $303.8 billion, with 68% ($139.1 billion) of the invested portion currently generating incentives[46][47] Capital Deployment Ares deployed a total of $26.9 billion in gross capital during Q2 2025, a slight increase from $26.4 billion in Q2 2024, with deployment evenly split between drawdown funds and perpetual capital vehicles - Total gross capital deployment in Q2 2025 was $26.9 billion[53][54] | Deployment Source | Q2 2025 ($B) | Q2 2024 ($B) | | :--- | :--- | :--- | | Drawdown Funds | $13.0 | $13.0 | | Perpetual Capital Vehicles | $13.9 | $12.4 | | Total | $26.9 | $25.4 | - By segment, the Credit group deployed $20.6 billion, Real Assets deployed $3.0 billion, Secondaries deployed $1.0 billion, and Private Equity deployed $0.8 billion[54] Segment Performance Credit Group The Credit Group's Fee Related Earnings (FRE) increased 16% YoY to $426.3 million in Q2 2025, driven by a 16% rise in management and other fees, with AUM reaching $377.1 billion | Credit Group Metric ($ in thousands) | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Management and other fees | $630,503 | $545,145 | +16% | | Fee Related Earnings | $426,310 | $368,281 | +16% | | Realized Income | $435,494 | $408,205 | +7% | | AUM ($ in billions) | $377.1 | $323.1 | +17% | - Gross capital deployment for the quarter was $20.6 billion, led by U.S. direct lending ($11.1B) and European direct lending ($3.8B)[67] Real Assets Group The Real Assets Group delivered exceptional growth in Q2 2025, with Fee Related Earnings (FRE) surging 120% YoY to $113.6 million and AUM nearly doubling to $129.8 billion, primarily driven by the acquisition of GCP International | Real Assets Group Metric ($ in thousands) | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Management and other fees | $224,482 | $106,054 | +112% | | Fee Related Earnings | $113,645 | $51,643 | +120% | | Realized Income | $97,648 | $41,069 | +138% | | AUM ($ in billions) | $129.8 | $67.7 | +92% | - The significant increase in fees and earnings was primarily driven by the acquisition of GCP International[76] Private Equity Group The Private Equity Group's Q2 2025 performance showed mixed results, with a 32% drop in Fee Related Earnings (FRE) to $9.8 million due to lower management fees, offset by a 13% increase in Realized Income to $12.9 million | Private Equity Group Metric ($ in thousands) | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Management and other fees | $32,201 | $34,019 | -5% | | Fee Related Earnings | $9,846 | $14,454 | -32% | | Realized Income | $12,858 | $11,392 | +13% | | AUM ($ in billions) | $23.8 | $24.6 | -3% | - The decrease in FRE was driven by lower management fees and higher operating expenses, while the increase in RI was due to realized net performance income[82] Secondaries Group The Secondaries Group posted strong Q2 2025 results, with Fee Related Earnings (FRE) increasing 50% YoY to $50.5 million and AUM growing 29% to $33.9 billion, fueled by a 40% rise in management fees | Secondaries Group Metric ($ in thousands) | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Management and other fees | $67,444 | $48,199 | +40% | | Fee Related Earnings | $50,537 | $33,641 | +50% | | Realized Income | $48,715 | $26,544 | +84% | | AUM ($ in billions) | $33.9 | $26.3 | +29% | - Fee growth was primarily driven by capital raised by APMF and commitments to the third infrastructure secondaries fund[89] Supplemental Information Financial Details - Segments This section provides a detailed unconsolidated financial breakdown for Q2 2025 across all segments, highlighting the Credit group as the largest contributor to earnings and the Operations Management Group (OMG) as a significant cost center | Q2 2025 ($ in thousands) | Credit Group | Real Assets Group | Private Equity Group | Secondaries Group | Operations Mgt. Group | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Management Fees | $617,141 | $175,924 | $31,767 | $61,643 | - | $900,285 | | Fee Related Earnings | $426,310 | $113,645 | $9,846 | $50,537 | $(195,991) | $409,111 | | Realized Income | $435,494 | $97,648 | $12,858 | $48,715 | $(196,244) | $397,814 | Balance Sheet and Liquidity As of June 30, 2025, Ares maintained a strong balance sheet with $1.23 billion in available liquidity and a corporate investment portfolio of $2.3 billion, while net accrued performance income increased to $1.03 billion | Financial Strength ($ in millions) | As of June 30, 2025 | | :--- | :--- | | Available Liquidity | $1,234.7 | | Cash and cash equivalents | $509.7 | | Term debt obligations | $2,560.2 | | Amount drawn on revolving credit facility | $1,115.0 | | Corporate investment portfolio (Unconsolidated) | $2,305.7 | | Net accrued performance income (GAAP) | $1,033.9 | - Net accrued performance income increased from $957.9 million at the end of Q4 2024 to $1,033.9 million at the end of Q2 2025, driven by $129.7 million in net change in unrealized value, offset by $53.7 million in net realizations[113][115] AUM and FPAUM Rollforwards AUM increased by $26.5 billion quarter-over-quarter to $572.4 billion, driven by net new commitments and positive market changes, while FPAUM grew by $14.5 billion primarily due to deployment and new fee-paying commitments | Q2-25 AUM Rollforward ($ in millions) | Credit | Real Assets | Private Equity | Secondaries | Other | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Q1-25 Ending Balance | $359,076 | $124,187 | $24,727 | $31,312 | $6,571 | $545,873 | | Net new commitments | $18,083 | $3,713 | - | $2,519 | $1,921 | $26,236 | | Distributions/Redemptions | ($5,944) | ($1,850) | ($1,056) | ($200) | ($417) | ($9,467) | | Change in fund value | $9,568 | $4,060 | $114 | $246 | $22 | $14,010 | | Q2-25 Ending Balance | $377,106 | $129,774 | $23,766 | $33,949 | $7,790 | $572,385 | | Q2-25 FPAUM Rollforward ($ in millions) | Credit | Real Assets | Private Equity | Secondaries | Other | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Q1-25 Ending Balance | $218,231 | $76,425 | $11,352 | $23,470 | $5,590 | $335,068 | | Deployment/Subscriptions | $6,973 | $1,287 | $16 | $409 | - | $8,685 | | Q2-25 Ending Balance | $228,153 | $79,495 | $10,993 | $24,535 | $6,381 | $349,557 | Appendix Fund Performance Metrics This section provides detailed performance data for significant funds across all investment groups, including quarterly, YTD, and since-inception returns for non-drawdown funds, and IRR and MoIC for drawdown funds - Detailed performance metrics are provided for significant funds within the Credit, Real Assets, Private Equity, and Secondaries groups[126][133][136][138] - For non-drawdown funds like ARCC (U.S. Direct Lending), the since-inception net return is 12.1%; for drawdown funds like ACOF VI (Corporate Private Equity), the net IRR is 16.0% and net MoIC is 1.5x[126][136] GAAP to Non-GAAP Reconciliation This section reconciles GAAP Income Before Taxes to the key non-GAAP metrics of Realized Income (RI) and Fee Related Earnings (FRE), detailing major adjustments for non-cash expenses and unrealized gains/losses - Reconciles GAAP Income before taxes ($286.9M) to Realized Income ($397.8M) and Fee Related Earnings ($409.1M) for Q2 2025[154] - Key reconciling items include adjustments for amortization, depreciation, equity compensation, acquisition-related expenses, and unrealized performance and investment income[154] Glossary The glossary provides definitions for key terms and non-GAAP financial measures used throughout the earnings presentation, including detailed explanations of AUM, FPAUM, FRE, and RI - Defines key non-GAAP metrics used by management, such as Fee Related Earnings (FRE), which assesses core operating performance from recurring revenues, and Realized Income (RI), which evaluates performance excluding unrealized fluctuations[179][185] - Explains the composition of various AUM metrics, including total AUM, Fee Paying AUM (FPAUM), AUM Not Yet Paying Fees, Incentive Eligible AUM (IEAUM), and Perpetual Capital[176][179][184]