Apollo Management(APO) - 2025 Q2 - Quarterly Results

Financial & Business Highlights Q2 2025 Financial Highlights Apollo reported strong Q2 2025 financial results with GAAP Net Income of $605 million and Adjusted Net Income (ANI) of $1.18 billion, driven by significant growth in core fee and spread-based businesses, with total AUM reaching $840 billion from robust inflows Q2 2025 Financial Metrics | Financial Metric | Q2 2025 | Q2 2025 Per Share | | :--- | :--- | :--- | | GAAP Net Income | $605 million | $1.00 | | Fee Related Earnings (FRE) | $627 million | $1.02 | | Spread Related Earnings (SRE) | $821 million | $1.33 | | Adjusted Net Income (ANI) | $1,179 million | $1.92 | | Total AUM | $840 billion | N/A | | Inflows | $61 billion | N/A | GAAP Income Statement The GAAP income statement for Q2 2025 shows total revenues of $6.8 billion and net income attributable to common stockholders of $605 million, primarily driven by increased net investment income from the Retirement Services segment GAAP Income Statement Summary | (In millions, except per share) | 2Q'25 | 2Q'24 | | :--- | :--- | :--- | | Total Revenues | $6,814 | $6,018 | | Net Income Attributable to Common Stockholders | $605 | $828 | | Diluted Earnings Per Share | $0.99 | $1.35 | Q2 2025 Business Highlights The second quarter featured record Fee Related Earnings (FRE) and strong Spread Related Earnings (SRE) totaling $1.4 billion, with AUM growing 21% year-over-year to $840 billion, supported by $179 billion in inflows over the last twelve months and active capital allocation to shareholders - Record quarterly FRE of $627 million and SRE of $821 million, demonstrating the strength of combined earnings streams[9] - Total AUM increased 21% year-over-year to $840 billion, driven by $179 billion of inflows over the last twelve months[9] - Achieved record quarterly origination activity of $81 billion[9] - Returned significant capital to shareholders, with over $1.3 billion in share repurchases and over $1 billion in dividends distributed over the last twelve months[9] Total Segment Earnings (Non-GAAP) On a non-GAAP basis, total segment earnings for Q2 2025 show Fee Related Earnings (FRE) of $627 million and Spread Related Earnings (SRE) of $821 million, leading to an Adjusted Net Income (ANI) of $1.18 billion or $1.92 per share Total Segment Earnings | (In millions) | 2Q'25 | 2Q'24 | | :--- | :--- | :--- | | Fee Related Earnings (FRE) | $627 | $516 | | Spread Related Earnings (SRE) | $821 | $710 | | Principal Investing Income (PII) | $47 | $33 | | Adjusted Net Income (ANI) | $1,179 | $1,009 | - Adjusted Net Income per share increased to $1.92 in Q2'25 from $1.64 in Q2'24[10] Segment Performance Asset Management Segment The Asset Management segment delivered strong results in Q2 2025, with Fee Related Earnings (FRE) growing 22% year-over-year to a record $627 million, driven by a 21% increase in management fees and record capital solutions fees, while total AUM grew 21% YoY to $840 billion from robust inflows Financial Performance The Asset Management segment's financial performance was highlighted by a 21.5% year-over-year increase in Fee Related Earnings (FRE) to $627 million, with management fees rising 21.4% to $816 million, and an improved FRE Margin of 57.3% due to disciplined expense growth Asset Management Segment Financial Performance | ($ in millions) | 2Q'25 | 2Q'24 | % Change | | :--- | :--- | :--- | :--- | | Total management fees | $816 | $672 | 21.4% | | Fee Related Earnings (FRE) | $627 | $516 | 21.5% | | FRE Margin | 57.3% | 55.3% | +200 bps | - Management fee growth was driven by third-party asset management inflows, record gross capital deployment, and strong growth from Retirement Services clients[15] Assets Under Management (AUM) Total AUM increased by 21% year-over-year to $840 billion, primarily driven by $179 billion in gross inflows over the last twelve months, with Fee-Generating AUM seeing a 22% increase to $638 billion, and perpetual capital constituting nearly 60% of total AUM - Total AUM grew by $143 billion (21%) YoY, driven by $98 billion of inflows from Asset Management and $81 billion from Retirement Services[19] - Fee-Generating AUM increased by $116 billion (22%) YoY, fueled by organic growth at Athene and broad fundraising[19] - Perpetual capital, which is highly scalable, represents nearly 60% of total AUM and 75% of Fee-Generating AUM[19] Inflows The company generated gross inflows of $61 billion in Q2, contributing to $179 billion over the last twelve months, with Asset Management inflows of $40 billion driven by strong demand for credit and equity strategies, and Retirement Services (Athene) contributing $21 billion in organic inflows Inflows | Inflows ($ in billions) | Q2 2025 | LTM Q2'25 | | :--- | :--- | :--- | | Asset Management | $40 | $98 | | Retirement Services | $21 | $81 | | Total Gross Inflows | $61 | $179 | - Asset Management inflows were driven by institutional and global wealth demand for credit strategies like ADS and Asset-Backed Finance, as well as equity strategies like Hybrid Value Fund III[22] Retirement Services Segment The Retirement Services segment, primarily Athene, reported a 16% year-over-year increase in Spread Related Earnings (SRE) to $821 million for Q2 2025, driven by robust net organic growth and favorable alternative investment returns, with a high-quality investment portfolio and strong organic inflows Financial Performance Spread Related Earnings (SRE) increased 15.6% year-over-year to $821 million, supported by strong organic growth and a 10% return from the alternative investment portfolio, with Net Investment Spread at $1.06 billion for the quarter Retirement Services Segment Financial Performance | ($ in millions) | 2Q'25 | 2Q'24 | % Change | | :--- | :--- | :--- | :--- | | Net Investment Spread | $1,060 | $945 | 12.2% | | Spread Related Earnings (SRE) | $821 | $710 | 15.6% | | Net Spread | 1.22% | 1.24% | (2) bps | - SRE growth was primarily driven by more favorable alternative returns and robust net organic growth[24] Return on Asset View & Portfolio Highlights The segment's average net invested assets grew 16.7% year-over-year to $268.7 billion, maintaining a defensively positioned portfolio with 97% investment-grade fixed income assets and a strong liquidity position of $9.3 billion in cash and equivalents - 97% of Athene's fixed income portfolio is invested in investment-grade assets[31] - The portfolio has a low historical average annual credit loss of 11 basis points over the past five years, comparing favorably to the industry average of 13 basis points[31] - As of June 30, 2025, Athene held $9.3 billion of cash and cash equivalents, representing 3.4% of net invested assets[31] Growth Profile Athene continues to demonstrate a powerful growth profile, with Q2 2025 gross organic inflows driven by strong retail annuity sales, flow reinsurance, and record funding agreements, showing a greater than 95% correlation with the growth of Spread Related Earnings (SRE) - Q2 2025 highlights include strong retail annuity sales, robust flow reinsurance volume from U.S. and APAC clients, and record quarterly inflows from funding agreements[32] - The growth of Athene's organic inflows and the growth of Spread Related Earnings (SRE) have a historical correlation of over 95%[34] Principal Investing Segment The Principal Investing segment generated $47 million of Principal Investing Income (PII) in Q2 2025, a 42% increase year-over-year, driven by a 25% rise in realized performance fees from private equity monetizations, while maintaining significant future potential with $261 billion in Performance Fee-Eligible AUM and $72 billion in dry powder Financial Performance Principal Investing Income (PII) for Q2 2025 was $47 million, up 42.4% from the prior year, primarily due to realized performance fees of $219 million, which grew 25.1% YoY, reflecting several sizeable monetizations in flagship private equity funds Principal Investing Segment Financial Performance | ($ in millions) | 2Q'25 | 2Q'24 | % Change | | :--- | :--- | :--- | :--- | | Realized performance fees | $219 | $175 | 25.1% | | Principal Investing Income (PII) | $47 | $33 | 42.4% | - The increase in realized performance fees reflects a few sizeable monetizations within flagship private equity, though overall monetization activity remains prudently delayed amid an uncertain exit environment[38] Performance Fee AUM and Dry Powder The segment's capacity for future earnings remains robust, with Performance Fee-Eligible AUM growing 23% year-over-year to $261 billion, Performance Fee-Generating AUM increasing 33% to $186 billion, and $72 billion of dry powder available for investment at quarter-end - Performance Fee-Eligible AUM increased 23% YoY to $261 billion[41] - Dry Powder available for investment stood at $72 billion at quarter-end, with $59 billion having future management fee potential[41] Investment Performance Investment performance was solid across key strategies, with Direct Origination and Asset-Backed Finance posting strong LTM gross returns of 12.0% and 11.9% respectively in credit, and the Hybrid Value strategy appreciating 17.4% over the last twelve months, while the Net Accrued Performance Fee Receivable stood at $1.57 billion LTM 2Q'25 Appreciation / Gross Returns | LTM 2Q'25 Appreciation / Gross Returns | % Return | | :--- | :--- | | Credit | | | Direct Origination | 12.0% | | Asset-Backed Finance | 11.9% | | Equity | | | Hybrid Value | 17.4% | - The Net Accrued Performance Fee Receivable was $1,572 million at the end of Q2 2025, a slight decrease from $1,594 million in Q1 2025, primarily due to net realized performance fees exceeding net unrealized gains[43] Capital Management & Balance Sheet Capital Strength & Allocation Apollo maintains a strong capital position, underscored by high-grade credit ratings for the parent company and its key subsidiaries, having returned $1.7 billion to stockholders over the last twelve months through dividends and opportunistic share repurchases, while holding $2.4 billion in cash and cash equivalents - Returned a total of $1.7 billion of capital to stockholders over the last twelve months through dividends and share repurchases[45] - Maintains strong investment-grade financial strength ratings from Moody's, S&P, and Fitch for Apollo Global Management (A2/A/A), Apollo Asset Management (A2/A/A), and Athene (A1/A+/A+)[45] Sharecount Reconciliation The company actively managed its share count through repurchases, with $15.7 million of common stock repurchased in Q2 2025, totaling approximately $1.34 billion over the last twelve months, and $1.03 billion remaining under the current share repurchase authorization Share Repurchase Activity | Share Repurchase Activity | Q2 2025 | LTM Q2'25 | | :--- | :--- | :--- | | of Shares Repurchased | 112,211 | 9,934,123 | | Capital Utilized | $15.7 million | ~$1.34 billion | - As of the end of Q2 2025, the company had $1.03 billion remaining under its share repurchase plan authorization[50] GAAP Balance Sheet As of June 30, 2025, Apollo's GAAP balance sheet shows total assets of $419.6 billion, a significant increase from $377.9 billion at year-end 2024, primarily driven by an increase in investments within the Retirement Services segment, with total liabilities growing to $385.7 billion and total stockholders' equity increasing to $19.3 billion GAAP Balance Sheet Summary | ($ in millions) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $419,550 | $377,895 | | Total Liabilities | $385,689 | $346,915 | | Total Apollo Stockholders' Equity | $19,321 | $17,253 | Supplemental Details & Reconciliations AUM Rollforward This section provides a detailed reconciliation of Assets Under Management (AUM) over the last three and twelve months, showing that for the twelve months ending June 30, 2025, Total AUM increased from $696.3 billion to $839.6 billion, driven by $182.6 billion in inflows, partially offset by outflows and realizations, with a positive market activity impact Total AUM Rollforward (LTM Q2'25) | Total AUM Rollforward (LTM Q2'25, $ in millions) | Amount | | :--- | :--- | | Beginning Balance | $696,253 | | Inflows | $182,603 | | Outflows | ($63,044) | | Realizations | ($20,100) | | Market Activity | $43,893 | | Ending Balance | $839,605 | Retirement Services Flows & Invested Assets This section details the flows and asset base for the Retirement Services segment, which generated $21.2 billion in gross organic inflows in Q2 2025, led by funding agreements and retail, resulting in net flows of $14.0 billion for the quarter, with third-party capital supporting approximately 25% of new business volume Q2'25 Gross Organic Inflows by Channel | Q2'25 Gross Organic Inflows by Channel ($ in millions) | Amount | | :--- | :--- | | Retail | $7,256 | | Flow reinsurance | $2,031 | | Funding agreements | $11,707 | | Total Gross Organic Inflows | $21,232 | - Third-party capital (ADIP) is a key growth enabler, supporting approximately 25% of Athene's organic new business volume in the quarter[48] Investment Record The investment record provides detailed performance metrics for Apollo's key credit and equity funds as of June 30, 2025, including committed capital, total invested capital, realized and unrealized value, and both gross and net Internal Rates of Return (IRR) for each vintage, demonstrating a long-term track record of value creation - The report details the performance of major funds, for example, the flagship private equity Fund IX (2018 vintage) has generated a 24% Gross IRR and a 16% Net IRR on $23.1 billion of invested capital[52] GAAP to Non-GAAP Reconciliation This section provides a detailed reconciliation of GAAP financial measures to non-GAAP measures like Segment Income and Adjusted Net Income (ANI), bridging the gap by adjusting for items such as equity-based compensation, unrealized performance fees, and investment gains/losses to present a clearer view of core operating earnings Reconciliation to ANI (Q2'25) | Reconciliation to ANI (Q2'25, $ in millions) | Amount | | :--- | :--- | | GAAP Net Income Attributable to Common Stockholders | $605 | | Plus/Minus Adjustments: | | | Preferred dividends & NCI | $237 | | Income tax provision | $3 | | Asset & Retirement Services Adjustments (unrealized gains, equity comp, etc.) | $430 | | Segment Income | $1,495 | | HoldCo interest & Taxes | ($316) | | Adjusted Net Income (ANI) | $1,179 | Definitions & Disclosures Definitions This section provides detailed definitions for key financial and operating metrics used throughout the earnings presentation, clarifying the calculation and components of non-GAAP measures such as Fee Related Earnings (FRE), Spread Related Earnings (SRE), Principal Investing Income (PII), and Adjusted Net Income (ANI), as well as operating metrics like Assets Under Management (AUM) and Dry Powder Forward-Looking Statements This disclosure contains standard safe harbor language, cautioning that the presentation includes forward-looking statements based on management's current beliefs and expectations, which are subject to various risks, uncertainties, and assumptions, and actual results may differ materially, advising readers to consult the company's SEC filings for a complete discussion of these risks