Higher Expenses to Hurt Apollo's Q4 Earnings, AUM Growth to Support

Core Viewpoint - Apollo Global Management, Inc. (APO) is expected to report a decline in quarterly earnings but an increase in revenues for Q4 2024, with earnings estimated at $1.90, down nearly 1% year-over-year, while sales are projected to rise by 19.5% to $950 million [1][3]. Group 1: Earnings and Revenue Estimates - The Zacks Consensus Estimate for APO's earnings is $1.90, indicating a decline of nearly 1% from the previous year [3]. - The consensus estimate for sales is pegged at $950 million, suggesting a year-over-year rise of 19.5% [3]. - In the last reported quarter, APO's earnings surpassed the Zacks Consensus Estimate, aided by strong performance across all segments, although rising expenses posed a challenge [2]. Group 2: Asset Management and Fees - The total assets under management (AUM) for Apollo are expected to be $755.4 billion, reflecting a sequential rise of 3.1% [5]. - The consensus estimate for management fees is $730.8 million, indicating a sequential rise of 2.9% [6]. - Fee-related performance fees are estimated at $58.15 million, showing a rise of 2% from the previous quarter [6]. Group 3: Partnerships and Strategic Moves - In November 2024, Apollo extended its multi-billion-dollar partnership with Mubadala Investment Company, which is likely to enhance its Capital Solutions business and improve fourth-quarter performance through increased global investment opportunities [4]. Group 4: Cost and Expense Considerations - The consensus estimate for net capital solutions fees and other segment earnings is $149.1 million, indicating a sequential decline of 6.2% [7]. - Ongoing investments in capital formation and credit investing teams, along with merger-related charges, are expected to keep expenses elevated in Q4 [7]. Group 5: Earnings Prediction Model - The model indicates low chances of APO beating earnings estimates this time, with an Earnings ESP of -0.55% and a Zacks Rank of 3 [8][9].