Blackstone(BX) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported GAAP net income for the quarter of $1.2 billion, with distributable earnings of $1.9 billion or $1.52 per common share, marking a 48% year-over-year increase [5][36] - Distributable earnings increased nearly 50% year-on-year, driven by a 26% growth in fee-related earnings and a more than doubling of net realizations [7][36] - Total assets under management (AUM) rose 12% year-over-year to a record $1.242 trillion, while fee-earning AUM grew 10% to $906 billion [35] Business Line Data and Key Metrics Changes - In private credit, AUM grew 18% year-over-year to over $500 billion, with infrastructure and asset-based credit business growing 29% year-over-year to $107 billion [20][21] - The private wealth channel saw AUM grow 15% year-over-year to nearly $290 billion, with significant fundraising success, raising over $11 billion in the third quarter [25][26] - The institutional business grew by 64% over the last five years, with infrastructure platform growing 32% year-over-year to $69 billion [29] Market Data and Key Metrics Changes - In the third quarter, global IPO issuance more than doubled year-over-year, indicating a resurgence in capital markets activity [10] - The company noted a significant external focus on credit defaults, clarifying that these were linked to bank-led credits rather than private credit [11][46] - Commercial real estate values are beginning to recover, with transaction activity increasing by 25% year-over-year in U.S. logistics [32] Company Strategy and Development Direction - The company aims to capture generational shifts in the global economy, focusing on massive capital solutions across equity and debt to support sectors like AI, energy infrastructure, and life sciences [17][18] - The firm emphasizes organic growth, having built major market-leading platforms across various sectors over the past 40 years [14][16] - The company is expanding its investment scope into digital and energy infrastructure, private credit, and Asia, among other growth areas [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in strong growth prospects, citing structural tailwinds in the alternative sector and increasing allocations to alternatives by institutional investors [8][9] - The firm anticipates a robust pipeline of realizations and a favorable environment for capital markets, which should support fundraising and deployment [38][100] - Management acknowledged potential increases in defaults as the cycle progresses but remains optimistic about the firm's structural advantages [12][46] Other Important Information - The company celebrated its 40th anniversary, highlighting its growth from a startup to the largest alternative asset manager globally [13] - The firm has a strong focus on investment performance, with various funds delivering healthy returns, particularly in infrastructure and private equity [39][42] - The company is committed to responsible management of dividend levels in response to market conditions [94] Q&A Session Summary Question: Follow-up on private credit market and credit quality changes - Management clarified that recent credit issues were linked to bank-led credits and not reflective of the private credit market, with minimal realized losses reported [45][46] Question: Plans for defined contribution business and partnerships - The company is building capabilities in the defined contribution market and plans to leverage existing partnerships with financial institutions [49][50][53] Question: Brand strategy and marketing evolution - The firm is expanding its brand presence globally, including targeted advertising efforts in key markets like Japan [55][56][59] Question: Impact of dividend cut on wealth management channel - Management noted that the wealth channel is adapting to the reality of floating rate products and expects strong flows despite the recent dividend cut [94][95] Question: Competition from banks in direct lending - Management acknowledged increased competition from banks but emphasized the firm's strong positioning and unique offerings in the private credit space [102]