Blue Owl Capital (US:OWL)2025-10-30 15:02Financial Data and Key Metrics Changes - The company reported fee-related earnings (FRE) of $0.24 per share and distributable earnings (DE) of $0.22 per share for Q3 2025, with a dividend declared at $0.225 per share [4][21] - Management fees increased by 29% over the last 12 months, with 86% coming from permanent capital vehicles [22] - FRE was up 19%, and DE was up 15% year-over-year [22] Business Line Data and Key Metrics Changes - In direct lending, gross origination in Q3 was approximately $11 billion, with net deployment increasing to $3 billion, bringing last 12-month gross and net originations to $47 billion and $12 billion, respectively [10][25] - The alternative credit strategy demonstrated scale benefits, deploying approximately $5 billion over the last 12 months, primarily focused on small business equipment leasing, aviation, and consumer transactions [10][11] - The company raised over $14 billion in new capital commitments during the quarter, achieving a record $57 billion in capital raised over the last 12 months [9][22] Market Data and Key Metrics Changes - The company noted a shift in investor focus towards credit and digital infrastructure, which are gaining market share from legacy categories [6] - The health of the private credit markets remains strong, with an average annual realized loss of just 13 basis points and no signs of meaningful stress in direct lending [7][8] Company Strategy and Development Direction - The company is strategically positioned to benefit from ongoing investments in institutional and private wealth distribution channels and new product expansion [5][6] - A substantial strategic partnership was announced with Qatar Investment Authority to scale and expand the digital infrastructure business [17] - The company aims for continued growth in management fees and earnings, with expectations of 20% growth in FRE per share by 2026 and 2027 [36][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of their credit portfolios and the ongoing health of underlying borrowers [8][32] - The company anticipates continued growth in Part 1 fees in 2026, despite recent rate cuts [26] - Management emphasized the importance of performance and duration of capital in achieving positive investment outcomes over time [19][20] Other Important Information - The company has an installed base of over 160,000 individual investors and is adding new products in digital infrastructure and alternative credit [18] - The company completed its largest strip sale to date, selling about 18% of the assets in Fund 4 for proceeds of over $2.5 billion, delivering a 3.2x gross return [18] Q&A Session Summary Question: Summary of growth investments and future metrics - Management expects margin expansion and meaningful acceleration in FRE and DE per share growth as they move into 2026 and 2027 [34][35] Question: Impact of credit volatility on retail flows - Management reported strong flows and continued momentum in wealth-focused products, indicating resilience in the channel [46][47] Question: Understanding stock price perceptions - Management is focused on execution and communication to address market misunderstandings and believes the current valuations do not reflect the underlying business strength [52][55] Question: Digital infrastructure business and lease structures - Management clarified that leases are designed for long durations with built-in flexibility, ensuring strong returns even in case of early termination [61][62] Question: Absorption of recent fundraising and fund performance - Management noted that while there was short-term noise in fund performance, the underlying projects are strong, and they expect to absorb new capital quickly [68][70]