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 declared dividend of $0.225 per share [4][22] - Management fees increased by 29% over the last 12 months, with 86% coming from permanent capital vehicles [21][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 was approximately $11 billion in Q3, with net deployment increasing to $3 billion [10][25] - The alternative credit strategy demonstrated scale benefits, deploying approximately $5 billion over the last 12 months [10][25] - The company raised $5.6 billion in credit during Q3, with $3 billion from direct lending [22][24] Market Data and Key Metrics Changes - The company raised over $1 billion in the Digital Infrastructure Fund, reflecting strong investor interest [16][17] - The installed base of individual investors in Blue Owl products exceeded 160,000, with significant growth in private wealth fundraising [17][18] Company Strategy and Development Direction - The company is strategically positioned to benefit from the shift towards credit and digital infrastructure, capitalizing on ongoing investments across institutional and private wealth distribution channels [5][6] - Blue Owl aims to continue expanding its digital infrastructure business, highlighted by a substantial partnership with QIA [17][19] - The focus remains on delivering exceptional returns per unit of risk while maintaining a vigilant approach to market changes [20][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the health of the credit portfolios, with an average annual realized loss of just 13 basis points [7][8] - The company anticipates continued growth in FRE and DE per share, aiming for 20% growth in management fees and revenues by 2026 [36][37] - Management emphasized the importance of execution and communication to address market perceptions and enhance stock performance [55][56] Other Important Information - The company has a growing base of AUM Not Yet Paying Fees, amounting to $28 billion, which is expected to drive over $360 million in management fees upon deployment [9] - The company has closed on two investments in GP stakes during Q3, with a significant focus on delivering liquidity to investors [18][19] 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 from 2026 onwards, aligning with their long-term goals [34][35] Question: Impact of credit volatility on retail flows - Management reported strong flows and continued momentum in wealth-focused products, indicating resilience despite market volatility [46][47] Question: Understanding stock performance relative to fundamentals - Management acknowledged the disconnect between strong fundamentals and stock performance, emphasizing execution and communication as key strategies to address this [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 regardless of early termination scenarios [61][62] Question: Fund performance and absorption of recent fundraising - Management noted that recent performance fluctuations are short-term noise, with strong underlying performance expected to continue [68][69]