10-QPeriod: Q1 FY2022

Apollo Global Management, Inc. Quarterly Report for Q1 Ended Mar 31, 2022

Filed May 10, 2022For Securities:APOAPOSAPO-PA

Summary

Apollo Global Management, Inc. (APO) reported its first quarter 2022 results, marked by the significant consolidation of Athene following their merger on January 1, 2022. This merger substantially altered the company's financial statements, leading to a reported net loss attributable to common stockholders of $870 million, or $(1.50) per diluted share, a notable shift from the net income of $679 million, or $2.81 per diluted share, in the prior year's comparable quarter. The reported loss is largely influenced by $4.2 billion in investment-related losses and a substantial increase in expenses related to the Retirement Services segment. Despite the net loss, the Asset Management segment showed resilience with Fee Related Earnings (FRE) increasing by 2.8% year-over-year to $310.0 million, driven by growth in management and advisory fees. Total Assets Under Management (AUM) grew to $512.8 billion. Investors should note the significant impact of Athene's integration, the prevailing market volatility affecting investment income, and the substantial equity-based compensation expenses that contributed to the net loss.

Financial Highlights

35 data points
Beta

Revenue

$862.00M

Net Income

-$401.00M

-46.5% Net Margin

EPS (Diluted)

$-0.70

Total Assets

$261.56B

Cash & Equivalents

$12.43B

Free Cash Flow

-$3.99B

Financial Statements
Beta
Revenue$862.00M
Operating Expenses$2.78B
Interest Expense$56.00M
Net Income-$401.00M
EPS (Basic)$-0.70
EPS (Diluted)$-0.70
Shares Outstanding (Basic)586.50M
Shares Outstanding (Diluted)586.50M

Key Highlights

  • 1Apollo Global Management reported a net loss attributable to common stockholders of $870 million for Q1 2022, a significant decline from a net income of $679 million in Q1 2021, primarily due to merger-related integration costs and investment-related losses.
  • 2The merger with Athene, effective January 1, 2022, led to a substantial increase in total assets to $261.6 billion and total liabilities to $241.3 billion, reflecting the consolidation of Athene's operations.
  • 3Total Revenues decreased by 61.9% to $875 million in Q1 2022 from $2.3 billion in Q1 2021. This was largely driven by a 60.6% decrease in Investment Income within the Asset Management segment, impacted by market volatility.
  • 4Fee Related Earnings (FRE) for the Asset Management segment increased by 2.8% to $310.0 million, reflecting growth in management and advisory fees, despite an overall decline in Asset Management revenues.
  • 5The Retirement Services segment reported revenues of $(234) million for Q1 2022, primarily impacted by $4.2 billion in investment-related losses, largely due to unfavorable changes in the fair value of reinsurance assets, mortgage loans, and hedging derivatives.
  • 6Total Expenses increased by 231.8% to $3.39 billion in Q1 2022, heavily influenced by the inclusion of Retirement Services expenses, which were $2.48 billion, compared to zero in the prior year's quarter.
  • 7Equity-based compensation expense significantly increased to $156 million from $56 million in the prior year's quarter, contributing to the higher operating expenses.

Frequently Asked Questions

The primary driver of Apollo's net loss in Q1 2022 was the significant integration of Athene following their merger, which resulted in substantial merger-related transaction and integration costs, alongside considerable investment-related losses within the Retirement Services segment due to market volatility. This, combined with increased operating expenses, led to a net loss attributable to common stockholders of $870 million.

The merger with Athene, effective January 1, 2022, significantly impacted Apollo's financial statements by consolidating Athene's operations. This led to a substantial increase in total assets to $261.6 billion and total liabilities to $241.3 billion. It also resulted in the booking of $4.2 billion in goodwill and the inclusion of Athene's revenues and expenses, including significant investment-related losses and operating costs, which contributed to the reported net loss for the quarter.

The Asset Management segment's Fee Related Earnings (FRE) showed growth, increasing by 2.8% to $310.0 million in Q1 2022. This growth was driven by an increase in management fees and advisory and transaction fees, supported by new capital inflows and growth in retirement services clients. Apollo expects continued growth in FRE, as it strategically invests in talent and expands its global team, aiming to capture future growth opportunities.

The Retirement Services segment reported revenues of $(234) million in Q1 2022, primarily due to $4.2 billion in investment-related losses. These losses were mainly driven by unfavorable fair value changes in reinsurance assets, mortgage loans, trading securities, and FIA hedging derivatives, as well as credit losses, largely influenced by rising U.S. Treasury rates and widening credit spreads. While expenses increased significantly due to the inclusion of Athene's operations, the segment's Net Investment Spread remained positive, driven by strong alternative investment income and fixed income performance, albeit impacted by purchase accounting adjustments.