10-QPeriod: Q2 FY2022

Apollo Global Management, Inc. Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 9, 2022For Securities:APOAPOSAPO-PA

Summary

Apollo Global Management, Inc. reported a net loss of $2.05 billion for the second quarter of 2022, a significant shift from the $658 million net income in the same period last year. This decline was largely driven by a substantial downturn in investment income, particularly within the Asset Management segment, which experienced a $1.0 billion decrease year-over-year due to equity market volatility and declines in performance allocations across several key funds. The Retirement Services segment also faced headwinds, reporting a significant investment-related loss of $5.8 billion primarily due to unfavorable market conditions affecting its investment portfolio, including a notable impact from its hedging derivatives and mortgage loans. Despite the overall net loss, the company's Fee Related Earnings (FRE) from its Asset Management segment showed resilience, increasing by 7.0% year-over-year, indicating stable fee-generating revenue streams. Spread Related Earnings (SRE) from the Retirement Services segment also grew, underscoring the steady income generated from its insurance and annuity products. The company's total Assets Under Management (AUM) remained robust at $514.8 billion, reflecting continued investor confidence. However, the significant investment losses, particularly in the Retirement Services segment, highlight the sensitivity of the company's performance to broader market fluctuations.

Financial Highlights

35 data points
Beta

Revenue

$2.29B

Net Income

-$1.64B

-71.6% Net Margin

EPS (Diluted)

$-2.82

Total Assets

$247.85B

Cash & Equivalents

$14.51B

Free Cash Flow

$3.97B

Financial Statements
Beta
Revenue$2.29B
Operating Expenses$5.45B
Interest Expense$54.00M
Net Income-$1.64B
EPS (Basic)$-2.82
EPS (Diluted)$-2.82
Shares Outstanding (Basic)584.77M
Shares Outstanding (Diluted)584.77M

Key Highlights

  • 1Net loss of $2.05 billion for the quarter, a significant decrease from a net income of $658 million in Q2 2021.
  • 2Asset Management Fee Related Earnings (FRE) increased by 7.0% to $341.1 million, demonstrating stable fee generation.
  • 3Retirement Services Spread Related Earnings (SRE) grew by 25.5% to $441.7 million, indicating continued profitability from insurance operations.
  • 4Total Assets Under Management (AUM) stood at $514.8 billion, a slight increase from the prior quarter, showcasing stable AUM levels.
  • 5Investment income (loss) in Asset Management turned negative to $(195) million from a positive $812 million in the prior year, heavily impacted by market downturns.
  • 6Retirement Services reported a significant investment-related loss of $(5.8) billion, primarily due to market volatility affecting its investment portfolio.
  • 7Total Revenues increased significantly by 64.3% to $2.27 billion, driven by the inclusion of Retirement Services' revenue streams.

Frequently Asked Questions

The substantial net loss of $2.05 billion in Q2 2022 was primarily driven by a sharp decline in investment income across both the Asset Management and Retirement Services segments. The Asset Management segment experienced a $1.0 billion year-over-year decrease in investment income, largely due to market volatility impacting performance allocations. The Retirement Services segment reported a significant investment-related loss of $5.8 billion, attributed to unfavorable market conditions affecting its investment portfolio, including derivatives and mortgage loans.

The Retirement Services segment showed resilience in its core operations. Spread Related Earnings (SRE), a key performance measure for this segment, increased by 25.5% to $441.7 million. This growth was supported by strong performance in fixed income and alternative investments, and offset by the cost of funds and operating expenses. The segment's ability to generate steady income from its insurance and annuity products contributed positively, even amidst broader market challenges.

The merger with Athene, completed on January 1, 2022, significantly altered Apollo's financial reporting by consolidating Athene's results. While Athene's revenue streams, particularly from Retirement Services, have substantially increased total revenues, the market downturns have also led to significant investment-related losses within this segment, impacting overall profitability. The merger has integrated Athene's substantial assets and liabilities, making Apollo's financial performance more sensitive to the dynamics of the insurance and annuity market.

Apollo's Asset Management segment demonstrated stability in its fee-generating activities. Fee Related Earnings (FRE), which represents recurring fee income less associated expenses, increased by 7.0% to $341.1 million. This growth was driven by increases in management fees, partly from Athene's higher Fee-Generating AUM and the acquisition of Griffin Capital's U.S. asset management business. Despite the overall market downturn affecting investment income, the FRE metric highlights the resilience of Apollo's core asset management business model.