Apollo Global Management, Inc. Quarterly Report for Q1 Ended Mar 31, 2023

Summary

Apollo Global Management, Inc. (APO) reported a strong first quarter for 2023, demonstrating significant growth and profitability across its business segments. The company's Asset Management segment saw substantial increases in management and advisory fees, driven by higher assets under management (AUM) and strategic acquisitions. Fee Related Earnings (FRE) grew robustly, indicating efficient operations within this segment. The Retirement Services segment, primarily driven by Athene, also showed impressive performance with a significant rise in net investment income, benefiting from a larger investment portfolio and higher interest rates. Investment-related gains also rebounded significantly, contributing positively to overall revenues. Despite a challenging market environment with rising interest rates and economic volatility, Apollo managed its expenses effectively, with compensation and benefits decreasing year-over-year for the Asset Management segment, though overall expenses rose due to the Retirement Services segment's growth and operational costs. The company maintained a solid liquidity position, with substantial cash and cash equivalents, and credit facilities available to support its operations and strategic initiatives. Key financial highlights include a significant increase in total revenues, driven by both the Asset Management and Retirement Services segments. The Asset Management segment's Fee Related Earnings (FRE) saw a considerable increase, reflecting strong growth in management and advisory fees. In the Retirement Services segment, Net Investment Income saw a substantial rise, bolstered by a growing investment portfolio and higher interest rates. This segment also experienced a notable rebound in Investment Related Gains (Losses), positively impacting its overall revenue. While total expenses increased, largely due to the expansion of the Retirement Services business and associated operating costs, the company managed its Asset Management compensation expenses effectively, reporting a decrease year-over-year. Apollo's liquidity remains strong, supported by substantial cash reserves and credit facilities, enabling continued investment in growth and strategic opportunities.

Key Highlights

• 1Total Revenues increased significantly to $5.3 billion in Q1 2023 from $862 million in Q1 2022, driven by strong performance in both Asset Management and Retirement Services.
• 2Asset Management Fee Related Earnings (FRE) grew by 28.1% to $397 million, reflecting robust growth in management fees and capital solutions fees.
• 3Retirement Services Segment Income (SRE) increased by 2% to $688 million, driven by higher net investment earnings, although partially offset by increased cost of funds.
• 4Net Investment Income in the Retirement Services segment rose by 50.9% to $2.6 billion, benefiting from a larger investment portfolio and higher interest rates.
• 5Investment Related Gains (Losses) in the Retirement Services segment swung from a loss of $4.2 billion in Q1 2022 to a gain of $1.1 billion in Q1 2023, significantly boosting overall revenue.
• 6Despite an increase in total expenses, Compensation and Benefits in the Asset Management segment decreased by 8.7% to $670 million due to lower profit sharing and equity-based compensation expenses.
• 7Total Assets under management (AUM) for Apollo's Asset Management segment grew to $597.7 billion as of March 31, 2023, an increase of 9.1% from December 31, 2022, demonstrating continued fundraising success.

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