How did Apollo's core earnings metrics perform in the first quarter of 2024?

Fee Related Earnings were $462 million ($0.75 per share), up 16% year-over-year. Spread Related Earnings were $817 million ($1.32 per share), up 19%. Combined, FRE and SRE totaled $1.3 billion, up 18%. Adjusted Net Income was $1.06 billion ($1.72 per share), compared with $845 million ($1.42 per share) a year earlier.

Why were realized performance fees lower this quarter?

Realized performance fees were $94 million, down from $269 million in 4Q'23 and $164 million in 1Q'23. Management said monetization of sizeable flagship private equity funds (Fund VIII and IX) continues to be prudently delayed because of a challenging exit environment, and market conditions are less accommodative for monetization activity.

What drove the growth in Retirement Services earnings, and are there any risks?

SRE growth was driven by robust organic growth, strong new business profitability, higher floating-rate income and higher alternative net investment income. Cost of funds rose 39.5% year-over-year on higher new-business costs in a higher rate environment and floating-rate hedging. Alternative investments returned 9.1% in the quarter, above management's 11% long-term expectation in part, which would have implied $56 million of additional income. Future results depend on continued alternatives performance and spread management.

How much capital did Apollo return to shareholders, and what is the outlook?

Apollo repurchased $512 million of common stock in the quarter and returned $1.1 billion to stockholders over the last twelve months through dividends and repurchases. It declared a $0.4625 per share common dividend payable May 31, 2024, and a $0.8438 per share dividend on its Mandatory Convertible Preferred Stock payable July 31, 2024. Management said it is confident in delivering its financial targets for the year, though dividends remain at the board's discretion.

Apollo Global Management, Inc. 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed May 2, 2024. Cited figures are marked; the original filing is the authoritative source.

Apollo Global Management (NYSE: APO) reported first quarter 2024 results on May 2, 2024, showing continued growth across both its Asset Management and Retirement Services segments.

Fee Related Earnings (FRE) rose to $462 million^a ($0.75 per share), up from $397 million a year earlier, while Spread Related Earnings (SRE) reached $817 million ($1.32 per share), up 19% year-over-year. Combined FRE and SRE totaled $1.3 billion, an 18% increase, and Adjusted Net Income (ANI) was $1.06 billion ($1.72 per share). GAAP net income attributable to Apollo common stockholders was $1.40 billion, or $2.31 per share basic.

Business activity was strong. Total assets under management reached $671 billion^b, up 12% year-over-year, supported by $40 billion of gross inflows in the quarter and $140 billion over the last twelve months. Debt origination was a record $40 billion for the quarter, and Athene's organic inflows reached a record $20 billion.

Management reiterated confidence in delivering its full-year financial targets. Apollo also declared a quarterly common dividend of $0.4625^c per share, payable May 31, 2024, and repurchased $512 million of stock in the quarter. Investors should note several items that affect the quality of earnings.

Realized performance fees fell to $94 million^d from $269 million in the prior quarter as monetization of flagship private equity funds remained delayed amid a challenging exit environment. Net spread rose to 1.47%, aided by a 9.1% return on Athene's alternative portfolio, but cost of funds increased as higher new-business costs and floating-rate hedging pressured spreads.

Alternative investment returns above management's 11% long-term expectation would have added $56 million of income, so results benefited modestly from strong alternatives performance. The results were furnished under Items 2.02 and 9.01 and are not deemed filed for Exchange Act purposes.

02—Key points

Key Highlights

GAAP net income attributable to Apollo common stockholders of $1.40 billion ($2.31 per basic share), compared with $1.01 billion ($1.67 per share) in 1Q'23.
Fee Related Earnings rose 16% year-over-year to $462 million, with FRE margin of 55.1% and fee-related compensation ratio of 26.2%.
Spread Related Earnings grew 19% year-over-year to $817 million, driven by organic growth, higher floating-rate income and higher alternative net investment income; net spread improved to 1.47%.
Total AUM reached $671 billion (up 12% YoY) and Fee-Generating AUM reached $506 billion (up 14% YoY), with nearly 60% of AUM in perpetual capital.
Record quarterly debt origination of $40 billion and record Athene organic inflows of $20 billion, with $40 billion total gross inflows in the quarter.
Realized performance fees declined to $94 million from $269 million in 4Q'23, reflecting delayed monetization of Fund VIII and IX; the Asset Management compensation ratio was 77% on an LTM basis.
Declared a $0.4625 per share common dividend payable May 31, 2024, and repurchased $512 million of shares in the quarter under a $3.0 billion authorization.

03—Questions

Frequently Asked Questions

How did Apollo's core earnings metrics perform in the first quarter of 2024?
Fee Related Earnings were $462 million ($0.75 per share), up 16% year-over-year. Spread Related Earnings were $817 million ($1.32 per share), up 19%. Combined, FRE and SRE totaled $1.3 billion, up 18%. Adjusted Net Income was $1.06 billion ($1.72 per share), compared with $845 million ($1.42 per share) a year earlier.
Why were realized performance fees lower this quarter?
Realized performance fees were $94 million, down from $269 million in 4Q'23 and $164 million in 1Q'23. Management said monetization of sizeable flagship private equity funds (Fund VIII and IX) continues to be prudently delayed because of a challenging exit environment, and market conditions are less accommodative for monetization activity.
What drove the growth in Retirement Services earnings, and are there any risks?
SRE growth was driven by robust organic growth, strong new business profitability, higher floating-rate income and higher alternative net investment income. Cost of funds rose 39.5% year-over-year on higher new-business costs in a higher rate environment and floating-rate hedging. Alternative investments returned 9.1% in the quarter, above management's 11% long-term expectation in part, which would have implied $56 million of additional income. Future results depend on continued alternatives performance and spread management.
How much capital did Apollo return to shareholders, and what is the outlook?
Apollo repurchased $512 million of common stock in the quarter and returned $1.1 billion to stockholders over the last twelve months through dividends and repurchases. It declared a $0.4625 per share common dividend payable May 31, 2024, and a $0.8438 per share dividend on its Mandatory Convertible Preferred Stock payable July 31, 2024. Management said it is confident in delivering its financial targets for the year, though dividends remain at the board's discretion.

04—Continue

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