Why did Adjusted Net Income per share decline despite record Fee Related Earnings?

ANI per share fell to $1.64 from $1.70 year over year, mainly because Spread Related Earnings dropped 11% to $710 million. Net spread compression from higher cost of funds and lower alternative investment returns offset the growth in fee-related earnings. Sequentially, ANI was roughly flat at $1.64 versus $1.72 in the prior quarter.

How does the Retirement Services business (Athene) affect Apollo's earnings quality?

Athene drives SRE, which is more sensitive to interest rates, credit spreads, and alternative investment returns than fee income. In Q2 2024 the alternatives portfolio returned 5.7% annualized, below management's 11% long-term expectation, which reduced SRE by roughly $154 million relative to that expectation. Investors should watch net spread trends, which fell to 1.24% from 1.52% a year earlier.

What drove the growth in Asset Management fee revenue?

Management fees rose 8.4% year over year to $672 million, led by Yield strategies (up 17.3%) on third-party and Athene capital. Capital solutions fees hit a record $208 million, up 50.7%, from debt origination activity. Fee-related performance fees rose 48.6% to $52 million, reflecting growth in Apollo's wealth-focused products.

Is the GAAP net income figure comparable to the non-GAAP results?

No, not directly. GAAP net income attributable to common stockholders was $828 million ($1.36 per share) and includes investment gains and losses, non-operating insurance liability changes, and other items that Apollo excludes from Segment Income and ANI. Investors should reconcile the two using the company's GAAP-to-non-GAAP reconciliation in Exhibit 99.2, which is also presented on pages 26 to 29 of the earnings presentation.

What is the capital return outlook and balance sheet position?

Apollo declared a $0.4625 quarterly common dividend and repurchased $75 million of shares opportunistically in Q2, with $2.38 billion remaining under its $3.0 billion buyback authorization. HoldCo debt rose to $4.08 billion from $3.86 billion, and Net Balance Sheet Value increased to $4.69 per share from $4.32. Future dividends are at the board's sole discretion, and the company cannot assure stockholders of future payments.

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

01—Abstract

Summary

Summary of the 8-K filed August 1, 2024. Cited figures are marked; the original filing is the authoritative source.

Apollo Global Management (NYSE: APO) reported second-quarter 2024 results on August 1, 2024, led by record Fee Related Earnings (FRE) of $516 million^a ($0.84 per share), up 16.7% year over year, and Spread Related Earnings (SRE) of $710 million ($1.15 per share).

Combined Fee and Spread Related Earnings were $1.2 billion^b. Adjusted Net Income (ANI), the company's primary non-GAAP earnings metric, was $1.0 billion, or $1.64 per share, down from $1.70 a year earlier. GAAP net income attributable to Apollo common stockholders was $828 million, or $1.36 per share, compared with $599 million in the prior-year quarter.

Management highlighted record quarterly debt origination of $52 billion^c, record gross capital deployment of $70 billion, and record third-party fundraising excluding flagship private equity. Total AUM reached $696 billion, up 13% year over year, with $39 billion of gross inflows in the quarter and $144 billion over the last twelve months. The quarter's profitability mix shifted toward fee income.

SRE declined 11% year over year to $710 million^d, with net spread compressing to 1.24% from 1.52%. The main drivers were a 17 basis point rise in cost of funds, partly reflecting a higher-rate environment and the maturity of funding agreements issued at lower rates. Alternative net investment income fell 35% to $168 million, equal to a 5.7% annualized return versus management's 11% long-term expectation.

Fee-related revenue grew 17.5% to $932 million, supported by a record $208 million of capital solutions fees and a 49% increase in fee-related performance fees. Fee-related expenses rose, partly due to $15 million of costs tied to the planned merger of two closed-end funds with MidCap Financial Investment Corporation. Capital returns and balance sheet items were also in focus.

Apollo declared a common dividend of $0.4625 per share, payable August 30, 2024, and returned $1.1 billion to stockholders over the last twelve months through dividends and opportunistic buybacks. Net Balance Sheet Value rose to $4.69 per share from $4.32.

Total debt increased to $4.08 billion at HoldCo, and Athene's gross organic inflows were $16.7 billion in the quarter. Note that this filing furnishes, rather than files, the earnings materials under Item 2.02, and the press release and presentation contain forward-looking statements and non-GAAP measures that investors should evaluate alongside GAAP results.

02—Key points

Key Highlights

Record Fee Related Earnings of $516 million ($0.84 per share), up 16.7% year over year, with FRE margin of 55.3%.
Adjusted Net Income of $1.0 billion ($1.64 per share), down from $1.70 a year earlier, while GAAP net income to common stockholders was $828 million ($1.36 per share).
Spread Related Earnings fell 11% year over year to $710 million as net spread compressed to 1.24% from 1.52%, driven by higher cost of funds.
Alternative net investment income declined 35% to $168 million, a 5.7% annualized return versus management's 11% long-term expectation.
Record quarterly debt origination of $52 billion and record capital solutions fees of $208 million, reflecting strong debt origination activity.
Total AUM of $696 billion, up 13% year over year, with $39 billion of quarterly inflows and $144 billion over the last twelve months.
Quarterly dividend of $0.4625 per common share payable August 30, 2024; $1.1 billion returned to stockholders over the last twelve months including opportunistic buybacks.

03—Questions

Frequently Asked Questions

Why did Adjusted Net Income per share decline despite record Fee Related Earnings?
ANI per share fell to $1.64 from $1.70 year over year, mainly because Spread Related Earnings dropped 11% to $710 million. Net spread compression from higher cost of funds and lower alternative investment returns offset the growth in fee-related earnings. Sequentially, ANI was roughly flat at $1.64 versus $1.72 in the prior quarter.
How does the Retirement Services business (Athene) affect Apollo's earnings quality?
Athene drives SRE, which is more sensitive to interest rates, credit spreads, and alternative investment returns than fee income. In Q2 2024 the alternatives portfolio returned 5.7% annualized, below management's 11% long-term expectation, which reduced SRE by roughly $154 million relative to that expectation. Investors should watch net spread trends, which fell to 1.24% from 1.52% a year earlier.
What drove the growth in Asset Management fee revenue?
Management fees rose 8.4% year over year to $672 million, led by Yield strategies (up 17.3%) on third-party and Athene capital. Capital solutions fees hit a record $208 million, up 50.7%, from debt origination activity. Fee-related performance fees rose 48.6% to $52 million, reflecting growth in Apollo's wealth-focused products.
Is the GAAP net income figure comparable to the non-GAAP results?
No, not directly. GAAP net income attributable to common stockholders was $828 million ($1.36 per share) and includes investment gains and losses, non-operating insurance liability changes, and other items that Apollo excludes from Segment Income and ANI. Investors should reconcile the two using the company's GAAP-to-non-GAAP reconciliation in Exhibit 99.2, which is also presented on pages 26 to 29 of the earnings presentation.
What is the capital return outlook and balance sheet position?
Apollo declared a $0.4625 quarterly common dividend and repurchased $75 million of shares opportunistically in Q2, with $2.38 billion remaining under its $3.0 billion buyback authorization. HoldCo debt rose to $4.08 billion from $3.86 billion, and Net Balance Sheet Value increased to $4.69 per share from $4.32. Future dividends are at the board's sole discretion, and the company cannot assure stockholders of future payments.

04—Continue

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