01—Abstract
Summary
Summary of the 10-K filed February 27, 2025. Cited figures are marked; the original filing is the authoritative source.
Ares Management Corp (NYSE: ARES) closed 2024 with $484.4 billiona in assets under management, up 16% year over year, and grew management fees 15% to $2.94 billion.
Total revenues rose 7% to $3.88 billionb, while GAAP net income attributable to Ares Management Corporation declined 2% to $463.7 million. Growth was driven by fundraising of $92.7 billion in gross new capital commitments and $106.7 billion of capital deployed, though carried interest allocation fell 37% to $390.2 million, reflecting reversals tied to weaker valuations in certain private equity funds. The most important investor metric is Fee Related Earnings (FRE), a non-GAAP measure of core, recurring profitability, which rose 17% to $1.36 billion.
Realized Income, which adds realized performance and investment income, grew 16% to $1.47 billionc. Management highlights 95% of management fees coming from perpetual capital or long-dated funds, supporting earnings stability. AUM not yet paying fees includes $81.0 billion available for deployment, which management estimates could generate roughly $728.8 million in incremental annual management fees.
Balance sheet and capital return items include the October 2024 issuance of $1.46 billiond of 6.75% Series B mandatory convertible preferred stock, a $750 million 5.60% senior note due 2054 issued to refinance near-term debt, and a Credit Facility balance reduced to zero. The Class A dividend rose to $0.93 quarterly in 2024 and was set at $1.12 per quarter for 2025, a fixed-dividend policy tied to FRE after taxes. Risks flagged include ARCC's concentration in management fees, the potential $2.8 billion TRA termination liability, fundraising sensitivity, and regulatory scrutiny of private fund practices.
02—Key points
Key Highlights
- AUM reached $484.4 billion at December 31, 2024, up 16% from $418.8 billion, with a five-year AUM CAGR of 27%.
- Gross new capital commitments were $92.7 billion across 185+ vehicles, with 85% of direct institutional fundraising from existing investors.
- Fee Related Earnings grew 17% to $1.36 billion; Realized Income grew 16% to $1.47 billion.
- Management fees rose 15% to $2.94 billion; 95% came from perpetual capital or long-dated funds.
- Carried interest allocation fell 37% to $390.2 million, driven by unrealized reversals in ACOF V (Savers Value Village exposure) and other private equity funds.
- Dividend policy moved to a fixed quarterly dividend set at $1.12 per Class A share for 2025, up from $0.93 per quarter in 2024.
- Issued $1.46 billion of Series B mandatory convertible preferred stock and a $750 million 2054 senior note; the Credit Facility was undrawn at year end.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2024filed February 27, 2025Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $3.88B$3.63B | +7.0% |
| SG&A Expenses | $736.50M$660.15M | +11.6% |
| Operating Expenses | $2.94B$2.80B | +5.0% |
| Net Income | $440.96M$474.33M | −7.0% |
05—Questions
Frequently Asked Questions
How did Ares perform on a GAAP basis in 2024?
Total revenues increased 7% to $3.88 billion and net income attributable to Ares Management Corporation decreased 2% to $463.7 million. Net income attributable to Class A and non-voting common stockholders was $441.0 million, or $2.04 per diluted share, versus $2.42 in 2023. The decline reflects lower carried interest and higher compensation and G&A costs, partly offset by strong management fee growth.
Why is Fee Related Earnings emphasized over GAAP net income?
FRE measures recurring core profitability by excluding volatile carried interest, investment gains, and certain non-cash items. Management uses it to set the dividend, so it signals the stability of the fee-based franchise. FRE rose 17% to $1.36 billion in 2024, while GAAP results were more affected by unrealized performance swings. Investors should still review GAAP results, since FRE is a non-GAAP measure with company-defined adjustments.
What drives future fee growth?
Management cites $81.0 billion of AUM available for future deployment that could generate about $728.8 million of incremental annual management fees, and $133.1 billion of total capital available for investment. Continued fundraising in the wealth channel, growth in ARCC and other perpetual vehicles, and the pending GCP International acquisition (expected to close in 2025) are additional growth levers. Realization of this growth depends on deployment pace and fundraising conditions.
What are the key risks to the earnings outlook?
Key risks include reliance on ARCC, which generated about 34% of Credit Group management fees, and the potential loss or reduction of those fees if the advisory agreement terminates. Carried interest is volatile and subject to contingent repayment, with $59.6 million potentially refundable if funds were liquidated at zero. The filing also notes a potential TRA payment of about $2.8 billion if change-of-control or early-termination provisions were triggered, plus fee-pressure and regulatory risks.
How does the capital structure and dividend look for shareholders?
Total debt obligations were $2.56 billion at year end, with the Credit Facility undrawn and $1.4 billion available. Cash and equivalents were $1.51 billion. Dividends on Class A and non-voting common stock totaled $3.72 per share in 2024, and the board set a $1.12 quarterly dividend for 2025. Series B preferred holders receive a 6.75% dividend that must be paid before common dividends, and the preferred converts to Class A shares on October 1, 2027.
06—Continue