Why is GAAP EPS $0.00 when net income was $47.2 million?

GAAP net income attributable to Ares Management Corporation of $47.2 million is reduced by $25.3 million of Series B mandatory convertible preferred dividends, leaving $21.9 million for Class A and non-voting common stockholders. That amount is spread across about 209 million weighted-average shares, which rounds to $0.00 per share. The GAAP figure is also depressed by large acquisition-related compensation and equity compensation expenses tied to the GCP International deal.

What drove the growth in Fee Related Earnings and Realized Income?

Management fees rose 18% to $818.4 million, led by the GCP International acquisition (Real Assets management and other fees up 54%) and by deployment in U.S. and European direct lending and alternative credit. Fee related performance revenues rose to $28.1 million from $3.7 million, mainly from incentive fees on a European direct lending fund. Realized Income also benefited from $41.0 million of realized net performance income, versus $10.0 million a year earlier, partly offset by higher compensation and G&A costs.

How much of Ares's revenue is recurring?

Management fees are the core recurring revenue stream. Management reports that 83% of AUM is perpetual capital or long-dated funds, and 92% of management fees come from those vehicles. Fee Related Earnings, which excludes performance income and investment income, is the metric most closely tied to this recurring base, and it reached $367.3 million in the quarter.

What is the outlook for future fee growth?

Management points to a large pipeline of capital not yet earning fees. AUM Not Yet Paying Fees stood at $99.2 billion, including $81.5 billion available for future deployment that could generate about $764.4 million in potential incremental annual management fees if fully invested and paid on an annual basis. Management stresses that no assurance can be given that this capital will be deployed or that these fee amounts will be achieved, and that some existing fees may be reduced.

What should investors know about the dividends?

Ares declared a $1.12 per share quarterly dividend on Class A and non-voting common stock, payable June 30, 2025 to holders of record on June 16, 2025. It also declared $0.84375 per share on its 6.75% Series B mandatory convertible preferred stock, payable July 1, 2025 to holders of record on June 15, 2025. Ares also has a Dividend Reinvestment Program effective for the June 30 dividend. Dividend policy is tied to expected annual FRE after an allocation of current taxes, and the company notes dividends could be reduced if FRE is insufficient.

ARES/ARES-PB 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed May 5, 2025. Cited figures are marked; the original filing is the authoritative source.

Ares Management (ARES) reported first quarter 2025 results on May 5, 2025, with GAAP net income attributable to Ares Management Corporation of $47.2 million^a, though GAAP EPS for Class A and non-voting common stock was $0.00 after deducting $25.3 million of Series B mandatory convertible preferred dividends.

The more closely watched non-GAAP metrics were stronger: After-tax Realized Income rose 44% year-over-year to $381.4 million^b ($1.09 per share, up 36%), Fee Related Earnings grew 22% to $367.3 million, and total Realized Income reached $405.9 million, up 40%. Fee-related revenue growth was driven by the March 1, 2025 closing of the GCP International acquisition, which added $45.3 billion of AUM and boosted Real Assets management fees by 54% year-over-year. Fundraising and deployment were robust.

Ares raised $20.2 billion^c of gross new capital commitments (net inflows of $19.6 billion) and deployed $31.4 billion, up from $18.6 billion a year earlier. AUM reached a record $545.9 billion, up 27% year-over-year, and Fee Paying AUM rose 25% to $335.1 billion. Available Capital of $142.0 billion and AUM Not Yet Paying Fees of $99.2 billion (including $81.5 billion available for future deployment, which management estimates could generate about $764.4 million in incremental annual management fees) give the firm substantial visibility into future fee growth, though these figures are not guaranteed.

The company declared a quarterly Class A common dividend of $1.12^d per share, payable June 30, 2025, and a Series B preferred dividend of $0.84375 per share. Investors should note that management fees and FRE remain the core earnings engine, with roughly 92% of management fees coming from perpetual capital or long-dated funds, while the GAAP EPS figure is depressed by the preferred dividend and by acquisition-related compensation charges. Note that the filing furnishes these results under Items 2.02 and 7.01 rather than filing them, and that the figures and forward-looking statements are management's.

02—Key points

Key Highlights

GAAP net income attributable to Ares Management Corporation was $47.2 million, versus $73.0 million in Q1 2024; GAAP EPS for Class A and non-voting common stock was $0.00 after $25.3 million of Series B preferred dividends, compared with $0.33 a year earlier.
After-tax Realized Income rose 44% to $381.4 million ($1.09 per share, up 36% from $0.80), and Fee Related Earnings increased 22% to $367.3 million, with an FRE margin of 41.5%.
Assets under management reached a record $545.9 billion, up 27% year-over-year, driven by the GCP International acquisition ($45.3 billion added) and strong credit fundraising.
Gross new capital commitments totaled $20.2 billion, with net inflows of $19.6 billion, and capital deployment reached $31.4 billion versus $18.6 billion in Q1 2024.
Available Capital of $142.0 billion and AUM Not Yet Paying Fees of $99.2 billion provide substantial dry powder for future fee growth; $81.5 billion of that is available for future deployment, which could generate roughly $764.4 million in potential incremental annual management fees.
The Board declared a quarterly Class A common dividend of $1.12 per share payable June 30, 2025 (record date June 16), and a Series B mandatory convertible preferred dividend of $0.84375 per share payable July 1, 2025.

03—Questions

Frequently Asked Questions

Why is GAAP EPS $0.00 when net income was $47.2 million?
GAAP net income attributable to Ares Management Corporation of $47.2 million is reduced by $25.3 million of Series B mandatory convertible preferred dividends, leaving $21.9 million for Class A and non-voting common stockholders. That amount is spread across about 209 million weighted-average shares, which rounds to $0.00 per share. The GAAP figure is also depressed by large acquisition-related compensation and equity compensation expenses tied to the GCP International deal.
What drove the growth in Fee Related Earnings and Realized Income?
Management fees rose 18% to $818.4 million, led by the GCP International acquisition (Real Assets management and other fees up 54%) and by deployment in U.S. and European direct lending and alternative credit. Fee related performance revenues rose to $28.1 million from $3.7 million, mainly from incentive fees on a European direct lending fund. Realized Income also benefited from $41.0 million of realized net performance income, versus $10.0 million a year earlier, partly offset by higher compensation and G&A costs.
How much of Ares's revenue is recurring?
Management fees are the core recurring revenue stream. Management reports that 83% of AUM is perpetual capital or long-dated funds, and 92% of management fees come from those vehicles. Fee Related Earnings, which excludes performance income and investment income, is the metric most closely tied to this recurring base, and it reached $367.3 million in the quarter.
What is the outlook for future fee growth?
Management points to a large pipeline of capital not yet earning fees. AUM Not Yet Paying Fees stood at $99.2 billion, including $81.5 billion available for future deployment that could generate about $764.4 million in potential incremental annual management fees if fully invested and paid on an annual basis. Management stresses that no assurance can be given that this capital will be deployed or that these fee amounts will be achieved, and that some existing fees may be reduced.
What should investors know about the dividends?
Ares declared a $1.12 per share quarterly dividend on Class A and non-voting common stock, payable June 30, 2025 to holders of record on June 16, 2025. It also declared $0.84375 per share on its 6.75% Series B mandatory convertible preferred stock, payable July 1, 2025 to holders of record on June 15, 2025. Ares also has a Dividend Reinvestment Program effective for the June 30 dividend. Dividend policy is tied to expected annual FRE after an allocation of current taxes, and the company notes dividends could be reduced if FRE is insufficient.

04—Continue

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