Why did KKR's GAAP net income decline in 2024 even though its non-GAAP earnings grew strongly?

GAAP net income attributable to KKR common stockholders was $3.08 billion for 2024, down from $3.68 billion in 2023. Non-GAAP measures such as FRE, TOE and ANI exclude unrealized investment gains and losses, unrealized carried interest, equity-based compensation and other non-operating items, so they can move very differently from GAAP results. Insurance investment-related losses and higher compensation tied to unrealized carried interest also weighed on GAAP results. The company's GAAP reconciliations in the appendix show these adjustments.

How much did GAAP revenue increase, and is that growth organic?

Total GAAP revenues rose to $21.9 billion in 2024 from $14.5 billion in 2023. Much of the increase reflects KKR's move to 100% ownership of Global Atlantic at the beginning of 2024, which means the insurance segment is now consolidated in full rather than at about 63%. Insurance revenues were $14.7 billion versus $8.7 billion. Investors should not read the headline revenue increase as purely operating growth.

What is the Strategic Holdings acquisition, and what does it mean for future earnings?

KKR has arrangements to increase its ownership in USI Insurance Services, 1-800 Contacts and Heartland Dental by about $1.1 billion, with completion expected in the first half of 2025. Strategic Holdings earnings come mainly from dividends paid by core private equity businesses. KKR now projects Strategic Holdings Operating Earnings of $350+ million by 2026, $700+ million by 2028 and $1.1+ billion by 2030, up from prior projections of $300+ million, $600+ million and $1+ billion. These are forward-looking estimates that depend on portfolio performance and may not be realized.

Is KKR's dividend growing, and is it secure?

KKR declared a Q4 2024 dividend of $0.175 per share, payable February 28, 2025, to holders of record on February 14, 2025. KKR intends to raise its regular annualized dividend from $0.70 to $0.74 per share beginning with the dividend declared alongside Q1 2025 results. KKR says it has increased its annualized dividend every year since its 2018 C-Corp conversion. Future dividends remain at the discretion of the board and depend on financial performance and other factors, so no payment is guaranteed.

How strong is KKR's balance sheet, and what does it mean for capital deployment?

At year-end 2024, KKR reported $4.2 billion of cash and short-term investments and $11.0 billion of asset management segment investments, for total cash and investments of $15.2 billion against $8.6 billion of debt at par, or about $6.7 billion net. KKR is rated A by S&P and Fitch, has a $2.75 billion undrawn revolving credit facility, and has about $110 billion of uncalled commitments. Its share repurchase program had $69 million of remaining authorization as of January 31, 2025.

KKR & Co. Inc. 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed February 4, 2025. Cited figures are marked; the original filing is the authoritative source.

KKR reported strong fourth-quarter and full-year 2024 results, with its key non-GAAP earnings measures all growing more than 35%^a year-over-year for the full year.

Fee Related Earnings (FRE) reached $843 million^b in the quarter (up 25%) and $3.3 billion for the year (up 37%), Total Operating Earnings (TOE) reached $4.4 billion for the year (up 36%), and Adjusted Net Income (ANI) reached $4.2 billion for the year (up 38%). Management attributed the growth to a better operating backdrop, growth in management fees, a record $1.0 billion of capital markets transaction fees, and KKR's increased ownership of Global Atlantic. Assets under management (AUM) rose 15% to $638 billion, and KKR raised $114 billion of new capital and invested $84 billion for the year.

GAAP results were more mixed and are distorted by consolidation. Full-year GAAP net income attributable to KKR common stockholders fell to $3.08 billion^c ($3.28 diluted EPS) from $3.68 billion in 2023, and total GAAP revenues rose to $21.9 billion from $14.5 billion largely because KKR consolidated 100% of Global Atlantic from the start of 2024. Investors should weigh the non-GAAP segment measures, which management presents as the more durable view of earnings, alongside these GAAP figures.

Looking ahead, KKR agreed to acquire additional stakes in USI Insurance Services, 1-800 Contacts and Heartland Dental for about $1.1 billion^d, with completion expected in the first half of 2025. Based on this and stronger portfolio performance, KKR raised its projected Strategic Holdings Operating Earnings to $350+ million by 2026, $700+ million by 2028 and $1.1+ billion by 2030, and plans to raise its regular annualized dividend from $0.70 to $0.74 per share beginning with the dividend announced for the quarter ending March 31, 2025.

02—Key points

Key Highlights

Full-year 2024 Fee Related Earnings of $3.3 billion ($3.66 per adjusted share) rose 37% year-over-year, with the FRE margin improving to 69% from 62%.
Full-year Total Operating Earnings of $4.4 billion ($4.88 per adjusted share) rose 36%, and Adjusted Net Income of $4.2 billion ($4.70 per adjusted share) rose 38%.
AUM reached $638 billion (up 15%) and Fee Paying AUM reached $512 billion (up 15%); perpetual capital grew 20% to $268 billion.
KKR raised $114 billion of new capital and invested $84 billion in 2024, with $109.6 billion of uncalled commitments available as dry powder.
Capital markets transaction fees reached $1.0 billion for the year, the first time in KKR's history, supported by a strong debt-product focus.
KKR agreed to buy about $1.1 billion of additional stakes in USI Insurance Services, 1-800 Contacts and Heartland Dental, and raised its Strategic Holdings Operating Earnings projections for 2026, 2028 and 2030.
The Q4 2024 dividend is $0.175 per share, payable February 28, 2025, and the regular annualized dividend will increase from $0.70 to $0.74 starting with the Q1 2025 declaration.

03—Questions

Frequently Asked Questions

Why did KKR's GAAP net income decline in 2024 even though its non-GAAP earnings grew strongly?
GAAP net income attributable to KKR common stockholders was $3.08 billion for 2024, down from $3.68 billion in 2023. Non-GAAP measures such as FRE, TOE and ANI exclude unrealized investment gains and losses, unrealized carried interest, equity-based compensation and other non-operating items, so they can move very differently from GAAP results. Insurance investment-related losses and higher compensation tied to unrealized carried interest also weighed on GAAP results. The company's GAAP reconciliations in the appendix show these adjustments.
How much did GAAP revenue increase, and is that growth organic?
Total GAAP revenues rose to $21.9 billion in 2024 from $14.5 billion in 2023. Much of the increase reflects KKR's move to 100% ownership of Global Atlantic at the beginning of 2024, which means the insurance segment is now consolidated in full rather than at about 63%. Insurance revenues were $14.7 billion versus $8.7 billion. Investors should not read the headline revenue increase as purely operating growth.
What is the Strategic Holdings acquisition, and what does it mean for future earnings?
KKR has arrangements to increase its ownership in USI Insurance Services, 1-800 Contacts and Heartland Dental by about $1.1 billion, with completion expected in the first half of 2025. Strategic Holdings earnings come mainly from dividends paid by core private equity businesses. KKR now projects Strategic Holdings Operating Earnings of $350+ million by 2026, $700+ million by 2028 and $1.1+ billion by 2030, up from prior projections of $300+ million, $600+ million and $1+ billion. These are forward-looking estimates that depend on portfolio performance and may not be realized.
Is KKR's dividend growing, and is it secure?
KKR declared a Q4 2024 dividend of $0.175 per share, payable February 28, 2025, to holders of record on February 14, 2025. KKR intends to raise its regular annualized dividend from $0.70 to $0.74 per share beginning with the dividend declared alongside Q1 2025 results. KKR says it has increased its annualized dividend every year since its 2018 C-Corp conversion. Future dividends remain at the discretion of the board and depend on financial performance and other factors, so no payment is guaranteed.
How strong is KKR's balance sheet, and what does it mean for capital deployment?
At year-end 2024, KKR reported $4.2 billion of cash and short-term investments and $11.0 billion of asset management segment investments, for total cash and investments of $15.2 billion against $8.6 billion of debt at par, or about $6.7 billion net. KKR is rated A by S&P and Fitch, has a $2.75 billion undrawn revolving credit facility, and has about $110 billion of uncalled commitments. Its share repurchase program had $69 million of remaining authorization as of January 31, 2025.

04—Continue

← View all 8-K filings