Apollo Global Management, Inc. earnings

Management highlights

• Strong first quarter results with record fee-related earnings, spread-related earnings, and total earnings. • Origination was of high quality, $71 billion for the quarter, with expectation of even stronger origination in Q2. • Capital formation was strong, $115 billion for the quarter. • Different business areas have defensive postures, e.g., equity business has zero exposure to software, credit business moving more toward investment grade. • Private credit market has a large opportunity in the investment-grade private credit market. • Focus on transparency in private markets, including daily pricing for credit business, market making in private markets, and addressing issues like day one markups and secondaries. • Innovation in retirement services with AMAPS and New Markets. • Apollo is leading the industry in revolutionizing capital, wealth building, and retirement solutions delivery.

Guidance

• Reaffirming 26% outlook of 20% FRE growth and 10% SRE growth. • Expecting origination in Q2 to be even stronger. • Reaffirming 10% SRE growth outlook assuming an 11% alts return. • Authority's pick acquisition to begin contributing in the second quarter at an annualized rate of approximately 20 basis points initially.

Segment performance

Asset management: AUM and Fijian AUM grew by 31% and 40% year-over-year respectively. Fee-related earnings of $728 million in the quarter reached a new high, with 30% year-on-year growth and 6% quarter-over-quarter growth. Management fees had 24% year-over-year growth. Capital solutions fees reached a new high and were the fourth consecutive quarter above $200 million. Fee-related performance fees grew 19% year-over-year. Fee-related expenses grew 27%. FRE margin reached 58% in the quarter. Retirement services: Athene's net investment assets grew 14% year-over-year to $300 billion. SRE was $719 million for the quarter. Alternative investment portfolio return for the quarter was 6%. Blended net spread across Athene's portfolio was 97 basis points versus 120 basis points in the prior quarter.

Risks & headwinds

• Geopolitical reset has the potential to cause out-of-line results. • Almost everything being done has the potential to be inflationary in the short term. • Comprehensive tech cycle has unknown political and other consequences. • Contagion concern in the insurance industry. • Transparency and liquidity issues in private markets, including potential mispricing and noise around day one markups and secondaries. • Regulatory interest and potential changes that could impact the business.

Analyst Q&A

• Q: Alex Blostein of Goldman Sachs asked about expense comments on origination volumes and transaction fees, sourcing evolution, and syndicate composition.

  A: Mark and Jim discussed growth in origination from Apollo ecosystem, global industrial renaissance, and being a holistic solution provider.

• Q: Stephen Chuback of Wolf Research asked about private credit marketplace opacity, daily pricing, validation, and revenue opportunity.

  A: Mark and Jim talked about private credit market focus on investment-grade, market making, transparency, and data standardization.

• Q: Bill Katz of TD Cowen asked about capital return prioritization.

  A: Mark discussed not needing acquisitions for 2029 goals, aggressive stock buying, and high bar for spending capital other than on stock.

• Q: Glenn Shore of Evercore ISI asked about daily pricing in private equity and hybrid land, secondary business, and illiquidity premium.

  A: Mark talked about transparency starting with investment-grade private credit, evolution of transparency, and secondary market thoughts.

• Q: Patrick Davitt of Autonomous Research asked about incremental expense on PIC and revenue potential.

  A: Mark said cost against revenue pull through is small and revenue potential includes 20 bps starting point.

• Q: Mike Brown of UBS asked about Asuri's spread dynamics, annuities, and PRT.

  A: Martin said in the middle of the spread range indicated last quarter, and talked about prepay headwinds and opportunistic positioning.

• Q: Ken Worthington of J.P. Morgan asked about Athene's cash levels.

  A: Mark said almost all spread widening was in media, and they are holding cash for opportunistic opportunities.

• Q: Michael Cypress of Morgan Stanley asked about Apollo's positioning in technology cycle.

  A: Mark talked about asset selection, underwrite customers, and internal industry changes.

• Q: Brendan Hawkin of BMO Capital Markets asked about funding agreement and retail annuities volume.

  A: Mark talked about funding agreement dynamics and retail annuities market competition.

• Q: Crispin Love of Piper Sandler asked about direct lending opportunity, risks, and retail conversations.

  A: Mark talked about direct lending pricing, industry dialogue, and asset class performance.

• Q: Wilma Burtis of Raymond James asked about market opportunity in Japan.

  A: Mark talked about private equity, yield product distribution, working with banks, and insurance business in Japan.

• Q: Bart Ziarski of RBC Capital Markets asked about regulatory temperature.

  A: Mark talked about regulatory focus on equal capital for equal risk, offshore jurisdictions, and competitive dynamic in the industry