KKR & Co. Inc. earnings

Management highlights

### Capital Raising - Total gross capital raised in Q1 2026 was $28 billion, with widespread demand across asset classes and geographies. Credit was a standout, with $15 billion raised across the platform, led by asset-based finance (ABF) which now has over $90 billion of AUM. Excluding GA-related capital, this was one of KKR's largest ever credit fundraising quarters, with inflows more than doubling quarter-over-quarter. - The flagship North America Private Equity 14 fund held its final close at $23 billion, exceeding the prior flagship fund size of $19 billion. Across the most recent vintages of KKR's regional private equity flagship funds (Americas, Europe, Asia), there is $46 billion of total dry powder available for investment. - KKR's K-Series wealth channel products raised $4 billion in Q1, with total redemptions of just $250 million, bringing total K-Series AUM to over $38 billion, an 80% increase year-over-year. Management notes strong performance relative to market expectations, but expects a temporary slowdown in Q2 2026 consistent with past market volatility events. - Direct lending, which has faced recent market attention, is a modest 5% of KKR's total AUM at $39 billion, with the private BDC sub-segment totaling only $3 billion (0.4% of total AUM). All vintages of direct lending since 2017 have delivered consistent outperformance versus benchmarks. ### Monetization Activity - Q1 2026 total monetization revenue was up over 50% year-over-year, with realized carried interest of $720 million, up 120% year-over-year. KKR holds a large and healthy pipeline of planned future realizations across all strategies and regions. - Recent completed and announced exits include OneStream Software (4.5x cost), Cool IT Systems (almost 15x cost), two 2021-vintage investments expected to deliver 2x and 3x cost respectively, and a secondary sale of remaining Hyundai Marine Solution shares (7+x full-life multiple of capital). ### Capital Allocation - KKR closed its acquisition of Arctos, a leading investor in professional sports franchise stakes and GP solutions with ~$16 billion total AUM and $10 billion fee-paying AUM, during the quarter. Management expects this to be a high-return capital allocation that expands KKR's product set and fundraising opportunities. - In the insurance segment, KKR maintained disciplined pricing and was more selective on new originations in Q1 due to high retail channel competition and tight asset spreads. As spreads have widened more recently, the entry point for new insurance business has become more attractive, and KKR holds $6 billion of dry powder equity to deploy into future dislocations, translating to over $60 billion of liability-side buying power. - KKR leaned into share repurchases in Q1 amid sector-wide volatility, repurchasing/retiring $317 million of stock through May 1 at an average price of ~$91 per share. The board authorized an additional $500 million increase to the repurchase program. Co-CEOs and multiple directors also purchased personal shares in the quarter, reflecting management's view that KKR stock trades at a meaningful discount to intrinsic value. - KKR's employee base owns roughly 30% of outstanding stock, aligning capital allocation decisions with shareholder interests. KKR prioritizes per-share growth of recurring, durable earnings over fixed allocation to specific capital allocation buckets. ### Firm Milestones - KKR increased its annualized dividend to 78 cents per share, marking the seventh consecutive year of dividend increases since its corporate restructuring, up from 50 cents per share seven years ago. KKR also marked its 50th anniversary as a firm during the quarter.

Guidance

- Management reaffirms confidence that it will exceed full-year 2026 targets for fundraising, strategic holdings operating earnings, and per-share fee-related earnings (FRE). - KKR entered 2026 targeting adjusted net income (ANI) of over $7 per share, which would represent 45% year-over-year earnings growth, assuming a constructive, normalized monetization environment. Given higher-than-planned market volatility in the first four months of 2026, management now views it more likely that full-year 2026 ANI will land below the $7 per share target. - Any delayed monetizations pushed out of 2026 are not lost; management expects these gains to be realized in 2027 and beyond, with the broader portfolio remaining in very strong shape and embedded gains near all-time record levels. - KKR's forward pipeline of signed/announced monetizations expected to close in coming quarters totals over $1.2 billion of gross monetization revenue, the largest such forward figure KKR has ever disclosed.

Segment performance

Asset Management: Management fees totaled $1.2 billion, up 30% year-over-year, or over 20% when excluding catch-up fees from both periods. Over the trailing 12 months, private equity, real assets, and credit each contribute approximately one-third of total management fees, showing a highly diversified fee base. Total transaction and monitoring fees came in at $253 million, capital markets fees were $224 million, and fee-related performance revenues were $24 million. Total fee-related earnings (FRE) were over $1 billion, translating to $1.13 per diluted share, up 23% year-over-year, with the FRE margin rising slightly to 69% quarter-over-quarter. Realized performance income exceeded $750 million, and realized investment income was approximately $120 million, bringing total Q1 2026 monetization activity to around $880 million, up over 50% year-over-year. Insurance: Segment operating earnings were $260 million; including mark impacts on investment appreciation would bring adjusted Q1 operating earnings to just over $300 million. When including all related fee streams (management fees, vehicle fees, capital markets fees) for the insurance business, total trailing 12-month net insurance economics after compensation were $1.9 billion, up 14% year-over-year. The insurance segment has over $60 billion of AUM tied to its Global Atlantic (GA) operations. Strategic Holdings: Segment operating earnings were $48 million in Q1, on track to reach the full-year 2026 target of over $350 million, with earnings expected to be back-end weighted through the year. Aggregate: Total operating earnings were $1.47 per share, up 18% year-over-year. Adjusted net income (ANI) was $1.39 per share, up 20% year-over-year, totaling $1.2 billion for the quarter. Over the trailing 12 months, 85% of total pre-tax segment earnings come from recurring streams, demonstrating the durability of KKR's business model. Total embedded gains (gross carry plus balance sheet gains across asset management and strategic holdings) reached $18.3 billion at quarter-end, up 11% year-over-year.

Risks & headwinds

- Recent market volatility, driven by geopolitical uncertainty and broader macroeconomic instability, has created a more uncertain exit environment for some portfolio assets, which could delay monetizations and near-term realized performance income. - The insurance segment faces heightened competition particularly in the U.S. retail annuity channel, alongside tight asset spreads that compress near-term return on equity in new originations. - There is public market sensitivity around private credit and wealth channel direct lending/BDCs, with elevated headline risk around redemptions in the wealth space, though management notes these exposures are very small as a share of KKR's total AUM. - Some software and business services portfolio assets, particularly in sectors like India-based outsourcing, face potential AI-related disintermediation risk. KKR has scrubbed exposures across its portfolio and does not see elevated concerns at this time.

Analyst Q&A

• Q: How is competitive pressure impacting KKR's insurance business growth and returns? /

  A: Management confirms high current competition in retail annuities and tight asset spreads, which has led KKR to pull back selectively on new originations in Q1. However, the business is diversified across retail and institutional segments, so not all lines face the same competitive pressure. KKR has shifted to originate 80% longer-duration (7+ year) liabilities in Q1 2026, up from 37% in full-year 2024. Longer-duration liabilities matched with KKR's origination capabilities allow for better returns than competitors can achieve. KKR holds $6 billion of dry powder to deploy into the market when volatility improves spreads and lowers liability pricing, creating outsized ROE opportunity down the line. This dry powder translates to $60+ billion of buying power on the liability side.

• Q: What explains the downward revision to the 2026 ANI target, and does delayed monetization create frustration with limited partners (LPs)? /

  A: The change in ANI guidance is purely a timing issue driven by recent market volatility, not a change in the fundamental value of the portfolio. Some potential strategic sellers are delaying exit processes to wait for market uncertainty to resolve, so gains that were expected in 2026 will shift to 2027+. Management notes KKR has industry-leading DPI, has returned more capital than it has called to LPs in 9 of the last 10 years for U.S. private equity, and has delivered a 120% year-over-year increase in Q1 realized carried interest. LPs are not frustrated; they remain satisfied with KKR's cash return performance, which is why KKR achieved a record $23 billion final close for its latest flagship U.S. private equity fund.

• Q: What is KKR's exposure to AI disintermediation risk, particularly for business services/software portfolio companies? /

  A: Software makes up just 7% of total KKR AUM (15% of private equity AUM, 5% of credit AUM, 2.5% of insurance AUM), with a similar low double-digit share of strategic holdings EBITDA. Operating performance for software holdings remains healthy, with high single-digit year-over-year revenue and EBITDA growth, though public market weakness led to lower marks in Q1. KKR underwrites AI risk by assessing impacts on margins, pricing power, workflow relevance and cash flow durability for every holding. On the positive side, KKR has already deployed AI across 150+ portfolio companies to automate workflows, enhance products and drive growth, and has a large existing position in digital infrastructure that benefits from AI-driven demand. The firm's collaborative culture allows operational best practices for AI adoption to spread quickly across portfolio companies.

• Q: How has institutional demand for direct lending changed amid recent wealth channel redemption volatility? /

  A: There has been a clear positive shift in institutional demand over the last several weeks. 12-24 months ago, institutions were cautious on direct lending due to compressed spreads and concerns that retail flows outpaced deal flow, leading many to pivot toward asset-based finance, which is already more than twice the size of KKR's direct lending business. Recent wealth market volatility has improved the risk-reward for new direct lending deals (spreads are up, fees are up, terms are tighter, leverage is lower), so institutions are returning to direct lending with fresh interest. The direct lending pipeline has strengthened as a result, and total wealth sector redemption risk is negligible for KKR, as wealth direct lending represents a tiny share of total firm AUM.