Apollo Global Management, Inc. Q1 FY2025 earnings call

• Strong Q1 results with record FRE, SRE, and adjusted net income. • Focus on origination as a source of excess return, willing to sit out volatile markets and wait for fat pitches. • Macro market commentary on hyper U.S. exceptionalism in prior years and current market dynamics. • Asset Management has $64 billion of dry powder, strong private equity performance with Fund Ten net IRR at 19% vs. 9% industry peers. • Retirement Services raised $26 billion in Q1, invested in cash and less risky assets, with strong demand for guaranteed income. • Capital formation: record quarterly organic inflows of $43 billion, with $18 billion from asset management and $20 billion from Athene. • Innovations in defined contribution, tax-advantaged tokenization, structured notes, and portfolio solutions.

In the first quarter, Apollo Global Management achieved strong results. In Asset Management, fee-related earnings (FRE) were a record $559 million or $0.91 per share, spread-related earnings excluding notable items (SRE) were $826 million or $1.35 per share, and adjusted net income was $1.1 billion or $1.82 per share. Asset Management generated $559 million of fee-related earnings, with 18% management fee growth, notable strength from credit (23% growth), and capital solutions fees over $150 million. In Retirement Services, Athene saw strong demand for guaranteed income, raised $26 billion in Q1 and $10 billion in April, invested in cash, treasuries, and agencies, and paid down leverage.

• SRE guidance adjusted due to 1.5 additional rate cuts (approx. $40 million headwind), competitive pressure in retail channel (10 basis points headwind), and higher asset prepayments ($40 million headwind). Expect mid-single-digit growth for 2025 off a rebased $3.2 billion starting point, with potential for higher growth based on deployment pipeline and market volatility. • Plan to be relatively active in share repurchases when there are compelling opportunities, returned $1.7 billion to shareholders over last twelve months, and announced acquisition of Bridge Investment Group.

• Market volatility leading to extreme price volatility in public markets and uncertainty in private markets. • Competitive pressure in the retail channel for fixed annuities. • Headwinds from lower rates forecasted in excess of those discussed at Investor Day and sizable prepays from record tight spreads in Q1. • Uncertainty in interest rate environment and its impact on net investment income and cost of funds.

Q: Simplify discussion on lower SRE and conditions to be less conservative?

A: Marc Rowan discussed macro factors, focus on origination, and Martin Kelly added on earnings profile components like existing business roll-off, prepays, and unknowns in rates and spreads.

Q: Perspective on wealth outlook and April flows?

A: Jim Zelter mentioned strong momentum in wealth channel, $5 billion inflows in Q1, $33 billion target for year, and April flows are strong and durable.

Q: Intersection of public and private and large scale M&A?

A: Marc Rowan talked about partnerships with traditional asset managers, focus on origination, and acquisition of Bridge Investment Group.

Q: Tokenization and alternative access?

A: Jim Zelter linked tokenization to open architecture, interval funds, and potential expansion in digital platforms.

Q: Foreign LPs and U.S. exposure?

A: Marc Rowan and Jim Zelter discussed macro trends, Apollo's insulation from foreign LP reductions, and focus on origination.

Q: Liquidity in private markets?

A: Marc Rowan compared private credit to loans, discussed market development, and ETF launch in private credit.

Q: Alternative space consolidation?

A: Marc Rowan discussed chances of larger firms in the space and importance of origination quality.