Apollo Global Management, Inc. Q3 FY2025 earnings call

• Strong third quarter results with record combined fee and spread related earnings. • Announced an extended fixed income call session for Athene on November 24. • Origination was very strong at $75 billion in Q3, led by platforms, second only to the record Q2. • Robust inflows of $82 billion, led by asset management and retirement services, with record AUM. • Discussed 3 fundamental goods driving the business: financing the global industrial renaissance, addressing the retirement crisis, and providing an alternative to concentrated public markets. • Asset management buckets performed well, with a focus on risk reduction, using ADS as an example. • Retirement services saw robust demand, with $23 billion in inflows in Q3 and year-to-date $69 billion. • The Bridge acquisition enhanced the real estate business, contributing to fee-related revenues.

In the third quarter, Apollo Global Management achieved strong results. Combined fee and spread related earnings were record-breaking, with adjusted net income of $1.4 billion or $2.17 per share, up 17% year-over-year. FRE was $652 million, up 23% year-over-year. Management fee growth was 22% year-over-year. ACS fees were $212 million, the second straight quarter over $200 million. SRE ex notables was $846 million in Q3, with an estimate of $880 million in Q4, driving full-year SRE to $3.475 billion, an 8% year-over-year growth. Origination was $75 billion in Q3, led by platforms, second only to the record Q2. Inflows totaled $82 billion, led by asset management ($59 billion) and retirement services ($23 billion), with record AUM of $908 billion, up 24% year-over-year.

• Expect FRE growth of 20% plus in 2026. • SRE is expected to grow 10% in 2026, with an 11% alt return assumption. • Full-year 2025 margin is consistent with 2024, excluding Bridge. • Anticipate FRE will equal SRE in 2028, ahead of previous expectations. • Executed over $350 million in share repurchases during the quarter, with the majority being opportunistic.

• Concerns that industry growth may be limited by the capacity to find good investments rather than raising capital. • Culture concerns to maintain preferred employer status. • Colm Kelleher's view on private letter ratings arbitrage in U.S. insurance as a potential systemic risk, but Marc Rowan disputes this, citing Athene's low reliance on certain ratings and high-quality asset composition.

Q: Steve Chubak of Wolfe Research asked about origination targets unveiled at Investor Day, with current origination running ahead of plan, whether thinking has changed.

A: James Zelter said it's an appropriate question, but they're sticking to 5-year estimates for now, with 75% growth next year from existing vehicles.

Q: Alex Blostein of Goldman Sachs asked about the wealth market and partnerships with traditional asset managers.

A: Marc Rowan discussed Global Wealth tiers and the potential for partnerships with traditional asset managers to add private assets to in-place exposures.

Q: Patrick Davitt of Autonomous Research asked about Colm Kelleher's view on private letter ratings arbitrage as systemic risk.

A: Marc Rowan disputed this, citing Athene's low reliance on certain ratings and high-quality asset composition, contrasting with the banking industry.

Q: William Katz of TD Cowen asked about wealth management opportunity and rotation risk.

A: Marc Rowan said industry is in risk reduction mode, James Zelter added that secular trends drive demand for private credit despite some compression.

Q: Craig Siegenthaler of Bank of America asked about traditional asset managers taking on privates and origination platforms.

A: Marc Rowan and James Zelter talked about potential partnerships with traditional asset managers, needing infrastructure and transparency, and open architecture models.

Q: Ben Budish of Barclays asked about the 2026 SRE guide details.

A: Marc Rowan and Martin Kelly mentioned understanding of prepays, roll-off of business, and immunized rates, with more detail on the November 24 call.

Q: John Barnidge of Piper Sandler asked about open capital markets and private to public moves.

A: James Zelter said it's open architecture, with companies using public and private markets, not a winner-take-all.

Q: Michael Cyprys of Evercore ISI asked about partnerships with traditional asset managers and market making.

A: James Zelter mentioned partnerships like State Street and Lord Abbett, emphasizing transparency and information as key to growth.

Q: Brennan Hawken of Bank of Montreal asked about alt return restructuring and constraints.

A: Marc Rowan discussed AAA component and other holdings like Venerable and Athora, expecting improvement with PIC deployment.

Q: Brian Bedell of Deutsche Bank asked about 401(k) and deaccumulation traction.

A: Marc Rowan talked about guaranteed lifetime income and progress in 401(k) plan sponsors considering privates, but it's a long-term theme.

Q: Wilma Jackson Burdis of Raymond James asked about the trade-off between higher volumes versus higher spreads.

A: Marc Rowan and James Zelter discussed excess return per unit of risk, emphasizing not growing without adequate spread and navigating credit cycles with portfolio upgrades.