Ares Management Corporation Q4 FY2025 earnings call

• Ares reached several milestones in the fourth quarter, including crossing $600 billion in AUM and exceeding $100 billion in 2025 fundraising and investing. - Record $113 billion in total fundraising for 2025, with $36 billion in the fourth quarter. - AUM grew 29% year-over-year to over $622 billion. - Fourth quarter deployment was a record $46 billion, with full-year gross deployment at $146 billion, up 37% from 2024. - Acquired GCP, expanding real estate and digital infrastructure offerings. - Invested in over 25 AI projects across the firm to enhance investment decision process, sales efforts, and back-office productivity. - Declared a 20% year-over-year increase in the first quarter 2026 common dividend to $1.35 per share.

Credit Group: In 2025, raised over $65 billion across 6 strategies. Fourth quarter raised over $18 billion, with U.S. and European direct lending strategies accounting for over $12 billion. Real Estate Group: Raised more than $16 billion in 2025, including over $7 billion in the fourth quarter. Infrastructure: Raised over $7 billion in 2025, with expectations of more in 2026. Secondaries Group: Raised $12.9 billion in 2025, AUM increased 45%. Wealth Channel: AUM in semi-liquid wealth products reached $66 billion at year-end, with $16 billion in equity inflows in the fourth quarter. Revenue contribution % wasn't explicitly stated for each segment but the financials for each are detailed above.

• Anticipate 2026 fundraising to be as good or better than the record year in 2025. - Expect growth in management fees due to strong FPAUM growth. - Potential for significant growth in FRP from real estate market recovery. - 2026 FRE margin expected to be at the high end of the annual target range of 0 to 150 basis points. - Expect to realize approximately $350 million in European style net realized performance income in 2026, more than doubling 2025 levels.

• Forward-looking statements subject to risks and uncertainties identified in SEC filings. - Potential market disruptions that could impact investment activities. - AI software-related risks, though Ares believes its software portfolio is diversified and underwriting disciplined, with negligible impact on earnings. - Credit dispersion among the peer group, though fundamentals across credit portfolios are improving.

Q: Craig Siegenthaler from Bank of America asked about software AI disruption and origination.

A: Michael Arougheti stated Ares has a diversified software portfolio with low risk of AI disruption, and origination volumes are expected to remain strong with a record pipeline.

Q: Alexander Blostein from Goldman Sachs inquired about wealth channel flows and sentiment.

A: Michael Arougheti said wealth channel had strong flows in January and February, with broad-based demand, and while there may be cyclicality, inflows are still strong.

Q: William Katz from TD Cowen asked about real assets, secondary platform, and flagship credit vehicles.

A: Michael Arougheti discussed plans for credit funds, growth in real assets and secondaries, and timelines for launching new funds.

Q: Kenneth Worthington from JPMorgan asked about ABF and deployment.

A: Michael Arougheti talked about ABF business positioning, underwriting standards, and expected growth in deployment.

Q: Brennan Hawken from BMO asked about catch-up fees in secondaries and wealth management AUM.

A: Jarrod Phillips and Michael Arougheti addressed catch-up fees and wealth management AUM geography.

Q: Brian McKenna from Citizens asked about nonsponsor channel and spreads.

A: Michael Arougheti and another executive discussed nonsponsor origination, spreads, and leverage in nonsponsor business.

Q: Ben from Barclays asked about performance fees and private equity.

A: Jarrod Phillips and Michael Arougheti commented on FRPR, REITs, private equity performance, and strategic considerations for private equity growth.

Q: Michael Brown from UBS asked about private equity strategy.

A: Michael Arougheti discussed strategic benefits of growing private equity, cultural fit, and financial accretion.

Q: Michael Cyprys from Morgan Stanley asked about software exposure in direct lending.

A: Michael Arougheti talked about software exposure in direct lending, underwriting discipline, and avoided deals.