Blackstone Inc. Q3 FY2025 earnings call

• Acknowledged the horrific shooting at the New York City offices on July 28 and honored Wesley Lepatner. - Reported outstanding third quarter results with distributable earnings up nearly 50% year-on-year, underpinned by 26% growth in fee-related earnings and more than doubling of net realizations. - Inflows reached $54 billion, fourth consecutive quarter over $50 billion, with total 12-month inflows $225 billion, lifting AUM to $1.24 trillion. - Structural tailwinds in alternative sector accelerating, with Blackstone as a reference firm. - Private credit market expanding, Blackstone well positioned with $150 billion-plus direct lending platform. - Celebrated 40th anniversary, grown organically from start-up to largest alternative asset manager. - In credit, corporate and real estate credit crossed $500 billion, private wealth AUM grew, institutional business had strong momentum. - Real estate investor sentiment improving, commercial real estate values bottomed in Dec 2023 and slowly improving.

Total AUM rose 12% year-over-year to $1.242 trillion, while fee earning AUM grew 10% to $906 billion. Management fees increased 14% year-over-year to a record $2 billion. Transaction and advisory fees nearly doubled year-over-year to $156 million. Fee-related performance revenues grew 72% year-over-year to $453 million in the third quarter. Distributable earnings increased 48% year-over-year to $1.9 billion or $1.52 per common share. In credit, corporate and real estate credit crossed the $500 billion milestone, up 18% year-over-year. Private wealth AUM grew 15% year-over-year to nearly $290 billion. Institutional business had strong momentum across various areas.

• Expect growing capital commitments across many areas. - Anticipate acceleration in realizations in 2026, concentrated in private equity with expanding contribution from real estate. - Cyclical resurgence in transaction activity alongside multiple secular growth engines positive for shareholders. - Believes prospects for growth are strong with structural tailwinds in alternative sector accelerating.

• External focus on credit defaults erroneously linked to traditional private credit market, which are bank-led and bank syndicated credits with idiosyncratic factors like fraud. - While defaults may increase as cycle progresses, structural advantages of Blackstone's private credit model expected to continue producing superior results.

Q: RIA channel focus in wealth, current AUM breakdown and product adjustment?

A: Jonathan Gray said RIA channel is large but harder to access, firm has 300-plus people on the ground, created interval product in multi-asset credit for RIA channel, major opportunity with right resources.

Q: Wobbles in bank loan market, impact on direct lending dynamics?

A: Jonathan Gray said market participants concluded recent events were isolated, no significant pullback from banks seen.

Q: Dry powder in credit and direct lending, capacity development in BCRED?

A: Jonathan Gray said direct lending loan-to-value in Q3 was 38%, spreads in line with historic levels, strong deployment year; Michael Chae added dry powder largely in drawdown funds, direct lending a smaller fraction of dry powder.