10-Q: Apollo Global Management Reports Q3 2026 Results

Apollo Global Management, Inc. (AGM) reported mixed financial results for the third quarter of 2026, with strong revenue growth in its asset management segment offset by significant investment-related losses in its retirement services segment.

Summary

• Apollo Global Management, Inc. (AGM) filed its Form 10-Q for the quarterly period ended September 30, 2026.
• Total revenues decreased by 51.8% to $4.7 billion compared to $9.8 billion in the prior year period, primarily due to a significant decrease in investment-related gains (losses) in the Retirement Services segment.
• Asset Management revenues increased by 7.7% to $3.9 billion, driven by higher management fees and advisory and transaction fees.
• Retirement Services revenues decreased by 58.5% to $3.5 billion, primarily due to a substantial decrease in investment-related gains (losses).
• Total expenses decreased by 12.2% to $6.2 billion, mainly due to lower interest sensitive contract benefits and market risk benefits remeasurement losses in the Retirement Services segment.
• Net income attributable to Apollo Global Management, Inc. common stockholders was a loss of $1.1 billion, compared to a net income of $1.7 billion in the prior year period.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a mixed to slightly positive filing, with strong revenue growth in asset management offset by significant investment-related losses in retirement services.

Positives

• Asset Management revenues increased by 7.7% to $3.9 billion, driven by higher management fees (+25.1% to $758 million) and advisory and transaction fees, net (+67.5% to $633 million).
• Fee Related Earnings (FRE) for Asset Management increased by 23.0% to $802 million.
• Net investment income in Retirement Services increased by 13.7% to $5.7 billion, reflecting strong net flows and higher rates on new deployments.
• Premiums in Retirement Services increased by 62.4% to $190 million.
• Principal Investing Income (PII) increased by 4.0% to $52 million, driven by higher realized performance fees and realized investment income.

Negatives

• Total revenues decreased by 51.8% to $4.7 billion, primarily due to a significant decrease in investment-related gains (losses) in the Retirement Services segment.
• Investment-related gains (losses) in Retirement Services were a loss of $3.4 billion, a decrease of $5.7 billion from a gain of $2.3 billion in the prior year.
• Net income attributable to Apollo Global Management, Inc. common stockholders was a loss of $1.1 billion, compared to a net income of $1.7 billion in the prior year period.
• The effective income tax rate increased significantly to 134.1% for the nine months ended September 30, 2026, from 13.9% in the prior year period, largely due to a valuation allowance against Bermuda deferred tax assets.
• Market risk benefits remeasurement (gains) losses in Retirement Services were a loss of $626 million, compared to a gain of $131 million in the prior year.

Risks

• Forward-looking statements are subject to risks and uncertainties, including inflation, interest rate fluctuations, market conditions, geopolitical events, and the performance of managed funds.
• The Company's asset management and retirement services businesses are affected by global financial markets and economic conditions, including price fluctuations in equity, credit, commodity, and foreign exchange markets, as well as interest rates and global inflation.
• Credit fundamentals remain generally constructive but risks are concentrated in certain sectors, particularly software, due to elevated leverage and approaching maturity walls.
• AI-related debt issuance warrants monitoring due to declining bond coverage ratios and widening credit spreads.
• The Company is subject to various legal proceedings, including shareholder derivative complaints and class action lawsuits, the outcomes of which are uncertain and could be material.
• The Company's tax positions are subject to examination by tax authorities, and potential adjustments could be material.
• The Company's financial instruments are subject to market risk, including credit risk, interest rate risk, currency risk, equity price risk, and inflation risk.

Future Outlook

The Company expects its current liquidity position and cash generated from revenues to be sufficient for at least the next 12 months. For the asset management business, future liquidity will be funded by management and performance fees, while the retirement services business relies on operating cash flows and liquid assets. The Company anticipates continued growth in Assets Under Management and positive investment performance, supporting future revenue generation and liquidity.

Management Comments

• "We carefully monitor economic and market conditions, including global inflation, that could potentially give rise to global market volatility and affect our business operations, investment portfolios and derivatives."
• "Athene addresses interest rate risk through managing the duration of the liabilities it sources with assets it acquires through asset liability management (ALM) modeling."
• "We believe that the long-term opportunity to provide investors with access to private credit, both investment-grade and sub investment-grade, will remain compelling across cycles."
• "The Company believes that these developments, including the revocation of ACRAs election to be subject to the Bermuda CIT, will have favorable implications for the Companys overall tax position over the longer term."

Industry Context

StockSavvy.ai notes that Apollo's results reflect broader industry trends in alternative asset management, including strong demand for credit strategies and growth in retirement services, while also highlighting the sensitivity of investment managers to market volatility and investment performance, particularly in the current interest rate environment.

Comparison to Industry Standards

• Apollo's Asset Management segment reported Fee Related Earnings (FRE) of $802 million for Q3 2026, an increase of 23.0% year-over-year, indicating strong operational performance in fee generation, a key metric for evaluating asset managers.
• The net investment spread for Retirement Services was 1.38% for Q3 2026, a decrease of 22 basis points year-over-year, reflecting industry-wide pressures from higher funding costs impacting insurance profitability.
• Apollo's total AUM reached $1.07 trillion, demonstrating significant scale comparable to other major global alternative asset managers like Blackstone and KKR, though specific AUM growth rates may vary based on strategy focus and market conditions.
• The company's focus on private credit, with $620 billion in private credit exposure within its $870 billion credit AUM, aligns with the industry trend of increasing investor allocation to private markets seeking higher yields.
• The significant investment-related losses in Retirement Services highlight the challenges faced by insurers in managing large fixed-income portfolios in a rising interest rate environment, a common concern across the insurance sector.

Legal Proceedings

• A purported stockholder derivative complaint challenges payments made to Former Managing Partners and Contributing Partners in connection with the elimination of the Up-C structure.
• A class action complaint alleges certain provisions of the stockholders agreement violate Delaware law.
• Two purported stockholders have filed class action complaints alleging violations of federal securities laws related to statements about business with Jeffrey Epstein.
• German tax authorities have made assessments regarding historical transactions in one of the Company's funds, with potential for further assessments.

Related Party Transactions

• Apollo engages in transactions with AAA and its subsidiaries, including purchases and sales of investments.
• Apollo provides investment advisory services to Athora and earns management and sub-advisory fees.
• Athene has investments in Athora, including equity and fixed maturity securities, and outstanding funding agreements.
• Athene has investments in Atlas, an asset-backed specialty lender, and holds AFS securities issued by Atlas affiliates.
• Athene has investments in Skylign Aviation Holdings, LP, directly through notes and indirectly through AAA and AAA Lux.
• Athene has investments in VA Capital Company LLC and Venerable, including AFS securities and term loans receivable.
• Athene consolidates AP Violet ATH Holdings, L.P., which holds an interest in VA Capital.
• Athene invests in Wheels Inc. indirectly through AAA and AAA Lux and holds AFS securities issued by Wheels.

Stakeholder Impact

• Shareholders may be impacted by the net loss attributable to common stockholders and the potential for future dividends.
• Policyholders in the Retirement Services segment are impacted by investment performance and the company's ability to meet future policy benefits.
• Creditors may be impacted by the Company's debt levels and its ability to service its debt obligations.
• Employees may be impacted by equity-based compensation and profit sharing arrangements tied to company and fund performance.
• Tax authorities are involved in ongoing examinations and potential assessments related to historical transactions and tax positions.

Next Steps

• The Company expects to continue to fund its asset management business operations through management fees and performance fees.
• Athene manages its liquidity position by matching projected cash demands with adequate sources of cash and other liquid assets.
• Athene may seek to secure additional funding at the AHL level through its credit facility or future issuances of debt or preferred stock.
• The Company expects to continue to grow its AUM and generate positive investment performance.
• The Company expects to continue to grow the investment portfolio of its retirement services business.
• The Company expects to continue to make payments to policyholders and satisfy pension group annuity obligations.
• The Company expects to continue to pay interest and principal on its debt and funding agreements.
• The Company expects to continue to repurchase common stock and make payments under tax receivable agreements.

Key Dates

Recommendation

The mixed results, with strong asset management performance offset by significant losses in retirement services, warrant a cautious approach. While AUM growth and FRE are positive, the substantial investment losses and increased tax provision create uncertainty. A 'hold' recommendation reflects the need to monitor the recovery in the retirement services segment and the impact of the tax changes before considering a more definitive stance.

Keywords

Apollo Global Management, Form 10-Q, Asset Management, Retirement Services, Alternative Investments, Financial Services, Investment Management, Quarterly Report