10-Q: Apollo Global Management Reports Second Quarter 2024 Results, AUM Reaches $696 Billion

Apollo Global Management's second quarter 2024 results show a significant increase in AUM to $696 billion, driven by strong inflows and market activity.

Summary

• Apollo Global Management reported its second quarter 2024 results, with total assets under management (AUM) reaching $696 billion.
• The company's asset management segment saw an increase in revenues to $1.1 billion, driven by higher investment income and advisory fees.
• Retirement services revenues decreased to $5.0 billion, primarily due to a decrease in premiums, partially offset by an increase in net investment income.
• The company's net income attributable to Apollo Global Management, Inc. common stockholders was $828 million, or $1.36 per basic share.
• Fee Related Earnings (FRE) for the asset management segment was $516 million, while Spread Related Earnings (SRE) for the retirement services segment was $710 million.
• Principal Investing Income (PII) was $33 million for the quarter.
• The company's effective income tax rate was 18.2% for the quarter.
• Apollo's net invested assets were $233 billion as of June 30, 2024.

Sentiment

Score: 6

Explanation: The document presents mixed results, with strong AUM growth and positive performance in some areas, but also a significant decrease in retirement services revenues and a decrease in net investment spread. The overall sentiment is neutral to slightly positive.

Positives

• The asset management segment saw an increase in revenues, driven by higher investment income and advisory fees.
• Net investment income for the retirement services segment increased by $856 million.
• The company's total AUM reached $696 billion, indicating strong growth.
• The company's effective income tax rate was 18.2% for the quarter.

Negatives

• Retirement services revenues decreased by $8.0 billion, primarily due to a decrease in premiums.
• Market risk benefits remeasurement (gains) losses were $(16) million in 2024, a decrease of $55 million from $(71) million in 2023.
• The company's net investment spread decreased by 35 basis points to 1.64%.

Risks

• The company's performance is subject to fluctuations in global financial markets and the economy.
• Changes in interest rates can significantly impact the value of investments and the company's net investment spread.
• The company is subject to extensive regulation, which could result in significant liabilities and penalties.
• The company is subject to litigation risk that could result in significant liabilities and reputational harm.
• The company's ability to execute its business strategy depends on its ability to raise additional investor capital and manage its projected costs.

Future Outlook

The company expects to continue to fund its operations through management fees, performance fees, and growth in its investment portfolio. The company also expects to continue to pursue strategic growth opportunities.

Industry Context

The document reflects the ongoing trend of institutional investors allocating capital towards alternative investment managers in search of more attractive returns. The company's focus on both asset management and retirement services positions it to capitalize on these trends.

Comparison to Industry Standards

• The company's AUM growth is consistent with the trend of increasing allocations to alternative investments.
• The company's performance in its various strategies, such as yield, hybrid, and equity, is comparable to other leading alternative asset managers.
• The company's net investment spread of 1.64% is within the range of other retirement services providers, but is subject to fluctuations in interest rates and market conditions.
• The company's focus on both asset management and retirement services is a unique approach compared to some of its competitors that focus on only one of these areas.

Legal Proceedings

• The company is party to various legal actions arising from time to time in the ordinary course of business.
• The company is involved in litigation related to a previous investment in SkyTerra Communications, Inc.
• The company is involved in litigation related to a previous acquisition of MPM Holdings, Inc.
• The company is involved in litigation related to secondary offerings of PlayAGS Inc. stock.
• The company is involved in a shareholder derivative complaint challenging payments made to the Former Managing Partners and Contributing Partners.
• The company is involved in a class action complaint alleging violations of Delaware law related to a stockholders agreement.
• The company is in discussions with the SEC regarding a potential resolution of an investigation concerning compliance with record retention requirements.

Related Party Transactions

• The company has various transactions with related parties, including management fees, transaction fees, and reimbursable expenses from the funds it manages and their portfolio companies.
• The company has a tax receivable agreement with its Former Managing Partners and Contributing Partners.
• The company has a cooperation agreement with Athora, a strategic liabilities platform.
• The company has an equity investment in Atlas, an asset-backed specialty lender.
• The company has a strategic modco reinsurance agreement with Catalina Holdings (Bermuda) Ltd.
• The company has investments in PK AirFinance, an aviation lending business.
• The company has a minority equity investment in VA Capital, the parent of Venerable.
• The company has investments in Wheels, Inc., a fleet management company.
• The company has investments in ACRA 1 and ACRA 2, which are partially owned by ADIP I and ADIP II, respectively.

Stakeholder Impact

• Shareholders may be impacted by the company's financial performance and dividend payments.
• Employees may be impacted by changes in compensation and benefits.
• Customers of the retirement services business may be impacted by changes in product offerings and interest rates.
• Investors in the funds managed by the company may be impacted by the performance of those funds.
• Suppliers and creditors may be impacted by the company's financial stability and ability to meet its obligations.

Next Steps

• The company will continue to monitor economic and market conditions.
• The company will continue to focus on growing its AUM and generating positive investment performance.
• The company will continue to manage its liquidity position and capital resources.

Key Dates

Keywords

Assets Under Management, AUM, Retirement Services, Asset Management, Investment Income, Performance Fees, Net Investment Spread, Fee Related Earnings, Spread Related Earnings, Principal Investing Income, Annuities, Alternative Investments