8-K: Apollo Global Management Reports Strong Third Quarter 2024 Results Driven by Broad-Based Momentum

Apollo Global Management announced robust third-quarter results for 2024, demonstrating strong performance across its asset management and retirement services segments.

Summary

• Apollo Global Management reported a net income attributable to common stockholders of $787 million, or $1.30 per share, for the third quarter of 2024.
• Adjusted Net Income (ANI), a key non-GAAP metric, reached $1.1 billion, or $1.85 per share, for the quarter.
• Fee Related Earnings (FRE) hit a record of $531 million, driven by growth in fee-related revenues and disciplined expense management.
• Spread Related Earnings (SRE) totaled $856 million, the second-highest quarter on record, reflecting strong organic growth.
• Total Assets Under Management (AUM) reached $733 billion, with inflows of $42 billion in the third quarter and $151 billion over the last twelve months.
• The company saw record quarterly origination volume of $62 billion, driven by diverse investing activity.
• Apollo declared a cash dividend of $0.4625 per share of its Common Stock for the third quarter, payable on November 29, 2024.
• A cash dividend of $0.8438 per share of its Mandatory Convertible Preferred Stock was also declared, payable on January 31, 2025.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to strong financial results, record origination volume, and growth in AUM. While there are some negative points, the overall tone is optimistic and confident.

Positives

• The company demonstrated strong financial performance with record Fee Related Earnings and the second-highest Spread Related Earnings.
• Apollo experienced significant growth in Assets Under Management, driven by both asset management and retirement services inflows.
• The company achieved record quarterly origination volume, indicating strong investment activity.
• Apollo's diversified suite of wealth-focused products contributed to a more than 40% year-over-year increase in fee-related performance fees.
• The company's focus on cost discipline is reflected in a modest quarter-over-quarter decline in fee-related expenses, excluding fund merger-related costs.
• Apollo's share repurchase program returned $426 million to shareholders in the third quarter.
• The company's Athene business saw a record quarter of funding agreement issuance and continued strength in retail annuity sales.
• Apollo's credit strategies saw broad-based fundraising activity, including direct lending, opportunistic credit, and multi-credit.

Negatives

• Net income attributable to non-controlling interests was a loss of $958 million.
• There was a decrease in net unrealized performance fees of $147 million quarter over quarter.
• The company experienced $60 billion of outflows primarily driven by normal course activity at Athene and $27 billion of realization activity.
• Spread Related Earnings included a $25 million notable item within cost of funds.
• The company's alternative net investment income was below management's long-term expected average annual return of 11%, resulting in $81 million less income.

Risks

• The company is subject to risks relating to inflation, interest rate fluctuations, and market conditions.
• Apollo faces risks related to its ability to manage growth and operate in competitive environments.
• The performance of the funds managed by Apollo and the ability to raise new funds are subject to variability.
• The company's revenues, earnings, and cash flow are subject to variability.
• Apollo is dependent on certain key personnel.
• Athene's ability to maintain or improve financial strength ratings is a risk.
• The impact of Athene's reinsurers failing to meet their assumed obligations is a risk.
• Changes in the regulatory environment and tax status pose risks.
• The company is subject to litigation risks.

Future Outlook

The company is focused on executing its growth plan unveiled at its recent Investor Day and building a next-generation financial services business.

Management Comments

• Marc Rowan, Chief Executive Officer at Apollo, stated, 'Our strong third quarter results reflect broad-based momentum across the platform.'
• Marc Rowan also said, 'We are building a next-generation financial services business uniquely positioned to win across massive market opportunities, and we are excited to execute on the attractive growth plan unveiled at our recent Investor Day.'

Industry Context

Apollo's results reflect a broader trend of strong performance in the alternative asset management industry, driven by increased investor interest in private markets and alternative credit strategies. The company's focus on both asset management and retirement services positions it well to capitalize on these trends.

Comparison to Industry Standards

• Apollo's AUM of $733 billion places it among the largest alternative asset managers globally, comparable to firms like Blackstone and KKR.
• The company's record origination volume of $62 billion is a strong indicator of its deal-making capabilities, similar to the origination activities of large private credit funds.
• Apollo's FRE margin of 57.4% is competitive with other publicly traded alternative asset managers, though specific comparisons would require detailed analysis of peer group results.
• The 8.2% annualized return in the third quarter from Athene's alternative investment portfolio is within the range of returns reported by other insurance companies with significant alternative asset allocations, although the target of 11% was not met.
• Apollo's historical average annual credit losses of 11 basis points over the past five years compares favorably to the industry average of 13 basis points, indicating strong credit risk management.

Stakeholder Impact

• Shareholders will benefit from the declared dividends and share repurchases.
• Clients will benefit from Apollo's investment expertise and capital solutions.
• Employees will benefit from the company's growth and success.
• The communities impacted by Apollo's investments will benefit from the company's approach to expanding opportunity and achieving positive outcomes.

Next Steps

• Apollo will continue to execute on its strategic growth pillars, including origination, global wealth, and capital solutions.
• The company will host a public audio webcast to review the financial results.
• Apollo will continue to monitor and manage its investment portfolio and capital deployment activities.

Key Dates

Keywords

Asset Management, Retirement Services, Alternative Investments, Private Equity, Credit, AUM, Fee Related Earnings, Spread Related Earnings, Origination, Dividends