8-K: Apollo Global Management Reports Strong Q3 2024 Results Driven by Asset Management and Retirement Services Growth

Apollo Global Management announced strong third-quarter 2024 results, highlighted by record fee-related earnings and robust growth in both asset management and retirement services.

Summary

• Apollo Global Management reported a GAAP net income 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 $531 million, driven by growth in fee-related revenues and cost discipline.
• Spread Related Earnings (SRE) was the second highest on record at $856 million, reflecting organic growth and profitability.
• Total Assets Under Management (AUM) reached $733 billion, boosted by $42 billion in inflows during the quarter and $151 billion over the last twelve months.
• The company saw record quarterly origination volume of $62 billion across various asset classes.
• Apollo's global wealth fundraising exceeded full-year 2023 results year-to-date through the third quarter.
• Approximately 60% of Apollo's total AUM is comprised of perpetual capital.

Sentiment

Score: 8

Explanation: The document presents a very positive outlook with strong financial results, record earnings, and significant growth in AUM. The company's strategic initiatives appear to be successful, and the overall tone is optimistic.

Positives

• Record Fee Related Earnings (FRE) of $531 million were achieved due to strong revenue growth and cost management.
• Spread Related Earnings (SRE) was the second highest on record at $856 million, indicating strong organic growth.
• Total AUM increased to $733 billion, driven by significant inflows and market appreciation.
• Record quarterly origination volume of $62 billion demonstrates strong investment activity.
• Global wealth fundraising has exceeded the full year 2023 results, showing strong investor interest.
• Realized performance fees reached the highest level since 2021, at $331 million.
• Athene's alternative investment portfolio achieved an 8.2% annualized return in the third quarter.
• The company repurchased 4 million shares for $426 million in the third quarter.
• Approximately 60% of Apollo's total AUM is comprised of perpetual capital, providing stability.

Negatives

• Net income attributable to non-controlling interests was a loss of $958 million in the third quarter.
• There was a $25 million notable item within cost of funds, primarily driven by a $16 million actuarial assumption review.
• The alternative net investment income was $81 million below management's long-term expected average annual return of 11%.

Risks

• The document mentions risks related to inflation, interest rate fluctuations, and market conditions.
• There are risks associated with managing growth and operating in competitive environments.
• The performance of the funds managed by Apollo and the ability to raise new funds are also risks.
• The variability of revenues, earnings, and cash flow is a potential risk.
• The company 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 obligations is a risk.
• Changes in the regulatory environment and tax status could pose risks.
• There are litigation risks associated with the business.

Future Outlook

The document does not provide specific forward-looking guidance, but it highlights the company's continued execution on strategic growth pillars and strong performance across its segments.

Management Comments

• The company believes that presenting Origination as the sum of debt origination and equity origination better represents the totality of its proprietary origination activity across asset classes.
• Management's long-term expected average annual return for Athene's alternative investment portfolio is 11%.

Industry Context

The results reflect a strong performance in the alternative asset management industry, with growth in both fee-based and spread-based earnings. The focus on origination and capital deployment aligns with industry trends of seeking higher-yielding opportunities.

Comparison to Industry Standards

• Apollo's historical average annual credit losses across its total portfolio of 11 basis points over the past five years compares favorably to the industry average of 13 basis points.
• The document references industry averages from SNL Financial, including companies such as AEL, AIG, AMP, BHF, EQH, FG, LNC, MET, PFG, PRU, VOYA and Transamerica.

Stakeholder Impact

• Shareholders will benefit from the strong financial performance and share repurchases.
• Employees may benefit from the company's growth and success.
• Customers of Athene will benefit from the company's financial strength and stability.
• Investors in Apollo's funds will benefit from the company's strong investment performance.

Next Steps

• The company will continue to execute on its strategic growth pillars, including origination, global wealth, and capital solutions.
• Apollo will continue to focus on cost discipline and efficient capital deployment.
• The company will continue to monitor and manage its investment portfolio and risk exposures.

Key Dates

Keywords

Asset Management, Retirement Services, Adjusted Net Income, Fee Related Earnings, Spread Related Earnings, Assets Under Management, Origination, Athene, Performance Fees, Capital Solutions