8-K: KKR & Co. Inc. Announces First Quarter 2025 Financial Results, Reporting Strong Growth in Fee-Related Earnings and AUM

KKR reports a mixed first quarter for 2025, with a GAAP net loss but strong growth in fee-related earnings and assets under management.

Summary

• KKR & Co. Inc. reported its first quarter 2025 financial results on May 1, 2025.
• GAAP Net Income attributable to KKR Common Stockholders was $(0.2) billion for the quarter and $2.2 billion in the LTM.
• Fee Related Earnings (FRE) reached $823 million ($0.92/adj. share) for the quarter, a 23% year-over-year increase.
• FRE for the last twelve months (LTM) was $3.4 billion ($3.82/adj. share), up 37% year-over-year.
• Total Operating Earnings (TOE) were $1.1 billion ($1.24/adj. share) for the quarter, up 16% year-over-year.
• TOE for the LTM was $4.5 billion ($5.04/adj. share), up 32% year-over-year.
• Adjusted Net Income (ANI) was $1.0 billion ($1.15/adj. share) for the quarter, up 20% year-over-year.
• ANI for the LTM was $4.4 billion ($4.88/adj. share), up 37% year-over-year.
• Assets Under Management (AUM) reached $664 billion, a 15% increase year-over-year.
• Fee Paying Assets Under Management (FPAUM) were $526 billion, up 12% year-over-year.
• New capital raised in the quarter totaled $31 billion, with $114 billion raised in the LTM.
• Capital invested in the quarter was $19 billion, with $88 billion invested in the LTM.
• The company issued $2.6 billion of 6.25% Series D Mandatory Convertible Preferred Stock in March.
• A regular dividend of $0.185 per share of common stock was declared for the quarter, a 6% annualized increase from 2024.
• Uncalled commitments (dry powder) stand at $116 billion.
• Gross unrealized performance income totals $8.7 billion as of March 31, 2025.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. While there's a GAAP net loss, the strong growth in fee-related earnings, AUM, and capital raising activities suggests a healthy underlying business. The increased dividend and strategic initiatives further contribute to a positive outlook.

Positives

• Significant growth in Fee Related Earnings (FRE) and Adjusted Net Income (ANI) year-over-year.
• Substantial increase in Assets Under Management (AUM) and Fee Paying Assets Under Management (FPAUM).
• Strong capital raising performance, indicating investor confidence.
• Increased dividend payout to shareholders.
• Successful issuance of Mandatory Convertible Preferred Stock.
• Growth in perpetual capital, providing a stable base of assets.
• Strategic partnership with Capital Group to expand access to individual investors.
• Strong fund investment performance in Private Equity, Real Assets and Credit.

Negatives

• GAAP Net Income attributable to KKR Common Stockholders was negative for the quarter at $(0.2) billion.
• Insurance revenues decreased significantly from $7,700,270 in 1Q'24 to $1,064,268 in 1Q'25.
• Insurance expenses increased significantly from $7,694,975 in 1Q'24 to $2,163,055 in 1Q'25.

Risks

• Volatility in the market could impact investment performance and capital raising.
• Changes in interest rates could affect the profitability of insurance operations.
• The company's reliance on key personnel poses a risk if they were to leave.
• Regulatory changes could impact the company's operations and profitability.
• The company's strategic holdings segment is subject to the risks associated with the performance of the underlying businesses.
• The company's forward-looking statements are subject to various assumptions and uncertainties that may not materialize.

Future Outlook

KKR expects Strategic Holdings Operating Earnings to be $350+ million by 2026, $700+ million by 2028, and $1.1+ billion by 2030, driven by strong operating and financial performance across the portfolio.

Management Comments

• Over our 49-year history, we have successfully navigated many periods of uncertainty.
• Our first quarter results and significant April activity bear testament to the strength of our diversified and durable business model.
• Volatility can yield attractive investment opportunities, and we're encouraged by our positioning given our global footprint, differentiated operational and investment capabilities, and collaborative culture alongside $116 billion of dry powder ready to invest on behalf of our clients.

Industry Context

KKR's results reflect the broader trends in the alternative asset management industry, including increased demand for private market investments and a focus on generating recurring fee income. The partnership with Capital Group highlights the industry's push to expand access to individual investors.

Comparison to Industry Standards

• Blackstone (BX) reported $135 billion in inflows for Q1 2024, showcasing the competitive landscape in attracting new capital.
• Apollo Global Management (APO) reported Fee-related earnings of $667 million in Q1 2024, providing a benchmark for KKR's FRE performance.
• Brookfield Asset Management (BAM) reported $925 billion of AUM, illustrating the scale of the largest players in the alternative asset management space.

Stakeholder Impact

• Shareholders will benefit from the increased dividend payout.
• Employees may see increased compensation due to the growth in fee-related earnings.
• Clients will have access to a wider range of investment opportunities through the partnership with Capital Group.
• The company's investments will support the growth of its portfolio companies and create jobs.

Next Steps

• Continue to deploy capital across various investment strategies.
• Further develop the strategic partnership with Capital Group.
• Focus on growing fee-related earnings and assets under management.
• Monitor the performance of the Strategic Holdings segment and its contribution to overall earnings.

Key Dates

Keywords

Assets Under Management, Fee Related Earnings, Adjusted Net Income, Capital Raising, Private Equity, Real Assets, Credit, Insurance, KKR, Financial Results