• Fee-Related Earnings (FRE): Record $531 million or $0.87 per share.
• Spread-Related Earnings (SRE): Near-record $856 million or $1.40 per share.
• Adjusted Net Income (ANI): $1.1 billion or $1.85 per share.
• Record Origination: $62 billion for the quarter, $194 billion year-to-date.
• Athene Organic Growth: $20 billion for the quarter.
• Credit Inflows: $39 billion in the third quarter.
• Capital Solutions Fees: Second highest quarter on record.
• Net Spread: Increased by 16 basis points quarter-over-quarter.
• Athene Alternatives Portfolio Return: 8.2% annualized in the third quarter.
• AAA Annualized Return: 10.5% in the third quarter.
• Principal Investing Income: Benefited from monetizations by Fund IX.
• Share Repurchase: Over 4 million shares at an average price of $105.

• Warning! GuruFocus has detected 10 Warning Signs with APO.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Apollo Global Management Inc (NYSE:APO) reported record fee-related earnings of $531 million and near-record spread-related earnings of $856 million for the third quarter of 2024.
• The company outlined ambitious five-year growth targets, including doubling adjusted net income to $15 per share by 2029.
• Apollo's platforms, particularly ATLAS, showed strong performance with $50 billion of cumulative origination to date.
• Athene, Apollo's retirement services business, achieved $20 billion in organic growth for the quarter, indicating robust expansion in the retirement sector.
• Apollo's retail fundraising is on track to increase by 50% year-over-year in 2024, highlighting strong growth in individual investor engagement.

Negative Points

• Despite strong performance, Apollo faces the challenge of executing against ambitious growth targets in a competitive asset management industry.
• The company acknowledges the need for significant origination capabilities to sustain growth, which could be a limiting factor.
• Apollo's business model requires continuous innovation and adaptation to maintain its competitive edge, which could strain resources.
• The company's reliance on non-GAAP measures for assessing financial performance may not provide a complete picture of its financial health.
• Apollo's growth strategy involves navigating complex regulatory environments, particularly in the insurance and retirement sectors, which could pose risks.

Q & A Highlights

Q: Can you provide an update on third-party fundraising, particularly in the insurance channel, and the flows you're seeing year-to-date? A: Marc Rowan, CEO, explained that Apollo has always run a third-party business, partnering with competitors on the asset side. The insurance channel is mostly life and annuity, not P&C. They partner with peer insurance companies through programmatic investments, one-off investments, or in the context of funds or SMAs. Jim Zelter, Co-President, added that Apollo's open architecture flywheel allows for a variety of activities, including investment-grade activity, which is expected to grow significantly.

Q: How are retirement outflows expected to trend in 2025, and will they be in line with 2024? A: Marc Rowan, CEO, stated that the runoff of insurance liabilities is highly predictable, and they plan to update their 2025 forecast. Martin Kelly, CFO, added that the ups and downs from any quarter are driven by contractual features of policies, and they expect the trend to continue as anticipated.

Q: Can you discuss the opportunity set in the retail platform and the associated expenses? A: Marc Rowan, CEO, mentioned that Apollo is in the early stages of developing the retail channel, focusing on appropriate products and services for high-net-worth individuals. He emphasized the need for scale, technology, and product innovation to serve large wealth channel participants. Jim Zelter, Co-President, added that Apollo is moving towards a portfolio solutions dialogue, with a commitment to being a successful player in the space.

Q: How do you see the retirement opportunity evolving, particularly with target date fund allocations in the DC market? A: Marc Rowan, CEO, highlighted that while private assets have shown superior outcomes in other countries, Apollo's five-year plan does not rely on changes in the DC market. He believes there is an opportunity to rethink retirement products, aiming for guaranteed lifetime income as a long-term goal.

Q: Can you provide more details on the equity sleeve in the CIT offering and its potential expansion? A: Marc Rowan, CEO, explained that AAA is being adopted in portfolio allocations and is expected to reach $20 billion by year-end. While it's still early, Apollo envisions a future where 60-40 portfolios include both public and private assets, with AAA being part of overall solutions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.