Good morning, and welcome to Apollo Global Management's First Quarter 2025 Earnings Conference Call. During today's discussion, all callers and following management's prepared remarks, the conference call will be opened for questions. Please limit yourself to one question and then rejoin the queue. This conference call is being recorded. This call may contain forward-looking statements and projections, which do not guarantee future events or performance. Please refer to Apollo's most recent SEC filings for risk factors related to these statements. Apollo will be discussing certain non-GAAP measures on this call which management believes are relevant in assessing the financial performance of the business. These non-GAAP measures are reconciled to GAAP figures in Apollo's earnings presentation, which is available on the company's website. Also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any Apollo fund. I will now turn the call over to Noah Gunn, Global Head of Investor Relations.

Great. Thanks, operator, and welcome again to our call. Joining me to discuss our results and the momentum we're seeing across the business are Marc Rowan, CEO, Jim Zelter, President, and Martin Kelly, CFO. Earlier this morning, we published our earnings release and financial supplement on the Investor Relations portion of our website. As you can see, first quarter results marked a strong start to the year. We generated record fee-related earnings of $559 million or $0.91 per share, spread-related earnings excluding notable items of $826 million or $1.35 per share, and adjusted net income of $1.1 billion or $1.82 per share. In addition, we declared a cash dividend of $0.51 per share of common stock for the quarter ended March 31, representing a 10% increase from our prior quarterly run rate and consistent with the growth trajectory we provided at Investor Day. And with that, I'll now hand it over to Marc.

Thank you, Noah. And thanks to all of you joining this morning. As Noah started off, strong results, particularly amid a very volatile market. FRE of $559 million, up 21% year over year, SRE of $826 million excluding notables, AUM of $785 billion, up 17% year over year, record inflows of $43 billion in the quarter inclusive of $26 billion at Athene, solid origination quarter at $56 billion led primarily by platforms and most importantly, fund level returns strong. I'd call out two particular areas in the credit business, 8% to 12% now depending on the fund on an LTM basis and in our hybrid area 19% on an LTM basis. In communicating what's going on in this market, most of the questions I received over the past month have been about the macro. So let me start there. It's never been more important to understand the manager philosophy and thus the direction of the business. You as investors, you should expect divergent paths for public asset managers. For us, purchase price matters in all markets. In debt and equity, in up markets and down markets, purchase price always matters. We are not a current period profit maximizer. That means we are willing to sit things out. We are willing to reduce leverage. We are willing to wait for the fat pitch. We are relentlessly focused on origination as our source of excess return. We are not riding market trends. Hope and prayer, we have found to be very poor business strategies but good strategies for life. Just a quick example of this. ADS was one time leverage in January of 2023. Prudent management of the vehicle took leverage down to 0.5 times in January of 2025. We have earned the right to deploy in this market and we expect…

Thanks, Marc. I'd like to start by sharing some perspective and view on the recent market volatility. The current administration was clear on their objectives pre and post-election. Want to revitalize American industry, bring back manufacturing, focus on domestic energy production and stimulate the industrial global renaissance. Tariff taxes and regulation are on the three-legged stool to support these objectives. While the tariff should not have come as a surprise, the scope and approach clearly rattle markets. At Apollo, we've been preparing for this environment like this environment and positioning the firm, as Marc mentioned, defensively, anticipation of this market disruption with dry powder and liquidity to thrive. As a reminder, we run our business as an equal opportunity investor. With the ability to pivot between public and private primary and secondary allowing us to focus on the most compelling risk reward. As market structure has evolved and private credit has grown far beyond direct lending, to include vast pools of investment grade assets, we believe our presence has been amplified given the differentiated model and strong relative position to address this broader opportunity set. Our long-dated capital has clearly demonstrated its capacity in the investment grade arena complementing our expertise in the non-investment grade arena over time. In recent months when public markets went no bid, we brought our own bid. This wasn't just liquidity, it was leadership. For some, capital light has become code for heads we win, tails we win, and hopefully our clients do okay. In contrast, our aligned client-centric model along with our principle-driven balance sheet allows our platform a degree of maneuverability that is unmatched. Over many years, we built a platform to deliver stable, strong performance for our clients and Q1 was no exception. Touching on origination, As Marc mentioned, we originated $56…

Thanks Jim and good morning everyone. Our Q1 results demonstrate the strength of our platform and our ability to execute in a dynamic environment. I'll quickly walk through our financial results highlight some key drivers that will position the balance of the year. And then touch on capital allocation. FRE, In asset management, we generated $559 million of fee-related earnings for the quarter, a new record FRE grew by 21% year over year and was driven by three components. 18% management fee growth notable strength from credit which grew by 23% capital solutions fees of more than $150 million for the quarter a very strong outcome in view of the emerging volatility. And expense discipline with combined comp and non-comp expenses growing by 11% year over year. The uptick in compensation expense reflects continued investments across our business to execute on our broad set of growth opportunities. 17% overall revenue growth combined with 11% overall cost growth resulted in approximately 200 basis points of FRE margin expansion year over year. Consistent with prior comments, we remain confident in the long-term margin potential of the business and expect to see expansion over a multiyear period as our business continues to scale. Key drivers within our FRE growth plan for 2025 include sustained momentum in global wealth, continued strength in third-party credit more broadly in particular, our asset-backed finance business and our origination platforms and growth in PE adjacent businesses within equity specifically hybrid value and secondaries. Given the momentum we see in the business, we are very confident in our 2025 earnings guidance. SRE, At the same time, Athene's business is facing a number of market-driven uncertainties which I will touch on in a minute. Bain's net invested assets grew by 15% year over year. Driven by record organic inflows with…

Thank you. The floor is now open for questions. First question is coming from Glenn Schorr of Evercore ISI. Please go ahead.

Hello there. I apologize in advance. I want to try to simplify the conversation even though you gave us a lot on SRE. And I'm thinking we a couple of years ago, we thought we were growing, you know, I would say, call it mid double digits. We brought that guy down to 11%, and now we're coming down to mid-single digits just this year. I like you being conservative to the environment and waiting for a fat pitch. I like the growth that you've seen. So can we break down the lower SRE on which piece is the conservative part of the investment and what conditions could make you less conservative and put that money to work sooner? And then the flip side of it is we didn't talk that much of there is a higher cost of funds. Cost of funds is up 28%. I'm assuming that's tied to funding agreements. But maybe we could try to simplify between the asset side and the liability side, and then we could understand, which is the conservative piece versus the market environment? Thanks.

Okay. It's Marc. I'll do the macro and then Martin will do some of the micro. We underwrite the business on a spread basis and an ROE basis. Some products offer higher spread, but are more capital intensive. Some products lower spread but are more capital efficient. So we also have adjustments in the spread that we earn. Our goal is to run a mid-teens, historically 15% plus ROE business. If we run a 15% ROE business, we are more than covering our cost of equity and we are able to get outside funders to help us fund our business that's the basis on which we want to do business. Recall that to do that business, there's actually three things. That get you to real spread. The first is your asset spread. The second is your cost of liabilities. The third and the one we don't talk about often enough is OpEx, which is very, very low for us on a relative basis. And so now step back and think about what's happened. We went through COVID and COVID offered some of the widest spread business we had ever seen. That business will roll off as you know throughout 2025 and through a portion of 2026. But the volume by which we've been doing business, has been very, very strong because you've seen a significant tick up in volume over the past few years. We've been doing that higher volume business at lighter spread. The conditions we saw in December and in the first quarter were not in my opinion healthy competitive conditions to put risk on the books. Can only imagine what's happening on a competitive basis given that we are 25 basis points ahead just on OpEx before you get to origination. But what we chose to do…

I would only add, as we look at the earnings profile, ahead of us, there's pieces that we know and can predict with certainty. And that's the behavior of the existing business and how it rolls off over time. Contractually. And then there's pieces of it that are sort of expectations which include prepays. And we obviously make assumptions and estimates about prepays, but given the extraordinarily tight conditions we saw, on spreads in CLOs in Q1, prepays are running a bit higher than we had forecast. And then you get to the unknowns and the unknowns are the components that Marc laid out. Which are rates in both pace and spreads on putting that to work. So as I think about the relationship between the cost of funds and the net the gross investment income, we're clearly under running on the business that we wrote in the quarter relative to the potential it has. And it'll take a period of time which we're making estimates around to turn that back. And that's really the primary uncertainty, both timing and spreads that we outsized business is put to work.

Thank you. The next question is coming from Steven Chubak of Wolfe Research. Please go ahead.

Hi, good morning. Thanks for taking my questions. So I was hoping to get some perspective on the wealth outlook. It sounds like you guys are continuing to see really good momentum. I was hoping you could speak to how flows were in AAA this quarter? Where you guys are in the distribution or platform journey, at the moment? And if you could provide more context just on the durability of those April flows and how it informs your outlook from here?

Well, let me start off, and I'm sure, Marc may have a couple of comments. But I would say if you go back twenty-four months ago in terms of 2023, we did, you know, a billion dollars in the overall channel. If you then you go to 2024, we were at $11 billion. We've been clear with $5 billion in the first quarter this year, and we've laid out a number $33 billion for the year. Feel quite strong on that number. There's no doubt there's been breadth in a variety of vehicles. ADS, AAA, ABC, AAA had solid numbers across the quarter and was not an outlier of the upside or the downside. So what's clear to us is the and we mentioned this before, performance is critical. But it's also technology, it's education, it's breadth of platform, it's the ability to have portfolio solutions, In time, it will be your ability to fund and finance and really provide the breadth of products. So we didn't see any wavering in the April. April's been a strong month as well. But it's you know, we are we do work live in a bit of an uncertain world, but we still feel very strong about the rest of the year in aggregate on this channel.

Thank you. The next question is coming from Alex Blostein of Goldman Sachs. Please go ahead.

Hey, guys. Good morning. Thank you. I was hoping we could expand the fundraising conversation a little bit more broadly. It obviously feels like retail and the wealth channel continues to be quite durable, you know, with respect to the current market uncertainty. When you think about how your institutional client base is responding and appreciate you guys actually don't have a large flagship fund in the market today, might be much might actually be a good thing right now. But as you think about other sources of institutional demand, in light of this volatility, how much more, I guess, durability do you see within that channel relative to maybe some of the other parts of the market?

You know, we feel extremely positive about the traction and the dialogue that we're getting from investors around the globe notwithstanding some of the actions would have taken place in the administration, you know. I would I would take a step back. We believe we have, you know, under hit our weight in terms of grabbing our fair share over the last couple of years. We're continuing to grow that. And when I see the dialogue with Marc described is our purchase price matters. We are not on the apology tour around the globe. And people have seen the breadth and success of a variety of our investment strategies. From the equity business across the board to our hybrid business and the breadth of our credit business. So you know, the call notes that we see, the engagement we see, the results we see, make us very, very positive, notwithstanding a bit of a macro headwind about how global investors might see The U.S. So we feel our share is going to whatever is out there we're going to gain share. The dialogues have been increasing and I think our strategies in terms of what we see going on in terms of how we run our business from purchase price matters to our origination focus, to our leadership in ABF, to our leadership in the hybrid areas, these are all areas where people are really institutional investors are refocusing their attention. And we're garnering a very strong share.

Maybe I'll just add and frame what Jim said. If you go back in just a little bit of history, we were fortunate in the creation of Athene and participating in Athene's growth. But Athene at the in its early days was growing much faster than Apollo. And so it was not we were not in a position to really expand the credit business in particular, but hybrid as a secondary matter substantially with third-party clients. Athene was taking everything we produced and more. About four years ago, we finally crested the hill, if you will, on origination. And we have continued to diversify. Jim is putting his finger on it. We have historically under earned our fair share of assets from the institutional channel. That has left us with more fertile opportunities going forward. If I look at where the dialogue is coming right now, insurance is a really strong part of this business. Not only are they seeing having to deal with the same tight spreads and therefore need to find ways to diversify, just the acceptance of private assets, as a more mainstream activity is really increasing the opportunity set across the board in insurance. I would say we are origination constrained rather than client constrained in the investment grade portion of the business. Everything we can originate at widespread, there's a home for. And that business will grow as fast as we can grow origination. And we have to be careful as an industry not to simply raise all the money because we can. We have to try as best we can to pace the growth of the capital side of our business with the growth of origination in our business. And this is a different way of thinking about traditional asset people who cover traditional managers but it is how we live every day.

I have to add here, Marc bring up a point. When you think about how you all and how the marketplace looks at our business, from a direct lending, it's very, very important for you to be able to commit to that sponsor a solution. The same analogy is going on in the high-grade capital solutions. You can't really work as agent. You need to be a principled investor and being able to go to that counterparty and deliver a solution with capital on the screws there's a reason why we've done a vast, vast majority of the transactions in the investment grade Capital Solutions business. We will continue to do so. Because of our platform and the way that we engage with this aligned capital. You can't go out and source an idea and then say, we'll come back in six weeks when our clients want to buy it. And that's the differentiating factor in our platform. So origination is so tied into capital formation and that flywheel that we are taking a garnering a greater share as deserve it because of our platform.

Thank you. The next question is coming from Bill Katz of TD Cowen. Please go ahead.

Great. Thank you very much. So Marc, couple of big picture questions for you. Always appreciate your perspective on this. You talked about sort of the intersection between public and private and you've been your franchise for that for a while. A couple of your peers, as you mentioned, it's sort of linked up on that sort of migration with the traditionalists trying to chase the private side. And expanding distribution on both sides. So you have KKR now with Capital Group, Blackstone working with Wellington and others. Where do you stand in terms of maybe a broader linkage to potentially participate in that? And then secondly, given the strong momentum of the business, how are you thinking about large scale M&A? I guess there's a large transaction out there where Apollo has been now sort of publicly linked. To that. I'm sort of curious of your appetite to sort of build into that channel as well. Thank you.

Okay. So we have two announced public partnerships, one with State Street and one with Lord Abbott. I would say this is a very active portion of our business. So much so that if as you follow Apollo closely, you'll notice the peeling off of what we call a new market group specifically to focus on traditional asset managers. And I have said internally in the firm that I expect traditional asset managers to be potentially one of the largest sources of capital formation for us. But I also want to give you the following perspective. No one firm in Service Capital Group or State Street or Lord Abbott or BlackRock or anyone else. We are all in the early days and these partnerships are about experimentation. If we are right, the scale of demand for private assets coming from traditional asset managers is going to be quite large. I believe we you, will eventually adopt the kind of thinking that we have, which this is not about how many of these partnerships I can get papered. It's about how many assets I can originate that are worthy of inclusion because they offer good risk rewards. It's a really weird dynamic over forty years because for forty years, we've gone from a small group of firms doing alternatives to now a fewer number of sizable firms doing private markets. We've always been measured by or limited by our capital base. We're now, in my opinion, limited by our capacity to find good assets. And as Jim said, it is inextricably linked to capital formation because demand for private assets, believe, does in some sectors today and will going forward exceed supply of private assets. And most people who cover our industry also cover traditional asset managers who historically have been judged by the quality and growth of their AUM. I believe that our industry will need to be much more close looked at the quality of our origination, And I like these early partnerships because we are learning a tremendous amount. But none of us have the size and scale today or in the future to serve the needs of the 10 largest asset managers on an exclusive basis. I'm very comfortable focused on origination. And if I have a good asset, it will have a home. I don't worry about that.

Thank you. The next question is coming from Patrick Davitt of Autonomous Research. Please go ahead.

I have a follow-up on that last point. You have been quietly launched on, I guess, launched than others on this hybrid illiquid liquid product with Lord Abbott. I think a few weeks before the other big partnership launched. Could you give more color on where that stands in getting distribution? And any broader thoughts on being able to talk about when think there could be a more tangible view of what demand even really looks like for these hybrid products? Thank you.

Well, I think I think, Marc, touched upon it. I mean, certainly, there's a reason why folks are partnering with those traditionals because of their reach of distribution. You know, we're not traditionally a direct to consumer franchise. And so we believe that our ability to whether it's new product creation like we've done with State Street and Lord Abbott, or just basic selling them SMAs or partnering on JVs there will be a whole litany of types of partnerships just like there's bank origination partnerships. Five years ago, when one of us announced a partnership that was thought to be exclusive, and now a variety of banks across a variety of asset classes have partnerships with us and many of our peers. That's what's going to happen in the traditionals as well. There will be a degree of open architecture. There will be a degree of desire not to have constant concentration in one manager. And so these are all early stages to where the business is going. And again, we think about the when you think about the limiting capacity it's not just aligning yourself with the platform and getting a product on it. It's actually producing the rare commodity, which is these private assets. Traditional managers historically have dealt in a sandbox with public stocks, and public investment grade bonds. And the sandbox of opportunities is limited to what has a CUSIP. We're bringing in a completely different perspective of actually originating bespoke solutions which we apply. And so again, I do think Lord Abbott's been out there because we had originally file it over a year ago. Not surprised by what we're seeing out of KKR and Capital Group. But as Marc said, we believe that when we have these calls in the ensuing years, you've talked about the institutional business, you've talked about global wealth, We believe there will be a pillar on traditional's in the broad brush perspective is what we talked about.

Thank you. The next question is coming from Ken Worthington of JPMorgan. Please go ahead.

You talked about tokenization as one of the innovations that will be meaningful for private assets over time. Was hoping you could help us link the two and how you see tokenization driving maybe its greater alternative access and ultimately driving greater alternative asset growth. But help us link the two together.

Yeah. I think again, I think you have to tie together. You have to have a view of a degree of open architecture. And you know, we do not hold ourselves out as leading front edge pioneers in the world of digital finance. But certainly, there's been a tremendous amount of assets raised a variety of stable value, stable coin structures. And is those institutions decide to expand beyond pure treasury investments, UST or otherwise, they will choose other yielding assets. And from what we've seen, interval funds because of the daily NAV and the subscription attributes are particularly attractive to a variety of potential digital platforms. And so we noted on our call, I believe either last call or two calls, that we had had one of our interval funds over a period of time a variety of subscription into that performing debt vehicle. And I suspect, again, in the breadth of open architecture, in scale of distribution, this will be something that potentially expands over time.

Thank you. The next question is coming from Mike Brown of Wells Fargo Securities. Please go ahead.

Good morning. Thanks for taking my question. So there's been a lot of negative headlines related to foreign LPs and endowments and kind of reducing their allocations to private markets or, you know, foreign LPs allocating less to The U.S. So Marc, from your perspective, is this a true risk for the industry? Should we be worried about the potential backlash for U.S. Managers or desire to invest less in The U.S? And then it would seem to me to Apollo would be more insulated from this dynamic just given your business mix, but curious about how you think about your potential exposure here.

So again, I'll start at the macro. We have lived through this period of hyper exceptionalism. And I gave you the stats of what had happened to our debt and our equity markets. I believe we are now back to exceptionalism. The reality is at least for the foreseeable future, there are not going to be alternatives to U.S. Capital markets for the most. Because The U.S. Market is still 60% of all the funding needs in the world. We will see reductions in allocations from foreign investors if current trends continue. And I think that's to be expected. The vast, vast majority of capital, as I've suggested, came into our public indices, and we're now watching it leave our public indices. And I don't think that's necessarily a bad thing. It's just we're moving. We've lived in this Goldilocks period of time of hyperexceptionalism that we're just not used to things going in reverse, but they do. In terms of our own business, on the margin, where we see certain pockets of limited partners where there's government pressure not to allocate to US until there's political resolution. I'm sure Do I expect it to have a major impact on our business? No, I do not. I think the reality is we are a source of diversification for almost every other portfolio. And it's always good to step back and think about relative size. The stat I like is just thinking about the size of The U.S. Debt market. And then think about everyone says we're going to Germany. Well, total market is $2.9 trillion. There's just no place to go right now. That does not mean that over time there will not be challengers to The U.S. But it's not one of the things that's keeping me up at night.

Yes. Would just add that the bar is going to be higher. Marc commented about Germany. Our travel schedules would not indicate that there's a lack of global demand for our products. But I would say like I was in all Australia in the last month. Talking to all the super funds that, you know, the scale that's a that's a $4 trillion pot of assets going to $7 trillion. By definition, Australia is not large enough for them to be able to service all of their needs. So we I think we feel comfortable that the hurdle for foreign capital or non-U.S. Capital to allocate to managers we feel like we're in a select group. And the breadth of our strategies, performance the other attributes that we bring to a $10 billion $20 billion $30 billion manager, probably challenging. We're going to get our fair share. We're very comfortable.

Thank you. The next question is coming from Benjamin Budish of Barclays. Please go ahead.

Hi, good morning and thank you for taking the question. Marc, in your prepared remarks, you talked a lot about liquidity in public markets. So if you could talk a little bit about liquidity in private markets. It's something the media has kind reported that you're poking around in providing more liquidity to the paper that you're originating. It's clearly part of you know, what is required for your partnership with State Street for the ETF. So just curious if you could talk a little bit about your activities terms of providing liquidity for private credit, how much capital this sort of requires and what your ambitions are there? Thank you.

Sure. First, look, the reality is we made significant changes in the plumbing of our financial system into following 2008. In the equity market, we had a number of firms step forward Citadel among them, Jane Street, who provides liquidity in the equity markets, some of the largest providers of that liquidity. I've now been through hundreds of client meetings and I asked them who does this in fixed income. And it's met with complete silence. And that is the answer. One stepped forward to do this in fixed income. By some estimates, fixed income trading capital in the world today is 10% of what it was in 2008 and the market is three times its size. The math is easy. We have a thirtieth of the liquidity. I expect that in every risk-off moment, we are going to see significant movements in trading prices and fixed income because there just is no market. We're discovering that public is both liquid and illiquid, and private. Liquid and illiquid. Just to differing degrees. The second thing I'd ask you to think about and then I'll get to your question. More than twenty years ago, some crazy bankers stood up in a meeting and said loans are gonna trade. And all of us looked at him and said, how could loans trade? Every loan is bespoke. There's no information. Took thirty days to settle a loan. And yet and they're not even securities. And yet, here we are more than twenty years later and we have loan ETFs and loan mutual funds and we all think loans trade. Well, Jimmy Lee was right. Loans traded. And JPMorgan made a market in loans and was earning widespread. Others on the street saw JPMorgan earning widespread and decided that that was unfair and they…

Thank you. We're showing time for one final question today. The final question will be coming from Alexander Bernstein of Piper Sandler. Please go ahead.

Good morning. Thank you for the opportunity. I know in some of your prior answers you said it's not about how many partnerships an asset manager or financial sponsor can start, but how many assets they originate that offer risk reward and you have those origination capabilities? How far off you think the alternative space is from something that that happened in the 401(k) space where the biggest providers garnered all the assets and then it became a consolidation opportunity for those at the top. Thank you.

Look, I like the chances of the larger firms in this marketplace. The reality is, however, one may feel about this, the individual opportunity is an opportunity that is available to the established firms who are capable of managing and manning the resources necessary to serve large distribution channels. I think the same is going to be true in the traditional asset management area, the same is true in the retirement services area. The scale of need just can't be met by the, you know, sole proprietorship PE firm. That doesn't mean we get everything because I don't think that's the case. I think there are a number of firms in our industry garner the largest share of assets should they keep their origination quality high and fortunate to be one of them. I'm thankful every day that we are.

Thank you. At this time, I'd like to turn the floor back over to Mr. Gunn for any additional or closing comments.

Great. Well, we really appreciate everyone's time this morning. If you have any questions or follow-ups on what we discussed, please feel free to reach out and we'll speak to you all next quarter.

Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.