Apollo's quarter fired on every cylinder except selling things.
Record FRE, record SRE, record inflows, and $16 million of principal investing income. Apollo's quarter was superb everywhere except the line the industry is named after.
Apollo made $16 million last quarter from the activity its industry is named after. Principal investing income, the line where profitable exits land, came to $16 million in the second quarter, down from $75 million in the first and $47 million a year ago. Almost everything around it set records.
The records first, because they are real. Fee-related earnings of $785 million, up 25% year on year, at a 58.5% margin. Spread-related earnings at Athene of $877 million, up 7%. Record organic inflows of $60 billion, split $38 billion into asset management and $22 billion into Athene, with $74 billion of origination on top. AUM of approximately $1.05 trillion, up 25% in twelve months. President Jim Zelter told the call that the latest flagship buyout fund has raised more than $12 billion through July. Marc Rowan's release opened with "record earnings across Asset Management and Retirement Services", and on those two lines he is entitled to it.
The trouble is the third line. Adjusted net income of $2.11 per share, up 10% on last year, still missed the $2.17 analysts polled by LSEG expected, because the volatile bit collapsed. Apollo said asset sales from certain funds were "prudently delayed" while market conditions are "less accommodative for monetization activity". Piper Sandler, politely, called principal investing income "the most volatile line item on a quarterly basis". Our read: prudence is carrying a heavy load in that sentence. Blackstone and KKR both reported brisk exit and listing activity for the same three months. The monetisation weather was not uniformly terrible. Apollo simply was not selling in it.
