Q4 2024 Earnings Summary
- Apollo is well-positioned to capitalize on the shift towards incorporating private assets into retirement solutions, tapping into a potentially $12 trillion 401(k) market. Marc Rowan highlighted that integrating private assets into retirement plans can improve results by 50% to 100%, and Apollo is at the very beginning of this journey, which could be overwhelmingly positive for their business.
- Apollo's wealth management fundraising is experiencing strong growth, with $12 billion raised in 2024, up 50% year-over-year, and ambitions to continue this momentum globally in 2025. The company reported that ADS had its best month on record in January, indicating continued strong demand for their products.
- Apollo's Athene segment has significant competitive advantages due to its capital, efficient origination platform at scale, ability to produce investment-grade assets with spreads, and low-cost liabilities, positioning it for continued growth in spread-related earnings despite increased competition. Marc Rowan emphasized that few others in the industry have these four key components, and Athene issued over $70-plus billion at reasonable spreads last year, expecting more this year.
- Increased Competition and Rising Costs in the Annuity Market: Apollo's insurance subsidiary, Athene, faces heightened competition in the U.S. annuity market, leading to a 12 basis point sequential increase in the cost of funding. This rising cost and competitive pressure could compress net spreads and impact spread-related earnings over the next few years. ( )
- Potential Deceleration in Apollo Capital Solutions (ACS) Fee Growth: Despite strong historical growth in ACS fees (24% in 2024), management's guidance suggests a meaningful deceleration, with a target that implies slower growth than previous years. This could negatively impact overall fee-related earnings growth, raising concerns about the sustainability of ACS as a growth driver. ( )
- Regulatory Uncertainty in the Retirement and Insurance Markets: Apollo's growth ambitions in retirement solutions may be hindered by regulatory uncertainties. Changes in fiduciary rules, litigation culture focusing on fees, and potential shifts in state or federal regulations could pose risks to Apollo's ability to expand in the vast retirement market, especially if anticipated regulatory changes do not materialize or are unfavorable. ( )
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | -52% (from $11,046m in Q4 2023 to $5,283m in Q4 2024) | The drastic drop in revenue suggests that Q4 2023 may have benefited from unusually high performance or one-off items—possibly strong fee-related or retirement services revenues—that did not sustain into Q4 2024. This decline could also be attributed to deteriorating market conditions and lower volumes in key business segments, resulting in a significant normalization of revenue levels. |
Net Income | -53% (from $3,581m in Q4 2023 to $1,662m in Q4 2024) | The net income fall mirrors the revenue decline, indicating that the lower top-line figures, coupled with persistent expense levels, have squeezed profitability. Previous period strong performance may have been driven by favorable market conditions and significant fee or investment gains that were not repeated in Q4 2024, reflecting broader economic or company-specific challenges. |
EPS (Basic) | -47% (from $4.55 in Q4 2023 to $2.43 in Q4 2024) | The decrease in EPS reflects the overall deterioration in profitability, as the substantial drops in both revenue and net income reduced earnings on a per-share basis. This outcome likely results from a combination of lower revenue generation across major segments and an unchanged or even rising cost structure, implying that the previous period's high EPS may have been buoyed by exceptional factors that normalized in Q4 2024. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Spread-Related Earnings (SRE) | Q4 2024 | no prior guidance | Expected to remain consistent with Q3 2024 in terms of SRE dollars; 5% growth rate for the year | no prior guidance |
Dividend | Q4 2024 | no prior guidance | $750 million per year | no prior guidance |
Origination | Q4 2024 | no prior guidance | $275 billion per annum over the next 5 years | no prior guidance |
FRE & SRE Growth | Q4 2024 | no prior guidance | 20% (FRE) and 10% (SRE) average annual growth, both reaching $10B by 2029 | no prior guidance |
Adjusted Net Income (ANI) | Q4 2024 | no prior guidance | More than double to $15 per share by 2029 | no prior guidance |
Capital Generation | Q4 2024 | no prior guidance | $21 billion | no prior guidance |
Fee-Related Earnings (FRE) Growth | FY 2025 | no prior guidance | 20% average annual rate over the next 5 years (15–20% in non-fundraising years) | no prior guidance |
Spread-Related Earnings (SRE) Growth | FY 2025 | no prior guidance | 10% average annual growth over the next 5 years | no prior guidance |
Interest Rate Assumptions | FY 2025 | no prior guidance | 6 total equivalent rate cuts from last September through the end of 2025 | no prior guidance |
Adjusted Net Income (ANI) | FY 2025 | no prior guidance | $4.6B reported for 2024 with expectations for continued strong performance | no prior guidance |
Assets Under Management (AUM) | FY 2025 | no prior guidance | $751B achieved, with total inflows of $150B and origination volume over $220B | no prior guidance |
Retirement Services | FY 2025 | no prior guidance | Focus on Athene’s net organic growth and net spread as key drivers of SRE | no prior guidance |
Principal Investing Income (PII) | FY 2025 | no prior guidance | Benefited from greater realized performance fees in 2024; continued strong investment performance expected | no prior guidance |
Global Wealth Management (GWM) | FY 2025 | no prior guidance | Significant momentum, aiming for high growth in semiliquid products and international markets | no prior guidance |
ACS Fee Growth | FY 2025 | no prior guidance | More conservative growth trajectory, aligning with strategic goals | no prior guidance |