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Ares Management Corp (ARES)·Q2 2025 Earnings Summary

Executive Summary

  • Revenue beat, EPS miss: Total revenues of $1.35B significantly exceeded Wall Street consensus ($0.97B), driven by record management fees and market appreciation, while Primary EPS (proxy: After-tax Realized Income per share) came in at $1.03 versus $1.09 consensus, a modest miss. Bold catalysts: record fundraising and AUM growth; seasonal fee-related performance revenues expected later in the year . Primary EPS Consensus Mean and Revenue Consensus Mean marked with asterisks; see S&P Global disclaimer below.
  • AUM expansion and dry powder: AUM reached $572.4B (+28% YoY), FPAUM $349.6B (+27% YoY), and available capital rose to $150.8B, positioning Ares to deploy into an improving transaction environment .
  • FRE strength with temporary margin compression: Fee Related Earnings rose to $409.1M (+26% YoY) with a 41.2% FRE margin; integration of GCP International modestly compressed margins, but management reaffirmed full-year FRE margin consistency with the prior year .
  • Dividend maintained with YoY increase: Declared $1.12 quarterly dividend; management noted the payout is 20% higher than the same quarter last year, a supportive shareholder catalyst .
  • Strategic momentum: First full quarter of GCP International contribution with identified synergies; growing wealth channel and secondaries; expanding infrastructure footprint (data centers and JV with Savion) .

What Went Well and What Went Wrong

  • What Went Well

    • “We generated strong second quarter results, growing AUM, fee paying AUM and management fees by 24% or more year over year” (CEO), supported by record quarterly market appreciation and second-highest quarterly fundraising ($26.2B) .
    • GCP International contributed $103M in revenues and $34M FRE in its first full quarter; management is “on track” to deliver ~$200M FRE in the first 12 months along with more-than-expected synergies and incremental fees from the $2.4B data center fund .
    • Perpetual capital AUM expanded to $166.6B (+43% YoY), underpinned by wealth products (e.g., ASIF, APMF) and insurance flows, enhancing visibility of management fee growth .

  • What Went Wrong

    • Fee related performance revenues in the Credit Group were down 95% YoY in Q2 (seasonality and mix), though CFO flagged typical FRPR realizations later in the year (Q3/Q4) .
    • FRE margin was temporarily compressed (41.2% vs prior year 42.1%) due to GCP integration costs (~$10M in Q2; $6–$7M per quarter set to run off over 12 months) .
    • Private Equity Group saw a 5% YoY decline in management fees and a 32% YoY decline in FRE, attributed to an extended value fund stopping fees at end of Q4-24 .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Total Revenues ($USD)$—$1,088,805,000 $1,350,128,000
GAAP Net Income Attributable to Ares ($USD)$177,300,000 $47,170,000 $137,062,000
GAAP Diluted EPS (Class A & non-voting)$0.72 $0.00 $0.46
Fee Related Earnings (FRE) ($USD)$396,200,000 $367,276,000 $409,111,000
FRE Margin (%)—41.5% 41.2%
After-tax Realized Income ($USD)$434,700,000 $381,431,000 $367,888,000
After-tax RI per share (Class A) ($)$1.23 $1.09 $1.03

Estimate comparison

MetricQ1 2025Q2 2025
Revenue Actual ($USD)$1,088,805,000 $1,350,128,000
Revenue Consensus Mean ($USD)$860,462,000*$971,312,500*
Primary EPS Actual ($USD)$1.09 $1.03
Primary EPS Consensus Mean ($USD)$0.94035*$1.093*

Segment performance (YoY)

Segment Metric ($USD ‘000)Q2 2024Q2 2025
Credit Group – FRE$368,281 $426,310
Credit Group – Realized Income$408,205 $435,494
Real Assets – FRE$51,643 $113,645
Real Assets – Realized Income$41,069 $97,648
Private Equity – FRE$14,454 $9,846
Private Equity – Realized Income$11,392 $12,858
Secondaries – FRE$33,641 $50,537
Secondaries – Realized Income$26,544 $48,715

Key operating KPIs

KPI ($USD Billions)Q1 2025Q2 2025
AUM$545.9 $572.4
FPAUM$335.1 $349.6
Available Capital$142.0 $150.8
AUM Not Yet Paying Fees$99.2 $104.8
Perpetual Capital AUM$154.8 $166.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
FRE MarginFY 20250–150 bps expansion achievable (Investor Day context) Full-year FRE margin consistent with prior year given GCP integration; ex-GCP, margins would expand Maintained (net consistent)
Fee Related Performance Revenues (FRPR)Q3/Q4 2025Majority of Credit FRPR realized in Q4 Expect Q3 FRPR from Open-End core alt credit; majority of Credit FRPR realized in Q4; growth “similar percentage” YoY with eligible AUM up ~10% YoY Maintained (seasonality confirmed)
Net Realized Performance Income (European style)2025–20262025 target $225–$275M (Q1) Over $500M across 2025–2026; split may be ~1/3 in 2025 and ~2/3 in 2026 depending on market timing Updated (timing shifted; magnitude across two years)
Effective tax rate on Realized IncomeH2 20258–12% ~9.5% in Q2; in line with 8–12% range for remainder of year Maintained
DividendQ3 2025 payment$1.12 declared (Q1) $1.12 declared; 20% higher than same quarter prior year Maintained (YoY increase highlighted)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Tariffs/macro impactTariffs introduced April 2; volatility; private markets’ stability; pipeline intact April slowdown, rebound in June; deployment slightly higher YoY; optimism for H2 acceleration with possible rate cuts Improving deployment backdrop
Wealth channel momentumRecord Q1 wealth flows ($3.7B equity; $5B total); resilience through April; education broadening July record equity inflows ($1.4B); August tracking higher; ~80 partners, increasing int’l flows; <1% redemptions in Q2 Strengthening; broader distribution
European private assetsImproving attractiveness; Ares scale advantage; pipeline up Europe credit quality at least on par/better; increased investor appetite; LTV ~49%, coverage ~2.3x Positive shift to Europe
Private credit demand/feesInstitutional appetite steady; Ares resisting fee pressure Spreads tightened but still premium vs liquid; Ares pushing back on fee cuts; wealth demand supports structures Stable pricing power
Digital infrastructure/data centersAnticipated pipeline; Japan DC fund first close in Q1 $2.4B final close for Japan DC Fund; expect additional DC fundraising in London/Tokyo/Osaka; GCP integration on track Scaling
401(k) inclusion of altsEarly discussions; cautious optimism “Closer than ever”; waiting on executive order/rulemaking; product ready, partnerships underway Advancing, timing TBD
Insurance (Aspida)~$20B investment capacity; primary originations strong $1.9B Q2 premiums; on track for ~$7B in 2025; $23B assets, $15B sub-advised by Ares Strong growth

Management Commentary

  • “Our AUM benefited from our second highest level of quarterly gross fundraising coupled with record quarterly market appreciation… we believe we are on pace to meet or exceed our previous annual record for fundraising.” – CEO .
  • “We believe we are on track to meet our financial goals for [GCP International], including greater than originally expected synergies…” – CFO .
  • “Management fees were a record $900 million, representing a 24% year over year increase… we expect fourth quarter FRPR from the credit group to grow a similar percentage year over year.” – CFO .
  • “With a record amount of dry powder of $151 billion… we believe that we're very well positioned to take advantage of higher levels of market activity.” – CEO .

Q&A Highlights

  • Private credit demand/fees: Ares sees continued growth and resists fee compression; spreads still offer premium vs liquid markets (direct lending ~100–200 bps wide; high grade ~60–90 bps) .
  • 401(k) channel: Closer to inclusion of alternatives; product ready, partnerships progressing; acknowledges non-linear path and litigation considerations .
  • Europe vs U.S. direct lending: Comparable/better credit quality in Europe; LTV 49% vs U.S. 43%; interest coverage 2.3x vs 2.0x .
  • Wealth distribution: Broader partnerships, stronger int’l flows; July/August record inflows; redemptions <1% of AUM in Q2 .
  • AUM not-yet-paying fees deployment: Historically near one-year conversion; H2 deployment likely accelerates timeline vs 18–24 months .

Estimates Context

  • Q2 2025: Revenue beat ($1.35B vs $0.97B*), Primary EPS miss ($1.03 vs $1.093*). Management fees and market appreciation drove the top-line outperformance, while seasonality in FRPR and integration costs modestly weighed on per-share metrics . Primary EPS Consensus Mean and Revenue Consensus Mean marked with asterisks; see S&P Global disclaimer below.
  • Q1 2025: Revenue beat ($1.089B vs $0.860B*), Primary EPS beat ($1.09 vs $0.940*), consistent with strong fundraising and deployment across credit and real assets (including initial GCP impact) . Primary EPS Consensus Mean and Revenue Consensus Mean marked with asterisks; see S&P Global disclaimer below.
  • Consensus revisions: Given management’s reaffirmed seasonality (FRPR concentrated in Q4), margin consistency, and stronger perpetual capital inflows, analysts may need to raise revenue run-rate assumptions for H2 while tempering near-term EPS for integration timing and performance revenue seasonality .

Key Takeaways for Investors

  • Ares delivered a substantial revenue beat on record management fees and market appreciation; Primary EPS modestly missed due to expected revenue mix and integration costs—focus on Q4 seasonality for FRPR .
  • Dry powder ($150.8B) and shadow AUM ($104.8B) set up for accelerated deployment; historically ~one-year conversion of AUM not yet paying fees supports near-term fee growth .
  • GCP International is tracking ahead of synergy expectations with tangible fee contribution and a scaling DC pipeline, underpinning Real Assets growth and “stickier” fee revenues .
  • Wealth channel is a structural growth vector—broadening distribution, resilient inflows, low redemptions—supporting perpetual capital expansion and fee visibility .
  • European private assets are increasingly attractive; Ares’ pan-European scale gives it a share-gain opportunity in a strengthening market .
  • Insurance flows (Aspida) are robust and diversifying earnings; continued origination supports recurring fee and potential investment opportunities across credit .
  • Near-term trading: Favor strength into Q4 on FRPR seasonality and deployment momentum; medium-term thesis: compounding management fees from perpetual capital, secondaries growth, and infrastructure/data centers, with margin normalization as integration costs roll off .

S&P Global estimates disclaimer: Values retrieved from S&P Global. Cells marked with * indicate consensus estimates from S&P Global.

Additional strategic press releases (Q2 timing):

  • Australian wealth access to Ares Core Infrastructure Fund via local trust—broadens international wealth distribution .
  • JV with Savion to invest in U.S. solar (Tango Holdings, 496 MW managed) strengthens energy infrastructure portfolio .
  • Infrastructure Debt team expansion and APAC focus—adds origination capacity and regional positioning .

Citations:

  • Q2 2025 press release and 8-K: .
  • Q2 2025 earnings call transcript: .
  • Q1 2025 8-K and press release: .
  • Q4 2024 press release: .
  • Other Q2-relevant press releases: .