606d8dc90387898bcae2a2e87274e9fd9698388752248ebe9867a727eec93dba

The spike in **Carried Interest Allocation** in **Q3 2024** is primarily due to markedly stronger segment contributions. Specifically, the **Credit Funds** segment saw an increase from **$34.8 million** in Q3 2023 to **$209.2 million** in Q3 2024, the **Real Assets Funds** segment increased to **$37.5 million**, and the **Private Equity Funds** segment rebounded to **$54.1 million** from a negative performance in Q3 2023. In addition, the improvement is attributed to better overall performance of underlying investments, with sensitivity to factors such as **market volatility, industry trading multiples, and interest rates**. This combination of stronger segment performance and favorable market conditions drove the significant turnaround in Q3 2024.  **[0001628280-24-046482_ares-20240930.htm:68]** **[0001628280-24-046482_ares-20240930.htm:32]** 

Why did Carried interest allocation spike in Q3 2024?

The unusually high **incentive fees** in Q2 2024 were primarily due to significantly higher fees generated by the **credit funds** and **secondaries funds**. Specifically, two alternative credit funds and two direct lending funds generated **$31.1 million** in Q2 2024 compared to **$5.8 million** in Q2 2023, and the incentive fees from the APMF secondaries fund increased from **$0.3 million** to **$15.6 million**. Although fees from the real assets fund decreased slightly (from **$1.9 million** to **$1.0 million**), the overall increase in the other two fund categories drove the total incentive fees to **$47.7 million** in Q2 2024 versus **$8.0 million** in Q2 2023.  **[0001628280-24-035320_ares-20240630.htm:70]** 

Why were Incentive fees unusually high in Q2 2024?

The documents indicate that while there was a slight improvement in the loss—showing a decrease from a loss of **$(3,242) thousand** in Q4 2022 to **$(2,469) thousand** in Q4 2023—the documents do not provide specific reasons for the change in Q4 2023. It is noted that adjustments in investment valuations or realized gains/losses during the quarter could have contributed to this slight improvement, but no definitive explanation is provided in the available information.  **[0001628280-24-003769_a2023q4-ex992earningspre.htm:9]** **[0001628280-24-007014_ares-20231231.htm:273]** 

Why did Principal investment income drop in Q4 2023?

The surge in **total revenues** for Q3 2024 was driven by a combination of factors. **Management fees** increased by **18%** due to higher capital deployment in direct lending, alternative credit, and opportunistic credit funds, which boosted fee-paying assets under management. Additionally, there was a dramatic turnaround in the **carried interest allocation**, shifting from a negative value in Q3 2023 to a strong positive figure in Q3 2024, reflecting improved performance in credit and real assets funds. Finally, **incentive fees** nearly **tripled**, rising by **196%**, which further contributed to the robust revenue growth.  **[0001628280-24-046482_ares-20240930.htm:68]** **[0001628280-24-046482_ares-20240930.htm:67]** **[0001628280-24-044637_a2024q3-ex992earningspre.htm:5]** 

What drove Total revenues to surge in Q3 2024?

The nearly doubling of net income in Q3 2024—from **$61,823 thousand** in Q3 2023 to **$118,460 thousand**—was driven by multiple factors. **Total revenues increased by 68%**, mainly due to higher **management fees** and a significant turnaround in the **carried interest allocation** (from a loss to a substantial gain). In addition, **fee-related earnings improved** and there was a more favorable allocation of income from Consolidated Funds due to decreased net income attributable to non-controlling interests and lower expenses. These factors combined to drive a **92% increase** in net income for Q3 2024.  **[0001628280-24-046482_ares-20240930.htm:51]** **[0001628280-24-046482_ares-20240930.htm:11]** **[0001628280-24-046482_ares-20240930.htm:67]** 

Why was net income nearly double in Q3 2024?

0443fd60ce42793643a099f431ea6356747db1266565a8dcd2b19855887fdac6

The significant drop in cash during Q1 2023 was primarily driven by **financing activities**. Despite a notable increase in operating cash (from higher net income and adjustments) and a reduction in cash used for investing activities (due to fewer acquisitions), the net cash used in financing activities—marked by higher redemptions of redeemable interests and increased dividends and distributions—more than offset these gains, leading to an overall decrease in cash by **$117,738 thousand**.  **[0001628280-23-016241_ares-20230331.htm:54]** **[0001628280-23-016241_ares-20230331.htm:14]** 

Why did cash drop significantly in Q1 2023?

The spike in **debt obligations** in Q1 2023 was mainly caused by an increase in **Credit Facility Usage**, where the carrying value increased from **$700,000 thousand** at the end of 2022 to **$795,000 thousand** by the end of Q1 2023, reflecting an additional draw of **$95,000 thousand**. Additionally, **debt issuance costs** related to the Credit Facility, Senior Notes, and Subordinated Notes decreased slightly due to amortization, which also affected the overall carrying value of the debt obligations.  **[0001628280-23-016241_ares-20230331.htm:26]** **[0001628280-23-016241_ares-20230331.htm:27]** 

What caused the spike in debt obligations in Q1 2023?

The documents indicate that **Investments held in trust** decreased from **$1,013,382 thousand** in Q4 2022 to **$484,901 thousand** in Q1 2023, but they do not provide any specific reasons for this sharp decline.  **[0001628280-23-016241_ares-20230331.htm:10]** 

Why did investments held in trust drop sharply in Q1 2023?

In Q2 2023, **total assets** jumped primarily due to an **increase in investments** (including accrued carried interest), a rise in **investments at fair value**, and higher **right-of-use operating lease assets**. Specifically, investments increased from **$3,974,734 thousand** to **$4,466,226 thousand**, right-of-use operating lease assets grew from **$155,950 thousand** to **$170,911 thousand**, and investments at fair value went up from **$12,191,251 thousand** to **$13,090,939 thousand**. These changes more than offset the decrease in cash and cash equivalents and a slight decrease in investments held in the trust account.  **[0001628280-23-026962_ares-20230630.htm:10]** 

What drove the jump in total assets in Q2 2023?

1a8e895acf8a0fb9ea006e0970797931bec6475d57b797dfe4c8b98c8f409c25

Management fees (USD, thousands)

Carried interest allocation (USD, thousands)

Incentive fees (USD, thousands)

Principal investment income (USD, thousands)

Administrative, transaction and other fees (USD, thousands)

Total revenues (USD, thousands)

Compensation and benefits (USD, thousands)

Performance related compensation (USD, thousands)

General, administrative and other expenses (USD, thousands)

Expenses of Consolidated Funds (USD, thousands)

Total expenses (USD, thousands)

Net realized and unrealized gains (losses) on investments (USD, thousands)

Interest and dividend income (USD, thousands)

Interest expense (USD, thousands)

Other income (expense), net (USD, thousands)

Net realized and unrealized gains on investments of Consolidated Funds (USD, thousands)

Interest and other income of Consolidated Funds (USD, thousands)

Interest expense of Consolidated Funds (USD, thousands)

Total other income, net (USD, thousands)

Income before taxes (USD, thousands)

Income tax expense (USD, thousands)

Net income (USD, thousands)

Less: Net income attributable to non-controlling interests in Consolidated Funds (USD, thousands)

Net income attributable to Ares Operating Group entities (USD, thousands)

Less: Net income (loss) attributable to redeemable interest in Ares Operating Group entities (USD, thousands)

Less: Net income attributable to non-controlling interests in Ares Operating Group entities (USD, thousands)

Net income attributable to Ares Management Corporation Class A and non-voting common stockholders (USD, thousands)

85dcbf5fbddc3bae15dd26ec153d3109ecbec33f3e37fb059a0c38550733ece7

04d9d7432f3599464f65d1137aeb6966eb1418ad0379b69df1288354ec0409fe

7ab673e2b9601f322fddc7da9735b9af0246f63c8c7aa4adbfeefdedc3d34e8f

Current Assets (USD, thousands)

Cash and Cash Equivalents (USD, thousands)

Accounts Receivable (USD, thousands)

Inventory (USD, thousands)

Non-Current Assets (USD, thousands)

Property, Plant, and Equipment (PP&E) (USD, thousands)

Goodwill (USD, thousands)

Intangible Assets (USD, thousands)

Current Liabilities (USD, thousands)

Accounts Payable (USD, thousands)

Short-term Debt (USD, thousands)

Accrued Expenses (USD, thousands)

Non-Current Liabilities (USD, thousands)

Long-term Debt (USD, thousands)

Lease Liabilities (USD, thousands)

Deferred Tax Liabilities (USD, thousands)

Shareholders' Equity (USD, thousands)

Retained Earnings (USD, thousands)

Common Stock (USD, thousands)

Additional Paid-in Capital (USD, thousands)

fd42ccff896ff3bad0380ffdf1529c77eae411cc4740b11979c69d6c70880c3f

Total Revenue (USD, thousands)

Cost of Goods Sold (COGS) (USD, thousands)

SG&A (USD, thousands)

R&D (USD, thousands)

D&A (USD, thousands)

Interest Expense (USD, thousands)

Operating Income (EBIT) (USD, thousands)

Net Income (USD, thousands)

EPS - Basic (USD, per share)

EPS - Diluted (USD, per share)

8cc01aeea6156f4339712afe6ed753d7abc1c0331f90ce1ec02324f1f60c03d6

Credit Group

- Management Fees

- Fee-Related Performance Revenues

- Other Fees

- Performance Income (Realized)

Real Assets Group

Private Equity Group

Secondaries Group

Other

Total Revenue

b15cac716fdb9677021c0df245fa972b78697c8d5d52f54e00f368346ddc6eef

Adjustments for Non-Cash Items (USD, thousands)

Stock-Based Compensation (USD, thousands)

Changes in Working Capital (USD, thousands)

Capital Expenditures (CapEx) (USD, thousands)

Proceeds from Debt (USD, thousands)

Repayments of Debt (USD, thousands)

Share Repurchases (USD, thousands)

Dividend Payments (USD, thousands)

Net Change in Cash (USD, thousands)

cd0dfdf08d8496dda812307257fe07a55df6d199d2ca4f899b7c18a47cff4798

Ares Management (ARES)

Financials