GCM Grosvenor Inc. (GCMG)·Q4 2024 Earnings Summary

Executive Summary

• Solid quarter with strong growth and operating leverage: Q4 revenue rose 42% YoY to $165.3mm, FRE grew 22% YoY to $49.2mm, and Adjusted EBITDA rose 56% YoY to $77.6mm; full-year 2024 FRE +19% and Adjusted Net Income +36% YoY, with FRE margin expanding to 42% for the year (47% in Q4) .
• Fundraising momentum and pipeline: Raised $2.3B in Q4 (FY 2024: $7.1B, +41% YoY); management expects 2025 fundraising to exceed 2024 based on bottoms-up pipeline and re-up calendar .
• Incentive fee earnings power building: 2024 performance fees were $55mm, run-rate annual performance fees entering 2025 are ~$30mm, and gross unrealized carried interest reached $836mm ($401mm firm share at NAV), positioning adjusted earnings for upside as realizations improve .
• Capital return and balance sheet: Dividend maintained at $0.11/share (payable Mar 17, 2025) and share repurchase authorization increased by $50mm to $190mm; cash and investments totaled $298mm; debt $436mm at YE 2024 .
• Strategic catalysts: Launch of an infrastructure interval fund seeded with ~$240mm and ~$82mm dry powder, partnerships expanding individual investor distribution (CION); management reaffirms goal to double 2023 FRE by 2028 and sees continued margin expansion .

What Went Well and What Went Wrong

• What Went Well

  • FRE and profitability: Q4 FRE +22% YoY to $49.2mm and Adjusted EBITDA +56% YoY to $77.6mm; full-year 2024 FRE +19% and Adjusted Net Income +36% YoY; FRE margin 47% in Q4, with management reiterating further margin expansion potential .
  • Fundraising and pipeline: $2.3B raised in Q4; $7.1B FY (+41% YoY); late-stage pipeline “remains robust,” and 2025 fundraising expected to exceed 2024 based on re-ups and fund closes (GCF III and IAF II) .
  • ARS performance and fees: Multi-strategy composite returned 4.5% gross in Q4 and 14.3% for 2024; annual performance fees of $55mm (third time >$50mm in five years) .
  • Management quote: “We ended 2024 on a high note, capping a year of strong investment returns, a 41% increase in annual fundraising, and significant growth in profitability” – CEO Michael Sacks .

• What Went Wrong

  • Incentive fee variability remains: Carried interest realizations muted despite growing unrealized carry; management notes improving environment but timing remains uncertain .
  • Catch-up fee step-down ahead: Q4 private markets management fees included >$7mm catch-up from IAF 2 and Elevate; Q1’25 catch-up expected to decline to $2–$3mm, creating sequential headwind .
  • Estimates comparison unavailable: Wall Street consensus (S&P Global) was not retrievable due to data access limits, constraining assessment of beats/misses this quarter (see Estimates Context) [Values retrieved from S&P Global unavailable due to daily limit].

Financial Results

Segment management fee detail (quarterly):

Incentive fees composition and run-rate:

AUM/FPAUM roll-forward (Q4 and FY):

KPIs and balance sheet:

Notes: Adjusted metrics are non-GAAP as defined and reconciled in the company’s materials .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We had a strong finish to a good year that saw solid results for our clients and significant growth in both fundraising and profit… Our fee-related earnings margin was 42% for the year… We believe we continue to have operating leverage… and see opportunity for continued FRE margin expansion going forward.” – Michael Sacks, CEO .
• “Our multi-strategy composite generated a 4.5% gross return in the fourth quarter and a 14.3% gross return for the full year… Those returns generated $55 million in annual performance fee revenue.” – Michael Sacks .
• “Just 2 weeks ago, we announced that our infrastructure interval fund is open for investment with a seeded portfolio of $240 million… and $82 million of dry powder… while it will take some time for sales… its potential over time is meaningful.” – Michael Sacks .
• “In the first quarter of ’25, we expect ARS management fees to increase by 4% to 5% from the first quarter of ’24… and expect private markets management fee growth ex catch-up fees of around 10% year-over-year.” – Pamela Bentley, CFO .
• “The pipeline is strong… we expect 2025 total fundraising to exceed the $7.1 billion we raised in 2024.” – Michael Sacks / Jonathan Levin .

Q&A Highlights

• FRE margins: Management expects continued operating leverage and further margin expansion from current levels over the next several years while pursuing the goal to double 2023 FRE by 2028 .
• 2025 fundraising cadence: Strong re-up calendar and specialized fund closes underpin expectation that 2025 fundraising exceeds 2024; quarter-by-quarter timing remains inherently lumpy .
• Conversion of CNYFPAUM: ~1/3 of beginning-of-year CNYFPAUM converted to fee-paying in 2024, consistent with typical ~3-year investment periods; YE CNYFPAUM rose 12% to $8.2B .
• Retail distribution: Infra interval fund launched with ~$300mm “anchor”-like scale; RIA-first focus and distribution partnership with CION; broader suite for individual investors planned over time .
• Incentive fee payout dynamics: ARS performance fees mainly crystallize in Q4; cash-based incentive fee comp typically ranges 40–50% over the year; firm’s share of carry expected to rise as newer vintages represent larger portion of realizations .

Estimates Context

• Wall Street consensus from S&P Global (revenue, EPS, EBITDA) for Q4 2024 was unavailable due to daily data access limits, so we cannot quantify beats/misses this quarter. Values from S&P Global could not be retrieved; therefore, estimate comparisons are not shown.
• Based on company-reported figures, revenue, FRE, and Adjusted EBITDA showed strong YoY growth, and management guided to continued FRE margin expansion and 2025 fundraising above 2024, which may prompt upward revisions to fee-related projections; however, without S&P Global consensus access, we cannot determine the magnitude of revisions required .

Key Takeaways for Investors

• Durable fee engine with operating leverage: Q4 FRE +22% YoY and FRE margin 47% (FY 42%); management continues to see runway for margin gains while pursuing goal to double 2023 FRE by 2028 .
• Multi-year AUM growth drivers: Private markets fee base expanding (Q4 PM mgmt fees +20% YoY), CNYFPAUM at record $8.2B (+12% YoY) supports organic growth as it converts over next few years .
• Incentive fee optionality: Gross unrealized carry $836mm ($401mm firm share at NAV) plus ~$30mm run-rate annual performance fees entering 2025 provide embedded upside as realizations normalize .
• Individual investor channel catalyst: Launch of infra interval fund with seeded assets and CION partnership opens new distribution lanes; initial 2025 revenue modest, but medium-term scaling opportunity is meaningful .
• Capital returns maintained: $0.11/share quarterly dividend and expanded buyback authorization (+$50mm) signal balance sheet strength and commitment to managing dilution .
• Near-term modeling notes: Expect Q1’25 PM catch-up fees to decline to $2–$3mm (from >$7mm in Q4) and PM mgmt fees ex catch-up to grow ~10% YoY; ARS mgmt fees guided +4–5% YoY in Q1’25 .
• Trading implications: Narrative skew is positive (fundraising, margins, retail launch, carry optionality), but quarterly incentive fees remain timing-sensitive; focus on fee base growth durability and visibility into 2025 capital formation .

Appendix: Additional Data Points

• AUM by strategy shows private markets growing faster than ARS; PM management fees CAGR ~12% since 2020; PM % of FPAUM now 66% .
• Balance sheet liquidity: Cash and equivalents $89mm; investments $209mm; debt $436mm (Term SOFR +225 bps) at YE 2024 .
• Dividend and payout timing: $0.11/share payable Mar 17, 2025 to holders of record Mar 3, 2025 .