KKR & Co. Inc. (KKR) Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 was strong on recurring metrics: FRE $823 million ($0.92/adj. share, +23% YoY), TOE $1.1 billion ($1.24/adj. share, +16% YoY), and ANI $1.0 billion ($1.15/adj. share, +20% YoY), while GAAP diluted EPS was -$0.22 due to insurance GAAP volatility .
• Street EPS was modestly beaten: Primary EPS consensus $1.13* vs. actual $1.15; Asset Management Segment Revenues beat consensus ($1.71B* est. vs. $1.77B actual). Management highlighted recurring earnings now ~80% of total segment earnings LTM, supporting durability .
• Fundraising momentum and deployment remained robust: $31B raised in Q1; Americas XIV reached $14B initial close in April; capital invested was $19B with line-of-sight to >$800M monetization-related revenue (≥$250M in Q2) .
• Strategic catalysts: activation of Americas XIV in Q2 (turning on fees), launch of Capital Group public‑private credit solutions (interval funds), and continued scale in Strategic Holdings; regular dividend raised to $0.185 (annualized $0.74) .

What Went Well and What Went Wrong

What Went Well

• Recurring earnings growth and margin resilience: FRE $823M ($0.92/adj. share, +23% YoY) with a 69% FRE margin; TOE $1.1B ($1.24/adj. share, +16% YoY), ANI $1.0B ($1.15/adj. share, +20% YoY) .
• Scaled fundraising and dry powder: $31B new capital raised in Q1, $114B LTM; uncalled commitments (dry powder) $116B, supporting deployment into volatility .
• Capital markets and monetization visibility: Transaction fees $229M; line‑of‑sight to >$800M monetization‑related revenue, with ≥$250M expected in Q2; “Volatility brings opportunity,” positioning KKR to play offense globally .
• Management quote: “We have direct line of sight to north of $800 million of monetization-related revenue… we expect at least $250 million to be generated in Q2” — CFO Robert Lewin .
• Tariff exposure assessed as limited: “90% of our AUM has limited to no first order impact… core private equity and Strategic Holdings are not expected to have any material impact” — CFO Robert Lewin .
• Private wealth acceleration with Capital Group: two public‑private credit solutions launched; equity strategies expected in 2026, plus work on models and target-date funds .

What Went Wrong

• GAAP results were pressured: GAAP diluted EPS -$0.22 and GAAP revenues fell to $3.11B (YoY down from $9.66B), reflecting insurance GAAP volatility and lower insurance GAAP revenues .
• Insurance Operating Earnings declined YoY: $259M vs. $273M (Q1’24), with net cost of insurance rising alongside higher funding costs and liability run‑off; management expects ~“$250M plus or minus” run‑rate over next few quarters .
• Sequential ANI per share down: $1.15 in Q1 vs. $1.32 in Q4; FRE per share also down sequentially ($0.92 vs. $0.94), as timing effects offset solid YoY growth .
• Analyst concerns centered on fundraising elongation and macro uncertainty; management flagged “barbelled” close patterns and reiterated confidence but acknowledged timing variability (Infra V final close timing not yet announced) .

Financial Results

Non‑GAAP Performance (per adjusted share) and FRE Margin

GAAP Results (YoY)

Segment Breakdown (Q1 2025 vs Q1 2024)

Key KPIs

Estimates vs Actual (S&P Global consensus)

Values with asterisk (*) retrieved from S&P Global.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Volatility brings opportunity, and we benefit from the global and connected nature of the firm… We’ve closed or committed to over $30 billion of new investments since the start of the year.” — CFO Robert Lewin .
• “Nearly 80% of our pretax earnings over the last 12 months were driven by more recurring earnings streams.” — Craig Larson .
• “We still feel good about our 2026 guidance… while this dislocation may be different… the key is to stay focused on what we control and to not waste the opportunities it affords.” — Co‑CEO Scott Nuttall .
• “Across our K‑Series… AUM was at $22 billion [including April 1] vs. $9 billion a year ago… we continue to be encouraged.” — Craig Larson .
• “Critically… our all‑in pretax ROE of our insurance business is approaching 20% with a clear path to 20‑plus percent returns.” — CFO Robert Lewin .

Q&A Highlights

• Asia strategy amid trade war concerns: No change; diversified Pan‑Asia effort across asset classes; intra‑Asia trade opportunity likely to grow .
• Buybacks vs growth uses of capital: Framework remains dynamic; senior management owns ~30% and has retired ~10% of shares historically at ~$28 avg price; buybacks remain core tool alongside core PE, strategic M&A, and insurance .
• Asset‑based finance scale and outlook: ~$74B ABF AUM within private credit (growing 35–40% YoY); significant sourcing via platforms and bank partnerships; 2025 positioned well .
• Capital Markets mix and outlook: ~2/3 debt‑focused is consistent historically; Q2 revenue may be slightly shy of Q1 but pipeline healthy given environment .
• Insurance OE cadence: Despite portfolio repositioning and wider spreads, OE held near ~$250M as alternative allocations and third‑party capital fees take time to impact P&L .

Estimates Context

• EPS: Primary EPS consensus $1.13* vs. actual $1.15 (small beat). Management emphasizes LTM recurring earnings at ~80% of segment earnings, underscoring quality of the EPS mix .
• Revenue: Asset Management Segment Revenues consensus $1.71B* vs. actual $1.77B (beat). Note GAAP revenues are less indicative due to insurance GAAP volatility .
• Analysts may lift FRE/TOE/ANI trajectories on activation of Americas XIV in Q2 and stronger monetization visibility (> $800M), while keeping insurance OE near $250M in models .

Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

• Recurring earnings strength offset GAAP volatility: FRE/TOE/ANI trends and ~80% recurring earnings LTM support quality of earnings and de‑risk near‑term macro uncertainty .
• Near‑term catalysts: Americas XIV fee activation in Q2, monetizations with ≥$250M expected in Q2, and ongoing infra/private credit deployment should support FRE and investing earnings .
• Private wealth vector broadening: Capital Group partnership opens mass‑affluent channel; expect continued AUM growth and eventual contribution to fee and incentive streams .
• Insurance economics: While OE holds ~$250M short‑term, all‑in pretax ROE approaching ~20% with path to 20%+ as longer‑duration, private assets scale and third‑party fees ramp .
• Strategic Holdings compounding: Guidance maintained ($350M+ in 2026, $700M+ in 2028, $1.1B+ in 2030), reinforcing medium‑term dividend and earnings growth potential .
• Capital markets floor and optionality: Diversified fee base and global reach provide resilience; upside tied to deal environment; expect Q2 solid though possibly below Q1 .
• Trading stance: Favor dips on macro volatility given visibility into fee growth (Americas XIV, K‑Series traction) and monetizations; monitor tariff headlines, infra/credit pipelines, and infra V closing timetable .