KKR Q2 2025: Sees $5 EPS in 2025, Over 40% Growth in 2026
- Robust and diversified revenue streams: The Q&A highlighted strong management fee growth across multiple strategies (credit, private equity, and real assets) with impressive fundraising numbers, underpinning a resilient and diversified earnings base [Speaker 13, index 18][Speaker 1, index 18].
- Compelling asset deployment and monetization activity: Executives emphasized significant capital deployment in asset-based finance, favorable market conditions for monetization deals (e.g., the Harley Davidson transaction), and a robust pipeline—indicating potential for further earnings acceleration [Speaker 1, index 10][Speaker 1, index 15].
- Strategic positioning for long-term growth: The management team’s focus on new markets (e.g., digital and energy infrastructure partnerships, AI innovation) along with a clear path for extending liabilities and scaling operating earnings provides strong tailwinds for future growth [Speaker 2, index 12][Speaker 1, index 11].
- Execution risk in new asset-based finance products: Management highlighted progress in launching KSeries credit and converting KCOP to a primarily asset‐based finance vehicle (KABF), but noted it’s “early days” and built on a relatively low base, which raises concerns about scaling these new products amid an increasingly crowded field.
- Uncertainty in timing and deployment of capital initiatives: Several Q&A responses emphasized there is no precise timing for deploying capital in new joint ventures and asset monetization activities, as well as multiyear processes for elongating liabilities. Such ambiguity suggests potential delays in realizing expected benefits and earnings growth.
- Competitive pressures and market volatility risk: Despite positive fee-related earnings and strong capital markets activity, management acknowledged that market sentiment in private credit remains volatile and that scaling operations in competitive segments like direct lending poses ongoing challenges. This introduces downside risk if market conditions or investor confidence were to deteriorate.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Insurance Segment Operating Earnings | FY 2026 | no prior guidance | $250 million plus/minus | no prior guidance |
Fundraising Target | FY 2026 | no prior guidance | Over $300 billion for 2024-2026 | no prior guidance |
Core Financial Metrics | FY 2026 | no prior guidance | Targeted growth in Fee Related Earnings (FRE) per share, Total Operating Earnings (TOE) per share, and Adjusted Net Income (ANI) per share | no prior guidance |
Strategic Holdings Operating Earnings | FY 2026 | no prior guidance | $350 million | no prior guidance |
Long-Term Earnings Target | FY 6 | no prior guidance | $15+ per share | no prior guidance |
Management Fee Growth | FY 2026 | no prior guidance | Continued solid results expected in management fee growth through the end of FY 2025 | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Management Fee Growth | Previously, Q1 2025 noted fees at $917 million with a 13% increase and anticipation of acceleration ( ), Q4 2024 highlighted historical growth (14% increase in 2024 with a CAGR of 19%) and strategic targeting, and Q3 2024 reported fees at $893 million with 18% YoY growth ( ). | In Q2 2025, fees reached $996 million with an 18% increase YoY, driven by the activation of Americas Fund 14 and diversified deployment across segments ( ). | Consistent positive growth with increased activation and diversification. |
Asset‐Based Finance and Monetization | Earlier calls showed robust ABF growth with AUM around $70–74 billion and high YoY increases (35–40% in Q1 2025 and 40% growth in Q3 2024), while monetization commentary pointed to moderate realized earnings and significant pipeline volumes ( ). | Q2 2025 highlighted a further expansion with ABF commitments of $6.5 billion, AUM growing to $75 billion, 20% YoY growth, and monetization performance recording $2.6 billion in income with $37 billion deployed and over $800 million pending ( ). | Continued scaling with stronger deployment and advanced monetization strategies. |
Fundraising Momentum | Q1 2025 reported $31 billion raised with diversified channels and institutional “cautious greed” ( ); Q4 2024 detailed a record year with $114 billion raised and innovation in new strategies; Q3 2024 noted $87 billion raised YTD from flagship and alternative funds ( ). | In Q2 2025, KKR raised $28 billion in the quarter and reported $109 billion over the trailing twelve months, with robust diversification across asset classes and strategic partnerships, including increased ABF contributions ( ). | Steady, robust, and increasingly diversified fundraising with continued momentum. |
Market Volatility and Macro Uncertainty | Q1 2025 described volatility as an opportunity and positioned the diversified portfolio with “cautious greed” ( ); Q4 2024 and Q3 2024 highlighted scenario planning, positive long‑term outlooks, and leveraging market dislocations ( ). | Q2 2025 reiterated that volatility creates opportunities; the firm emphasized a disciplined, long‑term deployment strategy with notable fee-related earnings and steady investment even in uncertain markets ( ). | An opportunistic, disciplined approach that consistently leverages volatility. |
Digital, Energy Infrastructure, and AI Innovation | Q4 2024 focused on digital infrastructure and energy themes (e.g. data centers, energy partnerships) while Q3 2024 showcased strong positions in digital assets; Q1 2025 did not feature these topics ( ). | Q2 2025 featured extensive discussion of a 50‑50 joint venture with Energy Capital Partners to address digital and energy infrastructure challenges, emphasized AI innovation for smarter solutions and reimagined business models, and noted significant equity exposure in digital infrastructure ( ). | A new and expanded emphasis with integrated digital‐energy strategies and AI innovation coming to the forefront. |
Insurance Segment Transformation (Global Atlantic) | Q1 2025 described earnings around $259 million with focus on longer-duration liabilities, enhanced alternative exposure, and strategic partnerships; Q4 2024 discussed integration following full ownership with a strategic shift despite short‑term accounting impacts; Q3 2024 highlighted strong sourcing of low‑cost liabilities and reinsurance deals ( ). | In Q2 2025, Global Atlantic’s operating earnings improved to $278 million, with notable progress in third‑party capital, active liability management, and methodical increases in alternative allocations, supported by strategic partnerships like Japan Post ( ). | A continuous transformation with incremental operating improvements and strategic capital enhancements. |
Traditional Private Equity Performance Concerns | Q1 2025 addressed industry dispersion and underscored a disciplined, global approach yielding strong returns; Q4 2024 explained a flat quarterly but robust full‑year performance, citing market dynamics; Q3 2024 reported positive performance metrics with significant unrealized gains ( ). | Q2 2025 reaffirmed a strong track record with nearly a two‑to‑one ratio of dollars returned to dollars called, dismissing market noise while underscoring consistent, resilient performance ( ). | Stable performance with continued reassurance of robust, disciplined private equity returns. |
Execution and Timing Risks in Capital Deployment | Q1 2025 mentioned broad deployment strategies with diversified global pipelines ( ); Q4 2024 noted fluid timing and some dependency on regulatory approvals; Q3 2024 did not explicitly address these risks ( ). | Q2 2025 did not flag explicit execution or timing risks; instead, the focus was on disciplined, diversified capital deployment with strong year‑to‑date activity, indicating effective risk management ( ). | No significant change—risks remain managed through disciplined, diversified deployment. |
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Earnings Growth
Q: What drives earnings growth next 12–18 months?
A: Management emphasized fee momentum, robust capital markets activity, and strategic deal enhancements to achieve $5 adjusted EPS in 2025 and drive 40%+ growth in 2026—supported by record embedded gains of $17.1B and improvements in its insurance and strategic holdings. -
Global Atlantic Performance
Q: What boosted Global Atlantic earnings?
A: They explained that Global Atlantic delivered $278M in operating earnings principally through stronger third-party capital and favorable variable investment income, outperforming the former $250M guidance. -
Management Fee Outlook
Q: What is the future fee outlook?
A: Management expects sustained, robust fee growth with Q2 up 18% YoY and a stable momentum into H2, driven by diversified capital raising across all business lines. -
Fees & Capital Markets
Q: Surprises in fee or capital markets results?
A: The call highlighted activation of larger funds (adding about $30M in Q2) and a strong capital markets pipeline that generated roughly $200M in fees, reinforcing a solid outlook for the remainder of the year. -
Institutional Fundraising
Q: How are institutional funds performing?
A: With $109B raised year to date and a target exceeding $300B by 2026, the firm is witnessing healthy, globally diversified institutional fundraising amid increasingly strategic discussions. -
Origination Platform
Q: How strong is your origination platform?
A: Management underscored a network spanning 35 platforms that drives annual originations of roughly $30–35B, bolstering a diversified and scalable credit strategy. -
Retail Partnerships
Q: Expect more deals like the HRD transaction?
A: They see the positive reception of the HRD deal as a model for more capital-light transactions, where companies free up capital for strategic initiatives—a trend likely to see broader retail participation. -
ECP JV Details
Q: What are the terms of the ECP joint venture?
A: KKR and Energy Capital Partners have unlocked a 50/50 alliance aimed at digital and energy infrastructure, planning to deploy €50B gradually without a fixed timeline. -
KFIT Progress
Q: How is KFIT fundraising advancing?
A: The team reported strong early activity—raising more capital in Q2 than historically—and noted the conversion into a focused asset-based finance vehicle, positioning the product well for future growth. -
401k Opportunity
Q: How might 401k reforms benefit KKR?
A: Management sees a long-term opportunity in broadening alternative investments in retirement accounts, potentially reshaping asset allocation for individuals over a lengthy horizon. -
Tech Transformation
Q: How will AI/blockchain affect the firm?
A: They are exploring these technologies to enhance portfolio productivity and operational efficiency, signaling an early-stage yet promising initiative to evolve traditional business models. -
Strategic Buyers
Q: What’s the view on strategic buyer bids?
A: Management noted active global monetization, with strategic buyers now benefiting from attractive pricing and a steadily narrowing bid–ask spread compared to previous periods. -
Deployment Timing
Q: Are projects pre-leased with clear timelines?
A: Projects are indeed pre-leased to attractive counterparties, with construction underway and expected completion in Q4 next year, ensuring timely revenue generation.
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