Apollo Global Management Second Quarter 2024 Earnings Analysis

 

Apollo Global Management, the global private equity and alternative assets manager reported very good results in the second quarter of 2024.

Apollo, like Blackstone, KKR and Carlyle has taken the strategic route of buying into an insurance firm, Athene in Apollo's case and using the long-term in nature, so called perpetual capital of insurance premiums to invest in its private equity, credit and lending, retirement services and principal investments segments.

Apollo has a lot of unrealized value judging by the 6 billion USD in non-GAAP netted revenue and net income of 828 million USD for 2Q 2024 compared with Apollo Global Management 1.3 billion USD in market capitalization, according to Wolfteam Ltd.'s projections and estimates.

 

(In millions, except per share amounts) 2Q'23 1Q'24 2Q'24 YTD'23 YTD'24
Revenues
Asset Management
Management fees $452 $438 $462 $866 $900
Advisory and transaction fees, net 170 169 267 325 436
Investment income (loss) 138 402 278 590 680
Incentive fees 26 26 47 41 73
Retirement Services
Premiums 9,041 101 673 9,137 774
Product charges 207 238 251 405 489
Net investment income 2,948 3,576 3,804 5,560 7,380
Investment related gains (losses) 366 1,677 (134) 1,431 1,543
Revenues of consolidated variable interest entities 347 411 366 628 777
Other revenues 7 2 4 20 6
Total Revenues 13,702 7,040 6,018 19,003 13,058
Expenses
Asset Management
Compensation and benefits (516) (667) (604) (1,186) (1,271)
Interest expense (31) (51) (53) (62) (104)
General, administrative and other (226) (240) (319) (423) (559)
Retirement Services
Interest sensitive contract benefits (2,012) (2,884) (1,824) (3,301) (4,708)
Future policy and other policy benefits (9,512) (543) (1,095) (9,978) (1,638)
Market risk benefits remeasurement gains (losses) 71 154 16 (275) 170
Amortization of deferred acquisition costs, deferred sales inducements and value of business acquired (153) (207) (227) (291) (434)
Policy and other operating expenses (452) (453) (478) (889) (931)
Total Expenses (12,831) (4,891) (4,584) (16,405) (9,475)
Other Income (Loss) – Asset Management
Net gains (losses) from investment activities 20 39 (21) 18 18
Net gains (losses) from investment activities of consolidated variable interest entities 12 25 1 46 26
Other income (loss), net 48 (26) 24 80 (2)
Total Other Income (Loss) 80 38 4 144 42
Income (loss) before income tax (provision) benefit 951 2,187 1,438 2,742 3,625
Income tax (provision) benefit (201) (422) (261) (454) (683)
Net income (loss) 750 1,765 1,177 2,288 2,942
Net (income) loss attributable to non-controlling interests (151) (338) (324) (679) (662)
Net income (loss) attributable to Apollo Global Management, Inc. 599 1,427 853 1,609 2,280
Preferred stock dividends — (24) (25) — (49)
Net income (loss) attributable to Apollo Global Management, Inc. Common Stockholders $599 $1,403 $828 $1,609 $2,231
Earnings (Loss) per share
Net income (loss) attributable to Common Stockholders - Basic $1.00 $2.31 $1.36 $2.67 $3.67
Net income (loss) attributable to Common Stockholders - Diluted $1.00 $2.28 $1.35 $2.67 $3.64
Weighted average shares outstanding – Basic 579 588 587 582 588
Weighted average shares outstanding – Diluted 579 605 590 582 605 

The stable, long-term insurance fees comprise circa 60 % of Apollo's assets under management:

Asset Management: Assets Under Management
Note: AUM totals may not add due to rounding. 1. Perpetual Capital AUM derived from Athene includes assets, unfunded commitments, and available capital attributable to ADIP. 2. Other primarily includes MidCap Financial ($13 billion), Apollo
Commercial Real Estate Finance, Inc. ($9 billion), Apollo Debt Solutions BDC ($11 billion), Apollo Diversified Real Estate Fund/Apollo Diversified Credit Fund ($7 billion), MidCap Financial Investment Corporation ($3 billion), Apollo Senior Floating
Rate Fund/Apollo Tactical Income Fund ($1 billion), and other AUM related to a publicly traded business development company ($2 billion), among others. Other also includes third-party capital within Apollo Aligned Alternatives ($6 billion), with
the remainder of its net asset value attributable to Athene ($11 billion). AUM related to Apollo Debt Solutions, MidCap Financial Investment Corporation and the publicly traded business development company is as of March 31, 2024.
21
• Total AUM increased $79 billion, or 13%, year-over-year primarily driven by $72 billion of inflows from Asset Management and $72 billion of gross inflows
from Retirement Services, as well as mark-to-market appreciation, partially offset by $61 billion of outflows primarily driven by normal course activity at
Athene and $29 billion of realization activity
• Fee-Generating AUM increased $60 billion, or 13%, year-over-year primarily driven by robust net organic growth at Athene, fundraising across a variety of
Asset Management strategies, mark-to-market appreciation, and strong levels of capital deployment
• Nearly 60% of Apollo’s total AUM is comprised of perpetual capital, which is highly scalable and does not rely on cyclical drawdown fundraising dynamic.

With 60 % of assets in long-term insurance premiums, Apollo can unlock tremendous further value by investing its insurance premium capital for the long-term in stable, net free cash flow and net profit generating leading, global businesses.