Apollo Global Management, Inc. (APO) Earnings

Management highlights

### Overall Business Momentum & Market Context - Q2 2026 delivered record results across all core metrics, with momentum across origination, capital formation, and earnings, putting the firm's 2026 full-year growth outlook on track. - The industry is undergoing unprecedented structural change: Apollo has built a leading investment-grade (IG) private origination franchise to support the global industrial renaissance, a trend peers are only just beginning to pursue. - Demand for private assets is expanding from just one historical source (institutional alternative allocations) to six new sources: individual investors, insurance companies, institutional debt/equity buckets, traditional asset managers, and 401(k)/defined contribution plans, creating massive long-term growth opportunity. ### Strategic Product & Infrastructure Initiatives - Went live with estimated daily net asset value (NAV) for the entire fixed income IG product suite on July 1, 2026; full daily pricing for all credit assets is expected by October 1, 2026. This increases transparency for investors and drives internal digitization and efficiency gains. - The joint venture with ICE is live, with over 2,000 ICE IDs issued for Apollo assets; over time, all debt and equity products will receive ICE IDs to enable standardized settlement and market making, similar to CUSIPs for public credit. Total trading volume now exceeds $30 billion and continues to double. - Confirmed the opening of a new office in Austin, Texas, focused on building future-facing business processes and accessing new technology-focused talent, while leveraging existing strong limited partner relationships in the region. ### Origination Highlights - Q2 origination totaled $74 billion, bringing first-half 2026 volume to nearly $150 billion and the trailing 12-month total to nearly $320 billion. An additional $50 billion in signed/announced originations (including the $35 billion Broadcom AI financing) will close and contribute to future quarters. - 92% of Q2 origination ($68 billion) was debt: 75% IG (average rating BBB+) with 280 basis points of excess spread over Treasuries (200 bps over comparable corporates), 25% sub-IG (average rating B) with 440 basis points of excess spread over Treasuries (150 bps over comparable corporates). Spreads have remained stable across recent quarters. - Originations spanned multiple sectors including healthcare, power/infrastructure, energy, sports, and AI, demonstrating the breadth of Apollo's origination franchise. ### Capital Formation Highlights - Total organic capital formation hit a record $60 billion in Q2: $38 billion in asset management, $22 billion in Athene. - Asset management inflows were 70% credit, 30% equity. Flagship private equity Fund 11 launched earlier this year has already surpassed $12 billion in commitments as of mid-July. The AMAPS program reached $25 billion in less than 12 months after two Q2 issuances. - Athene generated $22 billion in Q2 inflows, with $42 billion in first-half inflows, putting it on track to hit the full-year 2026 target of $85 billion. Retail and flow insurance had the second-highest quarter on record.

Guidance

- Full-year 2026: Management maintains guidance for 20%+ FRE growth, 10% SRE growth for Athene (assuming an 11% return on the alternatives portfolio), and ~100 basis points of FRE margin expansion, all of which are on track to be met. - Athene: Maintains the full-year 2026 inflow target of $85 billion, and the long-term net spread target of 120-125 basis points, which remains the baseline expectation for 2027. - Long-term: Apollo plans to deliver 20% FRE growth over the economic cycle, anchored by mid-to-high teens revenue growth and low-teens expense growth, supporting continued margin expansion even as the firm invests in strategic growth initiatives. - The $82 billion dry powder balance (the highest ever) has ~$400 million in future annual management fee income once deployed, creating embedded momentum for 2027 and beyond.

Segment performance

Asset Management: Delivered record fee-related earnings (FRE) of $785 million, up 25% year-over-year and 8% quarter-over-quarter. Management fees grew 23% year-over-year, driven by third-party fundraising across credit and equity strategies. Capital Solutions (ACS) fees reached a new high of $277 million, marking the fifth consecutive quarter over $200 million, with a 2/3 credit, 1/3 equity mix. Total AUM grew to over $1.5 trillion, with fee-generating AUM up 34% year-over-year; 60% of total AUM and 70% of fee-generating AUM comes from perpetual capital. This segment contributed 100% of the firm's fee earnings, the core recurring revenue stream. Retirement Services (Athene): Generated record spread-related earnings (SRE) of $877 million, up 11% year-over-year and 5% quarter-over-quarter. Gross invested assets grew 14% year-over-year to $414 billion. Reported net spread was 114 basis points, up from 97 basis points last quarter; adjusted for an 11% long-term alternative return expectation, net spread is consistent with the 120-125 basis point long-term target. This segment is the second core earnings stream, contributing all of the firm's spread-based earnings.

Risks & headwinds

- Offshore regulatory arbitrage in the retirement/annuity industry: New entrants using non-reciprocal jurisdictions (primarily Cayman) to avoid posting required capital have created spread pressure and eroded trust in the industry, creating a race-to-the-bottom risk that harms all legitimate participants, including Apollo. - Redemption risk in retail non-traded products like ADS: Industry-wide redemption pressure has impacted ADS, though Apollo has seen lower redemption requests in early Q3 2026 compared to Q2, and performance outperformance has supported stabilizing flows. - Underwriting risk: Management explicitly noted the risk of underwriting investments with equity-like risk for debt-like returns, and maintains a deliberate underwriting focus on secured IG credit, amortizing structures, and strong counterparties to mitigate this risk. - The structural shift to serve new investor classes requires significant internal change and investment, and carries execution risk as the firm builds new infrastructure and processes.

Analyst Q&A

• Q: Can you speak to the durability and long-term revenue potential of Apollo's Capital Solutions (ACS) business, which is already running ahead of the 5-year target set at Investor Day? /

  A: Management confirmed that ACS has evolved from an idea 7 years ago to a durable, sustainable revenue stream, with broad origination across all of Apollo's business lines. The growth opportunity extends far beyond just AI and data centers, as the global industrial renaissance will also drive massive financing need for re-onshoring of U.S. manufacturing, defense, and energy transition. ACS benefits from multiplier effect as it serves all six sources of investor demand, creating significant long-term upside. (278 characters)

• Q: What new pools of capital will daily NAV for private credit open up for Apollo that are not currently accessible? /

  A: Daily NAV and standardized infrastructure (like ICE IDs) makes private credit acceptable to investor classes that are accustomed to public market trading and valuation conventions, including institutional fixed income desks, traditional asset managers, 401(k)/defined contribution plans, and individual investors. This allows Apollo to fit private credit into public-style products like ETFs (already proven with the State Street PRIV ETF) and create liquidity that matches investor needs, eliminating the need for excess liquidity risk premium and expanding the firm's total addressable market. (382 characters)

• Q: Despite heavy new competition in retail annuities, Athene still had a strong production quarter. How is Apollo positioned to compete against new entrants? /

  A: Most new entrants only have capital, and lack Apollo's mature IG origination platform, stable liability generation infrastructure, cost-competitive overhead, and experienced management. Many new entrants have relied on offshore regulatory arbitrage to undercut competition, a practice that is likely coming to an end as regulators have proposed new rules to crack down on this activity. Apollo competes effectively across channels, prioritizes earning sustainable spreads, and has built buffer dry powder in treasury/agency portfolios to capture opportunity as markets change. (385 characters)

• Q: Can Apollo continue delivering margin expansion as it invests heavily in new infrastructure, technology, and expansion? /

  A: Management's long-term framework holds: 20% FRE growth over the cycle, anchored by mid-to-high teens revenue growth and low-teens expense growth. This framework accounts for continued strategic investment, and still delivers ongoing operating leverage and margin expansion. Apollo actively pursues cost efficiency (including AI-driven efficiency gains) to offset new investment, and keeps the long-term plan on track. (263 characters)