Blackstone Inc. Q1 FY2025 earnings call

• Strong first quarter results with distributable earnings up 11% YOY. $62 billion inflows in Q1, highest in 3 years, lifting AUM to a record $1.2 trillion. • Firm built to navigate uncertainty with long-term contracts and $177 billion dry powder. • Tariffs have limited direct impact on portfolio but affect real estate construction costs and new supply. • Innovation engine driving growth, including strategic alliance with Wellington and Vanguard. • Private credit has $465 billion AUM, strong inflows, and growth in insurance AUM. • Private wealth has over $270 billion AUM with various funds performing well. • Infrastructure and multi-asset investing show strong growth.

GAAP net income for the quarter was $1.2 billion. Distributable earnings were $1.4 billion or $1.09 per common share, and a dividend of $0.93 per common share was declared. Assets under management (AUM) rose 10% year-over-year to nearly $1.2 trillion. Fee-related earnings grew 9%. In Q1, $62 billion of inflows were raised, the highest in 3 years. Private credit has $465 billion AUM, up over 2.5-fold in 4 years. Insurance AUM grew 18% year-over-year to $237 billion. Private wealth AUM is over $270 billion, with funds like BCRED, BXPE, etc., performing well. Infrastructure AUM is up 36% to $60 billion, and multi-asset investing AUM is up 12% to $88 billion. Revenue contributions vary by segment, with private credit, private wealth, and infrastructure being key drivers.

• Management fees expected to continue on a strong positive trajectory. • Platform perpetual strategies expanding, widening aperture for fee-related performance revenues. • Uncertainty around tariffs and market volatility may affect near-term realizations, but firm sees opportunities in dislocation and plans to deploy dry powder in areas like digital infrastructure, energy, etc., with potential accelerated deployment in market dislocations.

• Uncertainty around tariffs and their impact on economic growth, inflation, and investor sentiment. • Market volatility affecting near-term realizations. • Potential second-order consequences of tariffs on the economy and portfolio companies. • Geopolitical and macroeconomic uncertainties impacting investor allocations and deployment cadence.

Q: Maybe just a question on the deployment opportunity set here with nearly $180 billion of dry powder across the platform. You've mentioned that this could be an attractive deployment opportunity and environment for Blackstone. But given that it is highly uncertain and volatile, can you talk about how you find the confidence to put capital to work here and how you see the cadence and type of deployment playing out near term versus medium term?

A: Jonathan Gray says dislocation leads to market reactions, and they accelerate deployment where value may have decoupled. Look at public companies and sectors like digital infrastructure, etc.

Q: So there's clearly been a lot of focus on the private markets over the past several weeks. I think it would be helpful to get your perspective on why private market solutions work so well in any and all environments, some of the underlying characteristics of the business that allow you to be offensive when others are pulling back?

A: Jon Gray says the model is well-designed for stress, no net debt, long-term investing, not procyclical, and provides diversification and strong returns.

Q: So there's clearly been a lot of focus on the North American institutional channel. It's the most mature market for privates globally. They've been facing DPI headwinds for 3 years, and it's likely now that 2025 will be the fourth. So what is your outlook for fundraising this channel, just given continued realization headwinds?

A: Jonathan Gray says North American channel is mature, stays with private, certain segments like secondaries, infrastructure, credit are more favorable.

Q: I was wondering if you could comment a little bit on just the opportunity to continue to expand the global wealth management business and in particular, I think there was announcement just a couple of days ago, working with Wellington and Vanguard. I was wondering if you could maybe flesh out how that may come together in terms of products or opportunities?

A: Jon Gray says wealth is large growth opportunity, combining liquid and private assets for individual investors, with potential for enhanced returns and diversification.

Q: I was hoping we can double-click into the investment-grade opportunity, John, that you talked about in your prepared remarks. Treasury Secretary earlier last week, I think, talked about some pretty meaningful regular changes to bank capital requirements. And one of the things you mentioned, I think, specifically with something along the lines of leveling the playing field between banks and nonbanks. Now I think you was talking mostly around mortgages, but curious to kind of how you think about the origination opportunity for Blackstone in IG private credit in light of potentially lose lending requirements on the bank side?

A: Jonathan Gray says bespoke solutions for borrowers, flexibility of capital, and higher returns for investors compared to public markets.

Q: If you could comment a little bit more on the international backdrop. I guess, both in the terms of the corporate decision-making with the tariff negotiations. But more importantly, on your on view on your ability to deploy, do you see any friction in the system as a result of some of the tariff back and forth and maybe if you can comment on that situation in both Europe and Asia?

A: Jonathan Gray says mostly questions about tariff diplomacy, no major pullback in private wealth, but interest in diversification.

Q: So Jon, the wealth flows were tremendously strong in the first quarter. April sounds like it's off to a good start, but I believe the subscriptions would be April 1, so before Liberation Day, and we're in a fundamentally different world now. So how do you expect the well flows to hold up broadly? And which asset classes do you think could remain in favor here just given the uncertainty?

A: Jonathan Gray says no pullback in first quarter, private assets' non-volatility is appreciated, but real estate may have speed bump but will recover.

Q: I wanted to ask 1 for Mike, just on some of the financial targets for the year. Last quarter, you indicated Q1 management fees would grow 10% year-over-year. I was wondering if you could give us an update. I realize there's a lot of moving parts wealth flows, realizations, what it means for earning AUM. But just curious if there's anything else you can share in terms of your expectations for management fee growth through the rest of the year?

A: Michael Chae says management fees grew 10% in Q1, stable margins with broadening strategies.

Q: Last year, you referred to it being a gold moment for private credit. What is your assessment today? Are we still in that golden moment or if we moved outside it?

A: Jonathan Gray says golden moment related to spreads, but private credit still has durable spread difference vs liquid fixed income and sees tailwinds in reindustrialization, etc.

Q: Maybe just a follow-up on the Vanguard-Wellington partnership. Vanguard obviously has a substantial presence in the 401(k) channel. So I really just wanted to get your updated thoughts on how close the 401(k) opportunity could be and with this partnership announced, how do you feel about Blackstone's current positioning to capitalize on that opportunity?

A: Jon Gray says potential large opportunity, but timing uncertain, but Blackstone's products and brands position well.

Q: I have a follow-up on the deployment question earlier. I think historically, one impediment particularly for PE has been that bank loan market sees up and delay, manager's ability to step in quickly. So do you think that is still the case? Or does private credit now having enough scale and dry powder to fill in that void and make it easier to step in quicker than in past drawdowns in that vein, is your direct lending business willing to step in now to fund other sponsors deal or still more in wait-and-see mode?

A: Jonathan Gray says it's fundamentally different, private credit has scale and can fill void, with deals announced and pricing not materially moved.

Q: And sorry, Jon, not quite done yet, but hopefully, this is the last one. How would you characterize the capital markets environment today just from your seat? Is the window shut on M&A and IPOs? Is it slightly open. And then what do you expect to drive a better or worse environment in the coming months? And can it change relatively quickly with the change in policy or even with policy changes, could still be delays just as uncertainty looms?

A: Jonathan Gray says it can change quickly with policy changes, IPO market most impacted, key is stabilization for M&A and IPOs to improve.