BLUE OWL CAPITAL INC. Q3 FY2024 earnings call

• Blue Owl continued strong growth over the third quarter, with 14 consecutive quarters of growth in management fees, FRE, and DE. - Distinct business model: high permanent capital, fee-driven earnings, aligned with secular trends in alternative assets. - Strategic M&A: Acquisitions of IPI, Atalaya, etc. to expand in digital infrastructure and alternative credit, with synergies expected though initial impact on revenues/earnings modest. - Strong fundraising: over 20% of Q3 equity raised from products not existing a year ago, including in insurance solutions, alternative credit, and real estate Europe. - Active deployment: credit, GP strategic capital, and real estate all have strong originations and pipelines.

Over the last 12 months, Blue Owl Capital grew management fees by 26%, fee-related earnings (FRE) by 27%, and distributable earnings (DE) by 22% compared to the prior year period. Over 3.5 years, management fees have grown nearly 200% and FRE by over 150%. In the third quarter, the firm raised $7.9 billion of equity capital and $12 billion including debt, with private wealth fundraising at $4.2 billion (a record quarter). Gross inflows into perpetually distributed products were $2.5 billion in Q3 and $9.3 billion over the last 12 months (67% higher than the prior 12-month period). In credit, gross originations were $10.9 billion in Q3 with net funded deployment of $4.3 billion, and over the last 12 months, gross originations totaled $47 billion with net funded deployment of nearly $18 billion. In GP strategic capital, $3.5 billion was raised during the quarter, and the firm remains confident in achieving its $13 billion goal by the end of 2025. In real estate, the net lease pipeline had over $22 billion of transaction volume under letter of intent or contract, and Fund VI was expected to be approximately 60% committed by year-end.

• Dividend: Currently expect ~$0.90 for 2025, considering SOFR curve volatility and growth potential in acquired businesses. - FRE growth: Mid-20% growth expected for 2025, with continued strong growth in management fees, FRE revenues, and DE. - M&A impact: Initial acquisitions modest but expected to contribute to long-term value creation, with opportunities for multiplicative growth over time.

• Volatility in interest rates affecting Part 1 fees. - Uncertainty in timing and extent of PE market recovery impacting deployment and origination fees. - Execution risks in integrating acquired businesses and realizing synergies.

Q: Alex Blostein from Goldman Sachs on dividend philosophy A: Alan Kirshenbaum discussed dividend considering SOFR curve volatility and growth potential in acquired businesses Q: Craig Siegenthaler from Bank of America on product innovation A: Marc Lipschultz talked about hybrid M&A strategy and product innovation in alternative credit and data centers Q: Brian McKenna from Citizens JMP on direct lending fundraising outlook A: Marc Lipschultz discussed continued opportunities in private BDCs, GPLP funds, and innovating on-ramps for direct lending Q: Brennan Hawken from UBS on dividend clarity A: Alan Kirshenbaum clarified dividend considerations based on SOFR curve and growth potential Q: Steven Tabak from Wolfe Research on FRE growth algorithm A: Marc Lipschultz and Alan Kirshenbaum discussed continued strong growth in FRE with focus on high growth areas and superior business model Q: Crispin Love from Piper Sandler on rate impacts and offsets A: Marc Lipschultz and Alan Kirshenbaum discussed potential offsets in moderated rate environment and Part 1 fee impacts Q: Patrick Davitt from Autonomous Research on acquisition flow and Adelaide contribution A: Alan Kirshenbaum and Marc Lipschultz talked about acquisition flow and Adelaide's fundraising potential Q: Bill Katz from TD Cowen on FRE margin and growth A: Alan Kirshenbaum and Marc Lipschultz discussed margin focus and long-term earnings growth trajectory Q: Brian Bedell from Deutsche Bank on deployment timing A: Marc Lipschultz discussed strong deployment and expected PE market pickup impact on fees