Given turbulence in nontraded BDCs and software headlines, how is ADS's competitive position for net flows, especially with its mid-teens software exposure?

Jim Zelter highlighted ADS's consistent philosophy of 100% senior secured, first lien, no PIK, and no ARR, which resonates with advisors. He noted ADS had over $5 billion in net inflows last year and expects to gain market share due to its differentiated, less risky profile compared to peers, especially regarding software exposure (negligible PIK/ARR software exposure). He also emphasized diversification into asset-backed finance (ABC). “We put out a deck in December and all the conversation recently has been about the narrow sector, the $2 trillion to $3 trillion of private credit, and it's really not touching the $35 trillion to $40 trillion opportunity in investment-grade private credit.”

How are LPs reacting to recent market events, particularly regarding software, and are they rethinking private allocations or shifting to more liquid vehicles?

Marc Rowan explained that public market volatility and software price resets (50-70% down for quality companies) are driving LPs to seek less risky first-lien debt for equity-like returns. He emphasized that future growth will be outside the traditional 'alternative bucket' in institutional businesses like insurance, debt/equity portfolios, and 401(k), which require different product sets and delivery. Jim Zelter added that the focus on the 'small pond' of non-investment-grade private credit misses the $35 trillion to $40 trillion investment-grade private credit opportunity. “I think you're going to see a change in the dialogue amongst the managers of private assets as they fully embrace this, which is not that wealth is not important, not that it's not going to grow. It's just the most visible. These other markets have every bit as much opportunity.”

Following CalPERS' shift, are other large pensions planning to follow suit, and how quickly will meaningful reallocations occur?

Jim Zelter stated that adoption will be gradual ('start stop') due to the cautious nature of public institutional marketplaces. He cited examples like Apollo Sports Capital and insurance sidecars where institutions are already seeking opportunities outside traditional asset class definitions to achieve better risk-adjusted returns. Marc Rowan added that public market volatility will accelerate this shift, as trustees seek less risk for similar or better returns. “If anything is going to speed it up, Patrick, it will be volatility. Public market volatility is ultimately a significant imperative.”

APO

Apollo (APO) Q4 FY25 earnings call: guidance and Q&A

Earnings call· Dec 2025 (Q4 FY25)· Financials· Feb 9, 2026

Source: earnings call transcript

Executive summary

Apollo Q4 FY25 — Record Origination and Strong Earnings Growth

Apollo delivered a robust Q4, capping a year of record origination and strong earnings growth, driven by its integrated platform and diversified capital formation channels. The firm is strategically expanding into new markets, including wealth and 401(k), while maintaining a principal's mindset and disciplined underwriting, particularly in areas like software. Management anticipates continued earnings growth and margin expansion, leveraging its global reach and specialized ecosystem strategies.

Highlights

Generated record combined fee-related earnings (FRE) and spread-related earnings (SRE) of $5.9 billion for the full year.
Achieved adjusted net income of $5.2 billion, up 14% year-over-year, or $8.38 per share for FY25.
FRE for the year grew 23% year-over-year to $2.5 billion.
Origination volume crossed $300 billion in FY25, up nearly 40% from the prior year.
Recorded $228 billion in inflows for the full year, including $42 billion in Q4 FY25.

Concerns

Software exposure is intentionally low across the firm (less than 2% of total AUM, 0% in PE, 0.5% on Athene's balance sheet, less than 4% in credit business ex-Athene), indicating a defensive stance against potential market overvaluation.
Athene built a $24 billion position of cash, treasuries, and agencies, which is acknowledged as a short-term drag on profitability.
Athene's blended net spread ex notables was 120 basis points in Q4, a slight decrease from 121 basis points in the prior quarter, primarily reflecting asset prepayments.

Guidance & targets

Category	Target	Timeline	Confidence
Asset Management FRE Growth	20% plus high materiality	FY26 · 2026	High
Retirement Services Inflows	approximately $85 billion medium materiality	FY26 · 2026	High
SRE Growth	10% high materiality	FY26 · 2026	High
Annual Dividend per Share	$2.25 medium materiality	Q1 FY26 · 2026	High
Dividend Growth Rate	approximately 10% annually medium materiality	Long-term	High
FRE Growth	20% plus high materiality	FY26 · 2026	High
Non-comp FRE Expenses Growth	low double-digit growth medium materiality	FY26 · 2026	Medium
Compensation Cost Growth	high teens growth rate medium materiality	FY26 · 2026	Medium
SRE	$3.85 billion high materiality	FY26 · 2026	High
FRE Margin Expansion	100 basis points annually medium materiality	Long-term	Medium
Multiyear Tax Rate	approximately 20% low materiality	Multiyear	High
401(k) Inflows	north of $1 billion low materiality	FY26 · 2026	Medium

APO operating KPIs by quarter

APO operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	This call Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Assets under management (AUM)	$751B Record AUM, $751 billion, total inflow is $150 billion and origination volume over $220 billion. Source: earnings call transcript	—	$840B Robust inflows of $61 billion across the firm; record AUM, $840 billion. Source: earnings call transcript	$908B Record AUM at the end of the quarter, $908 billion, up 24% year-over-year. Source: earnings call transcript	$938B In Asset Management, we generated increases in AUM and fee-gen AUM of 25% year-over-year to $938 billion and $709 billion, respectively. Source: earnings call transcript	—	—	+3.3%
Origination volume	$60B+ This quarter, second best quarter ever, more than $60 billion of originations. Source: earnings call transcript	$56B Solid origination quarter at $56 billion, led primarily by platforms. Source: earnings call transcript	$81B $81 billion originated from our platforms and our business in the quarter. Source: earnings call transcript	$75B $75 billion of origination led by platforms. Source: earnings call transcript	—	$71B Origination for the quarter was a particularly high quality, $71 billion. Source: earnings call transcript	$74B Origination here was a very strong quarter, $74 billion. Source: earnings call transcript	+4.2%
Net new assets	—	—	—	$82B Robust inflows of $82 billion for the quarter, led by asset management of $59 billion, retirement services of $23 billion. Source: earnings call transcript	$42B We generated $42 billion of inflows in the quarter and $228 billion for the full year. Source: earnings call transcript	—	$60B The reward for good performance is, of course, more to do capital formation, record for the quarter at $60 billion of organic inflows, $38 billion in Asset Management, $22 billion in Athene. Source: earnings call transcript	—
Net new assets Athene	—	—	$21B Inflows were driven by $40 billion from asset management, which included $12 billion of inorganic flows from the Redding Ridge Irradiant acquisition and $21 billion from Athene. Source: earnings call transcript	—	—	—	$22B The reward for good performance is, of course, more to do capital formation, record for the quarter at $60 billion of organic inflows, $38 billion in Asset Management, $22 billion in Athene. Source: earnings call transcript	—
Net new assets Asset Management	—	—	$40B Inflows were driven by $40 billion from asset management, which included $12 billion of inorganic flows from the Redding Ridge Irradiant acquisition and $21 billion from Athene. Source: earnings call transcript	$59B Robust inflows of $82 billion for the quarter, led by asset management of $59 billion, retirement services of $23 billion. Source: earnings call transcript	—	—	$38B The reward for good performance is, of course, more to do capital formation, record for the quarter at $60 billion of organic inflows, $38 billion in Asset Management, $22 billion in Athene. Source: earnings call transcript	—
Net new assets Global Wealth	—	—	$4B+ In Global Wealth, momentum continues to generate as we generated more than $4 billion of inflows in the quarter, the second best on record despite the turbulent backdrop. Source: earnings call transcript	$5B The $5 billion we raised in the wealth channel was the second best quarter on record, bringing year-to-date total over $14 billion, up 60% over the prior year period. Source: earnings call transcript	—	—	$3B Our Global Wealth business had a solid quarter as well with fundraising totaling $3 billion and despite a softer backdrop, flows continue across semiliquid and drawdown strategies. Source: earnings call transcript	—
Net new assets Athene - Retail	—	—	$7B By channel, inflows were driven by $7 billion from retail, $12 billion from funding agreements and $2 billion from flow insurance. Source: earnings call transcript	$10B Inflows were driven by $10 billion from retail, $10 billion from funding agreements and $3 billion in flow reinsurance. Source: earnings call transcript	—	—	$12B In particular, retail and flow insurance had exceptional quarters with inflows of $12 billion and $4 billion, respectively, marking the second highest quarter on record for each segment. Source: earnings call transcript	—
Net new assets Athene - Funding agreements	—	—	$12B By channel, inflows were driven by $7 billion from retail, $12 billion from funding agreements and $2 billion from flow insurance. Source: earnings call transcript	$10B Inflows were driven by $10 billion from retail, $10 billion from funding agreements and $3 billion in flow reinsurance. Source: earnings call transcript	—	—	—	-16.7%
Net new assets Athene - Flow reinsurance	—	—	$2B By channel, inflows were driven by $7 billion from retail, $12 billion from funding agreements and $2 billion from flow insurance. Source: earnings call transcript	$3B Inflows were driven by $10 billion from retail, $10 billion from funding agreements and $3 billion in flow reinsurance. Source: earnings call transcript	—	—	$4B In particular, retail and flow insurance had exceptional quarters with inflows of $12 billion and $4 billion, respectively, marking the second highest quarter on record for each segment. Source: earnings call transcript	—
Origination volume Debt	—	—	—	—	—	$61B Our activity in the quarter was $61 billion of debt comprised approximately 75% investment grade with an average A rating and 25% sub-investment grade with an average rating of B With respect to spreads in the quarter, our investment-grade origination, we generated excess spread of 290 basis points over treasuries or approximately 210 basis points over comparably rated corporates. Source: earnings call transcript	$68B Across our activity for the quarter, $68 billion was in debt, comprised basically 75% IG with an average rating of BBB+ and 25% sub-investment grade with an average rating of single B Consistent with recent quarters, we observed relatively stable spreads across our platform volumes. Source: earnings call transcript	+11.5%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline
Partnership with Schroders	milestone	announced this morning
PRIV ETF with State Street	milestone	current
Apollo Sports Capital	launch	current

Deals & partnerships

Apollo Commercial Real Estate Finance (ARI) acquisition $9 billion

Athene will acquire $9 billion of commercial mortgage assets from ARI, subject to ARI stockholder approval. Athene already has nearly 50% ownership overlap with the underlying loans. This transaction is part of a strategy to transfer assets from a public company trading at a discount to NAV to Athene.

Risks & headwinds

Short-term drag on profitability from defensive positioning short-term

Athene built $24 billion position of cash, treasuries and agencies.

Mitigation:Provides significant firepower to redeploy; willingness to sacrifice short-term profitability for doing the right thing.

Overvaluation and potential reset in software sector current/ongoing

Software exposure less than 2% of total AUM, 0% in PE, 0.5% on Athene's balance sheet, less than 4% in credit business ex-Athene. Public software companies down 50% to 70%.

Mitigation:Disciplined underwriting, principal's mindset, focus on first-lien debt, positioning to go on 'offense' when valuations become attractive.

Competition in retail annuity channels current

Not quantified, but noted as 'interesting competition' in lower-quality broker channels.

Mitigation:Athene's competitive advantages (asset origination, low-cost liability factory, low OpEx); belief that many new entrants will not achieve 'escape velocity' due to unsustainable practices (giving away fees, moving business offshore).

Public market volatility impacting institutional portfolios current/ongoing

Not quantified, but noted as a 'significant imperative' for LPs.

Mitigation:Drives institutions to seek less risky, better risk-adjusted returns in private assets; Apollo's focus on diversifying into new institutional markets (insurance, debt/equity, 401(k)).

Unpredictability of performance fees ongoing

Not quantified, but acknowledged as the 'most unpredictable part of the earnings stream.'

Mitigation:Anchored to a long-term guidepost of $900 million for PII; belief that disciplined buying at reasonable multiples allows for selling at reasonable multiples; not market-dependent on equity capital markets.

Q&A highlights

How does the ARI transaction, with its 7.7% loan yield, impact SRE and what are the offsets to consider?

Marc Rowan explained the philosophy of transferring assets from a discounted public vehicle (ARI) to Athene at fair market value, noting it's about finding durable spread and safe yield. Jim Zelter emphasized the principal mindset and alignment. Martin Kelly clarified that the transaction helps derisk the 10% SRE growth target for 2026, rather than being purely additive, as it displaces other SRE lending.

“So it goes into a principal mindset and alignment at the core of what we do.”

asked by Michael Brown · answered by James Zelter

2 min read 6 chapters

Detailed narrative

Integrated Platform and Origination Moat

Apollo emphasizes its integrated system, connecting origination, product, and investing teams across the firm. This bespoke investing approach allows for delivering the right cost of capital to opportunities quickly and at scale, while maintaining discipline. The firm originated over $305 billion of assets in 2025, a nearly 40% increase year-over-year, with $282 billion in debt, primarily investment grade.

This capability is seen as a long-term moat, enabling consistent, high-quality outcomes for clients.

Expansion into New Markets

The company is strategically expanding from serving institutional alternatives to six distinct markets: individuals, insurance, institutional debt/equity, traditional asset managers, and the 401(k) market. Each market is seen as potentially as large as the original institutional market, requiring tailored products, access points, and technology investments. This diversification is a key driver for future growth, with significant white space ahead for the business.

Disciplined Underwriting and Software Exposure

Apollo highlights its 'principal's mindset' and patient, purchase-price-matters discipline. This is evident in its low software exposure, representing less than 2% of total AUM, 0% in PE growth software, 0.5% on Athene's balance sheet, and less than 4% in credit business excluding Athene.

Management believes this defensive positioning, avoiding over-allocated sectors, will allow them to go on offense as market valuations reset, particularly in areas like software.

Capital Formation Momentum

Apollo achieved record organic inflows of $182 billion in 2025, with $100 billion into Asset Management and $83 billion into Athene. The firm's Global Wealth business saw $18 billion in fundraising, up nearly 50% year-over-year, with 9 strategies raising over $500 million. Third-party insurance mandates contributed $15 billion, bringing the platform to over $135 billion across 30 strategic and SMA mandates, demonstrating broad-based demand.

Athene's Strategic Positioning

Athene generated record inflows of $83 billion in 2025, driven by robust retail inflows, funding agreement issuance, and reinsurance. The company maintains a defensive posture with $24 billion in cash, treasuries, and agencies, providing significant redeployment firepower. The recently announced ARI transaction will transfer $9 billion of commercial mortgage assets to Athene, offering attractive yields and helping derisk the 10% SRE growth target for 2026.

Future Growth Drivers and Globalization

Apollo expects continued strong growth in 2026, with Asset Management FRE projected to grow over 20% and SRE by 10%. This growth is underpinned by established core businesses (asset-backed finance, direct lending, multi-credit, hybrid) and newer initiatives like Apollo Sports Capital.

The firm is globalizing its strategy, particularly in Europe and Asia, and building organic platforms to penetrate specialized industries that require specialized knowledge and capital pools.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.