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    KKR
    Earnings call· Mar 2026(Q1 FY26)

    KKR & Co. Q1 FY26 earnings call KKR

    May 5, 2026 Source

    Executive summary

    KKR Q1 FY26 — Strong Earnings and Capital Raising Despite Market Volatility

    KKR delivered robust Q1 FY26 results with significant year-over-year growth in key profitability metrics, driven by strong capital raising and monetization activity. While the firm maintains confidence in its underlying business momentum, the full-year adjusted net income target is now likely to be missed due to a more challenging operating environment and reduced visibility on future monetizations. Management emphasized the durability of its diversified business model and continued focus on strategic capital allocation, including share repurchases.

    Highlights

    5

    • Fee-related earnings per share (FRE per share) increased 23% year-over-year to $1.13.

    • Total operating earnings per share rose 18% year-over-year to $1.47.

    • Adjusted net income per share grew 20% year-over-year to $1.39.

    • Raised $28 billion of new capital in the quarter, including $15 billion in credit and $23 billion for North America 14 fund.

    • Total monetization activity was up over 50% versus Q1 2025, reaching $880 million.

    Concerns

    4

    • Full-year 2026 Adjusted Net Income (ANI) target of $7+ per share is now "more likely that we land below that level" due to a more challenging operating environment and less visibility on monetizations.

    • Increased competition in the retail insurance channel and tight spreads are putting pressure on ROEs, leading to more selective origination in Q1.

    • Stock volatility led to $317 million in share repurchases, indicating a perceived discount to intrinsic value.

    • Software equity market weakness negatively impacted marks in Q1 despite healthy operating performance.

    Guidance & targets

    4
    CategoryTargetConfidence
    Strategic Holdings operating earnings
    Exceed target
    medium materiality
    High
    Fundraising
    Exceed targets
    medium materiality
    High
    Fee-related earnings (FRE) per share
    Exceed targets
    medium materiality
    High
    Adjusted Net Income (ANI) per share
    More likely that we land below that level
    high materiality
    Low

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Insurance
    If we included the impact of marks on investments where a significant portion of the return relates to appreciation rather than cash yield.
    Operating earnings (including marks on investments): slightly north of $300 million
    		———$260 million
    Strategic Holdings
    Tracking nicely towards our expected $350-plus million of operating for 2026 with earnings here expected to be more back-end weighted over the course of the year.
    		———$48 million

    Operational metrics

    39
    Fee-related compensation ratio
    17.5%
    Q1 FY26
    Other operating expenses
    $195 million
    Q1 FY26
    Fee-related earnings (FRE) margin
    69%increased slightly QoQ
    Q1 FY26

    at March 31

    Total insurance economics (net of compensation)
    $1.9 billionup 14% versus the prior period
    LTM

    Includes management fees under investment management agreement, fees from IV-related vehicles, and GA related capital markets fees.

    Recurring earnings streams as % of total pretax segment earnings
    85%
    LTM

    Demonstrating the durability of the business model.

    Realized performance income
    $750 million
    Q1 FY26

    Within the Asset Management segment.

    Realized investment income
    $120 million
    Q1 FY26

    Within the Asset Management segment.

    Total monetization activity
    $880 millionup over 50% versus Q1 of 2025
    Q1 FY26

    Driven by public secondary sales, strategic transactions, dividends, and interest income.

    Adjusted net income
    $1.2 billion
    Q1 FY26

    After interest expense and taxes.

    Embedded gains
    $18.3 billionup 11% compared to 1 year ago
    Q1 FY26

    At March 31, remains elevated even with healthy monetization activity. The phrase 'at $331 billion' is likely an ASR error for 'at March 31' or similar date reference, given the preceding '$18.3 billion' value.

    Direct lending AUM
    $39 billion
    Q1 FY26
    Private BDC AUM
    $3 billion
    Q1 FY26
    Public BDC (FSK) AUM as % of total AUM
    2%
    Q1 FY26
    Dividend per share (annualized)
    $0.78increased from $0.50 per share
    Q1 FY26

    Beginning with this quarter.

    New capital raised
    $28 billion
    Q1 FY26
    Credit capital raised
    $15 billionmore than doubled quarter-over-quarter
    Q1 FY26
    Asset-based finance AUM
    $90 billion
    Q1 FY26

    Today.

    North America 14 fund final close
    $23 billioneclipsing the prior $19 billion fund
    Q1 FY26
    Total capital to invest across flagship regional funds
    $46 billion
    current vintage
    K-Series capital raised
    $4 billion
    Q1 FY26
    K-Series redemptions
    $250 million
    Q1 FY26
    K-Series AUM
    $38 billionup 80% year-over-year from $21 billion
    Q1 FY26

    At March 31.

    Realized carried interest
    $720 millionup 120% year-on-year
    Q1 FY26
    OneStream Software sale multiple
    4.5x
    Q1 FY26
    CoolIT Systems sale multiple
    15x
    Q1 FY26
    Infrastructure investment sale multiple
    2x
    Q1 FY26
    Traditional private equity investment sale multiple
    3x
    Q1 FY26
    Hyundai Marine Solution sale multiple
    7x
    Q1 FY26

    For the full life of that investment.

    Stock repurchased
    $317 million
    YTD through May 1
    Share repurchase program authorization increase
    $500 million
    current

    Board recently authorized.

    Committed but uncalled capital
    $125 billionnearly as much as we've had at any point in our history
    Q1 FY26
    Management fees and FRE (LTM) CAGR
    high teensover the last 3 years
    LTM
    Forward monetization revenue
    $1.2 billionlargest forward monetization figure discussed in history
    future quarters
    Insurance dry powder equity
    $6 billion
    current

    To invest into market dislocation.

    Q1 origination duration (7+ years)
    80%doubled from 37% in full year 2024
    Q1 FY26

    Across the franchise, reflecting a pivot towards elongating liabilities.

    Portfolio companies with employee ownership programs
    85
    current

    Globally, where every employee is an equity owner.

    Software AUM percentage
    7%
    Q1 FY26
    Digital infrastructure capital deployed
    $40 billion
    past 15+ years

    Across a variety of digital infrastructure themes, including with partners.

    Global data center platforms
    6
    current

    Industry KPIs

    6
    MetricValueDetails
    AUM$780 billionUSD
    Dry powder$125 billionUSD
    Fundraising inflows$28 billionUSD
    Performance revenue$24 millionUSD
    Fee related earnings$1.13USD
    Deployment realizations$880 millionUSD

    Deals & partnerships

    1
    Arctosacquisition

    Arctos is the leading investor in professional sports franchise stakes and a leader in GP solutions.

    Risks & headwinds

    5
    Challenging operating environment for monetizationsFY26

    Full-year 2026 Adjusted Net Income (ANI) target of $7+ per share is now 'more likely that we land below that level'.

    Mitigation: Any delayed monetizations that impact 2026 would not be lost as we would expect them to shift to 2027 and beyond.

    Increased competition in retail insurance channel and tight asset spreadsQ1 FY26, ongoing

    Putting some increased competitive pressure on ROEs; led to 'disciplined around pricing and a lot more selective in that channel' in Q1.

    Mitigation: As spreads have widened a bit more recently, we are starting to see a more attractive entry point; KKR has '$6 billion of dry powder equity' to invest into dislocation.

    Market volatility and perceived stock discountYTD through May 1

    $317 million of stock repurchased... at an average price of approximately $91.

    Mitigation: Board recently authorized an increase to our share repurchase program by an additional $500 million; co-CEOs and directors buying stock personally.

    Software equity market weaknessQ1 FY26

    Had a negative impact on the marks' for software companies in Q1.

    Mitigation: Software companies broadly are performing' with 'healthy year-over-year revenue EBITDA growth, high single digits.

    Potential for AI disintermediation in certain sectorsOngoing

    Hiring across that part of the Indian business sector come down meaningfully, dramatically.' (referring to outsourcing)

    Mitigation: KKR is 'not exposed to that' in its India portfolio; focus on infrastructure and digitalization in India; AI deployed across 150+ portfolio companies to automate workflows and enhance products.

    Q&A highlights

    8

    Asked about increased competition in the annuity business, underlying ROE potential, and growth trajectory, especially with softer institutional funding.

    Rob Lewin acknowledged high competition on the liability side and tight asset spreads, impacting Q1 origination. He emphasized viewing insurance through cycles, noting KKR's $6 billion dry powder equity (translating to $60+ billion buying power) to capitalize on future volatility. Scott Nuttall added that the U.S. retail market is competitive, but the institutional and longer-duration liability markets offer diversification.

    “We sit on $6 billion of dry powder equity that we can draw down to invest into that dislocation, much like you would in a private equity fund. And as a reminder, that $6 billion of equity, we think translates into $60-plus billion of buying power on the liability side.”

    asked by Craig Siegenthaler · answered by Robert Lewin

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 FY26 Performance Highlights

    KKR reported strong Q1 FY26 results, with fee-related earnings per share up 23% year-over-year to $1.13, total operating earnings per share up 18% to $1.47, and adjusted net income per share up 20% to $1.39. These figures represent some of the highest in the firm's history, demonstrating robust profitability and growth across its diversified business model. The firm's recurring earnings streams accounted for 85% of total pretax segment earnings over the last 12 months.

    02

    Capital Raising Momentum

    The firm raised $28 billion of new capital in Q1 FY26, with significant contributions from credit ($15 billion, driven by asset-based finance) and the final close of the North America 14 fund at $23 billion. Wealth channel inflows totaled $4 billion, bringing AUM to over $38 billion, despite an expected slowdown in Q2. This broad-based fundraising underscores KKR's ability to attract capital across diverse strategies and geographies.

    03

    Monetization Activity and Pipeline

    KKR generated approximately $880 million in total monetization activity in Q1 FY26, a 50% increase year-over-year, including $720 million in realized carried interest (up 120% YoY). The firm highlighted successful exits like OneStream Software (4.5x cost) and CoolIT Systems (nearly 15x cost). A forward monetization pipeline of over $1.2 billion, the largest in KKR's history, indicates continued strong realization potential, though some strategic exits may be delayed due to market uncertainty🌐.

    04

    Strategic Capital Allocation

    KKR actively managed its capital allocation, repurchasing $317 million of stock through May 1 at an average price of $91, and authorizing an additional $500 million for buybacks. The firm also completed the acquisition of Arctos, a leading investor in professional sports and GP solutions with $16 billion AUM, aiming to build a $100 billion-plus AUM business. This disciplined approach focuses on driving recurring, durable, and growing earnings per share.

    05

    Insurance Segment Dynamics

    The insurance segment reported $260 million in operating earnings, which would have been slightly over $300 million if including marks on investments. Increased competition in the retail channel and tight asset spreads led to a more selective approach to origination in Q1. However, recent widening of spreads is creating more attractive entry points, and KKR emphasizes its $6 billion of dry powder equity to capitalize on future market dislocations.

    06

    AI Strategy and Portfolio Impact

    KKR views AI as a significant theme, impacting both diligence and value creation across its portfolio. The firm focuses on how AI affects margins, pricing power, and cash flow resilience during underwriting. AI is deployed across over 150 portfolio companies to automate workflows and enhance products, with Capstone (KKR's operational team) facilitating knowledge sharing. Digital infrastructure, a key investment area, has seen over $40 billion deployed with a 20%+ gross IRR, driven by AI-related demand.

    AI-generated summary of the company’s earnings call. Not investment advice.