KKR (KKR) Q2 FY26 earnings call: guidance and Q&A

Given strong 2026 management fee growth, what are the drivers for 2027 and the multi-year algorithm, especially with tough comps?

Management highlighted momentum from 30+ products, record fundraising, and a record level of committed capital not yet earning fees as strong forward indicators. They expressed confidence in continued upside for management fees and a broader sense of strong operating fundamentals despite external pessimism, citing record fundraising and net income growth.

“I don't recall a period of time where the external perception is so disconnected from the operating fundamentals and how it feels inside the firm. And in our experience, the best response to pessimism is performance.”

asked by Alexander Blostein · answered by Scott Nuttall

How has GA's organic growth outlook evolved across retail annuities, flow reinsurance, and institutional channels, and what is the ROE trajectory given increased competition?

KKR has seen heightened competition and is allocating less capital to insurance. Organic growth will depend on market conditions. They are focused on originating long-duration liabilities (99% at least 5 years, 80% 7 years in Q2) and believe they are well-positioned for a more volatile environment where spreads expand and competition decreases. They view ROEs through a cycle, noting current structural lows due to competition.

“We've made the determination that we're going to allocate a little bit less capital to insurance based on what we're seeing in the market today.”

asked by Craig Siegenthaler · answered by Robert Lewin

How does KKR view the 'schizophrenia' between the mega CapEx cycle and market pessimism, and how does it impact risk management for clients and on the balance sheet?

KKR sees the mega CapEx cycle as a huge opportunity, focusing on infrastructure, real estate, and credit around AI development, rather than direct chip/LLM investments. They acknowledge market indigestion in data centers but emphasize their selective approach, focusing on counterparty quality and contract terms. Volatility is seen as helpful for selective investment, with digital infrastructure being broader than just data centers.

“We're going to care about our counterparty, we're going to care about contract terms, and it allows us to be selective -- and in that context, the volatility we're seeing, we think is helpful for us.”

asked by Glenn Schorr · answered by Craig Larson

What are the key drivers for increasing private wealth adoption and penetration over the next few years, considering evolving technology or new wrappers?

The primary driver is education, with KKR running 'Academies' globally to help advisors and clients understand private markets. Second is access and distribution, building relationships with platforms and RIAs. Third is expanding the investor type, leveraging the partnership with Capital Group to reach a broader base of advisors beyond the accredited investor segment, which K-Series currently targets.

“I think the first thing is education, just spending time making sure advisers and their clients understand what private markets is and the different forms of it, whether it's private equity, infrastructure, real estate or credit.”

asked by Michael Cyprys · answered by Scott Nuttall

Can management provide color on transaction revenue and realization visibility for the rest of the year, and is the $7 EPS target still on the table given the strong environment?

KKR has approximately $700 million of monetization-related visibility for Q3, split 80% realized performance revenue and 20% realized investment income, which is healthy following a record Q2. Management stated they removed the formal $7 EPS guidance as it became a distraction, preferring to focus on record earnings and strong fundamentals. They emphasized performance over a specific share price target.

“I'd say, in many ways, it has provided a bit of a distraction as we engage with our shareholders and analysts. I think we'd much prefer to focus on the facts that we had record earnings this quarter, ANI per share up 40%.”

asked by Benjamin Budish · answered by Robert Lewin

Given Q2's $290 million in insured operating earnings (including $40 million gains), how will this trend in H2, does the $250 million target still hold, and could there be a step function higher in 2027?

The $250 million plus or minus target for insured operating earnings remains a good go-forward number, as the $40 million in Q2 realizations is not a current run rate. However, as the alternatives book matures into late 2027 and 2028, materially higher outcomes are expected. The all-in economics of the insurance business, including mark-to-market, show strong year-on-year growth.

“I think the $250 million plus or minus, still a good number for the go forward. We did have an elevated level of realizations in the quarter. I wouldn't assume that, that is a run rate for right now.”

asked by Crispin Love · answered by Robert Lewin