ARES — Ares Management Corporation

ARES Management Corporation Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Assets Under Management (AUM): Increased 18% year-over-year to $644 billion; fee-paying AUM rose 19% to $400 billion.
• Management Fees: Exceeded $1 billion for the first time, up 22% year-over-year.
• Fee-Related Earnings (FRE): Grew 26% year-over-year to $454 million, with a FRE margin of 42.4%.
• Realized Income: Increased 24% year-over-year to $503 million; after-tax realized income per share was $1.24, up 14%.
• Dividend Declared: Quarterly dividend of $1.35 per share, a 20% increase from the previous year.

2. Strategic Updates and Business Highlights:

• Record Fundraising: Raised $30 billion in gross capital in Q1, marking a 46% increase from the previous year.
• Investment Pipeline: Strong demand in U.S. Direct Lending, Alternative Credit, and Infrastructure; record deployment of over $32 billion despite seasonal slowdown.
• New Products: Launched several new funds, including a global data center equity fund and enhancements to existing direct lending products.
• Diversification: 75% of AUM is institutional capital; expanded product offerings have led to a 54% increase in Wealth AUM to $68 billion.

3. Forward Guidance and Outlook:

• 2026 Goals: On track to achieve compound annual growth of 16% to 20% in FRE, 20% to 25% in realized income, and 20% in dividends.
• Market Positioning: Well-positioned to capitalize on market dislocations with over $150 billion in available capital for deployment.
• Expectations for Deployment: Anticipated increase in transaction activity in U.S. Direct Lending and continued strong performance across other strategies.

4. Bad News, Challenges, or Points of Concern:

• Redemptions in Retail Funds: Noted a moderation in equity flows to non-traded BDCs, primarily from smaller family offices, though 95% of investors did not request redemptions.
• Market Volatility: The geopolitical backdrop and inflation concerns have led to a slowdown in middle-market M&A activity, impacting U.S. Direct Lending.
• Credit Cycle Concerns: While credit fundamentals remain strong, there are indications of potential defaults in the broader market, though Ares does not anticipate an imminent default cycle.

5. Notable Q&A Insights:

• Institutional Demand Dynamics: Strong institutional demand persists despite retail fund pressures; larger institutions are consolidating relationships with scaled platforms like Ares.
• Deployment Opportunities: The firm is seeing a record pipeline in Credit, particularly in European Direct Lending, and anticipates a pickup in U.S. Direct Lending as market conditions stabilize.
• Software Portfolio Management: Ares maintains a low-risk profile in its software exposure, with only 1% categorized as high risk for AI disruption; the focus remains on senior lending to resilient businesses.
• Secondaries Market Growth: The secondaries market is experiencing acceleration, driven by a shift from LP-led to GP-led transactions, indicating a robust deployment opportunity.

Overall, Ares Management Corporation demonstrated strong financial performance in Q1 2026, with significant growth in AUM and fundraising, while navigating challenges in the retail market and broader economic conditions. The outlook remains positive, supported by a diversified investment strategy and robust capital availability.