Apollo misses earnings, but ’volatility historically has been our friend"

Investing.com -- Apollo Global Management (NYSE:APO) reported earnings below consensus for the first quarter of 2025, sending shares down 1.9% Thursday. Adjusted earnings came in at $1.82 per share, falling short of the $1.93 average estimate from analysts.

Despite the earnings miss, fee-related earnings rose 21% year-over-year to a record $559 million, supported by ongoing strength in asset management and origination. However, principal investing income declined to $14 million from $139 million in Q4, weighing on overall profit performance.

“Our first quarter results highlight Apollo’s strengths and our ability to navigate shifting market conditions,” said CEO Marc Rowan. He emphasized the firm’s “record organic inflows” and cited strong origination volume as key to future growth.

Total (EPA:TTEF) assets under management rose to $785 billion, up 17% from the prior year. Inflows for the quarter totaled $43 billion, with $26 billion generated by the Athene retirement services platform, the highest on record.

On the earnings call, executives pointed to April’s widening spreads and renewed volatility as catalysts to deploy capital at better terms. “Uncertainty leads to volatility, but volatility historically has been our friend,” Rowan said.

Rowan acknowledged concerns about foreign investment in U.S. assets amid global political uncertainty. “Will we see certain pockets of limited partners where there is government pressure not to allocate to U.S. until there’s political resolution? I’m sure,” he said. But added, “It’s not one of the things that’s keeping me up at night.”

Analysts raised concerns about the pressure on spread-related earnings given softer interest rates and fierce competition in certain channels. Apollo said it is “spring loaded” to take advantage of market dislocations and expects stronger deployment in the second quarter.

CFO Martin Kelly noted that ongoing cash build-up and elevated prepayments created temporary drag, but spread opportunities have improved. He forecast mid-single-digit spread-related earnings growth this year from a rebased $3.2 billion level, with potential upside from asset deployment.

Apollo declared a quarterly dividend of $0.51 per share and repurchased over $700 million of stock in Q1, signaling confidence in long-term value creation. The company also reiterated its ability to scale through origination and said its $64 billion in dry powder positions it to benefit from market disruption.