CG — The Carlyle Group Inc.

Summary of The Carlyle Group Inc. Q4 2025 Earnings Call

1. Key Financial Results and Metrics:

• Record Fee-Related Earnings (FRE): Up 12% year-over-year to $1.24 billion for the full year, with a FRE margin of 47%.
• Distributable Earnings (DE): Totaled $1.7 billion for 2025, or $4.20 per share, reflecting an 11% increase from the prior year. Q4 DE was $436 million, or $1.01 per share.
• Total Fee Revenues: Reached $2.6 billion for the year, a 10% organic growth rate, with Q4 revenues at $670 million, up 2% year-over-year.
• Assets Under Management (AUM): Closed the year at a record $477 billion, driven by strong investment performance and fundraising.
• Inflows: Totaled $54 billion for 2025, significantly above the $40 billion target, marking a 32% year-over-year increase.

2. Strategic Updates and Business Highlights:

• Strong IPO Performance: The Carlyle Group was the number one private equity sponsor globally by IPO proceeds, with notable transactions including Medline's $7 billion IPO.
• Carlyle AlpInvest: Achieved record FRE of $274 million, up nearly 60%, and $319 million in DE, driven by strong fundraising.
• Global Credit Business: Delivered a record $402 million of FRE, with a 21% year-over-year increase.
• Wealth Management Growth: Evergreen wealth AUM nearly doubled year-over-year, with a strategic focus on expanding offerings for individual investors.
• Direct Lending: Continued strong momentum with record originations and a new head of direct lending added to enhance the platform.

3. Forward Guidance and Outlook:

• 2026 Expectations: Carlyle anticipates continued growth supported by a diversified fundraising pipeline and improving capital markets conditions. The firm will provide more detailed multi-year financial targets at the upcoming shareholder update on February 26.
• Investment Performance: The company remains optimistic about monetization momentum and exit conditions, despite recent market volatility.

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

• Market Volatility: Recent market fluctuations have raised concerns about sustainability in monetization momentum, particularly regarding equity market exits versus M&A transactions.
• CLO Market Exposure: Questions arose regarding the impact of software sector performance on CLOs, although management expressed confidence in their CLO performance and resilience.
• Direct Lending Risks: The firm acknowledged potential risks associated with tighter credit spreads and market hesitance, although they believe their diversified credit strategy positions them well.

5. Notable Q&A Insights:

• Sustainability of Monetization: CEO Harvey Schwartz expressed caution about extrapolating recent market volatility into long-term trends but noted strong January performance indicators from their portfolio.
• CLO Performance: Management assured that their CLO business remains robust and well-positioned, with no expected negative impacts from recent market conditions.
• Wealth Channel Strategy: The firm emphasized its strategic pivot towards wealth management, highlighting strong brand recognition and client engagement as key drivers of growth.
• Future Capital Management: Discussions on capital priorities and the potential for new flagship funds were deferred to the upcoming shareholder update, with management indicating confidence in their fundraising capabilities.

Overall, The Carlyle Group Inc. reported a strong performance in 2025, with record financial metrics and strategic initiatives positioning the firm for continued growth, despite some concerns regarding market volatility and potential risks in the credit landscape.