tapebrief
ARES · Q4 2025

ARES · Q1 2026 Earnings

Bullish

Ares Management

Reported May 1, 2026

30-second summary

Ares opened 2026 with $1.40B revenue (+28% YoY), $644.3B AUM, and a record first-quarter capital raise of $29.5B (+46% YoY), while management formalized long-term CAGR targets across the P&L: FRE 16–20%, realized income 20–25%, and dividends 20%. The Q1+Q4 combined $200M realized performance income target is tracking; FRE margin printed 42.4% and 2026 remains guided to the upper end of the 0–150bps band. Management quietly withdrew the wealth-channel equity-inflow guide as non-traded BDC redemptions moderated, but reaffirmed the $125B 2028 wealth AUM target and reframed macro dislocation as a deployment tailwind with explicit GFC/COVID share-take anchoring.

Headline numbers

EPS

Q1 FY2026

$1.24

Revenue

Q1 FY2026

$1.40B

+28.3% YoY

Key financials

Q1 FY2026
MetricQ1 FY2026YoYQ4 FY2025QoQ
Revenue$1.40B+28.3%$1.50B-6.9%
EPS$1.24—$0.08+1450.0%

Guidance

FY2026 guidance largely reaffirmed with narrower framing on Realized Income growth (20%-25% vs. open-ended '20% plus') and formalization of long-term FRE and dividend CAGR targets; no material raises or cuts.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
Realized Net Performance Income (Q4 2025 and Q1 2026 combined)Q4 FY2025 / Q1 FY2026$200 million$200 millionin-lineMet

New guidance

MetricPeriodGuideYoY
Fee-Related Earnings (FRE) GrowthFY 202616% to 20% CAGR—
Dividend GrowthFY 202620% CAGR—

Changes to prior guidance

MetricPeriodPrior guideNew guideΔResult
Realized Income Growth
FY 2026
20% plus20% to 25% CAGR+250 bps on upper end (20%+ → 20%-25%)Raised
Wealth Channel Equity Inflows
FY 2026
meet or exceed prior year levelsWithdrawn — no replacement—Withdrawn

Reaffirmed unchanged this quarter: FRE Margin (upper end of 0-150 basis points annual target), European-style Net Realized Performance Income (approximately $350 million), Effective Tax Rate on Realized Income (11% to 15%), Total Fundraising (on track for another record year of fundraising)

Other KPIs

Q1 FY2026
SegmentQ1 FY2026
Assets Under Management (AUM)$644.3 billion
Fee Paying AUM (FPAUM)$399.6 billion
Available Capital$158.1 billion
AUM Not Yet Paying Fees$79.4 billion
Capital Raised (Gross)$29.5 billion
Net Inflows of Capital$27.9 billion
Capital Deployment$32.3 billion
Fee Related Earnings Margin42.4%

Management tone

Q2 2025 durability over momentum → Q3 2025 offensive raise into 2026 → Q4 2025 internal operational leverage as the engine → Q1 2026 dislocation reframed as deployment opportunity

Four quarters ago Ares was actively damping expectations on private credit category growth and arguing the moat was share-take. Three quarters ago they raised the FY fundraising bar mid-cycle. Last quarter they framed 2026 growth as internally mechanical — AUM conversion, margin expansion, accrued European carry. This quarter the frame shifted again: macro dislocation, geopolitical noise, and the U.S. direct lending slowdown (Q1 deal count down 41% YoY industry-wide) are reframed not as headwinds but as the entry point for "enhanced economics, lower leverage, and improved deal terms." The anchor: "Periods of uncertainty tend to create more attractive investment terms and risk-adjusted returns, and we're already seeing a broader set of opportunities across credit, real assets, and secondaries." This is the most offensive deployment posture management has communicated, and it is paired with explicit historical anchoring to GFC and COVID share-take precedent — a deliberate signal that management views the current setup as similarly advantageous.

The credit-cycle posture from Q3/Q4 hardened further into preemptive risk quantification. Last quarter Ares volunteered software/AI exposure disclosure unprompted. This quarter they paid a top-three global management consulting firm to validate it: 86% of the software portfolio low-risk to AI disruption, medium-to-high risk under 2% of U.S. and European direct lending AUM and well under 1% of firmwide AUM. Hiring a third party to externally certify the bear thesis is wrong is a confidence move — it only works if you're right, and it suggests management is treating the AI/credit narrative as a multi-quarter overhang they want neutralized.

Non-traded BDC redemptions moved from "managing a concern" (Q4) to "structurally immaterial" (Q1), with specific containment math: 95% of BDC investor base did not redeem; the redeeming 5% concentrated in smaller family offices and non-U.S. institutions. Management reaffirmed the unchanged $125B 2028 wealth AUM target despite withdrawing the FY 2026 wealth-channel equity-inflows guide — the long-term target is preserved while the near-term metric is quietly de-emphasized, which is the right tonal move but is also the quarter's clearest hidden cut. Watch whether the explicit wealth-channel guide returns next quarter.

Europe was reframed from cyclical lift (Q2 2025) to structural offset. Robust European deployment in Q1 attributed to "geopolitical reorganization driving focus to Eurozone investment" — record-sized European direct lending fund, healthy pipelines, diversification benefit as U.S. and Europe move counter-cyclically. The European thesis is now load-bearing for the 2026 deployment narrative, not incremental.

Formalization of long-term CAGR targets (FRE 16–20%, realized income 20–25%, dividends 20%) is the deepest tone shift. Management is moving from "we'll beat" to "here is the bounded model we are building toward." This trades headline optionality for institutional credibility — exactly the move a management team makes when it expects investor focus to shift from beat-and-raise dynamics to model durability.

Recurring themes management leaned on this quarter:

Record fundraising momentum with institutional consolidationEnhanced deployment economics in dislocated marketsStructural tailwinds for private credit secular growthDiversification across strategies reducing single-asset-class riskFRE margin expansion with operating leverageDifferentiated digital infrastructure and AI-driven capital deployment

Risks management surfaced:

Geopolitical issues impacting transaction activityNon-traded BDC redemption requests and potential subscription declinesSoftware portfolio AI disruption exposure (though minimized)U.S. direct lending market slowdown (Q1 deal count down 41% YoY)Potential defaults in broader credit markets

Q&A highlights

Craig Siegenthaler · Bank of America

Requesting perspective on evolving demand dynamics between institutional, insurance, and retail channels within private credit, given strong fundraising despite deceleration in newer retail funds.

Management emphasized need to differentiate between channels and credit tiers (high-grade vs sub-investment-grade). Highlighted $20B capital raise with $5B in wealth; noted strong flows in European and sports/media entertainment funds offsetting U.S. private credit slowdown. Stressed institutional investors are not anxious and view market dislocations as opportunities.

$20B capital raised in credit strategies in Q1$5B from wealth channel$3B from U.S. direct lending funds$2B from European and sports/media entertainment funds

Steven Chubak · Wolf Research

Seeking clarification on retail appetite for strategies outside credit (infrastructure, secondaries) and assessment of credibility of $125B 2028 fundraising target given private credit pressures.

Management contextualized retail challenges as periodic noise rather than structural issue, citing secular trend toward investor access to differentiated solutions. Noted 95% of non-traded BDC investors did not redeem; redemptions came from smaller family offices and non-U.S. institutions. Confirmed unchanged $125B 2028 guidance.

Eight products in wealth channel (plus two 1031 exchanges)95% of BDC investor base did not redeemRedemptions from smaller family offices and non-U.S. regions$125B 2028 fundraising target unchanged

Alex Flostein · Goldman Sachs

Requesting expansion on record deployment pipelines in credit business, including which segments show biggest pickup and how non-traded BDCs' role as incremental buyer affects market structure and spreads.

Management disputed characterization of non-traded BDCs as incremental buyer (15-20% of private credit AUM). Noted broad-based deployment across infrastructure, real estate, European direct lending, and secondaries, with U.S. direct lending slower due to M&A/PE market digestion. Highlighted liquidity-generated opportunity theme as key accelerator.

Non-traded BDCs represent 15-20% of private credit market AUMRecord aggregate pipeline across firmDirect lending pipeline increasing in momentumStrong deployment in infra, real estate, European DL, secondaries

Patrick Davitt · Autonomous Research

Requesting detail on shadow pipeline compared to historical periods and timeline for conversion to real deployment announcements.

Management acknowledged lag between pipeline visibility and closings; noted record aggregate pipeline with increasing direct lending momentum. Drew parallel to 2024 tariff-driven pause followed by back-half acceleration, citing aging PE capital and pro-business regulatory backdrop as structural drivers.

Record aggregate pipeline across firmDirect lending pipeline increasing in momentumSignificant private equity capital aging and requiring resolutionPro-business administration and regulatory backdrop

Ken Worthington · J.P. Morgan

Seeking better understanding of European direct lending deployment opportunity, noting record-sized fund and different M&A backdrop than U.S.

Management highlighted robust European deployment in Q1, attributing upside to geopolitical reorganization driving focus to Eurozone investment. Noted European DL business in good shape with healthy pipelines; emphasized diversification benefit as U.S. slowed, Europe accelerated.

Robust deployment in European market Q1Record-sized European direct lending fundEuropean pipelines as healthy as U.S. counterpartsDiversification benefit as U.S. and Europe move cyclically

Answers to last quarter's watch list

First Q1 2026 print on European-style realized performance income. Management reaffirmed the FY 2026 ~$350M guide unchanged and said the Q4+Q1 combined $200M realized net performance income target is "on track." The press release did not break out the European-style Q1 dollar figure separately, but the cadence implication is preserved.
Continue monitoring
U.S. Senior Direct Lending Fund IV early sales velocity. Management said they are "accelerating the launch of our fourth senior direct lending fund due to improving market conditions" with first close targeted late Q3/early Q4 2026. The acceleration commentary is qualitatively positive; the quantitative read awaits Q2/Q3.
Continue monitoring
Pathfinder Fund 3 progress toward "at/above $6.6B by summer." Management said the third alternative credit fund is "meaningfully oversubscribed" and expected to close at hard cap in Q2.
Resolved positively
Real Assets segment revenue absolute run-rate. Real Assets revenue +60% YoY in Q1 (mgmt fees $243M vs $152M), FRE +78%. The comp tailwind from GCP International integration is still active. AUM growth normalized to +15%, but the revenue-level translation remains well above firm average.
Resolved positively
Secondaries Q1 growth re-acceleration. Secondaries printed +25% mgmt fees / +34% RI YoY in Q1, comfortably above the sub-30% bear case on the RI line. The inflection thesis holds.
Resolved positively
Effective tax rate on realized income tracking toward 11–15% guide. Q1 rate printed 13.5%, just above the midpoint of the 11–15% range; management said this is in line with where they expect the rate to land for the year.
Resolved positively

What to watch into next quarter

Wealth-channel guide reinstatement. The FY 2026 wealth-channel equity-inflows guide was withdrawn this quarter without replacement. Watch Q2 for either reintroduction (positive — implies BDC flow stabilization) or continued silence (confirms the soft cut). The $125B 2028 target durability gets tested if the metric stays withdrawn for two consecutive quarters.

Realized-income trajectory vs. the formalized 20–25% long-term CAGR. Q1 after-tax realized income of $1.24/share (+14% YoY) is the baseline; sustaining the upper half of the band requires H1 acceleration as European-style carry crystallizes.

U.S. Direct Lending Fund IV Q2/Q3 sales disclosure. Acceleration was telegraphed with a late-Q3/early-Q4 first close; Q2 should produce a specific raise progress figure. Anything materially below pace would undermine the "improved deployment economics" framing.

Real Assets segment revenue durability. With Q1 mgmt fees at $243M (+60% YoY), the question is how much of that is one-time GCP catch-up vs. structural. Watch Q2 for sequential progression — the GCP comp tailwind annualizes through March, so Q2 YoY should compress toward a more normal range.

Non-traded BDC inflow trajectory. Management said the BDC continues to see "meaningful inflows alongside redemptions." Q2 net inflows are the cleanest read on whether the redemption wave is genuinely contained or building.

European deployment dollar disclosure. The structural-offset narrative needs a number. Watch for explicit European direct lending and infrastructure deployment figures in Q2 to validate the "diversification offset" thesis.

Sources

  1. Ares Management Q1 2026 Earnings Press Release (8-K Exhibit 99.2), filed 2026-05-01 — https://www.sec.gov/Archives/edgar/data/1176948/000162828026029083/a2026q1-ex992earningspre.htm
  2. Ares Management Q1 2026 earnings call transcript, 2026-05-01.
  3. Tapebrief Q4 2025 ARES brief (internal, for trend context).
  4. Tapebrief Q3 2025 ARES brief (internal, for trend context).
  5. Tapebrief Q2 2025 ARES brief (internal, for trend context).

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