tapebrief
ARES · Q2 2025
ARES · Q4 2025

ARES · Q3 2025 Earnings

Bullish

Ares Management

Reported November 3, 2025

30-second summary

Ares delivered $1.66B in revenue (+47% YoY) and grew fee-paying AUM to $367.6B, but the tape was set by two guidance moves: the FY fundraising bar was raised from "meet or exceed $92.7B" to "meaningfully exceed $93B," and FY FRE margins were upgraded from "consistent with 2024" to "at or slightly above," skewed to the top of the 0–150bps expansion band. Management used the call to actively reject the emerging credit-cycle narrative, calling recent high-profile blowups "idiosyncratic and isolated" while pointing to a near-record pipeline and ~$150B of dry powder. The setup into Q4 and 2026 is the most offensive Ares has communicated all year.

Headline numbers

EPS

Q3 FY2025

$1.15

Revenue

Q3 FY2025

$1.66B

+46.7% YoY

Key financials

Q3 FY2025
MetricQ3 FY2025YoYQ2 FY2025QoQ
Revenue$1.66B+46.7%$1.35B+22.8%
EPS$1.15—$0.46+150.0%

Guidance

Capital raising guidance raised to 'meaningfully exceed $93B' and FRE margins upgraded to 'at or slightly above 2024 levels' with margin expansion bias, reflecting stronger operational momentum and market conditions.

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

New guidance

MetricPeriodGuideYoY
Fee Related Performance Revenues (Credit Group)Q4 FY2025Approximately $125 million—

Changes to prior guidance

MetricPeriodPrior guideNew guideΔResult
Capital Raised
FY 2025
Meet or exceed $92.7 billionMeaningfully exceed $93 billionUpward revision from $92.7B baseline to $93B+ with stronger language ('meaningfully exceed' vs 'meet or exceed')Raised
Fee Related Earnings Margins
FY 2025
Consistent with prior year (2024)At or slightly above 2024 levelsUpgraded from 'consistent with' to 'at or slightly above', plus guidance to be 'closer to the top end of 0-150 bps annual margin expansion'Raised
Aspida New Premiums Target
FY 2025
Approximately $7 billionWithdrawn — no replacement—Withdrawn

Reaffirmed unchanged this quarter: GCP FRE Contribution ($200 million (in Q4 and early Q1 combined, part of $450M over next 5 quarters))

Segment performance

Q3 FY2025
SegmentQ3 FY2025YoY
Credit Group$0.728B+17.0%
Real Assets Group$0.295B+106.0%
Secondaries Group$0.126B+90.0%
Private Equity Group$0.034B-4.0%

Other KPIs

Q3 FY2025
SegmentQ3 FY2025
Assets Under Management (AUM)$595.7 billion
Fee Paying AUM (FPAUM)$367.6 billion
Available Capital$149.5 billion
AUM Not Yet Paying Fees Available for Future Deployment$81.0 billion
Gross Capital Raised$30.9 billion
Net Capital Inflows$28.5 billion
Capital Deployment$41.7 billion
Fee Related Earnings Margin41.4%

Management tone

Q4-2024 GCP integration narrative → Q1-2025 deployment caution → Q2-2025 durability over momentum → Q3-2025 offensive raise into 2026

Last quarter Ares was actively damping expectations — pushing back on the consensus that private credit was the fastest-growing alts category, framing the moat as scale-based share-take rather than category lift. This quarter the same management team raised the FY fundraising bar mid-cycle, lifted the 2028 semi-liquid wealth AUM target from $100B to $125B, and characterized the firmwide pipeline as near a record. The contrast is the signal: "our firm-wide investment pipeline remains at elevated levels near our record pipeline...nearly $150 billion in dry powder." When a management team that spent the prior call dismissing momentum narratives starts citing record pipelines and raising medium-term targets, that's a real shift in posture, not a marketing flourish.

The credit-cycle pushback is the more important tonal move. Industry-wide concerns about private-credit fraud and idiosyncratic blowups picked up materially over the quarter, and Ares chose to confront the narrative head-on rather than acknowledge and hedge: "these events appear to be idiosyncratic and isolated and not the sign of a turn in the credit cycle." They paired this with a hard claim that private credit spreads still offer "meaningfully better risk-adjusted returns" than traded credit at near-historical tights. Management is willing to put its conviction on the record, which means Q4 portfolio marks and any non-accrual disclosures will be measured against that posture.

FRE margin language shifted from defensive to offensive in a way that matters mechanically. Q2's guide was "consistent with prior year" — flat. This quarter it's "at or slightly above 2024 levels" with explicit framing toward the upper end of the 0–150bps expansion band. Combined with GCP integration costs rolling off as expected (a Q2 watch item), the implication is that 2026 operating leverage is real and quantifiable.

Wealth went from secondary growth driver to core engine. The August monthly record of >$2B in equity capital raised, $5.4B quarterly inflows (the firm's highest ever), and the upward repricing of the 2028 semi-liquid AUM target from $100B to $125B together resolve last quarter's projection of a "record semi-liquid Q3" decisively in the positive direction.

Infrastructure was reframed as a scaled platform, not a niche. >$10B raised across infrastructure products over the trailing twelve months, anchored by what management called the largest ever infrastructure-secondaries pool at $5.3B. This is the GCP thesis materializing earlier than the original 12-month integration timeline implied.

Recurring themes management leaned on this quarter:

Record fundraising and capital deployment accelerationWealth channel momentum and semi-liquid product scaleCredit portfolio health and resilience amid market concernsInfrastructure platform expansion and largest-in-market positionsFee-paying AUM growth (28% YoY) with elevated dry powderExpected margin expansion and operating leverage in 2026

Risks management surfaced:

High-profile bankruptcies and fraud events creating market concerns about credit cycle turnPotential deterioration in credit fundamentals if cycle turnsMarket value changes at year-end impacting Q4 FRPRGCP integration temporarily compressing margins in 2025Timing precision on performance fee crystallization across American vs. European waterfall structures

Q&A highlights

Steven Chubach · Wolf Research

Outlook for fundraising momentum in 2025 given anticipated contribution from campaign fundraising, near-record transaction pipeline, and tough 2025 fundraising comparables. How will deployment mix evolve?

Management expressed high conviction they will exceed prior $93B fundraising record this year. Attributed success to diversity of strategies (40+ funds institutionally), strong distribution investments, and transformed product portfolio (open-ended funds, SMAs, partnerships, insurance). Expects continued momentum with flagship credit funds resuming and floor for annual fundraising continuously raised. No expectation of slowdown.

Will exceed prior record of $93 billion in fundraising this yearOver 40 institutional funds in market this year40+ funds deployed absent large flagship credit fundsPathfinder series and Senior Direct Lending Fund anticipated to return next year

Craig Siegenthaler · Bank of America

How will investors react to lower private credit yields from Fed rate cuts? Risk of flows shifting to other asset classes or will sideline cash support continued allocation?

Management noted investor appetite for private credit is about relative returns versus alternatives, not absolute returns. Private credit spreads remain ~225 bps above traded alternatives, historically normal levels. Real-time wealth data from Oct-Nov shows no negative investor reaction to rate shifts. Lower rates typically widen spreads and increase transaction activity, creating net tailwind for the business through higher deployment and fees.

Private credit spreads at ~225 basis points above traded alternativesHistorically in line with long-term spreads25 basis points of spread widening observed in Q3Expected impact of lower rates: widening spreads + increased transaction activity

Alex Bloestein · Goldman Sachs

How does company envision franchising position in real estate as LP appetite normalizes, across institutional and wealth channels?

Third-largest global institutional real estate manager with vertically integrated platform spanning development through asset management. Focused on industrials and multifamily. Benefiting from supply constraints and rent growth support, with rate declines expected to drive transaction volumes. Q3 showed 51% sequential deployment increase and 78% YoY increase, demonstrating green shoots materializing.

Third-largest institutional real estate manager globallyFully vertically integrated from development to asset managementConcentrated in industrials and multifamilies51% higher deployment Q3 vs Q2

Michael Cypress · Morgan Stanley

How will company scale asset-based finance opportunity through partnerships, flow agreements, and acquisitions? How will sourcing funnel evolve over 3-5 years?

Company has one of largest non-rated ABF businesses with ~100 people sourcing across specialty finance companies, aggregators, banks, and platform acquisition. Balanced approach between non-rated (growing focus) and rated (50% of business). Direct calling, flow agreements, and selective platform acquisitions where durable demand exists. Q3 vs Q2 nearly doubled deployment; YoY well above 30%. New vintage fund anticipated early next year.

~100 people dedicated to ABF sourcing~50% of ABF business in rated segmentNearly 2x deployment sequential growth (Q3 vs Q2)Well in excess of 30% YoY deployment growth

Answers to last quarter's watch list

Record semi-liquid Q3 fundraising delivered. Quarterly equity inflows hit $5.4B — the firm's highest ever — with August setting a new monthly record above $2B. Management raised the 2028 semi-liquid wealth AUM target from $100B to $125B, a direct upward repricing of the medium-term trajectory.
Resolved positively
Deployable AUM activation tracking. AUM not yet paying fees moved from $86.8B in Q2 to $81.0B this quarter, with fee-paying AUM up +28% YoY to $367.6B — consistent with the ~one-year deployment cadence management flagged. The conversion mechanic is working as advertised.
Resolved positively
Real Assets revenue sustainability. Q2's $224M (+112% YoY) was followed by Q3's $295M (+106% YoY) — absolute run-rate not only held above $220M but stepped up materially. The reacceleration is now a two-quarter trend, removing the comp-distortion explanation.
Resolved positively
Aspida $7B new premiums target. Aspida was not refreshed in this quarter's guidance commentary, and the $7B target appears to have been dropped from active disclosure. Could mean already achieved, could mean reporting framework change.
Not resolved
GCP integration cost roll-off. FRE margin landed at 41.4% and management upgraded the FY FRE margin guide to "at or slightly above 2024" with bias toward the top of the 0–150bps expansion band — consistent with the Q2 framing that $6–7M/quarter of GCP integration drag was non-recurring and would surface as margin expansion. The $200M first-year FRE contribution from GCP was reaffirmed.
Resolved positively

What to watch into next quarter

Q4 FRPR delivery vs the $125M Credit Group guide. Management explicitly tied this to ~17% full-year FRPR growth — anything below ~$115M would imply year-end mark softness and undermine the "idiosyncratic, not cyclical" credit narrative.

Whether net realized non-accruals tick up in Q4 disclosures. Management put its credit-cycle posture on the record this quarter; a credit-quality print materially weaker than peers would force a meaningful tonal reset in Q1 2026.

2028 semi-liquid AUM trajectory vs the new $125B target. With $5.4B of Q3 inflows, the implied run-rate is ahead of the prior $100B path. Watch whether Q4 monthly cadence sustains the August-record pace or normalizes.

GCP FRE deployment within the $450M-over-5-quarters schedule. Q4 + early Q1 combined is supposed to deliver $200M of that — Q4 disclosure should make the split visible.

Aspida re-disclosure. Either management revives the new-premiums metric with FY actuals, or they confirm a reporting framework change. The silence this quarter is the open question.

Whether FRE margin lands at or above the top of the 0–150bps expansion band. That would set up a 2026 baseline materially above current sell-side models.

Sources

  1. Ares Management Q3 2025 Earnings Press Release (8-K Exhibit 99.2), filed 2025-11-03 — https://www.sec.gov/Archives/edgar/data/1176948/000162828025047895/a2025q3-ex992earningspre.htm
  2. Tapebrief Q2 2025 ARES brief (internal, for trend context).

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