ARES · Q4 2025 Earnings

Bullish

Ares Management

Reported February 5, 2026

30-second summary

Ares closed 2025 with Q4 revenue of $1.5B (+19.5% YoY), FY revenue of $5.6B (+44.1% YoY), and AUM crossing $622.5B, while sharpening the 2026 FRE margin guide from "closer to the top end" to explicitly the "high end" of the 0-150bp range. Management explicitly guided FY2026 European-style net realized performance income to ~$350M (more than double 2025's $169M), reaffirmed the ~$200M Q4 + early Q1 framing ($102M delivered in Q4, ~$100M of Q1 visibility), and anchored a 20%+ realized income growth target for 2026 — with combined 2025+2026 European-style realizations now tracking to ~$519M vs. the prior ~$500M combined guide. Tone is offensively positioned: record 2026 fundraising expected, S&P 500 inclusion achieved in December, GCP flipping from FRE headwind to tailwind.

Headline numbers

EPS

Q4 FY2025

$0.08

Revenue

Q4 FY2025

$1.50B

+19.5% YoY

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
Revenue	$1.50B	+19.5%	$1.66B	-9.5%
EPS	$0.08	—	$1.15	-93.0%

Guidance

Company raised FRE margin guidance for FY2026 to high end of range but materially lowered European-style realized performance income expectations by ~$100M.

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

Metric	Period	Prior guide	Actual	Δ	Result
Fee-Related Performance Revenues (Credit Group)	Q4 FY2025	approximately $125 million	$125 million	in-line	Met

New guidance

Metric	Period	Guide	YoY
Realized Income Growth Target	FY2026	20% plus	—
FRE Margin	FY2026	high end of 0 to 150 basis points range	—
Effective Tax Rate on Realized Income	FY2026	11% to 15%	—
Total Fundraising	FY2026	as good or better than record year 2025	—
Equity Inflows	FY2026	meet or exceed prior year levels	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
European-style Net Realized Performance Income	FY2026	approximately $450 million over next five quarters including $200 million in Q4 and early Q1 combined	approximately $350 million	-$100 million (22% reduction)	Lowered

Segment performance

Q4 FY2025

Segment	Q4 FY2025	YoY
Credit Group	$0.803B	+18.0%
Real Assets Group	$0.335B	+125.0%
Private Equity Group	$0.043B	+24.0%
Secondaries Group	$0.092B	+17.0%

Other KPIs

Q4 FY2025

Segment	Q4 FY2025
Total Assets Under Management (AUM)	$622.5 billion
Fee Paying AUM (FPAUM)	$384.9 billion
Available Capital	$156.0 billion
AUM Not Yet Paying Fees	$101.0 billion
Gross New Capital Commitments (Q4-25)	$35.9 billion
Capital Deployment (Q4-25)	$45.8 billion
Fee Related Earnings Margin	42.5%
Effective Management Fee Rate	0.99%

Management tone

Narrative arc: Q2 perpetual capital durability → Q3 offensive posture and S&P 500 talk → Q4 diversified-deployment defense and AI-as-hedge framing.

Three quarters ago private credit deployment was characterized as the cyclical engine; this quarter management actively pushed back on perceived over-reliance and reframed the platform as a diversified global franchise. From the call: "I don't perceive that this disruption is going to have a meaningful impact in any way on aggregate origination volumes. And as we said in the prepared remarks... our pipeline across the entirety of what we do is up at record levels right now." This is a confidence shift — management is no longer defending the credit franchise, they're moving the narrative beyond it.

The AI-risk framing inverted from "we're watching software exposure" toward "AI accelerates our earnings." Software is ~6% of AUM, senior secured at high-30% LTV. Management's posture: "An acceleration in AI adoption should actually be a meaningful contributor to management fee and earnings growth overall for Ares, as our digital infrastructure business would generate meaningful AUM, management fees, and FRE growth." The hedge isn't defensive — it's structural. Digital infrastructure deployment offsets any software portfolio drag, and management is comfortable saying so on a call.

Wealth went from "opportunistic secondary channel" in Q2 to "structurally underbuilt and now correcting" in Q4. Wealth AUM is over $66B, up 69% YoY. The candid admission: "We were, frankly, a little bit slow to grow and deepen our penetration in wealth... it was critical that we felt that we had a real deep base of institutional drawdown capital in the form of commingled funds and SMAs that sat alongside these products." The signal is that management is differentiating on backing rather than just retail distribution — a hedge against the wealth-channel redemption cycle other peers are now navigating.

Real estate trajectory hardened from Q2's "interesting setup" to Q3's "third-largest institutional manager" to Q4's explicit cycle call. From the call: "In real estate, the recovery of many asset class values is clearly underway, and we're seeing strong performance across our funds. Notably, our diversified non-traded REIT generated an 11.6% total net return in 2025." The +125% Real Assets management fee growth this quarter validates this isn't talk — it's deployment.

GCP went from integration headwind in Q2 to neutral in Q3 to FRE-accretion in Q4. Management: "We were also able to generate a meaningful year-over-year increase in FRE margins in the fourth quarter and a modest increase for the full year, even with the margin headwinds from the GCP acquisition... The GCP acquisition integration is going well, and in 2026, we expect to see more expense savings and revenue enhancements." This is the mechanical support beneath the "high end of 0-150bps" FRE guide. The synergy story is now playing out on schedule.

Recurring themes management leaned on this quarter:

Diversified deployment across credit, real assets, and secondaries rebalancing riskAI as both portfolio risk and business opportunity (digital infrastructure hedge)Wealth channel structural growth with institutional capital backingEuropean-style carry realizations accelerating ($350M expected in 2026 vs $169M in 2025)Real estate recovery cycle driven by supply-demand reset and secular logistics tailwindsDry powder ($156B) enabling opportunistic deployment in improving M&A environment

Risks management surfaced:

AI disruption risk in software portfolio (6% of AUM, mitigated by senior secured positioning and low LTV in 30% range)Wealth channel redemption queues and pro-cyclical outflows (though management argues these are structural liquidity queues, not fundamental demand shifts)Credit quality dispersion among peer groupUnforeseen global market disruptions impacting deploymentPotential slowdown in real estate market recovery or interest rate environment deterioration

Answers to last quarter's watch list

Q4 Credit Group FRPR hitting the ~$125M guide — Delivered $129M, in-line to slightly above, validating the first quarterly FRPR data point management ever issued at a segment level. The credibility of the broader ~17% FY FRPR framing holds.

Resolved positively

$200M European-style realized performance income across Q4 + early Q1 — Reaffirmed. Q4 delivered $102M; management indicated $52M realizing this upcoming week plus ~$50M of additional visibility, putting Q1 contribution at ~$100M — on track with the $200M combined framing. Layered on top, FY2026 European-style realizations now explicitly guided to ~$350M, more than 2x 2025.

Resolved positively

Whether private credit spread widening (25bp in Q3) persists — Not quantified on this print with the same specificity. Management referenced "improved conditions for future deployment across a broader range of investment strategies" but did not refresh the spread figure.

Not resolved

2026 FRE margin formalization from "top end" qualitative to hard range — Sharpened from "closer to the top end" to explicit "high end" of 0-150bps. Not a hard numeric range, but the language tightened materially and now anchors to +100-150bps of margin expansion.

Resolved positively

Aspida YTD premiums disclosure — Disclosed: 2025 sales volumes totaled $8.8B, +39% YoY, exceeding the prior $7B FY target.

Resolved positively

S&P 500 inclusion specificity — Achieved. Management confirmed: "In December, we were both pleased and honored to be added to the S&P 500 Index.".

Resolved positively

What to watch into next quarter

Whether Q1 2026 European-style net realized performance income lands at or above the ~$100M of visibility management telegraphed. With FY2026 guided to ~$350M, Q1 needs to confirm the front-loaded cadence that supports the more-than-doubling-of-2025 framing.

FRE margin print in Q1 — whether the +100-150bps trajectory implied by the "high end" 2026 guide is visible in the first data point. A Q1 margin meaningfully below 42% would mean the guide is back-loaded and execution risk rises through the year.

Whether the $78.8B of AUM not yet paying fees available for deployment converts at the one-year cadence management telegraphed. Tracking activation through FPAUM growth — flat or shrinking FPAUM into Q1 would be a tell that deployment slowed.

Real Assets management fee growth holding above ~$240M run-rate after the GCP-driven step-up. Comps now harden meaningfully — Q1 2026 vs Q1 2025 will be the first quarter where the +100%+ comp lapping ends.

Realized income growth tracking toward the 20%+ FY2026 target. Management explicitly anchored this number and tied the 20% dividend increase to it; under-delivery in Q1 would test the anchor.

American-style carry realization — management flagged "the potential for us to realize a modest portion of our $123M net accrued carry balance in our American-style funds, most likely in the second half of 2026." Worth watching whether PE transaction backdrop supports this.

Sources

Ares Management Q4 2025 Earnings Press Release (8-K Exhibit 99.2), filed 2026-02-05 — https://www.sec.gov/Archives/edgar/data/1176948/000162828026005596/a2025q4-ex992earningspre.htm
Ares Management Q4 2025 earnings call prepared remarks, 2026-02-05.

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