Good morning, and welcome to Apollo Global Management's Fourth Quarter and Full-Year 2024 Earnings Conference Call. During today's discussion, all callers will be placed in listen-only mode and following management's prepared remarks, the conference call will be opened for questions. Please limit yourself to one question and then rejoin the queue. This conference call is being recorded. This call may include forward-looking and projections, which do not guarantee future events or performance. Please refer to Apollo's most recent SEC filings for risk factors related to these statements. Apollo will be discussing certain non-GAAP measures on this call, which management believes are relevant in assessing the financial performance of the business. These non-GAAP measures are reconciled to GAAP figures in Apollo's earnings presentation, which is available on the company's website. Also note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase any interest in Apollo fund. I’d now like to turn the call over to Noah Gunn, Global Head of Investor Relations. Please go ahead.

Great. Thanks, operator, and welcome again everyone to our call. Joining me to discuss our results and the momentum we are seeing across the business are: Marc Rowan, CEO; Jim Zelter, President; and Martin Kelly, CFO. Earlier this morning we published our earnings release and financial supplement on the investor relations portion of our website. As you can see fourth quarter results punctuated a very strong year of performance. In the quarter specifically we generates record fee related earnings of $554 million or $0.90 per share. Spread-related earnings of $841 million or $1.37 per share, and adjusted net income of $1.4 billion or $2.22 per share, the highest quarterly level we've earned to-date. The fourth quarter represented another milestone for us as we were thrilled to be added to the S&P 500 in December. This is a testament to the firm's differentiated strategy, remarkable growth, and institutionalization as a public company. Since we listed on the NYSE in 2011, our market cap has grown from approximately $2 billion to more than $100 billion. We expect our inclusion will broaden our public shareholder base and enable more investors to gain exposure to private markets by investing in our business. Of course, this milestone would not have been possible without the collective effort and ingenuity of all our colleagues across the firm, who drive the business forward every day. And with that, I'll now hand the call over to Mark.

Thank you, Noah, and good morning to all. As Noah suggested, 2024 wrapped up in exactly the way we wanted, growth and execution. FRE for the quarter $2.1 billion, up 17% year-over-year. SRE $3.2 billion, in line with investor day guidance. Record annual ANI $4.6 billion. As we've often suggested, the reward for good work is more work. Record AUM $751 billion, total inflow is $150 billion and origination volume over $220 billion. In short, this is exactly the quarter and exactly the year we wanted. Recall what we are trying to do and what we've reiterated in our five-year planning process. We are not here to grow the fastest. We are not here to grow the largest. We are here to deliver the plan, buff a little, and like who we are and like our franchise at the end of the five-year journey. As we've said, our goal over the next five years is to grow FRE at an average annual rate of 20%, SRE at 10%, and in any one year, FRE between 15% and 20%, particularly in non-fundraising years. This is exactly what we hope to do. And again, we are not here to blow the doors off any one quarter. We are investing in the business, because what's in front of us dwarfs what's behind us. And it is important that we set ourselves up well for that opportunity. At a recent partners offsite, we gather all 200 partners of Apollo. And among the questions I asked them was, if we have a challenge meeting our five-year plan. Is that challenge external or internal? 90% of the people recognize what I recognize, is that challenge is internal. It is all about us executing, all about us aligning the resources that we have, making the right investments.…

Thanks, Marc. At Investor Day, we discussed our view of today's investing paradigm, which is that private markets have a pivotal role to play in the financing in the global industrial renaissance. As a society, we've laid out our massive global goals, including managing the energy transition, modernizing our power and utility grids, and building next generation digital infrastructure. Each of these has already created unprecedented need for capital and in our view these ambitions will be difficult to accomplish with our large scale private capital solutions. As we've discussed, our success is determined by our capacity to originate high-quality assets with excess return that benefit our fund partners and investors. The lack of flexible financing available today provides a unique opportunity to offer solutions that access our differentiated, scaled capital base. While public IG funding is widely accessible, we believe we can provide superior flexibility, customization, and certainty for borrowers, and these capabilities are resonating in the marketplace. As Marc mentioned, our origination engine has had tremendous momentum with a record $222 billion of our assets originated across our ecosystem in the last 12-months, approximately double that of 2023. This result was driven by meaningful contribution from each of our channels, including more than $95 billion from our 16 origination platforms, and more than $90 billion from traditional core credit, and approximately $25 billion from high grade corporate solutions, and $10 billion from a variety of equity inputs. Across all of our debt origination activity, we sourced assets at approximately 350 to 400 basis points above treasuries on average. Importantly, with spreads near multiyear tides across many segments of the credit market, our direct origination advantage remained durable, allowing us to capture 200 to 250 basis points of excess spread relative to comparatively rated corporates on the majority of…

Thanks, Jim, and good morning, everyone. As you can see in our results, and as you've heard from both Marc and Jim this morning, 2024 was a very successful year of growth and execution for Apollo, particularly given the shifting interest rate and more subdued monetization backdrop. We delivered on the financial targets we communicated, and we set a very strong foundation for the five-year plan we presented at the Investor Day. I'll quickly walk through our financial performance and highlight some key drivers that we believe will position us for a successful 2025. In the asset management business, we posted a new quarterly record for fee-related earnings, generating $2.1 billion of FRE for the full-year or 17% growth. Two distinct areas of strength in our revenue picture in 2024 were management fees from our credit business, which increased almost 20% within that growth in third-party credit management fees, exceeding that of the Athene and Athora, as well as capital solutions fees, which increased almost 25% year-over-year, as Marc highlighted. Our capabilities within ACS continue to expand alongside our overall origination and deployment activity. Fee related revenue grew by 15% and expenses by 14%, resulting in another year of FRE margin expansion. Very importantly, we're reaping the reward from past investments, which are now generating revenue growth across the platform, while at the same time prioritizing current investments to build strategically important areas of our multi-year plan. A few of the most important initiatives that will be critical to driving success in the year ahead and beyond include global wealth, third-party credit, and PE adjacent businesses within equity. In global wealth, we see significant momentum across the business with meaningful contributions likely to come from the semi-liquid products fleet, comprising 11 discrete products, including six currently sized at approximately $1…

Thank you. The floor is now open for questions. [Operator Instructions] Today's first question is coming from Bill Katz of TD Cowen. Please go ahead.

Okay, thank you very much. Appreciate the opportunity to ask a question and the colorful call. Marc, you mentioned sort of three or four major opportunities looking ahead. I think, I'm most intrigued on the retirement at the margin. I think your comments were like you think you can make progress within the retirement accounts even if there's no improved legislation. I was wondering if you could maybe expand on A, how you do that? And then B, from your conversation you might be having with folks down in D.C., what is the appetite to enhance the fiduciary umbrella to allow more proactive opportunity into target date funds? Thank you.

I'll do my best, Phil, but a real answer would probably absorb the rest of the call in question queue. So let's start with what people are invested in. People suggest there's $12 trillion to $13 trillion in 401(k), that'll be there on average for 50-years. These people are for the most part invested in daily liquid stock index funds for 50-years. Why? Well, that was history. That's just what people did. And what's happened to their investment is it's done well. I won't say that, but they are now, 10 stocks are now 40% of the S&P and their returns are leveraged to NVIDIA. We basically have leveraged the retirement system of the country to NVIDIA. And some to quarters that's good and some quarters that's not so good. But for a 50-year investment, it doesn't seem to be all that great. So the next innovation was the notion of a target date fund. A target date fund takes a massive individual, not an individual, and allocates them depending on their age cohort between daily liquid stock index funds and daily liquid bond funds. There's not really much innovation. People are still getting beta, although the beta is now more appropriate for their age cohort. Everywhere in the world where privates, and I'm going to use the word private, not alternative, has been added to retirement solutions. The results are not just a little bit better, they're 50% to 100% better. We are on that journey. Plan sponsors understand this, investment managers understand this. What we have is a litigation culture that has focused historically on fees that has prevented widespread allocation to private market solutions and a record keeping infrastructure that has been slow to adapt. We are starting to see changes of that around the edge. And…

Thank you. The next question is coming from Glenn Schorr of Evercore ISI. Please go ahead.

Hi, Marc. I wonder if you could peel back the onion just a little bit. You touched on it, but I'm a believer in the way you described the rethink and convergence of public and private. But for asset backs specifically and private investment grade, I think the vision is there, the proof is there with some of your partnerships, but some of the banks push back and say, we already have excess capital, regulations coming down, you know, why will more of this transition over? It made sense with the rec lending on non-investment grade and the capital charges. Don't the banks want to hang on to this business? So I figured I'd get you to pontificate a little bit on that? Thanks.

So look, this is consistent with our theme. Not every bank is the same. Let's start by saying we have a multi-cured banking system in the U.S. with a few banks at the very top, lots of small community banks, and then a big deal. I think your comments are mostly directed at the top end of this, and I don't disagree with that. Some of the banks at the top end will choose in a reduced capital strain or better regulatory column to keep more of their assets. I don't know why. I actually think the place they will keep assets is where you don't. I think they'll keep them in direct lending, because it's a really easy business to run. These clients are very fee generative. They're very relationship oriented and it's a pretty simple business. That is where the vast majority of private credit franchises around the world have been built. Do I think there'll be competition? I do. And typically in every cycle, we see people go to excess, which is why we run EDS on our vehicles the way we insist on running them. I don't think it fundamentally changes the nature of the banking business though. The nature of a bank is to borrow short and lends long. There is an inherent instability to taking long dated risk inside a short funded institution. Think about what the world is building. Next generation energy, next generation power and data, next generation infrastructure, energy transition. All of these things are long dated and complex. They are not normally in any market funded on bank balance sheets. I think what people don't really understand is a lot of the both competition or substitution is replacement of the normal regular way 10-year IG market. IG wants simple, not…

Thank you. The next question is coming from Patrick Davitt of Autonomous Research. Please go ahead.

Good morning everyone. There's been some chatter of some potentially large insurance assets coming up for sale. So could you update us on a themes willingness and ability to take on large and or more complicated M&A transactions? Thank you.

Thanks, Patrick. So I've heard the same rumors. I won't repeat them, but I've heard the same rumors. But recall that Apollo Global as an entity actually has three plus pockets by which we acquire requirements or insurance assets. One, is through our wholly-owned subsidiary, Athene. Athene primarily focuses on U.S. spread-based product along with U.K. and Japan. The second, and we don't spend much time talking about it, is our interest in Athora. Athora is our scaled European vehicle, who primarily works in a Solvency II jurisdiction, in Solvency II jurisdictions around the world. And the third is our interest in Venerable, which we share with some partners, who primarily buys variable annuities. When you add the three capabilities together, I believe that we are well positioned to do anything that we want to do that makes sense. When I say makes sense, we have the ability to issue $70-plus billion organically each year with protected surrender charges and market value adjustments at a pace and time that we want at a reasonable cost of funds. For us, growth is not about just growing the assets. This is a fool's errand. Growth for us is about earning spread. If someone is willing to step in and take low spread for the purpose of juicing for a short period of time, their asset management, that to me is a very short-term trade and one we should all be concerned about. But as it relates to capacity, we have plenty of capital, including committed capital, in our agent vehicle for Athene in uncalled equity at Athora. And anything that we want to do, we are capable of doing, but it all comes down to economics.

Thank you. The next question is coming from Alex Blostein of Goldman Sachs. Please go ahead.

Hey, Marc. Good morning, everybody. I was hoping to spend a couple minutes on your expectations for origination into 2025. The way you framed it, I thought it was really helpful between Atlas lender finance, and direct lending. I guess, how do you expect the mix of these three buckets to evolve over the course of next year? And as part of that, I think you mentioned some of the inorganic opportunities? Could you spend a minute on what could look most interesting from an acquisition perspective? And would that be an Apollo deal, or should we think of that similar to other platforms kind of residing within AAA? Thanks.

So I'll just say yes, and then I'll hand it to Jim.

You know, Alex, I would say that as we've identified, Atlas, when we thought about it three, four years ago, it was really a U.S. business. And geographically, with places like Europe, Japan, and Australia in particular, I would expect that to grow. So I don't think, when you think about the large buckets of the platforms and traditional credit, you know, at $85 billion, $90 billion a piece I don't think there is a variety of new dramatic moves out of those I think you'll see geographic expansion. I do believe what you're seeing go on right now with the European banks, the logical moves that Marc talked about earlier with really focusing on their business model. We've seen it out of HSBC and many others. So I think you'll see geographic distribution, geographic expansion. I also think that the high-grade capital solutions, and I know there was a question earlier and Marc addressed it, but you know there's just even the most well capitalized businesses, the amount of capital that they need, the public IG market is not going to be the solution. So we certainly believe high-grade capital solutions, the transactions we did for Sony and ABM, Bev and Intel and others, that will expand. The last thing I would say is massive focus on hybrid origination here across the platform. Obviously, we made some leadership evolutionary change over the last month. We brought together a lot of resources in that hybrid area, which is really the area between debt and equity. That is really when you think about the overhang from PE sponsors. When you think about the other challenges right now in monetization of the IPO market, certainly I think you're going to see a much, much greater volume of opportunity in the U.S. and in Europe and parts of Asia with regard to places like Australia and Singapore and Hong-Kong in that hybrid area. So, you know, I think it's really leaning into what we've done in the past. We're very, very comfortable with the breadth what we have. And I do think, you know, Marc appropriately addressed it. There's a narrative out there that we don't partner with the banks or there's a battle for the banks. The reality is somewhere dramatically different. The partnership dialogue, look what's going on with Standard Chartered with Apterra. Across the board, there are numerous partnerships that are in the drawing room or about to be announced. So I think that's really where the expansion will be in terms of bank partnerships.

Thank you. The next question is coming from Ken Worthington of JPMorgan Chase. Please go ahead.

Hi. Good morning. Thanks for taking the question. So, sentiment on rates has moved to higher for longer. I guess, what do you think about this shift in sentiment in the context of your inflation outlook and the Trump administration policy changes? And Apollo has been pairing for the lower interest rate environment for a lot of last year. What are your thoughts on the balance sheet positioning as you think about 2025?

Jim, why don't you take a shot at it?

Yes, Ken, I mean, we run a duration match business. We prefer a bit of a higher rate environment. There's that preparation for that. There's not really a prediction of it. Certainly, the actions of the last 90 to 120-days with the new administration is a bit different than we might have expected when we had Investor Day. And so you're right, there is a view of a bit higher for longer, what Torsten has been articulating. But again, when we talked about Investor Day last year, we talked about five or six prospective cuts. Four have taken place. But again, I think we think we're appropriately positioned right now where rates are with regard to our floater strategy, which we've been very focused on. But again, I don't think we have a -- we do not embed a strategic or tactical view based on rates for the next three to six months across the broad platform or the broad portfolio of the theme?

I'd say, I'd just add to that, Ken. Torsten has been on record and all of us have been on record. We have, Torsten's kind of been right here. Higher for longer has been the house theme, notwithstanding where the market has been. And so as Jim said, we took the appropriate action, we reduced our floater buck to a more prudent level, just given where rates and spreads are. But if I look at our business, we are generally better off in a higher rate environment. The vast, vast majority of our business is credit oriented. Credit is simply more attractive in absolute terms in the environment we're in as a solution set, because again, our client base is either solving for absolute levels of income, or is amortizing a retirement constant, which is usually a fixed constant. And so as John Zito often says, he scaled our credit business on the back of zero interest rate environments when no one wanted to talk about credit. Where we are right now is just orders of magnitude better off. So, I kind of like where we are and, you know, we'll have regulatory uncertainty, but generally the trend of regulatory uncertainty, I think is pretty favorable.

Thank you. The next question is coming from Steven Chubak of Wolfe Research. Please go ahead.

Hi. Good morning. So, I wanted to spend some time just unpacking your thoughts on the ACS fee outlook. You spoke of very strong momentum in the business. If we look at the multi-year trend, ACS fees grew 24% this year, 30% in ‘23, 39% in ‘22. And these outcomes were all achieved in a more subdued cap markets backdrop? So as I look at the billion fee target that you guys laid out at Investor Day, it does imply a meaningful deceleration in fee growth within ACS. And this one I'd better understand given the expectation for a lot of KPIs, whether it's origination activity, AUM growing much faster, why won't ACS fee growth keep pace? And is it reasonable to suggest that, that target feels conservative given some of the momentum you're saying?

Well, I'll start, but I'm going to let Jim take bulk of this. I just want to remind everyone on the call, this is a business that is an outgrowth of our strategy rather than the business in and of itself. Going back in history, when we founded Athene, Athene, as you recall, is for it to grow, it needs highly rated fixed income, offering excess return over public market benchmarks. And at the time, and still, it was unavailable in public markets, so we began to originate. But like any good manager, what we wanted to do was keep 25% of everything and 100% of nothing. And that meant we needed to find homes for the other 75% to be able to continue to originate, get what we wanted for our balance sheet and create the proper alignment with clients. That continues to be the case now spread not just over credit, but also over hybrid as Jim suggested. And I think that this again, to set out to build a syndication business was not the goal. To build a business that is strategic to us, because it allows us to speak for 100%, it garners new clients for us and it provides fee revenue is much more what we've been trying to do. So I'll turn it to you, Jim.

Yes, I would just emphasize to Marc's point. We didn't create ACS for the ACS in and of itself for the revenue. It really was an outgrowth of providing these large scale solutions along with an open architecture view of the world. And as Marc talked about the moves of the Behemoth Blackrock, I mean, again, if you really embrace the idea of open architecture across origination and have a view that you want to own a slug of everything, but 100% of nothing, that just broadens out the touch points for 1,000s of LPs and geographically around the globe in terms of our touch points. So again, I think there's a very narrow, when you look at the very narrow history of what ACS was, again, going back five years ago, it was really helping us, enabling us to have broader distribution of our PE portfolio financing or other capital raises, it morphed around to our credit business, it morphed around to our hybrid business. And now as we think about our Insurance Solutions Group and the open architecture of all these platforms, it really is just spurring on the breadth of our business. And, you know, when we think about what trades today, this whole public-private convergence, if one has a view that, you know, certainly there's a lot of assets and in the future vehicles and other mandates that will actually become more liquid, you know, I could see us for a very large traditional manager having an SMA for them and being able to provide a variety of turnkey solutions in terms of their ability to dial up and dial down private credit. So, you know, the vision which you talked about, we're not, it's only four months since our Investor Day, so we're certainly not prepared to change any trajectory right now. But it is, if one really takes a step back and understands our broad strategy, the broad open architecture and public-private convergence, this is a critical tool in the middle of that.

Thank you. The next question is coming from Mike Brown of Wells Fargo Securities. Please go ahead.

Great. Good morning. Thanks for taking my question. So Marc, the no new toys there seems like it's officially done and M&A is kind of back in terms of capital allocation. So I guess in terms of the key strategic opportunities, where else will you focus? And it sounds like it's on increasing origination versus maybe adding other capabilities, but I guess I'd love to just hear a little more about that? And then, does this have any implications to your capital allocation plans and capital return broadly? Thank you.

So I'll start with the latter. The answer is not really. All of the M&A, as I suggested, is small scale and origination based. We are focused on expanding capabilities that can be immediately accretive. Buying something that in and of itself does not fit with our franchise just makes little sense to the management team given the four big TAMs in front of us. Buying something that facilitates our ability to serve those TAMs by integrating it into our business is what we're trying to do. So if you think of Argo as the prototype, we have a large, but not yet fully scaled infrastructure climate business. Argo adds 20-plus originators with a proven track record who have been limited, who have been originating against a relatively small box, $6 billion of AUM. What we are getting is we're getting 20-plus qualified individuals, $6 billion of AUM, a home scale business. What they are getting is the opportunity to now originate, not just in the sectors they've been originating, but to originate debt, hybrid, lower risk, lower reward equity, equity, and across a much larger scale platform. You should expect us to continue to build origination capabilities in our hybrid and real asset businesses and in places where we are growing, but not yet at scale. I just don't think it's of a size or a scale where we even think about it in a capital allocation terms. But no new toys is officially over.

Thank you. The next question is coming from Craig Seigenthaler of Bank of America. Please go ahead.

Hey, good morning, everyone. I hope you're all doing well. My question is on the cost of funding a scene, which rose by 12 basis points sequentially. So how has the level of competition trended in the U.S. annuity market? Several Alts have replicated your model. They're guiding towards significant growth over five years. And how do you see changes in the competitive landscape impacted your spread related earnings net spread over the next few years? Thank you.

Thanks, Greg. Again, not to dwell on this in detail, but to go back in history a little bit, think about what you need to be successful in this business. You need capital. You need an efficient origination platform at scale. You need a source of assets that produces investment grade assets primarily, but with spread, and you need low-cost liabilities. With the exception of maybe one player, no one else in the industry has these four alternatives. They have capital, but they lack all three of the other components. They definitely are not at a scale platform and OpEx is a huge portion of this business, unlike in other asset management businesses. We are, you can look at what we do from an OpEx point of view and the detailed results. But as a primarily monoline doing one thing with new systems, we just kill it. Everything else from a cost of funds, everything from an infrastructure point of view just goes right into cost of funds. Almost every other player, no one that I know, has a regularly sized, scaled ability to produce investment grade assets with spreads. Access to the CLO market is not the ability to produce spread. Let's just be clear. And the final thing is access to a low cost source of funding. Until you are very highly rated and you have your operating infrastructure, you are not positioned to face off with what I'll call real accounts. What you can do is you can penetrate a portion of the market that does not care about credit quality, which is called the IMO market. It is an important, but a smaller part of the market for us. And in that sector where credit does not matter, we see people paying up for liabilities and…

Thank you. The next question is coming from Brennan Hawken of UBS. I'm sorry?

Let me add one more thing. Let me add one more thing to that comment, just as you're looking at the earnings. And you can see this on the spread walk across pages. You see -- you actually see a comparable increase in the gross income earned to that cost of funds increase in the quarter? And so we think on a net spread basis versus a gross income gross cost of funds basis. But the impact on spread for the quarter as we highlighted was the pull through of last year's rate actions, which are coming through on the asset side. So you really need to look at it combined and reference that spread table, which we tried to, which we used to try to distill the key drivers into the key movements.

Thank you. The next question is coming from Brennan Hawken -- thank you of UBS. Mr. Hawken, Please go ahead.

Thanks for taking my question. Sorry, Martin, you wrapped up?

Brennan, I'm wrapped up on that question.

Okay. I wasn't sure. You and the operator were talking over each other.

Thanks for checking.

Of course, no problem. We'd love to hear a little on wealth management. So the fundraising was really quite strong. I want to say $12 billion, up about 50% versus last year. So really picking up and that's in a market where we're seeing increased competition. So I'd love to hear about your ambitions. It seems as though ADS and AAA have driven a lot of this momentum, but do you expect that to continue? Do you expect there to be other products that will pick up in momentum as well? What should we think as we head into 2025 for that channel?

Go ahead, Jim, and then I'll wrap up.

Sure. So, you know, I appreciate this. This for us is a journey. We identified, you know, five years ago, not only our ambition, but the five crucial components in terms of product, distribution, technology, education, and performance. We brought that complete package to the table. Today we have 11,000 [Technical Difficulty] asset-backed credit company. But there's also a variety of other products, ADCF, which, you know, we're entering exciting times on that interval fund with demand from, you know, in tokenization. But from our perspective, like, again, 50% growth last year, the ambitions this year are still high. We believe this is going to be a group of select winners over time that have secured their position. And we rightly believe we have planted our flag, But by no means will we be resting on our laurels. We're continuing to invest not only in the U.S., which was our primary growth geography, but also in Europe, but also places like Korea and Japan and Australia that are critical. And as Marc mentioned earlier, we've really done this with a view on creating products from the historic Apollo Asset Management side. I suspect whether it's activities around Altitude, which is a variety of our insurance-wrapped product, the future creation of D.C. Solutions. We think that the sandbox of opportunity will not only execute what we've done today, but it will expand dramatically. I will tell you that ADS, we've got the January numbers, best month on record. So we believe we have those five critical components, never resting on our laurels, but certainly the ambition is global and to expand the product set in terms of client solutions, that's our objective and goal.

Nothing to add. It was well said.

Thank you. This brings us to the end of our allotted time for questions. I will now turn it back over to Mr. Gunn for closing comments.

Great. Thanks, operator, and thank you to everyone for joining us this morning and for your interest in Apollo. Of course, if you have any follow-up questions regarding our results or anything we discussed on today's call, please feel free to reach out to us, and we look forward to speaking with you again next quarter.

Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.