Ares Management Corporation

Ares reported management fees of over $1 billion, up 14% year over year, and total revenues including FRPR and other fees up 17% year over year. Fee-paying AUM increased 17% year over year to approximately $410 billion, and fee-related earnings rose 20% year over year to approximately $491 million; realized income was approximately $522 million, up 31%, and after-tax realized income was approximately $468 million, up 27%, or $1.29 per Class A and nonvoting common share, up 25%. The company also said AUM rose 17% year over year to approximately $671 billion and that available capital reached approximately $170 billion, with $114 billion of AUM not yet paying fees. For the third quarter, management expects FRPR from its open-ended core alternative credit fund to be about $62 million; it also said about $32 million of FRPR is accrued by nontraded REITs for possible fourth-quarter recognition. Jarrod Phillips said year-to-date FRE margin was 42.3% and the company still expects to approach the upper end of its full-year margin guidance of 0 to 150 basis points of improvement. Management reiterated 2026 financial objectives consistent with long-term compound annual growth targets of 16% to 20% for FRE and 20% plus for RI and dividend growth.

Michael Arougheti framed the quarter as evidence that Ares’ platform is becoming more diversified and durable, with fundraising and deployment broadening beyond direct lending into asset-based finance, real estate, infrastructure, secondaries, wealth, and insurance. He emphasized that institutional demand is strengthening, the wealth channel remains intact despite redemption noise, and the firm’s scale plus product breadth are creating more opportunities for future growth. His tone was confident but measured, repeatedly tying optimism to record pipelines, strong performance, and long-duration capital.

Jarrod Phillips highlighted that the company’s financial metrics continue to scale, with management fees above $1 billion, fee-related earnings of about $491 million, and realized income of about $522 million. He pointed to a capital base that is 84% in perpetual or long-dated funds and said 94% of management fees come from those sources, which he argued supports earnings durability. He also flagged temporary expense pressure from the firm-wide AGM, said year-to-date FRE margin was 42.3%, and reaffirmed that the company expects to be near the top end of its full-year margin-improvement guidance. On taxes, he said the quarter’s 13.7% rate was within the 11% to 15% full-year range.

Analysts focused on whether institutional private credit demand is accelerating, when wealth-channel redemptions might normalize, and whether institutional and wealth flows behave countercyclically. Management said institutional demand is clearly strong, citing Pathfinder III’s $8.5 billion first and final close against a $6.5 billion target and faster fundraises in opportunistic credit, while wealth demand remains solid overall despite headline redemption noise. On redemptions, Arougheti said core U.S. investor redemptions are running around 2% to 2.5% of NAV and that he expects stasis in the next 2 to 3 quarters if current trends hold. Questions also covered inorganic growth, U.S. direct lending deployment, ABF consumer exposure, secondaries returns, and digital infrastructure economics; management responded that M&A must be culturally, strategically, and financially accretive, that the deployment pipeline is at a record and sponsor activity is improving, that consumer ABF exposure is minimal, and that digital infrastructure could contribute $50 million to $100 million of FRE in 2027 and beyond.