Key Points
- Adjusted net income per share surpassed analyst estimates and rose 49% year over year.
- Total assets under management now exceed $600 billion.
- KKR raised its quarterly per-share dividend by $0.01 per share to $0.175.
Global investment firm KKR (KKR 1.26%) reported second-quarter earnings Wednesday that topped analyst consensus estimates for adjusted net income per share. The company's net income came in at $972 million, a 49% increase year over year, thanks largely to higher fees. Total GAAP revenue came in at $4.17 billion, which was up 15% year over year.
This quarter highlighted strong underlying operations and strategic growth, making it a solid period for KKR.
| Metric | Q2 2024 | Analyst Estimate | Q2 2023 | Change (YOY) |
|---|---|---|---|---|
| Adj. net income | $971.9 million | N/A | $652.6 million | 49% |
| Adj. net income per share | $1.09 | $1.06 | $0.73 | 49% |
| Total GAAP revenue | $4.17 billion | N/A | $3.63 million | 15% |
| Total AUM | $601 billion | N/A | $519 billion | 16% |
Source: KKR. Note: Analyst consensus estimate provided by FactSet. YOY = Year over year. GAAP = Generally accepted accounting principles. AUM = Assets under management.
Overview of KKR’s Business
KKR (KKR 1.26%) is a leading global investment firm known for private equity, credit, and real assets investment. Its primary focus is on delivering strong returns through a diversified set of investment strategies. Recently, KKR has focused on expanding its Assets Under Management (AUM) across various segments and strategic acquisitions.
KKR's business relies heavily on its ability to manage and grow AUM. As of Q2 2024, it had $601 billion in AUM (up 16% year over year) with notable growth in real assets, credit and liquid strategies, and private equity. The company also aims for alignment of interest by having significant capital invested alongside external investors.
Second-Quarter Highlights
This quarter, KKR reported substantial growth in its key metrics. The breakdown of AUM includes $137.9 billion in real assets (up 10.3% year over year), $257.5 billion in credit and liquid strategies (up 12%), and $195.5 billion in private equity (up 5.7%).
The performance and returns of KKR's investment strategies continued to impress. For example, Private Equity funds saw an 18% rate of return over the trailing 12 months while Real Assets infrastructure funds rose 17%. This strong performance further solidified investor confidence.
In terms of capital markets activity, KKR's Capital Markets segment arranged $3.8 billion in debt and equity financing solutions. This positive result highlights the firm's capability to generate substantial fee income while supporting portfolio companies and third-party clients.
Another key achievement this quarter was the strategic acquisition and growth initiative. KKR's acquisition of Metronet for $4.9 billion in collaboration with T-Mobile demonstrated its capability to expand into fiber internet services. Furthermore, its partnership with Marriott International to launch the Four Points Express by Sheraton in Japan signifies a strategic entry into the midscale hotel market with promising growth potential.
KKR noted significant capital deployment and new capital raised during the quarter. The company raised $32 billion of new capital in the quarter and capital invested totaled $23 billion, up from $10 billion one year ago.
One-time events did not significantly impact KKR's financial performance for the quarter. Additionally, KKR raised its quarterly dividend by $0.01 to $0.175 per share, reflecting consistent (and growing) shareholder returns growth over the past five years.
Looking Ahead
KKR management didn't offer specific guidance for 2024's third quarter, but KKR management did forecast that the firm will raise more than $300 billion in capital by 2026. Additionally, it provided an optimistic outlook for the future growth of one of its newest segments. KKR is targeting Strategic Holdings operating earnings of $1 billion-plus annually by 2030, a substantial leap from its current annualized performance of $123 million.
Investors should monitor the ramp-up and integration of recent acquisitions for potential impacts on near-term earnings, as well as ongoing regulatory compliance to mitigate any risks.
