KKR & Co. Inc. Financial Report Q3 2024

KKR & Co. Inc. (KKR), a leading global investment firm, reported strong financial results for the third quarter of 2024. The company achieved a significant milestone with fee-related earnings (FRE) surpassing $1 billion, reaching $1.12 per share, a 32% increase from the previous quarter. Adjusted net income (ANI) per share also saw a notable rise to $1.38, marking over a 50% year-over-year growth. KKR's strategic initiatives and market performance have positioned the firm for continued success, as reflected in the substantial growth in assets under management (AUM) and the optimistic outlook for future earnings and monetizations.

Key Takeaways

• KKR's FRE exceeded $1 billion, reaching $1.12 per share, a 32% increase from the previous quarter.
• ANI per share rose to $1.38, a 50% year-over-year increase.
• The firm raised $87 billion in new capital year-to-date, more than double the amount in the same period of 2023.
• Operating earnings were $1.47 per share, with management fees up 18% year-over-year to $893 million.
• Projections show significant contributions from strategic holdings, with expected net dividends of $300 million by 2026 and $600 million by 2028.
• The firm has a robust investment performance, with a 5% appreciation in traditional private equity for the quarter.
• Monetizations have surged, with $13 billion in gross proceeds year-to-date, and total gross unrealized carried interest stands at $7.9 billion, a 40% increase year-over-year.

Company Outlook

• KKR anticipates strong growth opportunities and effective scaling of operations.
• The firm is optimistic about meeting or exceeding the $300 billion fundraising target set at the last Investor Day.
• There is a focus on expanding the wealth management segment and leveraging the K-Series suite of products.

Bearish Highlights

• The IPO market has been sluggish, with improvements expected in 2025.
• Fee rates in Private Equity have seen a slight decline due to fee holidays on certain K-Series products.

Bullish Highlights

• The firm reported robust fundraising across various segments, with infrastructure and real estate AUM nearing $80 billion each.
• KKR's capital markets business achieved record revenues of $424 million, with expectations of a 50% increase in 2024 compared to the previous two years.
• The company has strong momentum in proprietary origination and fundraising, with a total addressable market projected to grow from $5 trillion to $7 trillion.

Misses

• No specific misses were highlighted in the earnings call summary provided.

Q&A Highlights

• KKR executives discussed the wealth channel's significant long-term opportunity, particularly in China.
• The partnership with Capital Group is seen as a strategic advantage in the retirement market.
• Visibility into the monetization pipeline provided, anticipating around $500 million in revenue for Q4.

KKR's third-quarter earnings call painted a picture of a firm that is not only growing but also strategically positioning itself for future success. With a strong financial performance and a clear vision for growth, KKR is set to continue its trajectory as a leading investment firm on the global stage.

InvestingPro Insights

KKR & Co. Inc.'s impressive third-quarter results are further supported by key metrics and insights from InvestingPro. The company's market capitalization stands at a robust $127.09 billion, reflecting its significant presence in the Capital Markets industry. This aligns with the InvestingPro Tip highlighting KKR as a prominent player in its sector.

The firm's strong financial performance is evident in its revenue growth, with InvestingPro data showing a remarkable 120.85% increase over the last twelve months. This substantial growth underscores KKR's successful fundraising efforts and the expansion of its assets under management, as reported in the earnings call.

Investors should note that KKR is trading near its 52-week high, with a price that is 97.37% of its peak. This is consistent with the InvestingPro Tip indicating a strong return over the last three months, which has been quantified at an impressive 24%. The company's stock performance aligns with its reported growth in fee-related earnings and adjusted net income.

Despite the high growth, KKR's P/E ratio stands at 32.65, which the InvestingPro Tip suggests is low relative to its near-term earnings growth potential. This could indicate that the stock may still have room for further appreciation, especially considering the firm's optimistic outlook and projected growth in strategic holdings.

It's worth noting that KKR has maintained dividend payments for 15 consecutive years, demonstrating a commitment to shareholder returns. However, with a current dividend yield of 0.49%, investors may be more focused on capital appreciation rather than income from this stock.

For those interested in a deeper analysis, InvestingPro offers 17 additional tips for KKR, providing a comprehensive view of the company's financial health and market position. These insights can be particularly valuable for investors looking to make informed decisions based on both current performance and future prospects.