Ares Management Corporation
ARES · NYSE
Dec 2026
Next quarter
Expected to report Feb 4, 2027 — estimated from last year’s reporting date.
Consensus is $1.87 EPS for Dec 2026 across 7 estimates, ranging $1.77 to $2.03.
ARES Sep 2026
- 0.80%
- $1.25
- $1.26
- —
- —
Highlights
- Core earnings: Fee Related Earnings rose 11% year over year to $524.2 million, with a 42.5% margin versus 41.4%; Realized Income increased 8% to $490.1 million.
- Per-share result: After-tax Realized Income per share was $1.26, 0.8% above the $1.25 consensus, and up 6% from $1.19 a year ago. GAAP diluted EPS was $0.21.
- GAAP volatility: Revenue fell 14% year over year to $1.43 billion, while net income attributable to Ares Management Corporation declined to $85.3 million from $288.9 million, chiefly reflecting lower carried interest allocation.
- Scale and capital raising: AUM grew 16% year over year to $690.6 billion and fee-paying AUM rose 13% to $416.4 billion. Ares raised $31.0 billion, with $28.6 billion of net capital inflows.
- Future fee base: Available capital was $173.8 billion; $93.8 billion of AUM not yet paying fees was available for future deployment. Together with $2.3 billion of development assets not yet stabilized, these could generate about $826.9 million of potential incremental annual management fees, subject to assumptions.
- Investment activity: Gross deployment was $34.8 billion, including $18.4 billion from drawdown funds. Activity was strongest in European direct lending, alternative credit, real estate and infrastructure; U.S. direct lending was slower, with management expecting a pickup in Q4.
- 2026 outlook: Ares expects full-year FRE growth within its 16%–20% target and Realized Income growth within its 20%–25%+ range. It expects FRE margin expansion slightly above the midpoint of its 0–150 basis-point range.
Analysis
Ares delivered a near-consensus per-share result alongside stronger recurring earnings, while GAAP revenue and attributable net income fell sharply from an unusually strong year-ago quarter. After-tax Realized Income per share was $1.26 versus the $1.25 consensus and $1.19 a year earlier; GAAP diluted EPS was $0.21. Revenue of $1.43 billion was down 14% year over year but essentially flat with Q2’s $1.43 billion. Net income attributable to Ares Management Corporation was $85.3 million, versus $288.9 million a year ago and $150.6 million in Q2. The contrast largely reflects lower carried interest allocation, not a reversal in the core fee business.
Fee Related Earnings rose 11% to $524.2 million and Realized Income grew 8% to $490.1 million, supported by 10% management-fee growth and a higher FRE margin. The other defining feature was continued scale-building: AUM reached $690.6 billion, fee-paying AUM $416.4 billion, and fundraising $31.0 billion, even as deployment eased from $41.7 billion a year ago to $34.8 billion. Management pointed to substantial undeployed capital and expects stronger Q4 activity, particularly in U.S. direct lending. For 2026, it maintained FRE and Realized Income growth targets and expects margin expansion slightly above the midpoint of its range.
Recurring earnings
- Fee Related Earnings: FRE increased 11% to $524.2 million from $471.2 million a year ago. The margin expanded to 42.5% from 41.4%, reflecting higher management fees, partly offset by higher expenses.
- Realized Income: RI rose 8% to $490.1 million from $455.5 million; after-tax RI per share increased 6% to $1.26 from $1.19. For the first nine months, FRE was up 19% to $1.48 billion and RI rose 20% to $1.51 billion.
- Management fees: Unconsolidated management fees were $1.07 billion, up 10%. Part I fees were $169 million, up 21%; growth reflected deployment in European direct lending and alternative credit, perpetual-vehicle fundraising and expansion in real assets.
- Segment mix: Credit FRE grew 11% to $521.4 million and Real Assets FRE rose 32% to $166.6 million. Secondaries FRE fell 32% to $50.7 million, mainly because the prior-year quarter included $27.2 million of ASIS III catch-up fees and current APMF incentive fees were lower. Private Equity FRE increased 25% to $16.4 million.
GAAP earnings volatility
- Revenue and attributable income: GAAP revenue declined to $1.43 billion from $1.66 billion a year ago, while net income attributable to Ares Management Corporation was $85.3 million versus $288.9 million. Against Q2, revenue was nearly unchanged and attributable net income fell from $150.6 million.
- Performance income: Carried interest allocation was $161.7 million compared with $464.7 million a year ago; incentive fees were $82.3 million versus $100.7 million. The lower carried interest contribution was the principal reason GAAP results diverged from growth in FRE and RI.
- Performance income outlook: Ares now expects $300 million–$325 million of full-year net realized performance income, implying $160 million–$185 million in Q4. Management said delayed European-style waterfall payments shifted some timing, while the underlying eligible asset base continues to grow.
Fundraising and fee base
- Platform growth: AUM reached $690.6 billion, up 16% year over year, and FPAUM was $416.4 billion, up 13%. Perpetual capital AUM increased 23% to $233.9 billion; 84% of AUM was perpetual or long-dated, and those sources generated 93% of management fees.
- Fundraising: Gross fundraising was $31.0 billion and net inflows were $28.6 billion. Credit raised $15.2 billion, Real Assets $11.2 billion and Secondaries $2.6 billion. Wealth-channel equity commitments exceeded $4.2 billion, while wealth AUM reached $82 billion, up 41% year over year.
- Undeployed capital: Available capital was $173.8 billion. AUM not yet paying fees totaled $117.1 billion, including $93.8 billion available for future deployment and $2.3 billion of development assets not yet stabilized. The latter two categories could provide approximately $826.9 million of potential incremental annual management fees if deployed or stabilized; this is not assured.
- Fundraising milestones: Ares reported an initial close above $8 billion for its latest U.S. senior direct-lending institutional funds, representing 80% of target. Japan Logistics Development Fund V closed at its $4 billion hard cap, and the Global Structured Solutions fund reached a $4.2 billion final close versus its initial $1 billion target.
Deployment and outlook
- Quarterly deployment: Gross capital deployment was $34.8 billion, down from $41.7 billion a year earlier; drawdown funds contributed $18.4 billion and perpetual vehicles $18.7 billion. U.S. direct lending was subdued amid softer M&A activity, while European direct lending, alternative credit, real estate and infrastructure were more active.
- Pipeline: Management said U.S. direct-lending pipelines were at record levels and were beginning to convert early in Q4, which is typically the strongest deployment quarter. Ares also agreed to buy a $1.1 billion institutional direct-lending portfolio, expected to close during Q4.
- 2026 targets: Management expects full-year FRE growth within its 16%–20% annualized target and Realized Income growth within its 20%–25%+ range. It expects FRE margin growth slightly above the midpoint of the 0–150 basis-point range, with additional margin support anticipated in 2027 from new funds and catch-up fees.
Portfolio performance
- Credit returns: Reported gross Q3 returns included 3.6% for alternative credit, 3.3% for U.S. senior direct lending, 2.2% for European direct lending and 5.0% for APAC credit. Ares said 83% of Credit Group debt assets were floating rate.
- Credit fundamentals: U.S. and European direct-lending interest coverage stood at 2.1x and 2.3x, respectively; U.S. direct-lending nonaccruals improved to 1.8% from 1.9% in Q2. Management described loan-to-value ratios as near historic lows and cited portfolio-company EBITDA growth of 8%–9%.
- Mixed non-credit returns: Infrastructure equity returned 3.7% gross in Q3, while private-equity secondaries returned negative 1.2% and corporate private equity negative 0.8%. Ares noted the secondaries composite is affected by a legacy fund; its first fund invested on the Ares platform had a 24% since-inception gross IRR.
ARCC transaction
- MFIC merger: On October 26, ARCC agreed to acquire MidCap Financial Investment Corporation in a stock-and-cash transaction with an approximate $2.6 billion enterprise value. Ares said a subsidiary will provide the cash portion; closing is expected in the first half of 2027, subject to customary conditions and MFIC stockholder approval.
