Blackstone Inc.

good day and welcome to the blackstone fourth quarter and full year 2025 investor call today's call is being recorded at this time all participants are in a listen only mode if you require operator assistance please press star zero if you would like to ask a question please signal by pressing star one if you're using a speakerphone please make sure your mute function is turned off to allow your signal to reach our equipment at this time i'd like to turn the conference over

John Gray, President and Chief Operating Officer, and Michael Che, Vice Chairman and Chief Financial Officer. Earlier this morning, we issued a press release and slide presentation, which are available on our website. We expect to file our 10-K report later next month. I'd like to remind you that today's call may include forward-looking statements which are uncertain and may differ from actual results materially. We do not undertake any duty to update these statements. For a discussion of some of the factors that could affect results, please see the risk factors section of our 10-K. We'll also refer to non-GAAP measures, and you'll find reconciliations in the press release on the shareholders page of our website. Also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any Blackstone fund. This audio cast is copyrighted material of Blackstone and may not be duplicated without consent. Just quickly on results. We reported GAAP net income for the quarter of $2 billion. Distributable earnings were $2.2 billion, or $1.75 per common share, and we declared a dividend of $1.49 per share, which we paid to holders of record as of February 9th. With that, I'll now turn the call over to Steve.

Good morning, and thank you for joining our call. Blackstone just reported the best results in our 40-year history. With distributable earnings of $1.75 a share, as Weston mentioned, This capped a record year for the firm, in which DE increased 20% to $5.57 per share, or $7.1 billion. Powered by strong growth in fee-related earnings and a significant acceleration in net realizations, inflows reached a stunning $71 billion just in the fourth quarter, the highest level in three and a half years, and approximately $240 billion for the full year, reflecting robust momentum across the institutional, private wealth, and insurance channels. Of particular note, our fundraising in private wealth increased 53% year-over-year in 2025, to $43 billion. And we expect strong inflows again in 2026, given our performance and continuous innovation. According to recent analyst research, Blackstone has an estimated 50% share of all private wealth revenue across the major alternative firms. In total, the firm's fundraising success lifted assets under management 13 percent year over year to a new industry record of nearly $1.3 trillion. Most importantly, we generated outstanding investment performance overall for our limited partners again in 2025, highlighted by notable strength in infrastructure, corporate private equity, our multi-asset investing business, BXMN. We achieved these results amid the turbulent year for markets, which was impacted by tariff uncertainty, geopolitical instability, and the longest government shutdown in U.S. history. Federal Reserve officials likened this backdrop to driving in a fog. For Blackstone, a key advantage of our leading scale with a portfolio spanning more than 270 companies, nearly 13,000 assets in real estate, and one of the largest credit platforms is the expansive array of proprietary data it produces. This data provides deep insight into what's happening in the global economy, helping us see through the fog and chart the path forward. What we saw in the data was a fundamentally strong economy, underpinned by the ongoing technology and AI-driven investment boom. We were also encouraged by what we were seeing on the ground in terms of moderating inflation in the context of limited input and labor cost growth at our companies, as well as our real-time understanding of shelter costs, given our unique position in real estate. We shared these perspectives with you throughout the year, which did not always align with the consensus viewpoint. Today, there continues to be a range of geopolitical uncertainties that are impacting markets, but we remain anchored by the strong operating and capital market fundamentals we see through our portfolio. Our views on the economy and inflation have informed our investment approach, They also led to our conviction that the deal cycle would accelerate, including a resurgence in capital markets activity. First, in terms of our investments, our data gave us the confidence to lean into key thematic areas such as digital infrastructure, including data centers, power, and electrification, private credit, life sciences, and from a regional perspective, India and Japan. These areas have been among the largest drivers of appreciation in our funds. We also took advantage of volatility in markets to sign or close eight privatizations during the year in private equity and real estate, including in the fourth quarter, medical technology company Hologic for $18 billion. And in credit, we saw record deployment in 2025, including the emergence of an important new source of direct origination, customized long duration capital solutions for investment grade corporates. We've executed multiple of these to date and we expect to do more over time. In total, we invested $138 billion across the firm in 2025, the highest level in four years, planting the seeds of future value. Stepping back, the historic pace of investment taking place in the US to facilitate the development of artificial intelligence, including the design and manufacture of semiconductors, data center construction, and the expansion of power generation is the key driver of economic growth today and is creating an enormous need for capital solutions. The U.S. has long occupied a unique position in the world in terms of its innovation and economic leadership, and the investment meta-cycle underway in AI and power and the expected future boost in AI-related productivity should propel U.S. economic growth for years to come. Blackstone is extremely well positioned to benefit against this backdrop, given our scale and expertise in these areas, including our ownership of the world's largest data center platform, as well as our position as a major investor in the modernization and growth of the U.S. electric grid. Turning to the acceleration in the deal cycle and capital market activity, we regularly spoke about this dynamic last year, and we're now seeing it start to materialize. IPO and M&A activity are accelerating. Deal sizes are increasing, and sponsor activity is picking up. In the fourth quarter, global IPO issuance rose 40% year over year. including a two and a half fold increase in the United States, notwithstanding the government shutdown. Blackstone was a major contributor with the $7.2 billion IPO of medical supply company Medline, the largest IPO since 2021, and the largest sponsor-backed IPO in history. The offering was extremely well received with shares trading up over 40% on the first day. Medline is a perfect illustration of the power of Blackstone's private equity model at work and our ability to generate attractive returns on large scale control deals across vintages. This 2021 transaction represented the largest healthcare buyout in history, which we completed in partnership with the company's founding family, key limited partners, and two other financial sponsors. During our ownership, we accelerated the company's growth, implemented multiple initiatives to drive value, and executed accretive acquisitions to expand the company's product suite and end markets. Today, Medline is a category-leading public company that is exceptionally well positioned for continued success. Medline was Blackstone's fourth IPO globally since last summer, and our momentum continues to build. We have one of the largest IPO pipelines in our history. reflecting a diverse mix of sectors and geographies. Looking forward, the structural tailwinds driving the alternative sector, and in particular Blackstone, are accelerating. More investors are discovering the benefits of private market solutions, including in the vast private wealth and insurance channels. At the same time, we continue to deepen our relationship with institutional limited partners across multiple areas. These tailwinds, alongside the cyclical recovery underway in transaction activity, are a powerful combination for our firm and our shareholders. In closing, I couldn't have more confidence in the firm and our prospects for continued growth our business performed exceptionally well through the high cost of capital backdrop of the past several years. And we believe we're now moving into a more supportive environment with a portfolio concentrated in compelling sectors and nearly $200 billion of dry powder to take advantage