Blackstone Inc.

Thank you for standing by. You're on hold for the Blackstone first quarter 2026 investor call. At this time, we're gathering additional participants and should be underway shortly. We appreciate your patience and ask that you continue to hold. Good day and welcome to the Blackstone first quarter 2026 investor call. Today's conference 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 call over to Weston Tucker, head of shareholder relations. Please go ahead.

Great. Thank you, Katie, and good morning, and welcome to Blackstone's first quarter conference call. Joining today are Steve Schwarzman, Chairman and CEO, 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 10Q report in a few weeks. 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 discussion of some of the factors that could affect results, please see the risk factor section of our 10-K. We'll also refer to non-GAAP measures, and you'll find reconciliations and press releases on the shareholders page of our website. Also note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase in interest in any Blackstone fund. This audio cast is copyrighted material of Blackstone and may not be duplicated without consent. Quickly on results, we reported GAAP net income for the quarter of $1.3 billion. Distributable earnings were $1.8 billion, or $1.36 per common share, and we declared a dividend of $1.16 per share, which will be paid to holders of record as of May 4th. With that, I'll turn the call over to Steve.

Good morning, and thank you for joining our call. Blackstone reported outstanding results in the first quarter. Distributable earnings increased 25% year over year, to $1.8 billion, as Weston mentioned, underpinned by 23% growth in fee-related earnings and a 26% increase in net realizations. Inflows reached $69 billion in the first quarter and nearly $250 billion over the last 12 months, reflecting broad-based strength across our fundraising channels. Total assets under management grew 12% year over year to a new record level of more than $1.3 trillion. Most importantly, nearly all of our flagship strategies reported positive appreciation in the quarter compared to declines in major equity and credit indices led by exceptional strength in infrastructure. We achieved these results amid a volatile market backdrop, which was impacted by geopolitical turbulence, including the war in Iran and AI disruption fears. We've also been navigating an intensely negative campaign against the private credit sector, despite the strong long-term returns generated in this area, resilient fund structures, and continued healthy demand from institutional investors and insurance companies. First, with respect to the market backdrop, since 2020 alone, we've experienced five market moving events around this same time of year. The COVID shutdown in 2020, the Ukraine invasion in 2022, the regional banking crisis in 2023, the tariff announcements in 2025, and now the conflict in the Middle East, which triggered the largest quarterly increase in oil prices in over 35 years. In each of these prior events, having patience was the key. When the world ultimately normalized, Risk appetite returned and investors refocused on fundamentals. To that end, what we see through the lens of our extensive global portfolio is an economy that has been highly resilient through the macro shocks of the past several years. The AI revolution, an extraordinary level of investment taking place in data centers, equipment, chips, Energy infrastructure and other related areas continues to power economic growth, and we see no signs of that engine slowing down. At Blackstone, we began thinking about the transformative potential of AI many years ago. I personally became active in the field in 2015, spending time with key industry figures that would define the AI revolution. Today, we believe Blackstone has become the largest investor in AI-related infrastructure in the world. And we have a front row seat to the remarkable advancements underway in this ecosystem. In 2021, well before ChatGPT arrived, we privatized QTS, which would become the cornerstone of our data center strategy. Our total portfolio now consists of over $150 billion of data centers globally, including facilities under construction, and it continues to grow rapidly with an additional $160 billion in prospective pipeline development. In addition to developing data centers, two weeks ago, we filed to launch a new public company that will acquire stabilized, newly constructed data centers, leveraging our deep expertise in this area. We've also become one of the largest investors in the modernization and growth of the U.S. electric grid, given the rising demand for energy, including to power data centers. Specifically, we are the most active private investor in the utility sector over the past several years. Our portfolio also includes the longest cross-country network of natural gas pipelines in the U.S., with this resource expected to account for approximately half of data center power generation within the next five years. Additionally, We are major providers of private credit to energy companies. Alongside our expansive platforms in digital and energy infrastructure, we've also invested in several of the leading innovators driving the AI revolution itself, such as Anthropic and OpenAI, primarily through our wealth platform. In addition to these winning areas, we expect AI to catalyze new opportunities across other Blackstone business lines, such as life sciences, where we believe AI will accelerate advancements in biomedical research. At the same time, the firm has significant exposure to physical assets, which we believe are well insulated from disruption and benefit from their own positive tailwinds, including logistics, residential real estate, transportation and communications infrastructure, and many forms of asset-based credit. We also own fast-growing franchise businesses that are effectively royalty streams on physical assets, alongside a significant portfolio in the healthcare and industrial sectors. Overall, we believe Blackstone is extraordinarily well-positioned for an AI-enabled future. Of course, some sectors and companies will see disruption. Software in particular has come into focus as an at-risk area, and we expect the range of outcomes here. The sector will have to adapt to AI, and there will be winners and losers, with mission-critical platforms likely to be more resilient. As technology modes narrow, advantages will increasingly come from proprietary data, deep workflow knowledge, customer trust, being embedded as systems of record, and the speed and strength of execution. At Blackstone, we will continue to drive preparations in our own portfolio to help our companies address and incorporate these innovations. Turning to private credit, where it's worthwhile to separate fact from fiction. External assertions have ranged from the sector posing systemic risk to the prospect of significant losses of investor capital. These assertions and their dissemination have negatively impacted capital flows in the wealth channel to private credit strategies. including to our flagship vehicle in the space, B-CRED. Despite the external noise, our institutional and insurance clients, who represent 75% of our credit platform AUM, have continued to commit large-scale capital to the asset class. Of note, BDCs and credit interval funds with redemption features represent less than 10% of the U.S. noninvestment-grade credit markets. Meanwhile, the Treasury Secretary, leaders of the Federal Reserve, and the SEC, and the heads of numerous financial institutions have now acknowledged they do not see systemic risk from private credit. The key question is whether private credit is a good product for investors And can it continue to deliver premium to liquid credit over time? At Blackstone, we've generated 9.4% net returns annually in our non-investment grade private credit strategies since inception nearly 20 years ago, roughly double the return of the leveraged loan market. This track record crosses market and economic cycles periods of high and low interest rates, and multiple credit default cycles. We believe we're moving toward a period of lower base rates once we work through the impact of the Iran war. And we also expect defaults to move higher from historic lows, as we've stated previously. But we've designed our funds with these cycles in mind, with low fund leverage, high current income generation, and the equivalent of meaningful reserves for future potential losses. We remain highly confident in our ability to continue to achieve a premium return to liquid markets over time. Meanwhile, our overall credit platform is expanding significantly, including to the investment-grade private credit area, which John will discuss further. Performance and innovation have been the foundation of the outstanding results we've achieved in credit, as with every business at Blackstone. We believe we'll continue to drive our growth in credit going forward. In closing, the firm remains laser-focused on delivering for our investors in these dynamic markets. We've established leading businesses across virtually every part of the alternatives industry with over 90 distinct investment strategies, providing a unique platform for future growth and profitability. Our people are more innovative than ever, and we are relentlessly pursuing new markets and asset classes. We remain steadfast in our mission to be the best in the world at whatever we do, and we have no intention of slowing down.