DigitalBridge Group, Inc.

Welcome to Digital Bridge, fourth quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Severin White. Please begin.

Good morning, everyone, and welcome to the DigitalBridge fourth quarter 2023 earnings conference call. Speaking on the call today from the company is Mark Gansey, our CEO, and Jackie Wu, our CFO. We're also joined by Tom Meroffer, who will be transitioning into the CFO role during the second quarter of this year, as previously announced. I'll quickly cover the safe harbor, and then we can get started. Some of the statements that we make today regarding our business operations and financial performance may be considered forward-looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. All information discussed on this call is as of today, February 20th, 2024, and DigitalBridge doesn't intend and undertakes no duty to update it for future events or circumstances. For more information, please refer to the risk factors discussed in our most recent Form 10-K to be filed with the SEC for the year ending December 31st, 2023. Great. So we're going to start with Mark summarizing the progress we've made on our key priorities in 2023. Jackie will walk us through our new simplified financial results and turn it back over to Mark to lay out our 2024 business plan. With that, I'll turn the call over to Mark Gansey, our CEO. Mark.

Thanks, Severin. Before we look ahead to 2024 in our third section, Executing the Digital Playbook, I'd like to recap 2023 and summarize on how we delivered on our key priorities for the following year. As I like to say, it's the three things that matter. Fundraising, simplification, and performance down at our portfolio companies. And let's put this report in a broader context because, look, at the end of 2023, We have successfully completed a multi-year transformation at DigitalBridge, taking a diversified read across five real estate verticals and refocusing that business exclusively on the digital infrastructure ecosystem, where my team has been successfully investing and operating for over 25 years. Along the way, on this $80 billion transformation, we harvested real value for DigitalBridge shareholders from the sale of legacy assets while continuing to grow. what I believe is the leading global asset management platform focused on digital infrastructure. So let's start with fundraising, where we saw terrific growth in fourth quarter. The combination of new capital formation, contribution from the InfraBridge acquisition, and FIIM activation drove our fee revenues up 59% year over year, and fee-related earnings in our investment management segment up over 64% year over year. This is really industry-leading growth. Much of that growth was fueled by new capital formation, $7.7 billion in new capital formed since January of last year through today, including the closing of over a billion dollars in our inaugural credit strategy, which is a key piece of the multi-strategy asset manager that we are building here today at Digital Ridge. Next up, Simplify. This really was front and center in 2023. deconsolidating our operating segments successfully with DataBank and Vantage SDC, both moving off the books. We got this done. And as a part of that process, monetized a ton of value while simultaneously deleveraging our balance sheet by over $5 billion. That's a huge win-win. We realigned our financial reporting over the course of the year to match our alternative asset manager peer set, including enhancing our returns disclosure, And in fourth quarter, we moved the operating segment to discontinued operations. And I think you'll agree, the simplified financial profile is much easier to follow and to understand for you, the investor. Lastly, my third priority, performance at the portfolio company level. This is always front and center for us in terms of what drives returns, what drives LP interest in partnering with us, and what drives the continued growth of our platform. In 2023, digital infrastructure continue to perform across all of our verticals. And interestingly, we're seeing the early impacts of generative AI demand, particularly across the data center ecosystem. Let's cover these three topics in a little more detail, and then I'll turn it over to Jackie to cover the financials. Next slide, please. So it starts right here. FIEM and AUM are two metrics that I now track vigorously. First, with AUM, we ended the year up just over $80 billion, which represents a 52% growth rate year-over-year. And as you can see here, FIEM, our key revenue and earnings driver, continued its strong growth in Q4 with the activation of our most recent flagship strategy. We're now up over $10 billion, or 47%, year-over-year to $33 billion in FIEM, driven by a combination of organic capital formation and the contribution from the InfraBridge acquisition which we successfully and fully integrated this year into our platform. In fact, we're confident that the InfraBridge platform will provide a good growth vector for us in 2025, amplifying our ability to take advantage of the middle market opportunities across a broader set of digital infrastructure and adjacent industries.