KKR & Co. Inc.

Ladies and gentlemen, thank you for standing by. Welcome to KKR's fourth quarter 2025 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following management's prepared remarks, the conference will be open for questions. 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. I will now hand the call over to Craig Larson, Partner and Head of Investor Relations for KKR. Craig, please go ahead.

Thank you, Operator. Good morning, everyone. Welcome to our fourth quarter 2025 earnings call. This morning, as usual, I'm joined by Rob Lewin, our Chief Financial Officer, and Scott Null, our Co-Chief Executive Officer. We would like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our press release. which is available on the Investor Center section at KQR.com. And as a reminder, we report our segment numbers on an adjusted share basis. We will refer to forward-looking statements on the call which do not guarantee future events or performance. So please refer to our earnings release and our SEC filings for cautionary factors about these statements. So beginning first with our headline financial metrics. This quarter, we're pleased to be reporting $1.08 of fee-related earnings per share, $1.42 of total operating earnings per share, and $1.12 of adjusted net income per share. The $1.12 figure includes the carried interest repayment obligation we reviewed on our last earnings call, and excluding this, A&I per share for Q4 was $1.30. Management fees in the quarter were $1.1 billion. That's up 24% on a year-over-year basis, and that's driven really by all of our fundraising initiatives as well as the continued deployment across the firm. Excluding catch-up fees in both periods, management fees grew by 22%. And as KTR has grown, our management fee profile has become meaningfully more diversified. Looking at full year 2025, management fees were $4.1 billion. With private equity, real assets, and credit, each contributing approximately one-third of total fees. Total transaction and monitoring fees were $269 million in the quarter. Capital markets fees came in at $225 million, driven by activity across private equity, credit, and infrastructure. And fee-related performance revenues in the quarter were $34 million. Turning to expenses, fee-related compensation was again at the midpoint of our guided range, or 17.5%. And other operating expenses for the quarter came in at $205 million. So in total, fee-related earnings were $972 million, which is up 15% year-over-year. And our FIRE margin was a healthy 68% for the quarter and just over 69% for the full year 2025. Insurance saving operating earnings in Q4 were $268 million. As a reminder, we report the insurance investment portfolio largely based on cash outcomes. So to give you a sense of the embedded profitability here, our insurance operating earnings would have been approximately $100 million higher in Q4 if we'd included the impact of marks on our investments where a significant portion of the return relates to appreciation and not just cash yields, with around 50 of that 100 million coming from a portfolio that was purchased in the quarter that was subsequently marked out. So said another way, if you included what we think of as the more recurring performance in the portfolio, insurance operating earnings would have been approximately 320 million in Q4. And one more point on Global Atlantic. I'd like to turn your attention to page 20 in our earnings release. We introduced and walked through this supplemental page on our last earnings call. As a reminder here, insurance segment operating earnings alone do not capture the impact of Global Atlantic recognizing the economics that show up in our asset management segment. So on this page on the right-hand side, we detail the management fees we receive under our investment management agreement, fees from IV-related vehicles, where we have over $50 billion of AUM that wouldn't exist without GA, as well as GA-related capital markets fees. Taken together, as you see on the page, total insurance economics in 2025 were $1.9 billion net of compensation, and that figure is up 15% for the year. Strategic holdings operating earnings were $44 million in Q4, and on a full-year basis, they've more than doubled compared to 2024. And perhaps more importantly, we continue to track nicely towards our expected $350-plus million of operating earnings looking forward to 2026. So putting that all together, total operating earnings came in at $1.42 per share. And these more durable and recurring earnings drove 85% of our total pre-tax segment earnings, again, looking at the last 12 months. Now moving on to investing earnings within our asset management segment. Realized performance income was $528 million. That excludes the impact of the carried interest repayment obligation. And realized investment income was 27, bringing total monetization activity to north of $550 million. This activity was driven by a combination of public secondary sales and strategic transactions, dividends and interest income, as well as the annual performance fee for Marshall Waste. After interest expense and taxes, adjusted net income was just over a billion for Q4, or the $1.12 per share figure I mentioned a few minutes ago. Turning to investment performance, page 10 of the earnings release details the continued performance we're seeing across asset classes, both in Q4 as well as over 2025. And given our investment performance really over a long period of time, in turn, we're you're seeing record embedded gains across the firm. Now, this is an important point for us. Total embedded gains, so that's gross carry together with the gains that sit on our balance sheet across asset management and strategic holdings, were $19 billion at 1231. That's a record figure for us. And even with the gains that we've been realizing, total embedded gains have continued to scale at a healthy rate. That $19 billion number is up 19% compared to one year ago, and it's up over 50% compared to two years ago. Now let's turn to fundraising, which has continued to be a real bright spot for us. We raised $28 billion of new capital in the quarter, bringing full-year capital raised to $129 billion. That's the highest fundraising year in our 50-year history, and almost double where we were as a firm two years ago. And we're seeing continued demand really across the full breadth of asset classes and regions. Momentum continues to be strong in credit, with a record $68 billion raised across the platform in 2025, driven by our asset-based finance business, as well as our insurance business more broadly. And spending a minute on Global Atlantic's third-party capital fundraising, we held the final close of our IV3 sidecar vehicle in the quarter, bringing total capital raised here to $4.5 billion. And when you combine this with the $2 billion commitment from Japan Post Insurance that we discussed last quarter, we now have approximately $6.5 billion of third-party capital capacity. And for some context, IV2 raised a total of $2.7 billion of third-party capital in 2023. So you've seen a meaningful increase in scale, reinforcing our view that client demand for insurance-related strategies just continues to deepen. And as a reminder here, the Ivey sidecar vehicles pay fee and carry similar to a drawdown credit or private equity fund and also allow us to grow GA in a capital efficient way. And once this $6.5 billion of capital is fully deployed, we would expect it to translate into more than $65 billion of fee-paying AUM over time. Now turning to activity in private equity and real assets. Our North America private equity fund now has over $19 billion of committed capital and we're less than one year since its first close, already eclipsing the prior fund. And our global infrastructure flagship fund now has nearly 16 billion of commitments also on track to be larger than its predecessor. In our view, the momentum and success we've seen despite a more challenging fundraising environment is a real testament to our differentiated investment performance, our focus on linear pacing, as well as the ability to return capital to our investors. And notably, Flagships represented only 14% of our total 2025 fundraising, which speaks also to the breadth and diversity of our business across our fundraising activity. More broadly in infrastructure, we've already raised nearly $4 billion of capital for the latest vintage of our Asia Infrastructure Fund, and we expect this to be larger than its $6 billion predecessor. And looking at another important piece of our capital raising efforts, private wealth. Our K-Series suite of products brought in $4.5 billion in Q4 and over $16 billion in full year 2025, which is nearly two times the amount raised in 2024. AUM across our K-Series vehicles is now over $35 billion. That's including activity that closed January 1st, and that compares to $18 billion a year ago. And also in December, we completed the conversion of an existing vehicle to Kiki, our asset-based finance fund, or KABF. Today, the ABF market is larger than the direct lending, syndicated lending, and high-yield bond markets combined. And the shift in our investment approach here now offers individual investors the opportunity to access this high growth and, in our view, really differentiated asset class. We also continue to feel really excited about our strategic partnership with Capital Group. The two credit products we launched last April are getting on more platforms. We filed an equity product and we're making progress on a target date fund solution as well as public private model portfolios. So putting all of our capital raising together, we've already raised over 240 billion or over 80% of the 300 plus billion fundraising target that we outlined for the 24 through 26 period at our investor day in April of 2024. And then finally, consistent with our historical practice, We intend to increase our annual dividend from 74 to 78 cents per share, which will go into effect alongside a first quarter 26 earnings. This will now be the seventh consecutive year that we increased our dividends since C Corp conversion. And with that, I'm pleased to turn things over to Rob.

Thanks a lot, Craig. And thank you, everyone, for joining our call this morning. We had a strong 2025, and our fourth quarter results, especially our key forward indicators, give us continued confidence as we head into the new year. 2026 is a special year at KKR, as we will be celebrating our 50th anniversary on May 1st. And while we have been in this business for five decades, we still feel like a very young firm, with our three growth engines, asset management, insurance, and strategic holdings, positioning us extremely well over the long term. A critical element of our success is our highly collaborative culture, which allows us to maximize the impact of our business model and to attract and retain best-in-class talent across everything that we do. Our business model and our culture, which both reinforce and perpetuate each other, are what gives us our confidence not only as we look to 2026, but over the next 5 to 10 years and beyond. I'm going to begin today by reviewing some key operating metrics from the quarter. and the very tangible signs of momentum that we are seeing across our businesses. Craig already walked you through our strong capital raising, so I will start with monetizations. We remain very pleased with our overall performance and continue to see the benefits of our focus on linear deployment and disciplined portfolio construction. In 2025, we generated $2.7 billion of gross monetization activity. That is excluding the carried interest repayment obligation that we discussed on our last call. Gross realized carried interest increased approximately 30% year on year, and that growth came on top of what was already a very solid level of monetizations for us in 2024. Even with our healthy momentum of monetizations, our embedded gains currently stand at 18.6 billion, as Craig noted just a moment ago. That is up from 15.6 billion a year ago, or 19%. Our portfolio is in very good shape, and ultimately that is the most important indicator for future monetizations. Turning to deployment, we invested $32 billion of capital in the quarter and $95 billion over the course of 2025. That is up 13% compared to 2024. Our deployment was driven by a number of our key focus areas, including Asia, infrastructure, and asset-based finance. With $118 billion of dry powder, we are incredibly well-positioned to build our portfolio for the future, and if anything, we feel capital constrained by the opportunities that we are seeing across the world today. Asia continues to be one of the most dynamic regions globally for us. Our full-year investment activity in the region was up more than 70% versus 2024. and span traditional private equity, growth equity, infrastructure, and real estate. This reflects both the scale of our local teams and the breadth of opportunity that we are seeing in that part of the world. As a reminder, we have nine offices and approximately a thousand people in Asia, with over 200 employees in Japan, which remains one of our most active investment markets globally. We also invested nearly $15 billion into infrastructure in 2025. That's a record figure for us, with over half of that activity occurring outside of the United States. The need for infrastructure investment remains massive, and this is one of the biggest growth factors that we have as a firm. We've recently invested in a high-quality logistics facility in Korea, a European built-to-suit data center platform, and our first structured alternative transaction for our insurance business out of Europe in the renewable space. We've also continued to lean into the opportunity within credit, deploying $44 billion in total over 2025. That's up 14% compared to 2024. Our ABF business, which today represents $85 billion of AUM, invested $19 billion of capital last year. And finally, I did want to touch on our strategic acquisition of Arctos, which we announced earlier this morning. You would have seen a press release earlier today on Arctos, as well as a presentation on the transaction and all of the opportunities that we see together. I'm not going to page slip through that presentation, but would encourage everyone to review that deck, as it does a great job highlighting the quality of the business we are acquiring and the opportunities that we see together. Arctos is the leading investor in professional sports franchise stakes and a leader in GP solutions with approximately $15 billion of assets under management. We are extremely excited to partner with the Arctos management team and believe that we can build on their leading franchises and create meaningful value together by combining the strengths of our respective organizations. The transaction is valued at $1.4 billion in equity and cash with much of the equity subject to long-term vesting. In addition, there is the potential for up to $550 million of additional long-term vesting equity that is subject to KKR share price and Arctos operating performance targets. We do expect that this transaction will be accretive per share across our key financial metrics immediately post-closing. Critically, we've known Arctos' co-founder Ian Charles for over a decade, He has been one of the leading and most creative minds in the secondary space. And we have direct experience working together on one of the industry's first structured secondary transactions, which helped launch our healthcare and technology growth franchises, businesses that today manage over $17 billion of capital. Upon closing, the acquisition immediately puts us in a leadership position in sports. Arctos is the largest institutional investor in professional sports franchise stakes and is the only firm that has approved for multi-team ownership across all five major U.S. leagues. In addition, Arctos is a top player in GP Solutions, a rapidly growing asset class focused on providing liquidity to alternative asset managers, which we expect will continue to expand. We've been asked quite a bit about the secondary space. including a few times over the years on these calls. I think it's fair to say that we have evaluated most of the secondaries asset managers that have traded over the last decade. For a variety of reasons, we did not pursue any of those opportunities. However, we knew that when we found that right partner, the partner who could give us conviction that we could build a leading secondaries and solutions franchise, that we would be all in. And we are confident that we have found that in Arctos. Ian Charles and his partner, Doc O'Connor, have been leaders in the sports and solutions industries for over two decades. And the combination of the existing Arctos team and their reputation in the market make us incredibly excited about the business that we can build together over the course of the next decade plus. In connection with the acquisition, we will be creating a new investing vertical called KKR Solutions. which will include sports, GP solutions, and future secondary strategies. Over time, we do expect this business to reach 100 plus billion of AUM and be a very meaningful contributor to our P&L. Importantly, as you think about this acquisition, it is highly consistent with the strategic M&A framework that we have previously laid out for our investors and analysts. That includes five things of note. Number one, Access to leadership positions in large addressable markets that would be difficult to build organically. Number two is long-dated capital. The vast majority of Arctos' 15 billion of AUM is long duration in nature with no fixed end date. It is really as close to permanent capital as it gets in the asset manager space. Number three, highly complementary capabilities with a differentiated origination and sourcing engine. that we believe can be valuable across the full KKR ecosystem, in particular, our insurance business. Number four would be the synergy that exists around distribution across both wealth and institutional channels. And number five, most importantly, strong cultural alignment between our two firms. We are thrilled to be welcoming the Arctos team to KKR and are confident in the opportunities ahead. Before handing things over to Scott, I'd like to reiterate the strong momentum that we are seeing across the firm so far in 2026. On our investor day in April of 2024, we introduced 2026 guidance across our key metrics. We are highly confident in our ability to meaningfully exceed our fundraising and FRE per share targets. And as we explained last quarter, Presuming a constructive modernization environment, we also continue to feel confident that we can achieve $7 plus per share of adjusted net income. However, if the environment does deteriorate, we may delay some of our modernization activity. And if that were to happen, we'd be earning less in 2026, but again, that would be in service of more earnings in 2027 and beyond. With record unrealized gains, we continue to feel incredibly well-positioned, for the future. And the good news here is that we will be communicating frequently on modernizations through these quarterly calls and also our inter quarterly monetization press releases so that we can track our progress together and no one will be surprised as we work through the year. And with that, let me turn the call over to Scott.