KKR & Co. Inc.

Ladies and gentlemen, thank you for standing by. Welcome to KKR's second quarter 2026 earnings conference call. During today's presentation, all parties will be in the listen-only mode. Following management's prepared remarks, the conference will be open for questions. At that time, if you'd like to ask a question, please press star 1 on your telephone keypad. I will now hand the call over to your host, Craig Larson. Partner and Head of Investor Relations for KKR. Craig, please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to our second quarter 2026 earnings call. This morning, as usual, I'm joined by Rob Lewin, our Chief Financial Officer, and Scott Nuttall, 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 gap figures in our press release which is available on the Investor Center section at KKR.com. And as a reminder, we report our segment numbers on an adjusted share basis. This call will contain forward-looking statements which do not guarantee future events or performance. Please refer to our earnings release and our SEC filings for cautionary factors about these statements. Rob's going to begin by reviewing our key growth drivers as a firm and how those are impacting our results. And afterwards, I'll review our Q2 results in more detail. And so with that, I'd like to hand the call over to Rob.

Great. Thanks a lot, Craig. And thank you, everyone, for joining our call this morning. We've been in an environment with a lot of volatility and noise around our space. So I wanted to take a step back today and go through how we are seeing things. As a firm, We feel better positioned than ever to drive differentiated earnings growth. Our confidence here comes from four key secular and structural growth drivers. What is particularly encouraging, and what I will walk you through in the second part of my remarks, is that we continue to see these drivers play out in our operating results as well as our financial performance. But let me first start by laying out our framework. We are fortunate to operate in high growth industries with multiple megatrends. The alternative asset management industry has been growing at a healthy rate, and we expect that to continue well into the future. We are in the midst of a global capex cycle, AI, digital and energy infrastructure, defense, industrial, so massive needs here for capital on a global basis, which makes our industry increasingly relevant. From a geographic perspective, we continue to see significant opportunity in Asia. The Asia-Pac region today is one of the most dynamic parts of the world and represents roughly 60% of the expected global GDP growth. It is the area where alternatives are the least penetrated relative to the US and Europe, creating an enormous opportunity across private equity, infrastructure, real estate, private credit, and insurance. Simultaneously, we are experiencing significant demographic shifts with an aging population that is in need of retirement solutions. The number of people aged 65 and up around the world is expected to roughly double between now and 2050, and more individuals are investing for their own retirement. We are well positioned against that backdrop with multiple identifiable growth avenues across our platform. Just to take you through a few of them. We have one of the largest infrastructure platforms in the world at approximately $120 billion of AUM. We are benefiting from that demographic shift and need for retirement solutions in both our insurance and our wealth businesses. In GA, we see significant opportunity to grow both in the US and internationally. We have a differentiated presence and track record in Asia. We are the largest private equity player, we are the largest infrastructure player, we have rapidly growing real estate and credit businesses, and we see a huge opportunity in insurance. We have built a platform over the past 20 years that cannot be replicated overnight, given our track record, our geographic coverage, our brand, as well as our existing footprint, which includes nine offices and nearly 1,000 people on the ground in the region, over 200 of whom are sitting in Tokyo. And I could really go on here. We have a world-class private equity business that continues to grow rapidly. We have a leading asset-based finance platform. We are seeing increased demand in private investment grade and are incredibly well positioned for that opportunity. And with our acquisition of Arctos, we believe we can scale KKR's solutions to over $100 billion of AUM over time. The third driver is our differentiated business model. We have been very purposeful in building a business model that allows us to meaningfully grow our earnings and share price over the long term. without requiring us to significantly increase our headcount or sacrifice our culture in order to do so. In our asset management business, there is substantial growth in front of us and we have been intentional about creating additional ways to take full advantage of the broader KKR ecosystem over the next 10 to 20 years. That is why we also have an insurance business and strategic holdings. Both of those segments leverage many of the core competencies that we have built up in asset management over the past 50 years, including our investing acumen, our access to differentiated capital, certainly our brand, and our collaborative culture. Which brings me finally to that unique culture and how it could be a real accelerator of growth. We run KKR as one firm with one compensation approach. Relationships travel, ideas travel, lessons learned travel. Our culture creates much of our investing alpha, which is why we have built a business model that allows us to keep the firm small and maintain that competitive advantage. Importantly, KKR employees also own approximately 30% of our shares. For context, the other companies in the S&P 500 have an average of approximately 2% insider ownership. So it's that ownership mentality that fundamentally shapes how we think about capital allocation and long-term value creation. We are incredibly well aligned with our shareholders. Now I will walk you through some examples of how these drivers are showing up in our results. Let me first start with an example of a secular tailwind and how we are positioning ourselves. AI and the need for infrastructure build-out behind it will require trillions of dollars of investment over the coming decade. To date, we have committed and invested over $75 billion across digital infrastructure and power. However, our existing infrastructure funds carry diversification guidelines that limit how much we could dedicate to a single theme relative to the scale of that opportunity. So we formed Helix Digital Infrastructure, which we announced in June. with over $10 billion of initial long-duration committed capital. Helix is an AI infrastructure company that delivers coordinated data center, power, and connectivity to hyperscalers. It is a perpetual open-ended vehicle that adds to our perpetual capital base where KKR will earn management fees and performance fees. Alongside our infrastructure team, Helix is led by Adam Salipsky, who is the former CEO of Amazon Web Services. Adam brings firsthand experience scaling the world's largest cloud business and deep insight into hyperscaler priorities. Navidya and Vistra joined us as important strategic partners and together with Kuwait Investment Authority and KKR as founding investors. Pairing KKR's track record here, and our expertise with the execution capabilities at Helix. We believe that we have unique positioning against what is a megatrend. Turning to our asset management growth avenues and fundraising. The execution here has been tangible. At our April 2024 Investor Day, we set out a three-year, $300 billion fundraising target. That was an ambitious number for us at the time, given our size. Since the beginning of 2024 through June 30th of this year, we have raised $305 billion of capital, with $34 billion coming in in Q2, so beating our three-year target in just two and a half years. In those two and a half years, we have seen significant AUM growth across our platform. Private equity increased approximately 45%. Infrastructure has doubled. Our credit business is up roughly 35%. Asia increased over 35%. Third-party insurance is up over 50%. Wealth increased six times and we are still in the earliest of days. And with the closing this quarter, we now manage approximately $20 billion of capital through Arctos with significant upside in front of us. Alongside investment performance, an important driver of our broad-based fundraising success relates to capital return. A common narrative that investors hear is that our industry isn't returning capital to investors. This is just not accurate from a KKR perspective. We've actually had an acceleration in exit activity. The second quarter was the largest monetization quarter in our history. Let me turn your attention to page 21 of our earnings release. Here, you see some of the activity in just this quarter alone. as well as transactions that we've announced but have not yet closed. Importantly, exits have been diversified across strategies, regions, and exit type and reflect strong returns with multiples ranging from two times to up to 20 times of our invested capital. Our success here speaks to the quality and maturity of our portfolio, the strength of our operational teams, and the collaborative culture that I mentioned earlier. And despite our heightened level of monetization activity over the last three years, the remaining unrealized gains in our portfolio have continued to grow, and today stand at roughly $18 billion. Now, let me address our differentiated business model and some of the impacts that we are seeing in our results. In Q2, our FRE margin was 70%. and it's been over 65% for the last 10 consecutive quarters and we do not view that as a ceiling. The reason for that goes back to our business model. We have no ambition to be all things to all people in asset management. Rather, we want to be great in the areas that we are already present. So if we are successful at executing on our business plan and we have a lot of confidence as a management team that we will be, We are going to continue to grow our revenue at a pace that meaningfully exceeds our headcount and expense growth. We are starting to see that operating leverage flow through our financials, and when we look to future earnings growth, we still have significant latent earnings within our asset management, insurance, and strategic holding segments. Let's go through them. Within asset management first, we have a record amount of capital on which we are not yet earning fees, with $72 billion committed. and that is up almost 30% since this time last year. And it has a weighted average management fee of about 90 basis points that turns on when the capital is either invested or enters its investment period. And second, our average annual performance income eligible deployment over the past five years has more than doubled versus the prior five year period. And it is that more recent deployment that is going to drive future performance related income. So significant visibility into future earnings growth. In insurance, there's embedded growth that hasn't shown up in our P&L, given we report largely based on cash outcomes. As a reminder, we've been focused on elongating GA's liability profile and in turn growing our alternatives portfolio, which we are showing on a cash outcomes basis versus mark to market. Including the impact of mark to market, Insurance Operating Earnings would have been north of $600 million year-to-date. And looking at strategic holdings, our existing portfolio and activity gives us confidence that we could scale strategic holdings operating earnings from $187 million over the LTM period to $1.1 plus billion by 2030. Finally, on our alignment. As we disclosed in our intra-quarter press release in late June, This quarter we made an important structural change to how we report our K-Series private equity vehicle. We are now reporting realized performance fees earned from this vehicle within fee-related performance revenues within our segment earnings, which is subject to a 15% to 20% compensation rate. Historically, these fees were included within realized performance income and were subject to a 70% to 80% compensation rate. We feel this change conforms to current industry practice and enhances comparability for investors. And, given the compensation rate impact, all else equal, this change structurally increases KKR's forward earnings per share and I think further reflects our commitment to alignment. As owners of approximately 30% of KKR stock, we do think like shareholders first. We have tremendous confidence in our forward monetization pipeline and our ability to generate differentiated performance outcomes, which gives us the confidence to make changes like this to enhance long-term earnings per share growth. Putting this all together, multi-decade secular tailwinds, multiple growth avenues across geographies and asset classes, a business model that allows us to compound earnings over a long period of time, and a culture built on alignment and long-term outcomes. We are confident in our ability to drive differentiated earnings growth for many years to come. With that, I'm going to hand the call back over to Craig and he's going to walk you through our record Q2 results in some additional detail.