Blue Owl 2025 Q1 Earnings Misses Targets as Net Income Declines 67.3%

Blue Owl (OWL) reported its fiscal 2025 Q1 earnings on May 01st, 2025. The results fell short of Wall Street expectations, marking a significant downturn in net income compared to the previous year. Analysts had anticipated stronger performance, particularly in earnings per share (EPS), which also missed expectations. Guidance for the remainder of the fiscal year remains in line with previous projections, despite the disappointing results. The company remains committed to leveraging its permanent capital model to navigate ongoing market challenges.

Revenue
The total revenue for Blue Owl in fiscal 2025 Q1 saw a notable increase of 33.1%, reaching $683.49 million from the $513.34 million reported in Q1 of 2024. Management fees netted $604.19 million, showcasing substantial growth in this segment. Administrative, transaction, and other fees contributed $72.99 million, while performance revenues added a modest $6.31 million to the overall results. The robust revenue increase underlines Blue Owl's effective capital deployment strategies and its diversified revenue streams.

Earnings/Net Income
Blue Owl's EPS sharply declined by 80.0% to $0.01 in 2025 Q1 from $0.05 in the same quarter last year. Net income experienced a significant drop, falling 67.3% to $36.67 million from $112.01 million year-over-year. This downturn suggests challenges in maintaining profit margins despite revenue growth, reflecting a concerning earnings performance.

Post Earnings Price Action Review
The analysis of Blue Owl's earnings reports indicates a positive correlation between earnings beats and subsequent stock price appreciation. Historically, revenue surprises have led to short-term stock performance improvements, with a 61.11% win rate over three days. Net income beats show similar trends, with a 55.56% win rate over the same period. Likewise, EPS surpassing expectations often results in stock gains. Despite recent underperformance, past instances have seen returns as high as 14.13% over 30 days, suggesting potential for recovery if future earnings exceed expectations. Investors may find value in monitoring these metrics for signs of stock volatility and potential growth.

CEO Commentary
Marc Lipschultz, Co-Chief Executive Officer, highlighted Blue Owl's resilience amid economic challenges, pointing to a record quarter of fundraising and growth drivers. He emphasized the strength of their diversified capital sources and permanent capital model, offering downside protection and income generation. Lipschultz expressed confidence in their products' ability to provide certainty and comfort in volatile markets.

Guidance
Blue Owl anticipates continued growth in FRE per share, projecting roughly 20% growth over the next five years. Management fee revenue is poised for a boost, with over $23 billion of AUM expected to start paying fees, potentially generating $290 million in additional revenue. The company forecasts strong fundraising, particularly in the institutional sector, as they prepare for flagship fund launches later in 2025. FRE margin guidance remains at 57% to 58%.

Additional News
Blue Owl Technology Finance Corp. completed its merger with Blue Owl Technology Finance Corp. II, creating the largest software-focused BDC with over $12 billion in assets. In another strategic move, Blue Owl hired Robert Campkin as Managing Director for their European Net Lease Strategy, enhancing their presence in the European real estate market. Additionally, Blue Owl declared a quarterly dividend of $0.225 per Class A Share, highlighting its commitment to returning value to shareholders amidst market challenges.