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Carlyle(CG.US) Q2 total revenue increased by 131% YoY, private equity business profit decreased

AInvestMonday, Aug 5, 2024 7:40 am ET
1min read

On Monday, private equity giant Carlyle Group (CG.US) reported its second-quarter 2024 financial results before the market opened. The earnings report showed that Carlyle's total revenue for Q2 was $1.07 billion, up 131% from $462 million in the same period last year. Net income attributable to shareholders of the company's common stock was $148 million, up from a net loss of $98.4 million in the same period last year. Distributable earnings were $343 million, down from $389 million in the same period last year; earnings per share were $0.78, below the market's expectation of $0.83.

Carlyle said that the reason for its weak profitability was a decline in profits from its private equity business, which is the company's largest contributor to distributable earnings and is also its most well-known business. Revenue from fees related to expenses (the holy grail of shareholders), which grew 32% year-over-year to $273 million, beat analyst expectations of $268 million. The fee-related margin (FRE margin) rose to 46%, up from 34% a year ago, and the company's target is for that metric to be 40%-50% in 2024. In addition, Carlyle's managed AUM grew 13% year-over-year to $435 billion.

Investors are watching CEO Harvey Schwartz face challenges in accelerating the company's growth and boosting its stock price. How Schwartz will turn the $425 billion company into a larger "investment supermarket," and whether rate cuts will attract sellers to exit and provide some relief for investors who are exiting are questions investors are asking. Schwartz has asked division heads to carefully review costs and tie pay closer to performance for investment professionals.

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