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DigitalBridge (DBRG) 1 Nov 24 2024 Q3 Earnings call transcript

AInvestFriday, Nov 1, 2024 9:34 pm ET
2min read

DigitalBridge Group, Inc. recently held its third quarter 2024 earnings call, providing insights into the company's financial performance, fundraising activities, and strategic initiatives. The call, led by CEO Marc Ganzi and CFO Tom Mayrhofer, highlighted a period of significant growth and strategic shifts, underscoring the company's commitment to capital formation and its position as a leading player in the digital infrastructure ecosystem.

Financial Performance and Capital Formation

DigitalBridge reported a strong financial performance, with fee revenues up 16% and fee-related earnings (FRE) up 42% year-on-year. The company's fee-earning equity under management (FEAUM) stood at $34 billion, a significant increase from the previous year. This growth is largely attributed to the company's successful capital formation efforts, with $6.1 billion raised year-to-date, positioning DigitalBridge to exceed its $7 billion target.

This capital formation has been driven by a surge in investor interest in digital infrastructure, with DigitalBridge's approach to raising capital globally across different investment solutions setting it apart. The company's focus on co-investments and funds that charge fees on invested capital, rather than committed capital, has contributed to the timing and composition of its capital formation, impacting its in-period FRE for 2024. However, this approach is expected to generate significant reoccurring fees in future periods, accelerating FRE growth.

Strategic Initiatives and Outlook

DigitalBridge's strategic initiatives include expanding its presence in data centers and towers, with notable deals such as the acquisition of Yonder, a global hyperscale data center platform, and the establishment of J-Tower, the largest independent tower company in Japan. These moves demonstrate the company's commitment to capital deployment in high-growth areas of the digital infrastructure market.

Looking ahead, DigitalBridge is optimistic about its prospects, with a focus on maintaining a strong balance sheet and liquidity position while continuing to evaluate accretive acquisitions of adjacent asset managers. The company's long-term priorities include doubling its FEAUM in the next 5 years and expanding margins from the 30s to the mid-40s.

Market Trends and Investor Sentiment

The earnings call also provided valuable insights into market trends and investor sentiment. The company's success in raising capital, particularly in the face of a challenging macroeconomic environment, underscores the growing demand for digital infrastructure and the confidence of investors in DigitalBridge's ability to capitalize on this trend. The company's approach to co-investments and strategic partnerships has been well-received, with investors showing strong interest in these opportunities.

Conclusion

DigitalBridge's third quarter 2024 earnings call painted a picture of a company well-positioned for future growth, with a robust pipeline of opportunities in the digital infrastructure sector. The company's strategic focus on capital formation and investment in high-growth areas, coupled with its strong financial performance, positions DigitalBridge as a key player in the digital infrastructure ecosystem. As the company continues to execute its strategic initiatives and capitalize on market trends, it remains poised for continued success.

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