Carlyle Group Inc Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Bill Katz - Cowen and Company LLC - Analyst : Great. Thank you very much for taking the question this morning and congratulations to everyone with the promotion. Wonderful to see. Just maybe pick up, John, where you left off on the guidance. Great to see the increase for sure. I was wondering maybe a two-part question, maybe part-one for you and maybe part two for Harvey. For you, wondering maybe unpack maybe the driver the step-up of the FRE growth, how much of that is more second half versus sort of strong first half? And then where do you see the incremental growth on sales? And then for Harvey, I know we've been speaking about this a little bit. I know your peers are laying out sort of five-year targets. It doesn't seem like you want to do that, but it seems like you might be receptive to looking out a little more intermediate term. I'm wondering if you can maybe frame out how we should be practically, sort of initially thinking through 2026 opportunity to grow the business? Thanks.

Question: Bill Katz - Cowen and Company LLC - Analyst : Yes, and thank you for the great results, great birthday present.

Question: Bill Katz - Cowen and Company LLC - Analyst : Thank you.

Question: Alexander Blostein - Goldman Sachs Group Inc - Analyst : Great. Good morning, everybody. Hello. I wanted to maybe click into another area of sort of strategic priorities for the firm, which has been around Credit. Really nice results this quarter, even when you back out the catchup fees. Maybe talk a little bit about how you view the credit business over the next couple of years? Specifically related to asset-backed finance, investment grade, private credit, the capabilities you have there. And how you expect that business to grow, not so much for the back out, but if you think about it on a multiyear basis?

Question: Alexander Blostein - Goldman Sachs Group Inc - Analyst : Great. Thank you.

Question: Benjamin Budish - Barclays Services Corp - Analyst : Hi. Good morning and thanks for taking the question. Just curious if you could talk a little bit more about the near-term outlook AlpInvest and the overall Solutions business. It seems like the secondaries vehicle fundraising is going really, really well. Curious how much more there is to go there? CAPM is in the market, you've got a new secondaries vehicle launching a little bit later. I know in the past, there's been a little more of a kind of cadence of big fundraisers for co-investment. Secondaries and then kind of gaps in between, but it seems like that's starting to fill out a little bit more. So just curious if you could -- I know you mentioned earlier, you're not necessarily looking yet to give kind of longer-term targets. But how should we think about that one? Can the FRE potentially double again with the same speed as it has in the past? And how should we be thinking about that kind of medium-term trajectory there, given all those moving parts? Thank you.

Question: Benjamin Budish - Barclays Services Corp - Analyst : All right. Thank you very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 12:30PM, CG.OQ - Q2 2025 Carlyle Group Inc Earnings Call

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : Thanks. Good morning, everyone. And first off, congrats on all the momentum. So John, you've been CFO for about two years now. I'm assuming you've had a little bit of a different view and look at the entire business just in this position. So as you transition back to global private equity, is there an opportunity to collaborate more and leverage the broader Carlyle ecosystem to drive better outcomes in that business? And really, what are your top priorities going to be once you're back in that role? And ultimately, how do you permanently accelerate growth in that segment longer term?

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : Great. Thanks, guys.

Question: Patrick Davitt - Bernstein Autonomous LLP - Analyst : Hey. Good morning, eveyrone. You get the strong flagship marks, obviously, returning a lot more capital. But the net IRR of CP7 still kind of stuck at that 8%. So how should we think about the tipping point where you would feel more comfortable taking cash carry on incremental realizations from that fund? And I know you don't give specific like realization numbers, but you mentioned the $1 billion in 3Q already. As you look at that, I think about what could be sold before year-end, how are you feeling about the tenor of realized performance fees and 2H versus 1H, or does the CP7 issue and/or lead times make this more of a 2026 story now? Thank you.

Question: Brian Bedell - Deutsche Bank AG - Analyst : Great. Thanks for taking the question and congrats on the promotions as well. Maybe just going back to Capital Markets fees. Obviously, this has been a great growth build on a strategic perspective -- on a strategic level, sorry. I'm counting like seven quarters of year-over-year -- straight REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 12:30PM, CG.OQ - Q2 2025 Carlyle Group Inc Earnings Call quarters of year-over-year growth. So maybe if you could just comment, given the capital markets backdrop coming into the second half, whether you think the second half can exceed the first half in terms of capital markets fees? And then a little bit on the longer-term strategy coming into '26 in terms of what are the sort of the key organic growth drivers you see in the capital markets business in terms of what you're building relative to just simply the macro environment.

Question: Brian Bedell - Deutsche Bank AG - Analyst : Great color. Thank you.

Question: Kenneth Worthington - JPMorgan Chase & Co - Analyst : Hi, good morning. Just digging into Wealth. Your Wealth products are really ramping nicely. We're seeing flows get better each quarter, great success in CAPM and CTAC and you got new funds coming -- just remind us, can you flesh out the path forward on next steps? What's the ongoing vision here?

Question: Kenneth Worthington - JPMorgan Chase & Co - Analyst : Thanks.

Question: Michael Cyprys - Morgan Stanley - Analyst : Hey, good morning. Thanks for taking the question. Just wanted to follow up on the success in the private wealth channel with the success with CAPM, CTAC and the new private equity evergreen product to come in the second half. So just curious how you're thinking about leveraging the success across even broader suite of products over time in the private wealth channel? So curious how you're thinking about product development, scope for partnerships to maybe create hybrid public-private products, scope for accessing the 401(k) channel. Just curious how you're thinking about this, how you're approaching this? And what might be what might we see from Carlyle over the next several years?

Question: Kyle Voigt - Keefe Bruyette & Woods Inc - Analyst : Hey. Good morning, everyone. Just on GPE, earlier this year, you mentioned the rate of decline for 2025 management fees would be meaningfully below the 7% you posted in 2024. And it seems like you're well on track to deliver that. I just wanted to get your updated thoughts on the progression of management fees for GPE and whether you think we could be at an inflection point here in terms of getting back to year-on-year management fee growth in 2026? And Harvey, there's been a lot of change in the macro environment just over the past year -- or the past quarter. When you're out speaking with LPs, how do you think receptivity is right now for potentially allocating to US buyout? And has the tone changed at all there recently and obviously asking just in light of you getting ready to launch CP9 fundraising?