Carlyle Group Inc. (CG) Earnings & Analysis

Latest quarter

Carlyle reported Q2 revenue of $1.1 billion, above the $908.7 million consensus, and adjusted earnings of $1.07 per share, above the $0.88 consensus. Revenue fell from $1.6 billion a year earlier, while diluted earnings per share declined to $0.37 from $0.87.

The filing said incentive fees increased from a year earlier, primarily because of catch-up fees from restructured arrangements. It also described lower fund management fees in part of the business, driven by investment exits and fee step-downs, alongside higher advisory and transaction fees associated with completed deals.

Carlyle’s operating margin narrowed to 22.0% from 25.0% a year earlier. The filing said compensation and benefits expense declined, primarily because lower performance allocations reduced associated compensation, partly offset by higher equity-based and cash compensation. Free cash flow was −$32.5 million, compared with −$186.3 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

The available earnings call covered Q1, rather than Carlyle’s latest reported quarter. CEO Harvey Schwartz said geopolitical uncertainty was influencing investment decisions, while demand for private capital continued to grow. He pointed to opportunities linked to national security, energy security and economic growth.

Schwartz described an investment solution that secured a $5 billion commitment for Carlyle’s next U.S. buyout fund. He said it combined access to the fund with a tailored liquidity solution, drawing on Carlyle AlpInvest’s portfolio finance and secondaries capabilities. He added that fundraising for the fund had not yet launched.

CFO Justin Plouffe said management fees had grown with Carlyle AlpInvest and Global Credit, and that he expected fee growth to accelerate over the following two years. He also expected transaction fees to increase in Q2 as signed or closed transactions were completed.

In the question-and-answer session, Plouffe said the timing of AlpInvest’s carry, or performance-related earnings, was “a little bit more difficult to predict.” He expected transactions in other funds to generate realized carry over the following quarters, but was hesitant to specify timing or amounts because of pricing and market conditions.

Asked about fundraising, Plouffe said Carlyle was beginning a fundraising cycle across AlpInvest, private equity and credit and expected the pace to accelerate. On CTAC, Schwartz said redemptions might persist for a while, although he viewed the credit fund’s longer-term trajectory favorably.

Schwartz also said Carlyle was investing heavily in data science and AI, including assessing opportunities and disruption at the point of investment. He said portfolio-company CEO engagement was high, but expected the broader process to take longer than some might anticipate.

Guidance

On the Q1 call, CFO Justin Plouffe reaffirmed Carlyle’s previously stated goals for fee-related earnings and distributable earnings by the end of 2028. He also expected net realized performance revenue to increase in FY2026.