Apollo Global Management (APO) Q3 2026 earnings review
Apollo's fee earnings hit a record, but Athene's profit falls
Apollo's fee business keeps setting records while its retirement insurer Athene earns less on the money it manages. Fee-related earnings rose 23% to $802 million, a new high. Chief executive Marc Rowan pointed to a record in originated assets, but Athene's profit slipped 3% as the cost of its policies outpaced investment income.
| Fee-related earnings | $802M +23% from a year ago |
|---|---|
| Spread-related earnings (Athene) | $844M −3% from a year ago; +7% excluding one-offs |
| Athene net spread | 1.06% 1.24% a year ago |
| Full-year targets | Not updated by our math, Q4 spread earnings must rise 49% from Q3 to meet the 10% target |
⚖️ Verdict: 🔴 Bearish
The story got worse because Athene moved further from the targets management set in August. Its net spread, the gap between investment earnings and what it pays savers, fell to 1.06%. By our math, fourth-quarter spread earnings must rise 49% from this quarter to meet the full-year target. The good news: fee earnings beat what the fee target implied, so that leg of the plan is ahead.
The question now is whether management keeps or resets its 10% spread-earnings target. Either new-business pricing and the alternatives portfolio lift the spread in the fourth quarter, or Apollo lowers the target and the 2029 plan with it. February's fourth-quarter results will tell.
🐂 Bull Case
Fee Earnings Rose 23% on Lower Overhead
Fee-related earnings are Apollo's profit from managing other people's money, before any share of fund exits. They are the steadier of its two earnings streams, and the one its long-term growth plan leans on most.
The asset manager earned a record $802 million, up 23% from a year ago. Fee revenue grew 20%, and overhead rose more slowly. The margin therefore widened to 58.4% from 56.8%, because the cost of running the business took a smaller share of each fee dollar.
- Non-compensation expenses: 15.4% of fee revenue, down from 16.7% a year ago
- Fee-related compensation: 26.2% of fee revenue, down from 26.5%
- Capital solutions fees: $290 million, 21% of fee revenue
- Fee-related performance fees: $67 million, down 8%
The result also came in above what the full-year fee target implied for this quarter, about $761 million by our math. That says the target was set with room to spare; it does not say growth is speeding up. Growth slowed from 25% last quarter to 23%, because the Bridge acquisition no longer lifts the comparison.
What to watch: fourth-quarter fee-related earnings. By our math the full-year floor needs only about $719 million, so a figure near $800 million would keep fee earnings well ahead of the 2029 plan.
Capital Solutions Fees Set a Fourth Straight Record
Apollo Capital Solutions arranges debt and equity for Apollo's funds, their companies and outside borrowers, and earns fees for it. Chief executive Marc Rowan says everything starts with originating assets, and "Origination reached a new high of $114 billion in the quarter".
Capital solutions fees rose 37% to $290 million, "a fourth consecutive quarterly record". The unit handled about 115 transactions, most of them credit deals, so the fees come from many borrowers rather than one.
The record volume has not reached the fee line yet: fees rose 5% from last quarter while origination jumped 54%. Apollo said in August that large financings pay fees over several quarters, so this quarter's deals have yet to pay.
What to watch: fourth-quarter capital solutions fees, when the Broadcom facility begins to pay. A figure well above $300 million would mean record origination turns into recurring fees.
Positives this quarter didn't test
Four parts of the positive case got no new numbers in the results presentation. Each has a date or a disclosure that will test it, and none of them moved this quarter.
- Daily pricing for all credit assets: due October 1; the presentation does not mention it, so the call or the filing will show whether the date held.
- Broadcom facility fees: due to begin this quarter under the August timetable; fourth-quarter capital solutions fees will show the first draw.
- Fund XI: over $12 billion raised by July with fees not yet switched on; the first-half 2027 start date is the reading.
- Regulatory reciprocity on offshore reinsurance: no update in the presentation; a NAIC decision would move the case.
🐻 Bear Case
Athene's Spread Narrowed as Funding Costs Rose
Athene, Apollo's retirement insurer, sells annuities and funding agreements and invests the money. Its profit is the spread between what those investments earn and what it owes savers. Apollo credits a record quarter excluding one-offs to "strong and diversified organic growth trends and higher alternative net investment income".
The reported figures say otherwise. The net spread fell to 1.06% from 1.24% a year ago, because the cost of funds climbed 0.26 percentage points while the earned rate gained only 0.04. Apollo's own bridge blames "Higher cost of funds on new business vs. run-off" and updated actuarial assumptions.
- Net spread: 1.06%, down from 1.14% last quarter
- Cost of funds: 4.05% of assets, up 0.26 points from a year ago
- Spread-related earnings: $844 million, down 3%; up 7% excluding one-offs
- Alternatives return: 9.65%, below the 11% assumption, costing $54 million
This matters because the targets set in August rest on reported figures and an 11% alternatives return. By our math, the fourth quarter needs spread-related earnings of about $1,257 million to deliver the full-year growth target. That is 49% above this quarter, and the alternatives portfolio has now missed its assumption for seven straight quarters.
What to watch: Athene's reported net spread in the fourth quarter, and whether management restates the spread targets in February. A reading below 1.2% again would mean the spread leg of the 2029 plan needs a reset.
Management Fee Growth Slowed Below 20%
Management fees are what Apollo charges each year on the assets it runs, and the most predictable line in its results. They rose 18% to $1,017 million. That is the slowest growth in more than a year by our math, and the first quarter below 20%. Apollo credits "growth at Athora stemming from its acquisition of Pension Insurance Corporation", institutional inflows and Athene.
The slowdown is a base effect, because the Bridge acquisition entered the comparison in September and no longer lifts growth. The PIC assets still do, until next spring. Fee-generating assets grew 28%, faster than fees, because those assets and Athene's loan pools carry low fee rates.
What to watch: management fee growth in the first quarter of 2027, when PIC drops out of the comparison. A rate in the low teens would mean organic fee growth sits well below the fee-earnings plan, leaving capital solutions to carry it.
Realizations Returned, but Employees Took Most
Principal investing is Apollo's share of profits when its funds sell holdings. Last quarter it earned $16 million, and exits had been slow for a year. This quarter realized performance fees jumped to $362 million, from sales of Fund X holdings among others.
Principal investing income still only reached $52 million, because employees took 85% of the realized revenue. A year ago their share was 71%. Apollo calls the payout "incentive based compensation earned from portfolio monetizations and strong business performance".
One quarter of exits does not settle the concern. Net accrued performance fees, the fund profits Apollo has earned but not yet collected, stayed flat at $1,505 million, and the flagship private equity fund lost 2.6% in the quarter.
What to watch: fourth-quarter realized performance fees and the compensation ratio. A ratio back near 70% with sales continuing would mean fund exits reach shareholders again.
Risks this quarter didn't answer
Five standing concerns got only partial numbers or none in the results presentation. Two of them moved in the balance sheet without any comment, and the rest wait for the call or the quarterly filing.
- Wealth channel: redemptions fell to $3.0 billion from $7.3 billion last quarter, but the presentation gives no Global Wealth fundraising figure; the filing's flow tables will.
- Related-party assets at Athene: $48.4 billion at September 30, up from $35.0 billion at year-end; the filing will show what Athene bought and from whom.
- AI and power concentration: no sector breakdown of the $114 billion of origination; the call will.
- Fund VIII: remaining holdings valued at $1.9 billion against $2.2 billion of cost; the filing's escrow ratio is the reading.
- German tax assessments and the Delaware derivative case: no update in the presentation.
👓 Other Themes
A $1.1 Billion GAAP Loss From Interest Rate Marks
Apollo reported a GAAP net loss of $1,057 million, which it says was "driven primarily by unrealized mark-to-market losses on certain investments within the Retirement Services segment resulting from higher interest rates". The paper losses do not touch segment earnings, but they cut stockholders' equity to $15.9 billion from $23.3 billion at year-end as unrealized losses widened.
💲 Other KPIs
Taxes took 21% of segment income, up from 11.6% a year ago and rising in each quarter of 2026 by our math. Segment income rose 8%, but adjusted net income fell 5% because of the higher tax line. The presentation gives no reason for the increase.
Committed capital that will start paying management fees once invested rose to $65 billion from $62 billion last quarter, about 65% of it in credit. Total dry powder held at $82 billion. The pool grew even as origination hit a record, so the backlog of future fees keeps building.
Assets that earn management fees grew 28% from a year ago, down from 40% in the first quarter as the PIC acquisition moves through the base. Net flows added $23.2 billion in the quarter. Growth here runs ahead of fee growth because much of the new money carries low fee rates.
New money fell for a second quarter, to $53 billion from $60 billion, and compares with $82 billion a year ago. Asset management brought in $35 billion and Athene $19 billion. The twelve-month total of $270 billion includes the $65 billion PIC acquisition.
🔮 Guidance
Unchanged. The board declared $0.5625 per share, payable November 30, the third quarter at this level after the 10% increase in the spring. By our math the dividend takes about 44% of fee-related earnings per share, down from 49% a year ago, because fee earnings grew faster than the payout.
❓ Key Questions
Can Athene still reach the 2026 spread targets?
By our math the fourth quarter needs spread-related earnings of about $1,257 million and a net spread near 1.6-1.8% to meet the August targets. Management should say whether the targets stand on a reported basis or only on the 11%-adjusted basis.
Why did taxes on segment earnings jump to 21%?
Taxes and related payables took 21% of segment income against 11.6% a year ago, turning 8% segment growth into a 5% fall in adjusted net income. The presentation gives no cause or run-rate.
Is daily pricing live for all credit assets?
Management committed to daily pricing across the credit book by October 1. The presentation does not mention it, so investors need the status and whether the date slipped.
What did Global Wealth raise, net of redemptions?
Redemptions across all funds fell to $3.0 billion from $7.3 billion, but the presentation gives no wealth fundraising figure. A net number would show whether the retail channel has stabilised.
How much of the record origination went to AI and power?
Origination reached $114 billion with no sector breakdown. The share tied to data-centre and power financing determines how exposed fees and Athene's deployment are to a capital spending slowdown.