Global investment firm KKR (KKR -0.46%) reported fourth-quarter and full-year 2024 earnings on Tuesday, Feb 4, that topped analysts' consensus estimates. The firm reported an adjusted earnings per share (EPS) of $1.32, beating the estimate of $1.28. Total revenue came in at $3.26 billion, significantly exceeding expectations of $1.96 billion. This indicates strong revenue growth driven by strategic initiatives and a robust asset management segment.
Overall, this quarter marked a positive financial trajectory for KKR, underscoring its strong market position.
| Metric | Q4 2024 | Analysts' Estimate | Q4 2023 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $1.32 | $1.28 | $1.00 | 32% |
| Adj. revenue | $3.26 billion | $1.96 billion | $4.43 billion | (26.4%) |
| Fee-related earnings | $843 million | N/A | $675 million | 25.% |
| Total operating earnings | $1.1 billion | N/A | $921 million | 19.5% |
Source: KKR. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year.
Business Overview: KKR
KKR is a prominent global investment firm renowned for its diversified asset management operations. Its broad spectrum of investment activities includes private equity, real assets like infrastructure and energy, and credit solutions. A standout feature of the firm is its strong insurance presence, primarily through Global Atlantic. Recently, KKR has concentrated on strategic growth, leveraging diverse investment capabilities across multiple sectors. Key success factors include a robust capital base and an extensive network, which underpin its global reach and expansion endeavors.
KKR focuses on numerous growth trajectories including investments powered by technology advancements. The integration of Global Atlantic, now a wholly-owned subsidiary, has broadened KKR's offerings further into the insurance domain, solidifying its competitive edge. Strong fundraising capabilities and strategic holdings represent crucial pillars to KKR's sustained success.
Quarterly Performance Insights
The quarter marked significant corporate milestones for KKR, most notably in its asset management and insurance divisions. Assets under management rose 15% to $638 billion. The asset management segment benefitted from a 14% increase in management fees, driving fee-related earnings up by 37% to $3.66 billion annually. This increase was supported by strategic capital raises totaling $114 billion for the year and $27 billion in the fourth quarter alone.
KKR's insurance segment showed robust performance, with net investment income climbing due to favorable market interest rates. The now fully acquired Global Atlantic contributed significantly to this growth, elevating total earnings in the insurance sector from $816 million in 2023 to $1.01 billion.
Meanwhile, strategic holdings are on the rise, as KKR increased its stake in key private equity investments, enhancing its economic interests in potentially high-growth sectors. This strategic move aims to propel operating earnings in that segment to $1.1 billion by 2030.
However, the quarter was not without its challenges. Insurance expenses surfaced as a concern, driven by rising funding costs, which could affect financial margins if interest rates shift adversely. KKR also noted volatility in unrealized investment income, a factor that might influence future income streams depending on market conditions.
Outlook and Forward Strategy
Looking ahead, KKR's management didn't offer specific guidance in its earnings report. Elsewhere, the company has provided promising financial guidance, reflecting its confidence in ongoing growth initiatives. The annualized dividend is set to increase from $0.70 to $0.74 per share, aligning with sustained earnings growth. Strategic priority areas include infrastructure and technology investments, alongside expanding its insurance platform through Global Atlantic's integration.
Investors should monitor KKR's deployment of capital, especially within the infrastructure and tech-driven sectors. The company’s strategies to manage insurance assets and expand its capital market presence are crucial for enduring growth. Future guidance suggests close attention to cost structures and market volatility as KKR navigates the complexities of global investment management.
