Business Context and Reporting Period
Company: The Carlyle Group Inc.
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Three and six months ended June 30, 2026
Business Overview: Carlyle is a global investment firm operating through three segments: Global Private Equity, Global Credit, and Carlyle AlpInvest. The firm manages assets across buyout, growth, real estate, infrastructure, credit, and secondary markets.
Key Financial Metrics
| Metric (Dollars in millions) | Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 |
|---|---|---|
| Total Revenues | $1,123.5 | $1,377.5 |
| Net Income (GAAP) | $224.8 | $82.9 |
| Net Income Attributable to Carlyle | $137.1 | $4.9 |
| Distributable Earnings (Non-GAAP) | $472.3 | $799.3 |
| Fee Related Earnings (Non-GAAP) | $357.7 | $657.7 |
| Cash and Cash Equivalents | $1,256.5 | $1,256.5 |
| Total Debt Obligations | $2,998.8 | $2,998.8 |
| Assets Under Management (AUM) | $485.5 billion | $485.5 billion |
| Fee-Earning AUM | $334.4 billion | $334.4 billion |
Material Changes vs. Prior Period
- Revenue Decline: Total revenues decreased 29% year-over-year for the quarter and 46% for the six-month period. This was primarily driven by a significant reversal of unrealized performance allocations.
- Performance Allocations: Performance allocations swung from a gain of $638.8 million in Q2 2025 to a gain of only $44.7 million in Q2 2026. For the six months ended June 30, 2026, performance allocations resulted in a loss of $636.4 million compared to a gain of $861.7 million in the prior year. The decline was largely due to reversals in the Global Private Equity segment, specifically Carlyle Partners VII (CP VII), driven by decreases in market prices of certain public investments.
- Net Income Volatility: Net income attributable to Carlyle dropped to $4.9 million for the six months ended June 30, 2026, compared to $449.7 million in the prior year period, reflecting the volatility in unrealized investment income.
- Compensation Expenses: Total compensation and benefits decreased significantly ($303.4 million for the quarter) due to lower performance allocation-related compensation, which is tied to the decline in performance revenues.
- Segment Performance:
- Global Private Equity: Distributable Earnings decreased 26% year-over-year for the six-month period due to lower realized net performance revenues and principal investment income.
- Global Credit: Distributable Earnings increased 11% year-over-year, driven by higher fee-related earnings and realized net performance revenues.
- Carlyle AlpInvest: Distributable Earnings increased 11% year-over-year, supported by growth in fee-related performance revenues.
Guidance, Outlook, and Risks
- Market Outlook: Management notes that equity markets posted strong returns in Q2 2026 despite geopolitical tensions. However, private market exit activity remains constrained, and the firm expects Global Private Equity distributable earnings in the second half of 2026 to potentially be lower than the first half due to the expected realization of a loss on an infrastructure fund investment (cumulative unrealized loss of $222 million as of June 30, 2026).
- Liquidity: The company maintains $1.3 billion in cash and cash equivalents and has a $1.0 billion senior revolving credit facility with no outstanding borrowings. Management believes existing sources are sufficient to fund capital needs for at least the next twelve months.
- Dividends: The Board declared a quarterly dividend of $0.35 per share, payable August 26, 2026.
- Share Repurchases: The company repurchased approximately 7.9 million shares for $365.0 million during the six months ended June 30, 2026. Approximately $1.6 billion of repurchase capacity remains.
- Risks: Key risks include the volatility of unrealized performance allocations, geopolitical tensions affecting global markets, potential giveback obligations on carried interest, and the impact of foreign exchange rates on non-U.S. denominated funds.
Investor Verification Checklist
- Performance Allocation Reversals: Verify the magnitude and specific drivers of the $1.5 billion swing in performance allocations year-over-year, particularly the impact of CP VII and public market volatility.
- Infrastructure Fund Loss: Confirm the timeline and potential impact of the expected realization of the $222 million unrealized loss in the Global Private Equity infrastructure fund.
- Non-GAAP Reconciliations: Review the reconciliation between GAAP Net Income and Distributable Earnings to understand the exclusion of unrealized gains/losses and equity-based compensation.
- Debt Covenants: Confirm continued compliance with the senior credit facility covenants, specifically the management fee-earning assets requirement ($156.9 billion) and leverage ratio (<4.0 to 1.0).
- Giveback Obligations: Assess the $92.4 million accrued giveback obligation and the potential for future reversals if fund values decline further.