Business Context and Reporting Period
Company: The Carlyle Group Inc.
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Three months ended March 31, 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 (in millions) | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenues | $254.0 | $973.1 |
| Net Income (Loss) | $(141.9) | $158.6 |
| Net Income (Loss) Attributable to Carlyle | $(132.2) | $130.0 |
| Distributable Earnings (Non-GAAP) | $327.0 | $455.4 |
| Fee Related Earnings (Non-GAAP) | $300.0 | $310.6 |
| Cash and Cash Equivalents | $1,673.2 | $1,190.3 |
| Total Debt Obligations | $3,001.6 | $2,997.0 |
| Assets Under Management (AUM) | $475.4 billion | $476.9 billion (Dec 2025) |
Material Changes vs. Prior Period
- Revenue Decline: Total revenues decreased 74% to $254.0 million from $973.1 million in Q1 2025. This was primarily driven by a $904.0 million swing in performance allocations, which turned from a $222.9 million gain in 2025 to a $(681.1) million loss in 2026.
- Performance Allocation Reversals: The Global Private Equity segment recorded a $(698.1) million loss in performance allocations, largely due to depreciation in Carlyle Partners VII (CP VII) driven by declines in public market prices and preferred return impacts. This contrasts with an $85.0 million gain in the prior year.
- Net Loss: The company reported a net loss of $(132.2) million attributable to Carlyle, compared to net income of $130.0 million in the prior year. The loss was driven by unrealized investment losses and performance allocation reversals.
- Compensation: Total compensation and benefits decreased $514.3 million to $(21.0) million (a net credit) due to the reversal of performance allocation-related compensation, offset by a $16.3 million increase in equity-based compensation.
- Assets Under Management: Total AUM decreased slightly to $475.4 billion from $476.9 billion at year-end 2025, impacted by outflows and foreign exchange, partially offset by inflows of $13.0 billion.
Guidance, Outlook, and Risks
- Market Environment: Management notes elevated geopolitical risks due to hostilities in the Middle East and the closure of the Strait of Hormuz, which could impact global energy supplies and inflation. However, the U.S. economy retained underlying momentum with strong business spending, particularly in AI-related investments.
- Investment Activity: Carlyle deployed $10.0 billion in Q1 2026 and realized $12.2 billion in proceeds from traditional carry funds. Global M&A activity was strong, though leveraged buyout (LBO) activity decelerated.
- Dividends: The Board declared a quarterly dividend of $0.35 per share, payable May 28, 2026. The company maintains a policy of paying $1.40 per share annually.
- Share Repurchases: The Board reset the share repurchase authorization to $2.0 billion in February 2026. As of March 31, 2026, $1.9 billion of capacity remained. The company repurchased approximately $65.0 million of shares and retired $139.8 million of shares for tax settlements in Q1.
- Risks: Key risks include the volatility of performance allocations due to fair value changes in underlying investments, geopolitical instability affecting global markets, and the potential for giveback obligations if fund values decline below hurdle rates. The company has an accrued giveback obligation of $102.0 million.
Investor Verification Checklist
- Performance Allocation Volatility: Verify the magnitude of unrealized losses in CP VII and other funds driving the Q1 2026 performance allocation reversal of $(681.1) million.
- Non-GAAP Reconciliation: Review the reconciliation of Net Loss to Distributable Earnings ($327.0 million) to understand the core operating performance excluding unrealized items.
- Consolidated Funds Impact: Assess the impact of consolidated CLOs and other funds on the balance sheet, noting that assets and liabilities of these funds are non-recourse to the company.
- Liquidity Position: Confirm the availability of the $1.0 billion senior revolving credit facility and the $1.9 billion remaining share repurchase authorization.
- Giveback Obligations: Monitor the $102.0 million accrued giveback liability and the potential for future reversals if fund valuations continue to decline.