Apollo Global Management, Inc. — FY 2023 Form 10-K
Reporting period: Year ended December 31, 2023. This is an annual filing, not a standalone fourth-quarter report. Amounts are U.S. dollars unless noted.
Business context
Apollo operates asset management, retirement services through Athene, and principal investing. Its model combines fee income and fund performance revenues with insurance spread income. Comparisons of consolidated GAAP results are affected by volatile insurance investment marks and accounting estimates; Apollo’s FRE, SRE and PII are management measures, not GAAP or liquidity measures.
Key financial metrics
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Total GAAP revenue | $32.644 billion | $10.968 billion |
| Net income | $6.509 billion | $(3.507) billion |
| Net income attributable to Apollo common stockholders | $5.001 billion; $8.32 diluted EPS | $(1.961) billion; $(3.43) diluted EPS |
| Segment Income | $4.959 billion | $4.163 billion |
| Adjusted Net Income (ANI) | $4.082 billion | $3.246 billion |
| Operating cash flow | $6.322 billion | $3.789 billion |
| Investing cash flow | $(42.407) billion | $(23.444) billion |
| Financing cash flow | $42.638 billion | $28.710 billion |
Total GAAP revenue rose sharply, but the comparison is not a clean measure of underlying growth: Retirement Services revenue was $29.1 billion versus $8.2 billion, largely reflecting investment-related gains of $1.4 billion in 2023 versus losses of $12.7 billion in 2022, along with growth in investment income and insurance business. Insurance accounting and market movements also materially affect reported profit.
- Asset Management: AUM was $650.8 billion, up 18.8%; fee-generating AUM was $493.0 billion, up 19.6%. FRE increased 25.4% to $1.768 billion. Apollo reported approximately 200 basis points of FRE margin expansion, but the filing does not state the margin percentage in the supplied text. Dry powder was $58 billion.
- Retirement Services: SRE increased 25.9% to $3.108 billion. Net investment spread rose to 1.93% from 1.71%; net investment earned rate increased to 4.61% from 3.66%, while cost of funds rose to 2.71% from 1.98%.
- Principal Investing: PII declined 70.8% to $83 million, mainly because realized investment income fell by $332 million; higher realized performance fees partly offset the decline.
- Balance sheet and liquidity: Total assets were $313.5 billion, versus $257.2 billion; total equity was $25.2 billion, versus $14.4 billion. Unrestricted cash and cash equivalents were $15.8 billion, with $4.9 billion of available funds under credit and liquidity facilities. Total reported debt was $8.1 billion, comprising $3.9 billion in Asset Management and $4.2 billion in Retirement Services.
- Athene: Net invested assets were $217.4 billion, up from $196.5 billion; total investments including related parties and consolidated VIEs were $259.2 billion. Athene reported U.S., Bermuda and consolidated RBC ratios of 392%, 400% and 412%, respectively. It estimated approximately $8.0 billion of deployable capital, including assumed untapped debt capacity that depends on market availability.
Material changes and unusual items
- AUM growth reflected strong net flows of $107.2 billion, including the Atlas transaction, growth in retirement-services client assets and fundraising. Fund X closed with approximately $20 billion of commitments.
- Athene recorded a $555 million gain from settlement of the VIAC recapture agreement. The transaction also involved recaptured reserves and recognition of $104 million of unrealized asset losses as intent-to-sell impairments.
- Apollo issued $1.4 billion of 6.75% mandatory convertible preferred stock. It also issued $600 million of 7.625% subordinated notes and $500 million of 6.375% senior notes; Athene issued $600 million of 5.875% notes.
- Equity-based compensation expense was $1.026 billion, including $457 million for special fully vested grants to senior leaders. This contributed to higher Asset Management expenses.
- AHL redomiciled from Bermuda to the United States effective December 31, 2023. Enactment of Bermuda’s 15% corporate income tax from 2025 generated material deferred tax assets and a tax benefit, contributing to the reported 2023 tax benefit of $923 million and negative effective tax rate of 16.5%.
- Apollo adopted long-duration targeted improvements (LDTI) retrospectively from January 1, 2022. This changed insurance liability and market-risk-benefit accounting and materially revised 2022 reported results and balances.
Outlook, risks and contingencies
Apollo gave no specific earnings or revenue guidance in the supplied filing text. Management stated that current liquidity and expected cash generation should be sufficient for anticipated expenses and working capital needs for at least the next 12 months. Athene generally seeks mid-teen or higher returns on deployed capital; this is a target, not a forecast or guarantee.
Management highlighted sensitivity to interest rates, inflation, credit conditions, commercial real estate and financial-market volatility. Other key risks include variable and realization-dependent performance fees, illiquid assets, fund and insurance leverage, fundraising and competition, policyholder withdrawals, insurer ratings and regulatory capital, reinsurance counterparty performance, conflicts of interest, valuation uncertainty, cybersecurity, litigation and tax changes. Athene’s investment portfolio includes meaningful real estate exposure, including office and retail lending; management also cited uncertainty around financing and valuations in commercial real estate.
- Approximately $5.0 billion of cumulative performance fees could be reversed if existing investments became worthless; management views that scenario as remote. General partner obligations to return previously distributed fees were $174 million at year-end. Fund VII and Fund VIII performance-fee distributions were subject to escrow conditions.
- Apollo subsidiaries provided assurance letters supporting Atlas’s $3.3 billion deferred purchase obligation. The filing says the fair value of the related guarantee liability was not material.
- Athene had $21.2 billion of investment commitments, expected mostly to be invested over five years, although they may become due on counterparty request. Certain commitments and guarantees have timing or funding conditions.
- Legal matters include a derivative action challenging approximately $570 million of payments relating to elimination of the former Up-C structure; Apollo said no reasonable estimate of possible loss could be made. Certain investment-adviser subsidiaries also received an SEC information request concerning retention of business communications. The filing provides no clear estimate of any loss from these matters.
Important facts for investors to verify
- Review segment results and reconcile FRE, SRE, PII and ANI to GAAP results; these measures exclude items and are not substitutes for GAAP earnings or cash flow.
- Assess the quality and realizability of performance-fee receivables and fund valuations, including the $174 million general partner obligation and escrowed fees.
- Examine Athene’s asset-liability sensitivity, credit and real estate exposure, liquidity resources, capital ratios and restrictions on subsidiary dividends.
- Confirm the effects of the AHL redomicile, Bermuda corporate tax and future tax rules on cash taxes and deferred tax assets.
- Track the $3.3 billion Atlas deferred purchase obligation and assurance letters, Athene’s investment commitments, and developments in the disclosed litigation and SEC inquiry.
The financial statements received an unqualified audit opinion, and the auditor reported effective internal control over financial reporting as of December 31, 2023.