CG

Business Context and Reporting Period

Company: The Carlyle Group Inc.
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal Year Ended December 31, 2025
Overview: Carlyle is a global investment firm operating through three segments: Global Private Equity (GPE), Global Credit (GC), and Carlyle AlpInvest. As of December 31, 2025, the firm managed $477 billion in Assets Under Management (AUM), an 8% increase from the prior year, driven by $53.7 billion in net inflows.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Decline: Total revenues decreased 12% primarily due to a 39% drop in performance allocations ($793.2 million decrease) and a 50% drop in principal investment income. This was partially offset by a 10% increase in fund management fees.
• Segment Performance:
  • Global Private Equity: Distributable Earnings (DE) decreased 7% to $890.8 million, driven by lower realized net performance revenues and fee revenues.
  • Global Credit: DE increased 27% to $481.0 million, driven by higher fee revenues and realized net performance revenues.
  • Carlyle AlpInvest: DE increased 67% to $319.4 million, driven by significant growth in fee revenues and realized principal investment income.
• Capital Deployment: The firm deployed $54.5 billion in 2025, a 25% increase over 2024, and realized $34.1 billion in proceeds for carry fund investors.
• Shareholder Returns: The company returned approximately $0.9 billion to shareholders in 2025, consisting of $505 million in dividends and $400 million in share repurchases (7.5 million shares).

Guidance, Outlook, and Risks

• Outlook: Management does not provide specific quarterly guidance. The firm expects continued volatility in performance allocations due to the timing of realizations and market conditions. The firm is well-positioned with $88 billion of available capital to deploy.
• Dividend Policy: The Board declared a quarterly dividend of $0.35 per share (annualized $1.40) in February 2026. The Board also reset the share repurchase authorization to $2.0 billion effective February 26, 2026.
• Key Risks:
  • Market Volatility: Adverse economic conditions, interest rate fluctuations, and geopolitical tensions (including U.S.-China relations and conflicts in the Middle East/Eastern Europe) could impact asset valuations and fundraising.
  • Regulatory Environment: Extensive regulation in the U.S., EU (AIFMD II, SFDR), and UK (IFPR) could increase compliance costs and limit fundraising capabilities.
  • Performance Allocation Volatility: Revenue is heavily dependent on carried interest, which is subject to "giveback" obligations if fund performance declines below hurdles.
  • Key Personnel: The firm relies heavily on senior professionals; the loss of key personnel could materially impact operations.

Important Facts for Investor Verification

• Non-GAAP Reconciliation: Verify the reconciliation between GAAP Net Income ($808.7 million) and Distributable Earnings ($1.69 billion), noting the significant impact of unrealized performance allocations and equity-based compensation.
• Performance Allocation Giveback: Review Note 8 for the accrued giveback obligation of $72.8 million and the potential exposure if fund investments were deemed worthless ($1.5 billion total, with $0.6 billion attributable to professionals).
• Consolidated Funds Impact: Understand that the consolidation of CLOs and other funds significantly gross-ups assets and liabilities but has no net effect on net income attributable to Carlyle beyond capital contributed.
• NGP Restructuring: Review the impact of the March 2025 restructuring of the NGP strategic investment, which resulted in a $92.5 million impairment charge and a reduction in accrued performance allocations.
• Debt Covenants: Confirm compliance with the senior revolving credit facility covenants, specifically the requirement to maintain management fee-earning assets of at least $156.9 billion.