The Carlyle Group Inc. Q2 FY26 Earnings Analysis

- Transaction fees are expected to increase in Q2 due to completed and pending deals, reflecting a natural expansion of Carlyle's capital markets business tied to broader platform activities. - Management fees show momentum with a 4% year-over-year increase and a 7% increase on a last twelve months (LTM) basis; these are expected to accelerate notably during the upcoming fundraising "super cycle." - Fee-related earnings (FRE) growth is targeted at mid- to high single-digit percentages for the year, supported by strong fundraising and inflows across private equity, AlpInvest, and credit platforms. - Private credit and CLO businesses are growing robustly, with diversification and strong performance driving durable fee income. - Record inflows ($13 billion in Q1) and increased AUM across AlpInvest ($107 billion record) and Global Credit ($209 billion) signify sustained growth and growing transaction volumes. - Overall, Carlyle expects continued revenue and volume growth through organic platform expansion and tailored capital solutions.

- Carlyle expects fee-related earnings (FRE) growth to accelerate over the next 2 years, aligned with their previous guidance. - They anticipate reaching or exceeding $1.9 billion in fee-related earnings by the end of 2028. - Distributable earnings per share (DE) goal is $6 or more by the end of 2028. - Fundraising momentum and inflows are strong, with a clear path to $200 billion of inflows by 2028. - Long-term FRE growth is expected to be mid- to high single-digit percentages annually. - The base fees increased 7% on an LTM basis and are expected to accelerate with upcoming fundraises and new higher-fee products. - Transaction fees are anticipated to increase in the near term due to several signed or closed deals. - Overall, Carlyle maintains confidence in its strategic plan and financial targets amid complex markets.

- Carlyle announced a first-of-its-kind $5 billion investment solution anchored for their next U.S. buyout fund, providing capital-efficient tailored solutions addressing client needs (Pages 2, 4). - They have several large transactions closing soon including an $8 billion carve-out of BASF's coatings business and a $3 billion acquisition of MAI Capital Management, contributing to increased transaction fees (Page 2). - Deployment in the quarter was $10 billion, including $4 billion in private credit and $4 billion in Carlyle AlpInvest across diverse strategies, indicating ongoing capital deployment and investment activities (Page 2). - Carlyle is preparing to come to market soon with an opportunistic credit fund and raising capital in direct lending, both higher fee and growth areas (Page 7). - The firm has a clear organic growth plan targeting $200 billion inflows and $1.9 billion fee-related earnings by 2028, implying continued strategic investments (Page 3).

- Carlyle is raising capital across several fronts in 2026: - Next vintage U.S. Buyout Fund: A $5 billion cornerstone financing solution was closed, with fundraising to officially launch later this year. - Credit business: Fundraising continuing with a new opportunistic fund expected to come to market soon, described as a higher fee product. - Direct lending: Good success in raising capital for the private BDC. - Carlyle AlpInvest: Next vintage funds expected to have first closings later this year, showing strong momentum and record inflows. - Asset-backed finance fund: A new closed-end strategy had a first close of $1.5 billion, with that strategy now over $12 billion. - Total inflows in Q1 were $13 billion with nearly $7 billion raised by Carlyle AlpInvest and $4 billion in Global Credit. Overall, Carlyle expects fundraising momentum to accelerate through 2026 across both debt and equity strategies.

- Carlyle announced two large transactions expected to close in the coming months: - $8 billion carve-out of the coatings business from BASF. - $3 billion acquisition of MAI Capital Management. - These transactions are anticipated to contribute to a pickup in transaction fee revenue in upcoming quarters. - The next vintage U.S. buyout fund has secured a $5 billion cornerstone investment solution, which is capital-efficient and provides liquidity to clients. - Record inflows and strong fundraising momentum suggest a robust pipeline of future deals across private equity, credit, and Carlyle AlpInvest strategies. - Dry powder stands at a record $96 billion, up 13% year-over-year, signaling ample capital available for deployment. - Several transactions in private equity and other segments are near term and expected to come through in the rest of 2026, supporting active deal flow.