KKR Reports Strong Q4 Earnings Amid Expense Concerns

KKR & Co. Inc. has announced its earnings for the fourth quarter of 2024, showcasing adjusted net income per share of $1.32, exceeding the Zacks Consensus Estimate of $1.27. This reflects an increase from $1 reported in the same quarter last year.

In 2024, adjusted net income per share was reported at $3.46, which fell short of the Zacks Consensus Estimate of $3.54, and marked a decline compared to $4.14 in the previous year.

The strong quarterly results can be attributed to significant growth in assets under management (AUM) and record transaction fees within the capital markets sector. However, higher expenses continue to pose a challenge to overall profitability.

According to the Generally Accepted Accounting Principles (GAAP), net income attributable to the company for the fourth quarter reached $1.12 billion, reflecting an 8.2% increase year over year.

For the year 2024, the net income attributable to KKR fell to $3.08 billion, representing a decline of 16.4% compared to the previous year.

Revenue and Expense Growth

KKR's total segment revenues for the fourth quarter stood at $1.26 billion, marking a 17% year-over-year increase, surpassing the Zacks Consensus Estimate of $1.23 billion.

The company's full-year revenues reached $4.8 billion, growing by 23.9% year over year, and also exceeding the Zacks Consensus Estimate of $4.74 billion.

However, total segment expenses rose by 3.7% from the previous year, amounting to $412 million, which raises concerns about ongoing profitability.

Assets Under Management Show Improvement

As of December 31, 2024, KKR's total AUM grew to $637.6 billion, reflecting a 15.3% increase year over year. Fee-paying AUM reached $512 billion, up 14.7% from the same period last year.

Rising Operating and Fee-Related Earnings

In a positive turn, total operating earnings saw a significant increase of 19.5% year over year, amounting to $1.1 billion, driven primarily by growth in fee-related earnings.

KKR's fee-related earnings reached $843 million, which is a rise of 24.8% year over year, largely due to increased management fees and capital market transaction fees, coupled with a decreased compensation margin related to fees.

Outlook for KKR

Looking ahead, KKR is likely to capitalize on attractive investment opportunities, bolstered by its strong capabilities in fundraising. The growth in fee-related earnings and overall operating earnings is supportive of the company’s financial health. Nonetheless, the ongoing expansion of its global operations suggests that expenses may continue to rise in the coming quarters.

KKR currently holds a Zacks Rank of #3, indicating a 'Hold' recommendation for potential investors.

Comparative Performance of Peers

Invesco reported fourth-quarter adjusted earnings of 52 cents, surpassing the Zacks Consensus Estimate of 49 cents, aided by reduced expenses and improved net revenues, alongside a positive increase in AUM.

BlackRock also exceeded expectations with fourth-quarter adjusted earnings of $11.93 per share, surpassing the Zacks Consensus Estimate of $11.44. This was driven by revenue growth and an increase in AUM, which reached $11.55 trillion, though higher expenses and lower non-operating income were obstacles.

KKR, Earnings, AUM, Revenue, Expenses