Q4 2022 Apollo Global Management Inc Earnings Call
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Good morning, and welcome to Apollo Global management's fourth quarter and full year 2022 earnings conference call.
Todays discussion all callers will be placed in listen only mode and following management's prepared remarks, the conference call will be opened for questions. Please.
Please limit yourself to one question and then rejoin the queue.
This conference call is being recorded.
This call May include forward looking statements and projections, which does not guarantee future events or performance. Please refer to apollo's. Most recent SEC filings for risk factors related to these statements.
Apollo will be discussing certain non-GAAP measures on this call, which management believes are relevant in assessing the financial performance of the business.
These non-GAAP measures are reconciled to GAAP figures in Apollo's earnings presentation, which is available on the company's website.
Also note that nothing on this call.
Constitutes an offer to sell or a solicitation of an offer to purchase an interest in any Apollo fund I would now like to turn the call over to Noah Gunn Global head of Investor Relations. Please go ahead.
Thanks, Donna and a special thanks to a couple of members in the research community, who selected two of the three songs for our hold music Jukebox that was playing before we got on the line today.
Earlier. This morning, we published our earnings release and financial supplement on the Investor Relations portion of our website.
In short, we're very pleased to deliver a strong set of results for 2022 that featured a record fee related earnings of $1 4 billion.
Or $2 36 per share and record normalized spread related earnings of $2 3 billion or $3 88 per share. This strong combination of fee and spread related earnings alongside principal investing income drove total adjusted net income of $3 1 billion or $5 21.
<unk> per share for the full year joining me. This morning to discuss these results and our positive outlook on the business in further detail our Marc Rowan CEO , Jim is out there co president and Martin Kelly CFO with that I'll turn the call over to Mark.
Thank you Noah and good morning Tor.
2022 was a transformational year for the firm.
At the end of 2021 we held our first Investor day, and we set out our five year targets.
And laid out what we needed to accomplish internally to achieve those targets and a 2021 it seems like a lifetime ago or at least a fed regime or two ago.
However, in 2022, we met or exceeded those targets record FRE of one 4 billion was in line with our target and record normalized sorry, a $2 3 billion was meaningfully ahead of target.
As important and as we suggested we restarted the growth engine.
Inflows in 2021 were 75 billion.
Inflows this year.
28 billion inflows for 'twenty three will be higher.
We expect a record year of capital raising in 2023.
As I've often cautioned capital raising is the reward for good performance. It is not actually the goal that we set out.
AUM ended the year at $548 billion or X rates and FX would have been about 565 billion.
All meaningfully and meaningful progress against our five year targets.
Recall that in Investor day, we laid out three key objectives were three key pillars that we had to focus on to achieve our plan.
Global wealth.
Origination and capital solutions.
Global wealth had a really strong 2022.
We ended the year with approximately 30 billion of AUM in our global wealth segment, including 6 billion of capital raised in 2022 accounting for and implementing successfully the Griffin acquisition. During the mid part of the year, we are on track to meet or exceed our $50 billion target at the end of.
<unk> 2026.
When we laid out these targets, we had zero perpetual projects products in the marketplace by year end, we expect nine perpetual products in the marketplace.
In short, we've had tremendous receptivity to our product and to our franchise and the global wealth community.
Our goal here like the goal elsewhere in our organization.
Just not to be the biggest we will not necessarily be the fastest growing we will be seen and are seeing as the <unk>.
Later in this marketplace showing the global wealth community the kinds of products that they have never seen before and addressing the unique needs of this interesting constituency.
Origination volume totaled north of 100 billion on a 12 month basis.
We now have 15 platforms, including seven platforms, which were new additions during 2022.
You will hear later in the call the.
The most recent addition, Atlas formerly known as the credit Suisse Securitized products group.
We are definitely on track here to meet or exceed our $150 billion annual targets at the end of 2026, having a steady source of unique credit production every year.
Really enables us to power our business.
To make the kind of projections and predictability.
The client commitments.
That are necessary for us to grow.
This is good for our <unk> business.
And then it powers, our third parties, particularly in private credit and it is especially good for our Srs business and that we produce reliable amounts of excess spread particularly in investment grade private credit.
I'm going to spend a second just on that term.
We hear the term private credit a lot.
We actually have no idea what the words private credit mean, Theyre just two words that follow each other.
Well, we have focused on in our platform and what we have done uniquely is to create a source of private investment grade credit.
Very few people very few organizations have that capability.
This is in addition to the strength.
Franchise has always had in more generic private credit.
Jim will spend a lot of time on this in his remarks.
It's a very important part of our franchise going forward and a huge differentiator.
The third pillar that we set out as our capital solutions business capital solutions in 2021 was approximately $250 million of annual revenue and we suggested that at the end of 2026, we wanted that to be north of $500 million of annual revenue and.
In 2022, we exceeded $400 million of annual revenue. It gives me great confidence that we are on track to meet or exceed the five year projections that we laid out at the beginning of 2021.
The team has been fully built out globally.
You have a massive pipeline that we executed on partially in 2022 and will carryover into the first quarter of 2023, which Martin will touch on.
And most important is to help understand and help explain the ecosystem that we're creating.
<unk> platforms.
15 companies, whose only job is to produce credit wake up every day.
And do what they do they produce credit.
We as a diversified buyer of credit for our own balance sheet and FRE, we want 25% of everything and are 100% of nothing.
And so what that means we are creating everyday.
Credit that needs to be syndicated into the marketplace. Some of that goes into funds or to SMA is of clients, who have previously come to the Apollo platform.
The rest of it.
Goes into our capital solutions business.
This is a strategic imperative for us and does two very interesting things one as we place credits.
With third parties, we earn fees, earning fees is a fundamental part of our business model, but as important they are expanding our ecosystem.
We have done business in the alternative community with investors with circa 3500, Counterparties for a long period of time.
This is an opportunity with unique product with side by side with aligned product.
With recurring product for our capital solutions group to go out and build new relationships. Some times those new relationships will result in one off transactions, which is just fine.
But oftentimes those new relationships will open up client size as to what we can do and we will turn those into SMA and recurring revenues.
This is an ecosystem that is picking up tremendous traction in the team here is doing an unbelievable job.
As excited as I am about the 'twenty two performance against the three initiatives.
I now want to turn to Athene, who had just an awesome year.
Inflows at Athene on.
On an organic basis, where some 48 billion.
What's the number one purveyor of annuities in the United States, Despite not being represented in a lot of annuity markets.
New business was put on the books in the fourth quarter at about 145 basis points of spread.
Versus about 120 basis points of spread for the full year.
Both of those targets are meaningfully ahead of what we would consider normal levels of business.
2023, I believe we will also continue to be very strong I doubt. It will continue at the same levels that we saw in the fourth quarter, but new business is being put on the books very profitably.
Athene to alts portfolio, which as many of you will also understand forms the foundation for AAA, our retail product or equity replacement product was up 10% during the year versus the S&P benchmark, which was down almost 20% very strong performance in an indication that athene and <unk>.
AAA or doing something other than buying in providing clients with market data.
As we step back and we think about.
Our positioning in this marketplace one of the questions. We asked the team who is the fortress balance sheet.
In our industry.
And the answer is we are the fortress balance sheet.
Our industry.
We are a plus across all three agencies, we ended the year $2 billion of excess capital and more than 1 billion ahead of S&P double a.
Okay.
Some years ago, we introduced was the first sizable reinsurance sidecar for our industry affectionately known as <unk>, one with $3 25 billion of capital that sidecar has now been nearly fully deployed.
And yesterday or earlier this morning, we announced the first closing for <unk> two of some $2 billion and we expect that aided two will be larger than.
<unk>, one and further that ADM to will take an increased share.
Of the new business that Athene puts on the books.
This is good all around this is good for Athene from a capital generation point of view and a capital efficiency point of view, even though it will mean that some of their assets are now essentially belong to investors and they will realize the benefits of FRE growth.
It is good for FRE.
And it is good for our origination franchises, creating additional capacity that needs to be filled which will further spur the flywheel of our capital solutions and other businesses.
In short.
An amazing year for Athene.
Our success in this business of retirement solutions has not gone unnoticed.
By some measure there are now north of 100.
Asset management entities or insurance entities, who have become asset managers pursuing a strategy similar to that which athene started on 13 years ago.
To be successful in this business and to understand where we sit relative to the rest of the business I believe there are four things that contribute to success.
First is capital.
Massive amounts of capital in an industry that has not been able to raise capital.
The second is an ability every day to create investment grade spread.
This is something in a skill set that is not traditionally resident within the alternatives industry or quite frankly within traditional asset management is a skill that we have built up.
The third is a really attractive cost structure, you need scale, because ultimately spread is a function of your net interest margin, but its also a function of a very efficient cost base.
And finally, you need a very attractive cost of funds.
If your cost of funds as low because your efficient and because your products are well designed you do not need to take investment risk to earn good returns and if you're a good investor returns can actually be quite high.
Everything goes in reverse if your cost of funds is very high.
What we are watching in our industry is the haves like Athene, where we have some $48 billion of organic origination versus the have nots the market entrants who in fact are paying up for inorganic blocks at very high cost of funds, which also are very expensive to administer on a hope that they will.
Get to scale.
I believe that the vast majority of new entrants, although not all we will not be successful and we will learn a very expensive lesson along the way.
We are also in a period of time, where the increased activity by asset managers has resulted in increased regulatory interest in what we are doing we have spent 13 years, creating the kinds of regulatory dialogues and transparency and putting out a best in class set of standards.
We are to my knowledge, not just a fortress balance sheet, but the most transparent of the companies. We regularly published stress tests. Although we are not required we regularly publish details of assets that we are not required we regularly go back and forth with respect to our reinsurance so that people understand there is no quote arbitrage between the U.
<unk> regulatory standard and the Bermuda regulatory standard.
All of the things I've just mentioned have not are not generally followed by many although some are good actors of the new entrants.
You will see in 2023 on our part is an increase foot forward to help lead this regulatory dialogue to make sure that we get to the right place with appropriate transparency and appropriate oversight.
This is an amazing business that is driven by powerful trends, but it is also a business of promises to retirees.
We expect that we will be included among a group of companies as internationally active insurance groups at some point in 2023 give.
Giving us an opportunity and a seat at the table to participate in shaping the regulatory future for our industry, which is changing very fast.
That's already for US is the flip side of FRE.
The ability to generate safe yield.
Is something that very few people have who need safe yield.
Retirees need safe yield pension.
Pension funds, replacing a portion of their fixed income need safe yield.
Banks need safe yield Japanese insurance companies and international investors need safe yield the world is short safe yield.
We are very good at producing it.
So when we produce it in an asset that is short we want to maximize the profitability of our capability.
And then that's why I say that SRT is the flip side of that we are in FRE for the safety of we produce for third parties and for Athene, but then on top of that we earn FRE, we're spread related earnings by matching the safe yield with long term sticky liabilities in 2022, a number of other forms of so called <unk>.
And capital went in reverse.
<unk> 22 was an awesome year for Athene.
Let me step back and now return to a higher level view of our business.
Our business as I've suggested previously exists in our industry exists to provide investors excess return per unit of risk. It does not exist for us to grow or for us to pursue that which we want we are fundamentally responding to investor needs.
Fortunately, we have very strong tailwind as a firm and as an industry for the need for income.
Return per unit of risk.
Our business strategy is being driven and growth is being driven in areas, where we believe we can continue to produce excess return per unit of risk are.
Our business is guided not just by excess return by unit of risk, but by and aligned investing philosophy.
The combination of Athene and a thorough in our balance sheet side by side with investors insurers investors at all points in time that we are fully aligned with them.
Finally, as I'm sure Jim will pivot onto purchase price matters.
Purchase price matters strategy is very hard to pursue.
And our risk on everything rally.
Nonetheless, we did that and the reward for doing that was certainly available and shown in 2022, but I believe the positioning we've taken out.
And our industry tailwind.
Really bode well for us going forward.
2023 will be a very good year for Apollo. We're on offense, we are $50 billion of dry powder across the platform, we deployed $160 billion in 2020 to.
Fundamentally we do better.
<unk> are uncertain and when there is uncertainty in the economy, we expect FRE and FRE in 2023 to be more than up more than 20% over 2022 as I'm sure Martin will detail.
In his remarks.
But we also have an amazing opportunity in our business to really focus on operating leverage.
We have enough in front of us with the initiatives that are currently on our plate.
To not just meet our 202023 goals, but to meet our five year targets.
Alongside the three pillars of global wealth origination.
And capital solutions, we have added a number of growth initiatives and I will not steal Jim's else responder as he lays out the things that are in front of us to focus on.
Suffice it to say 2023 will be a year of execution.
We will return the business to operating leverage in 2023.
And again in 2020 for the team here at <unk>.
Great there's tremendous momentum.
We are incredibly engaged and energized.
And at the end of the day, what makes us a great place is the people.
This is a group of hardworking charitable people, where the vast majority of the team 93% are involved in are giving programs and.
And our job is to be the single best place to be a partner in the financial services industry and with that I want to thank the employees for an amazing year.
And the investors and analysts for all the time you have given us to understand what we're trying to do and with that let me turn it over to Jim.
Thanks, Mark as.
As you've heard us say before one of our core tenants as excess return per unit of risk.
After 12, plus years of low rates and relatively free money. The best investors will begin to reveal themselves.
Strong investment performance is the foundation of our business and we take our responsibility to provide differentiating returns to work our clients quite seriously.
As we look out to 2023, we believe this is a particularly good time for a power to generate excess return.
Other managers may be in a defensive position we have been patiently waiting for this type of environment, and we're confident there'll be meaningful opportunities to deploy capital amid a heightened volt period of volatility and candidly a boggy capital markets backdrop.
Mark provided a high level update on our three Q3 key growth pillars and ride bikes deep dive deep dive for a moment into origination.
As we addressed at that Investor day are short.
16 months ago, a large portion of what we do is this high grade fixed income replacement into the market.
Central to our strategy is the ability to originate originate a recurring supplier these durable assets.
And one of the primary ways, we do though is from these platforms real operating businesses with within a variety of industries.
Platform origination is clearly a differentiated way to originate this investment grades assets at scale, which is needed to grow our retirement services business profitably and increasingly through third party accounts that want the same alpha in their portfolio.
Importantly, however, rather than expand holdco balance sheet resources the capital used to purchase these origination platforms can be sourced by the normal course purchasing power of the themes all portfolio as well as AAA.
At year end, our platform ecosystem was producing approximately 35 billion of annual volume and generating about 425 basis points of excess spread versus equivalent IAG benchmarks.
We've assembled a portfolio of 16 platforms across asset classes and sectors, which have been acquired through variety of funds. We manage also built organically and we're now focused on scale execution of those metaphorically speaking we paid the tuition to develop this important capability at scale, which we think is a great.
Competitive advantage or remote.
This advantage will this advantage will expand following this week's or the yesterday's announcement of the CFS securitized products from our platform.
Which has been renamed Atlas SP.
This platform is the best in class.
Asset back warehousing business really a finance company of finance companies with an extensive network of clients, an amazing 20 year track record of negligible losses the.
The industry, leading team at Atlas is excited to be working with Apollo and through the closing process. It's become clear that the variety of Counterparties also want to work with the Apollo ecosystem.
Many investors are reaching out to us as they expand their private credit exposure from direct lending into.
Broad base of asset based finance capabilities. We think this is the largely untapped part of the $40 trillion.
Fixed income replacement market and simply put we believe the opportunity to source resilient yield and asset based finance is worth sponsor finance was in private credit was 10 years ago.
In addition to the three growth pillars, we begun to execute on six additional strategic initiatives that we've mentioned in past, we've organized our efforts and resources around these initiatives and now 23 is focused on execution.
In this competitive fund raising landscape, our innovative and differentiated product offerings, we believe will stand out and we're seeing early indications of those facts.
And I'll mention a few here we continue to be very optimistic on the growth of AAA or Apollo aligned alternatives. We're broadening the distribution system domestically through additional bank platform and a variety of other independent channels as well as globally to Asia and Europe .
To note, we are launching our European product platform in the coming months designed to offer a full suite of options to individuals in Europe , and AAA will be the first product available on that platform.
We've also begun marketing athene altitude. This is a product designed to offer a range of Apollo managed funds across the risk reward spectrum, but to do so in a tax efficient vehicle.
Well I'll start while still early we raised $300 million in the fourth quarter from our first client a third party insurance firm to invest in AAA through Athene altitude.
Additionally, a couple of key organic initiatives in nascent asset classes are building scale, our sponsor and secondary solutions platform named S. Three has gained momentum following a cornerstone investment from audio last year.
This overall business has committed or deployed over 13 billion of capital since 2020, mainly inform finance, but as can been committed over 1 billion of X into equity and credit secondaries over the past six months and we expect formally to launch fund raising for an equity secondaries fund in the second quarter and off.
Tunis quickly raise capital for our credit Secondaries Fund ahead of a dedicated fund raised in 2024.
We're seeing a similar story in our clean transition franchise.
Since launch since launching our sustainable investing platform about a year ago, we've committed or deployed over 6 billion of capital into these investments and later this month, we will be adding a dedicated team for requirement and infrastructure yield.
To further boost our origination capabilities across the board and we anticipate launching fundraising for clean transitioned finance and opportunistic vehicles in the latter half of this year.
Next we're bringing in the investment tool kit that has made a theater in a tourist successful to others in the retirement services industry.
Our proprietary origination volume has grown as Mark said and consistency and diversity and now we're reaching a point, where we can distribute more of these assets to third parties, who had the same fundamental needs. We are building on a strong foundation of existing relationships in that area and over the next year, we aimed to raise over 10 billion.
Of capital from others in the retirement services space.
And finally, we're replicating the successful sidecar structure, we've had with midcap in Egypt in <unk>.
Variety of other areas in our business and to do so in a simplified cost effective effective manner to really scale and partner with the investors as Mark mentioned in the Apollo ecosystem.
Turning to our broader fund raising activities apart from these new six initiatives our momentum on a variety of fronts is firm and.
In asset management, we had strong inflows and included 46 billion of third party fundraising, which doubled 2021 levels.
In the fourth quarter, specifically total fund raising of 9 billion was driven by new capital for a thorough and.
And incremental capital for a variety of drawdown fund raises co investment capital and in our global wealth, including 800 million for AAA.
Looking into 'twenty, three we expect to a record amount of capital from third party investors exceeding the strong levels achieved last year and we're already in the market with a range of drawdown funds, including our fourth vintage European Principal finance, our third infrastructure fund as Mark mentioned eight of two and certainly our 10th vintage.
<unk>, our flagship private equity fund.
Additionally, a variety of.
Bonds and manager parents across the yield strategies that are currently raising capital capital or will be later in the year similar to our cord series as well as a variety of perpetual products.
Mark mentioned in the global wealth channel, including the non traded BDC non traded REIT and two interval homes.
Regarding fund 10 fund raising I'm pleased to report that we are experiencing broad support from the existing shareholder investor base, and gaining traction with new investors, especially from non U S regions and the global wealth channel through January we have received commitments approximately $15 billion and with Congest.
Dynamics in the market, it's difficult to predict the ultimate size of the fund and exact timing. However, we expect to close on the majority of incremental commitments in the back half of the second quarter and we believe the farm will land within striking distance of our target.
Coming into the new year, we believe investors are focusing on managers with healthy portfolios.
We have less exposure to growth oriented sectors, which certainly bodes well for our long tenured strategy. It's.
It's worth noting that our private equity fund portfolios outperformed the S&P by over 25% in 2022 and our <unk>.
Flagship PE Fund fund nine appreciated 22% during the year Rev.
Revenue and EBITDA trends remained strong in those portfolios up mid teens percent year over year across the broader fund portfolios.
Historically as you've heard we've generated some of our best returns for investors and mid market downturns and we're one of the few firms with a complete product toolbox.
Our proprietary financing capabilities.
[noise] allowed us to execute transactions when the traditional markets are more restricted as they are now and our flexible mandate across corporate carve outs public to privates and distressed allows us allow us to pivot to more attractive opportunities.
For example fund 10 began its investment period in October we've already deployed a 1 billion of capital into nine distressed positions through year end as well as another $2 billion in a take private or other variety of funds and a sizable chunk of capital to our structured financing.
Moving to retirement services as Mark mentioned Athene had a spectacular year of organic inflows totaling $48 billion, including 11 billion in the fourth quarter the.
The most significant contributor to the fourth quarter was the retail channel, which was $7 5 billion, a new quarterly record and.
And retail annuities or certainly in high demand industry wide as principal protected products within attractive guaranteed yield are compelling in today's environment.
Zooming in though it's clear that Athene success has driven more than just the industry tide, expanding distribution differentiated asset origination and ample capital resources to robust to support that robust growth, which has allowed us to generate record flows while writing writing business at compelling spreads.
For 'twenty three we expect another robust year.
<unk> growth from a themes across our green athene across all channels with gross inflows exceeding 2022 levels and reaching new highs.
Retail and flow insurance should remain the strongest but also benefited from a solid pipeline of new distribution relationships in both the U S and Asia and.
And we also expect pension group annuity is likely to remain heightened as the funded status of many corporate pension.
<unk> continues to exceed our 100% and while the public F. A b end market remains less attractive we're seeing more opportunities in private transactions that require our overall flexibility.
Reflecting on the past year, we've certainly re instill the growth through all assets of our past and some of our business and put the building blocks to execute our five year plan in place.
As we said 2023 will be a pivotal year of execution and optimization and we're seeing great momentum already.
With that let me hand, it over to Martin.
Alright, Thanks, Jim and good morning, everyone.
As Marc and Jim have highlighted 2022 was a very successful year of growth and execution for polo.
Maybe the backdrop of significant market Choppiness financial results demonstrate the strength and resiliency of our earning streams.
And our first full year post merger the combination of our asset management and retirement services businesses proved increasingly valuable.
F R E and S. Sorry comprised 93% of total pretax earnings in 2022 and.
And on average, we expect 90% or more of our earnings to be driven by stable recurring predictable earnings streams over the long term.
This translates to a meaningfully less potential for volatility versus other businesses that may be more aligned on incentive and investment based income streams.
Our business model is fully aligned with the growth of FRE and FRE inextricably linked and highly correlated.
We intend to drive consistent and attractive earnings growth, regardless of the macro backdrop in line with our stated Gulf from Investor day of doubling earnings by 2026.
2022 was a solid proof point of our progress towards this goal as we met or exceeded nearly all of our key financial and business targets, which we outlined on page four of our earnings release.
FRE of $1 4 billion in 2022 grew 11% year over year in line with our expectations, while we absorbed costs associated with significant investments in our next chapter of growth.
Management fees increased 14% year over year supported by strong fundraising from both our asset management and retirement services clients as well as a solid pace of capital deployment.
As Mike mentioned capital solutions fees reached a record quarterly $142 million in the fourth quarter, bringing full year revenue to $414 million up approximately 40% year over year, an incredible result, amid a turbulent capital markets truck markets backdrop, highlighting the quality of.
That same and the capabilities we've built.
Finally full year FRE margin of 54% was in line with our previously communicated guidance.
So I Havent services normalized net spread reached 140 basis points and one on 123 basis points in the fourth quarter and for the full year 'twenty two respectively, well above our initial 110 to 115 basis point guidance as the higher interest rate backdrop more interesting.
Investing climate and robust organic growth trends drove upside to our expectations.
The <unk> alternative investment portfolio returned 10, 4% in 2022.
Close to a 11% normalized assumption driven by broad based strength across strategic retirement services platforms origination platforms and fund investment returns.
Entering 2023, we expect another year of strength across the businesses I'll walk through some of the key building blocks.
As previously communicated we expect fee related revenue growth of more than 20% in 2023.
The bulk of this growth should be driven by management fees, resulting from a variety of new strategic growth initiatives that Marc and Jim walked through.
Robust organic inflows from Athene strong capital deployment in yield and hybrid strategies and additional capital raised for fund 10.
Turning to capital solutions fee revenue from this business far exceeded our expectations in 2022.
Rowing approximately twice as fast as we originally expected.
Given the strong outperformance, we currently see last year's level, providing a good baseline for 2023.
Which is tracking very nicely versus a $500 million target by 2026.
We see a healthy pipeline of transactions to support this revenue.
Moving to expenses, we expect our rate of growth in total fee related expenses to moderate as we progress through 2023, driving positive operating leverage versus our full year 2022 margin.
We added almost 400 Apollo employees to our total head count in 2022, following several previous years, a significant head count expansion.
We've been very fortunate to attract top talent in the industry across investing fund raising product development capital markets and enterprise solutions.
This has helped to drive strong 2022 financial results and solid progress as we look forward on our growth initiatives we.
We expect that the bulk of our senior hiring is now behind us.
Relatedly, we have seen a meaningful increase in our non comp expenses to support this higher run rate level of employees as well as our strategic initiatives, which has materialized principally through growing occupancy and technology costs.
Additionally, our travel and entertainment expenses normalized back to pre Covid levels.
We are prudently managing discretionary expenses as we enter the new year, which should help drive a lower growth rate year over year in 2023.
However, you should expect the fourth quarter of 2022 non comp to be a good jumping off point for 2023.
Altogether, we expect FRE growth of 25% in 2023, equating to approximately $1 $75 billion or slightly under $3 per share.
Turning to retirement services, we expect another strong year of growth and spread related earnings.
<unk> continues to fire on all cylinders.
We generated extraordinary normalized <unk> in the fourth quarter, which was driven by another year of record organic inflows underwritten to spreads above our target returns as well as historic interest rate tailwind. These.
These ingredients led to a truly remarkable performance.
To an increasing degree now as we look forward, we have the flexibility to choose how much we want to grow and how we want to fund that growth.
Given the rising rate wider spreads and strong demand environment of last year, we leaned in and added tens of billions of dollars of highly profitable business that we believe will drive predictable and durable spread related earnings for years to come.
We found the same growth in a highly capital efficient manner utilizing its fortress balance sheet resources, which includes third party capital via the equity the eight a M.
Equity side cause that Marc referenced.
For every $100 of inflows sourced we put up approximately $8 of capital.
Last year, the same contributed approximately 80% of that capital as I'd have deployed most of its remaining dry powder.
And as <unk> comes online, we expect greater utilization of third party capital to support incremental growth likely double 2020, twos level or approximately 40%.
Which will make the business, even more capital efficient than it already is today.
In addition to increasing capital efficiency Ada provides external validation, but by sophisticated third party investors of <unk> core business risk framework fee structure.
Strong returns on capital.
Importantly, Apollo owns management fees on total gross assets within the ethane complex, including those managed on behalf of the third party investors.
Because of this mechanism we are agnostic to the method of funding for things growth from an asset management perspective.
As fee related earnings benefit dollar for dollar in either scenario.
As we've emphasized before sorry, as a highly attractive earnings stream and the economics of growing it represent a highly attractive return on group capital as we evaluate the highest and best uses of capital across the complex.
The returns on capital are even more attractive with more equity sidecar funding and that's another reason, we intend to utilize it to a greater degree.
We expect this effort will result in a things net invested assets growing by a mid single digit rate in 2023.
As you know with benefited from higher rates due to an allocation to floating rate assets and the positive impacts on new money yields with.
With the forward curve signaling a flattish trajectory.
We expect our normalized net investment spreads remain in the vicinity of the strong fourth quarter level, which we expect will underpin a normalized net spread of 135 to 140 basis points for the full year 2023.
Combining our current expectations for organic growth the use of ATM equity the investing environment and the interest rate backdrop, we expect normalized <unk> growth of approximately 20% in 2023.
When combining FRE normalized esarey, we expect year over year earnings growth of more than 20%, 20% and 23.
As it relates to principal investing we expect continued equity market volatility and relatively muted capital markets activity at least in the first half of 'twenty three.
Although it's difficult to predict market trends with any accuracy based on the visibility we have into our pipeline through the first half of the year.
We currently expect <unk> to be below our multiyear average target of $1 per share in 'twenty three.
If markets continue to improve its entirely possible will move more actively into our monetizing phase in the back half of the year.
Now finally, let me spend a minute on capital.
As a reminder, we expect to generate $15 billion of capital to invest over 2022 to 26 <unk>.
Including $5 billion to fund the base dividend of $1 60 per share.
$5 billion for additional capital return via opportunistic buybacks and dividend increases and $5 billion.
Strategic growth investments in.
In 2022, we spent nearly $1 billion of capital on the base dividend.
$350 million of capital on strategic investments.
And over $300 billion of capital for opportunistic share repurchases above ongoing Stockholm immunization.
Given the line of sight, we have into a strong earnings growth year, we intend to raise the annual dividend by seven 5% to $1 72 per share starting with the first quarter of 2023 dividend Declaration we.
We also expect to be a regular buyer of our stock as we believe the intrinsic value remains highly compelling.
In conclusion, we ended the year on a very strong note in what was a very difficult market backdrop, where refreshed and focus on executing the next leg of our strategic five year plan with great enthusiasm and with that I'll turn the call back to the operator for Q&A.
Thank you the floor is now open for questions. If you would like to register a question. Please press star one on your telephone keypad at this time, if you would like to remove your question. Please press star two on your telephone keypad. As a reminder, we do after you. Please limit yourself to one question and then rejoin for any additional questions. The first question today is coming from Glenn.
<unk> of Evercore. Please go ahead.
Hi, Thank you.
I appreciate all the detail, particularly on retirement services have a quickie one.
Middle and Big picture on <unk>.
At this time and services on Slide 24, you go through 11 billion of <unk>.
Inflows attributed Athene.
On the gross inflows, but you also have $11 billion gross outflows it looks like <unk> was.
Our sale and half was actually policy driven withdrawal. So curious if you could just talk to that and then what's your.
Assuming on surrenders.
And then maybe you could just flush out a little bit more about your comments on just.
Investment grade in the credit portfolio holding up in this backdrop.
I appreciate it.
Sure, It's Mark I'll take the first piece of it and then Martin will pick up so surrenders basically continue at normal levels, what you're watching in the fourth quarter as a normal level of surrenders. The maturity of one <unk>, which is a scheduled maturity of the ABN and then during the year, we reinsured just under five.
$5 billion to Catalina Catalina is our close block P&C business, we do not believe the closed block P&C market to be that attractive and so we are in the process of diversifying Catalina as business from fully closed block P&C, 250% closed block P&C.
Mostly in runoff, but with a long tail and 50% annuity it as another source of capital think of it like a dip and it participate side by side with a dip too.
One in these sorts of transactions, but it is modest and its capital base. So maybe it grows to 10 or $15 billion over a number of years.
But it is really more than just a sideshow to what else is going on in the business in terms of credit there is nothing going on in the portfolio.
Impairments were like in the two to three basis points Theres, just nothing we see Glenn that gives us cause for concern across the portfolio and again it gets back to this notion we speak a lot about the words private credit and I say as you've heard me say there are two words that are both English words that actually don't mean anything.
Private credit can be double a and private credit can be below investment grade both have their place and portfolio on a regulated balance sheet. It is investment grade private credit excess spread all of our publicly traded corporates, but without excess risk.
Thank you. The next question is coming from Alex <unk> of Goldman Sachs. Please go ahead.
Thanks for all the detail as well Mark I had a question for you around the the origination ecosystem that you guys are bill that continues to be a really powerful engine for the whole organization. So $100 billion annual origination this year very good run rate, while it kind of on your way to your goals.
My question is over the course of 'twenty two how much of that has been placed with third party clients that pay you a management fee, whether it's a separate account nor through a commingled fund how much has been placed at Athene, North Ora and ultimately as you look forward what would you want that mix to look like a daily.
So Alex I'll I'll size, the business and it's not a statistic I havent funded but I will give you a feel and we'll get back to you with the detail. So of the 100 billion of origination as Jim mentioned $35 billion. This year came off platform and 65 billion came from what I would say more traditional sources of origination us calling on companies high grade alpha or.
Other methods of origination.
The run rate of the platforms given that we added seven new platforms in 'twenty two plus. The addition, now of Atlas means that the run rate will be materially above.
The $35 billion the vast majority of what's being originated by the way is investment grade.
My gut tells me that about a third of that ends up in the Apollo ecosystem, meaning athene and a thorough.
That another chunk of that maybe 20%, 25% goes into SMA.
And somewhere in the balance is going through our capital solutions business.
As we build the business going forward, we will always be expanding into new clients I think the Athena thorough share is kind of where it needs to be as I jokingly said on the call Athene was 25% of everything in 100% of nothing a thorough wants 5% to 10% of everything and the balance therefore is available to clients our job is to.
Build the third party recurring client business to another 35, or 40%, leaving 15 or 20% as capital markets. Clearly, we view capital solutions excuse me capital solutions as both a moneymaker in the fee business, but as important as a client generator new.
Clients, particularly investment grade clients, who have never come to the alternatives industry much less Apollo are for the first time seeing that they can come and pick pick up two or three or 400 basis points over the comparable publicly traded <unk> rating and so for a portion of their portfolio and they're doing it and why.
We're having a discussion on it sounds relatively normal this is not a product they can buy.
And so we're experiencing the product for the first time through capital solutions and as they get comfortable with the product, we're moving them into side cars and into recurring source of revenue I mean, the only doubleclick I'd say on that Alex and it's really the core of our business.
Our in our securitized products Atlas in the past investors only had access to the end results.
I E.
Asset would be in a warehouse platform and they would have access to the securitized product what we're doing for our retirement services balance sheets and a few others now is offering that interim role where they can have access to that pre securitized.
<unk> product.
And again that ecosystem it creates a flywheel. It started several years ago with our high grade Alpha what we did in <unk> and hurts in a b inbev, but thats opened an amazing amount of doors for us of folks coming into our ecosystem, giving us side cars or SMA and then they come into commingled funds, but we will put a little bit fine.
Pin on that but it really creates the ecosystem as Mark said.
Thank you. The next question is coming from Patrick Davitt of Autonomous Research. Please go ahead.
Hey, good morning, everyone.
A follow up on the origination discussion could you could you maybe more specifically frame.
What the annual origination volume of the Atlas team has been running at.
And then more broadly the release seems to suggest this is kind of the first announcement related to the credit Suisse transactions does that mean, there are more incremental things that are going to be announced here like this at the beginning.
So.
This is a group that historically had raised.
Originated in excess of $50 billion a year.
Over the last several years, sometimes who is chunkier, sometimes less but it's a massive platform with an excess of 250 underlying financing facilities where partnerships are.
The reason why Youre seeing the release as stated is it's a bit of a staged closing are there needs to be investor consults.
Industrial consents as well as a variety of some international licenses that are regulatory approvals. So the bulk of what we announced in the last 24 hours as the initial closing youll see some rolling closes over the next several months.
And it will all be done by mid year, but the fact is that the team is engaged they've been rebranded there are operating as inappropriate entity.
And for.
For us it's.
Really the first stage, but what's interesting about it is there will be not only assets and facilities, we manage on behalf of our retirement services, but as we roll out a variety of commingled or SMA side cars, along there will along there will be a residual a portfolio that we manage.
On behalf of credit Suisse over the next several years.
Patrick It's Mark I wanted to give you a way of thinking about this and again, we always have to execute before but what do we see here.
We this is a business that has not heretofore existed outside of the banking system.
Each of the banks, who own one of these businesses as competitive with the other banks.
We are not a competitor to the banking system.
We actually don't want what the banking system once we do.
I don't want the client and I'm, saying it in a in a confusing way, but we can't sell the client equity advice, M&A treasury payments FX and derivatives.
The bank and the banking system wants to sell all of those things and what they don't want for the most part is the asset.
So we are actually an incredible partner to the banking system, but if you're in a competitive bank or a boutique you historically have not wanted to bring your clients to this business because youre, bringing it to a competitor who is interested in the same thing that U R. R.
Our job here is to represent a capital box, which will serve as an investment grade capital box as Jim suggested we will build and have a massive warehouse business. The warehouse business is a really good business.
That I have in my mind is more than $350 billion of origination over the last seven eight years with de Minimis losses at spreads we believe single a credit spreads, but at very wide spreads, which then the warehouses are cleaned out through securitization, which is broadly available to a variety of investors.
Our job is to scale that but also to become the financing partner to lots of boutiques, who have clients, where they are nervous about bringing them to the two banks who are their full fledged competitors also were a great partner to existing banking system on hold positions.
People, who have securitizing businesses.
Were they just don't want to hold or they don't want the capital, bringing us in to be a side by side with them. They are bringing in someone who is not a competitor for their clients.
That's our job.
And we.
We have a lot of work in front of us by Jae Kim has built an amazing team and we're very excited about what can be done here.
We expect as I suggested previously this will be accretive financially in 2023, but it's up to us to make it in 2023 strategically accretive to our platform.
Thank you. The next question is coming from Craig Siegenthaler of Bank of America. Please go ahead.
Thank you and good morning, everyone.
Good morning.
Follow up too.
<unk> question on retirement and OTT.
The historical loss rate has been very low seven basis points annualized.
But what was the real loss range for Q.
And do you have any view on how this should trend this year, especially in light of the prospects for an economic recession.
Yes, so Craig it's Martin the loss rate was right on top of that in Q4.
As we go through every asset class.
And go through a pretty rigorous process, we're just not seeing.
We're not seeing any uptake the if you look at the headline there was some pick up.
So adjustments, which were just sort of accounting required, but don't reflect actual credit losses, but the actual.
<unk> in the reserves incidence of any stress in actual realized losses coming through.
We're just not we're just not seeing it across across Rajiv loans commercial loans asset backs any any other asset classes.
Yeah, and if I could just highlight Craig.
I know, there's lots of questions about credit cycle and a concern from our perspective and we're not economists we will look towards to do that and we're just following our discipline of purchase price matters. I mean, the reality is there are certain sectors that are doing very well post call, but there are certain that are having a bit of a challenge.
Hotels Entertainment lodging airlines doing very well hard industrials or the auto sector is having a tough time R. E book lot of financials, how did the big banks Big IAG book CLO book really strong double AA AAA book. So we're we really feel like we have a very well thought out strategic asset.
Allocation and how we put it together is showing the robust nature of the portfolio.
I'll just finish it youre going to see a tremendous amount of additional activity from a theme this year and communicating its portfolio and what's going on we have a tremendously good story to tell and the team is anxious to tell it.
And they're going to be very visible and very transparent and how that gets sold but I'll just echo Martin and Jim started we're just not seeing it in the portfolio absolutely absolute normalcy in terms of credit.
And we're getting paid for structure and for illiquidity and for origination were not getting paid for credit.
Thank you. The next question is coming from Michael Cyprus with Morgan Stanley . Please go ahead.
Hey, good morning, Thanks for taking the question wanted to circle back on the normalized necessary spread if I heard Martin correctly I think he was suggesting 135 to 140 for 'twenty. Three maybe you can correct me or not but maybe you could just help unpack some of the moving pieces in your guidance clearly the benefit from higher rates I think 20% of the book is floating but also take a portion of the liabilities are also flow.
We're seeing cost of funds ticking up here in the quarter. So I was just hoping you could elaborate on some of the moving pieces, where our cost of funds on new business and as you look out three to five years, where do you see that net <unk> spread settling out to overtime. Thank you.
Yes, so Mike that's the reason we provided a single net number.
So to get through the puts and takes in.
They go into that the the benefit of interest rate increases on the floating rate assets is starting to diminish as you would expect a lot of that benefit has come through the numbers.
And if.
If we just assume that today's rate curve at the short end holds for the year.
Over the next couple of quarters that will that will flatline out right. So that's a temporary.
The benefit for the year Theres also option costs are required to hedge.
Right.
<unk> and policies, which are part of that and so we're seeing some headwinds there.
And we're assuming that fourth quarter was extraordinary in terms of net spreads.
We had 100.
45 basis points.
Fully netted costs 185 before.
Opex and financing costs and so you know.
We don't expect in our models, so that will continue and so.
If you bring if you bring that down to a more normalized level.
And that all of the above.
Including what we think is an appropriate allocations of holds for the year you get to that 135 to 140 basis points and that's the reason, where we're trying to anchor around a single metric.
Which which we believe is the most appropriate view of spread for the year.
Given given the components that go into it.
Maybe I'll take the two pieces of it that Martin didn't flush out one is it all one has to be stepping back and saying that if I look at the relative attractiveness of asset classes, a credit is simply more attractive and equity.
And so you will see that reflected in the on the margin allocations.
From Athene.
And all of this nets down into credit requires less capital than equity.
It allows us to do more business the.
The other piece and it's important that you track this through and the model is we have a choice and the choices keep 100% of the business on the books realize the growth in FRE and deploy our own capital.
Scenes balance sheet capital.
Or allocate a portion of the business to side cars.
And essentially receive a fee for fronting that at Athene receive FRE at Apollo for managing that and allow investors to earn the spread given the attractiveness of credit.
This for investors is another opportunity for investors to invest in private investment grade credit with perfectly matched low cost liabilities, which is why we've seen such good take up at <unk>. Two in addition to the really strong performance of 81, and so as Martin suggested we will.
<unk>.
However, we expect a very strong origination year organically.
Not even looking at inorganic where the cost of funds is now not sufficiently attractive to justify spending any money.
But we will allocate more of that that growth two side cars, then we will to the athene balance sheet and so it is not just understanding the spread of the business. It's understanding how much of the business, we elect to keep and so the second number I think you need to anchor on is.
We're expecting <unk> growth.
Of about 20% year over year.
Combination of margin.
Basis points margin, which in part reflects a decision between debt and equity and then on the growth side, how much capital we want to deploy as principal versus how much we want to deploy through the side cars.
In a fortunate position, where we have that choice.
Thank you. The next question is coming from Finian O'shea of Wells Fargo. Please go ahead.
Hi, everyone. Good morning, another on the Atlas partner's origination.
Athene provide the warehouse financing and if so are you offering.
Similar to what banks do on advance rates or go further and then relatedly for the equity of those deals will you mainly sell to something like AAA internal or more so external parties. Thank you.
Okay, let's take a step back for a second.
<unk> is not offering warehouses were going out there.
There is a consortium of global banks that you are very familiar with it are offering us.
Appropriate financing facilities for the commercial real estate, the resi real estate and the consumer facilities again global banks massive facilities and what Athene will take as other investors.
They'll take the either the mezzanine or the residual of that financing facility and again I contrast, this to what we were talking earlier theyre not taking residual securitization risk, which is you know.
A higher attachment lower spread what athene and the other investors will have access to is those financing facilities with lower attachment points and higher spreads behind those senior banks, So think spreads $3 $54 50 over think attachment points.
65% to 65% were once those companies go to the securitization market. The attachment point goes to 80, 85% it dramatically tighter spreads so that what we're talking about is offering these investors Athena thora and many many others to get earlier in the.
S earlier in the in the manufacturing of these facilities and they'd ever got ever had they been able to participate before.
I think it's important to say, we're not in the credit risk business in what we're talking about there is nothing about the advance rate that is going to be different than that which that is available commercially everywhere.
We want to get paid for structure and direct origination we are not looking to get paid for credit risk unless we're in a credit fund that is supposed to get paid for credit risk.
This is about avoidance and in terms of the funding of this the funding of this theres very little equity funding that is required for the platform upfront.
It will be funded by AAA and by third party investors.
Buy side.
And this is the funding structure itself.
Laid out in the 10-K coming out.
Thank you. The next question is coming from Rufus Horn of BMO capital markets. Please go ahead.
Great. Good morning, Thanks, very much wanted to come back to your comments about the capital efficiency at Athene the side cause contribution now stepping up to about 40% of the capital I guess, that's a fair amount of capital being freed up.
And I was curious about where you are looking to deploy that capital.
I think the last couple of quarters, you've mentioned buybacks, we're right at the top of your capital hierarchy I suppose how are you thinking about all of that thank you.
So good morning, it's Martin so at the at the top of the house, we have choices and the choices are to buy back stock, which we expect to be programmatic about we think that thats.
Very very attractive use of capital.
Given the business plan, we see in front of us even at current multiples.
I think a small portion for increasing the dividend because we think that's important to be sort of an S&P like company.
And then a portion to invest in the business, which frankly I think we see less need to do right now given most of that growth is organic and the three initiatives in the next six or.
Being built out with people and not being acquired so.
That that Holdco capital benefits from.
A dividend up from Athene, each year of $750 million, we expect that that will continue at its current level.
And then and then when you when you look at the capital efficiency at the same level.
Dania is growing is growing massively so grass growth requires capital.
St is creating.
<unk>, two 3 billion anniversary.
In the year just finished.
Up 20% next year that will be used to fund growth.
That's not retained by by item.
And to fund the $750 million dividend, but as we look at the choice to spend.
Capital of Athene.
With or without the benefit of Ida, it's clearly more accretive across the group.
Deleverage item.
Validates the structure and has terrific returns for its on.
Investors, So and then and then there's AAA right, which gets to the to the.
So the platform strategy so.
Other key pockets of capital that we look at and we're looking to optimize it realizing that uses of capital for buybacks dividend increases and investments are all attractive in their own ways, but you know growth gross requires capital and so at Athene, and so where we're very focused on making sure that we can manage that appropriately and maintain.
Low leverage and strong capital levels above what's required.
To ensure that the balance sheet is really robust.
Thank you. The next question is coming from Ben <unk> of Barclays. Please go ahead.
Hi, guys. Thanks, so much for taking my question.
Wanted to dig in a little bit on the <unk>.
Inflow outlook for Athene.
It sounds like you guys have a lot of confidence that growth is going to be pretty nicely into next year I'm just kind of curious on the retail side, how much of that is coming from new distribution versus sort of ongoing just underlying strength given where rates are.
And on the pension side, just kind of curious.
You've explained that is somewhat seasonal but.
So just curious what would you think of as kind of a normalized run rate as we go into next year. Thanks.
So we'll get back to on the absolute breakdown between new distribution and strong distribution, but it is clear to me that consumers prefer higher rates versus lower rates and so youre seeing a tailwind to the industry, having said that.
New distribution, new pockets, we opened up in the beginning last year have been incredibly strong and I won't steal <unk> thunder or their announcement, but they expect this year to be.
At least two massive launches and so we are still early in our build out phase of expanding distribution not to mention new suites of products and everything else. So I think there the tailwind is really good across distribution and.
Based on what we've seen at least so far early data. It appears that 'twenty three is off to a really good start.
In terms of PRT. This is not a question there's a lot of volume to do out there.
But the only business worth doing is business that comes at acceptable spreads.
And so we have a budget of what we want to do for the year.
Finished roughly 10 ish billion and it's our job to optimize within the deals that are out there that which provides us the greatest spread in term and the <unk> the best mix of business.
We expect and all I'll say, we expect that we will exceed organically in 'twenty three what athene did in 'twenty two.
And we will likely have to make choices.
In Tampa our growth this will not be a question of whether theres business to do this it can be a question of how much business, we want to do.
Thank you. The next question is coming from Gerry O'hara of Jefferies. Please go ahead.
Great. Thanks, I, hoping maybe we could get just a little bit of an update on sort of the outlook for global wealth.
I appreciate it's still early days, but I'm, hoping we could get a sense of how to think about the cadence in flows.
While balancing I think your comments of not looking to be necessarily the biggest fastest growing.
Kind of.
Product generation and then also if you could just maybe give us a sense of what the incremental products are that we might be able to expect with as it relates to the sort of nine perpetual products by year end that you called out in the prepared remarks. Thank you.
Thanks for the question.
Well just to Dimensionalize it like taking a step back Mark talked about what we did last year around $6 billion. We got about 30 billion in the entire platform right now of products within various global wealth channels in terms of our existing products and as you pointed out.
Of the $9 billion to $10 billion. This year, probably two thirds of that 657 billion will be in the <unk>.
Perpetual type of product that we've created which is AAA Apollo debt solutions, which has been out etfs as well as a variety of non traded Reits and we also.
Purchased a couple of products from <unk>.
From Griffin, a interval fund in real estate and an interval fund in credit. So we see broad growth across those and then the residual of the 9 billion. This year will be a variety of our institutional products that we put in the appropriate wrapper.
But again our view is youre stepping back is this is a long journey.
Certainly the characteristics of those who are going to win not everybody is going to win in these distribution channels want a handful of producers are providers. We have the track record we have the brand now and end with additional as necessary as the technology and the education. So those are.
How we want to solve the riddle if you will but we're not seeing you know the vehicles, we have had solid performance.
Not gotten anything that we would think as any kind of redemptions at yearend from windows. So we're happy with the journey, we're on and it's you know as I said between the retail perpetual funds from from non a couple of years ago to almost 90 year end to the variety of drawdown funds you know more than five of those we feel very comfortable with.
Our product set.
Thank you. The next question is coming from Adam Beatty of UBS. Please go ahead.
Alright, Thank you and good morning, just a quick follow up on retail wealth, Mark I think mentioned some of the challenges that our products elsewhere faced last year, just wondering how does that kind of dampen sentiment. How do you view the take up and also Jim just mentioned education, how much recognition have you seen so far that some of you.
Apollo products are just truly distinctive and a better mousetrap.
Well certainly you know as we've talked about what we're doing on an AAA Apollo aligned alternatives. We think this market has been public saying, we think that could be the largest flagship vehicle of our firm over the next several years.
What we're doing with some of the insurance products and what we're doing with the Apollo altitude. We think those are a bit.
I use the term groundbreaking, but we think they are providing incredible value and they're somewhat unmatched in terms of the attributes that being said you know there's been some noise about some other folks out there having some redemptions first of all I think they're doing the right thing by the discipline that they're engaging in in terms of making sure people don't think that the increase.
That'll yield comes without a cost but that being said. This is this is a mere hiccup and a long successful transition in Germany, and we're happy to be part of that transition, but no doubt. It is not just about you have to have multiple resources to create all of those things we talked about we've launches Apollo Academy, which is a broad.
<unk> education set available to those channels and the take up on that has been extraordinary. So it's you know it's not only product creation execution returns, but also technology applications as well as education.
Thank you ladies and gentlemen, we have reached the allotted time for questions for today's event I will now turn the floor back over to Mr. Cohen for closing comments.
Great. Thanks, again, Donna and thank you everyone for your time and attention this morning.
Appreciate your continued interest in Apollo and if you have any follow up questions on what we discussed on today's call. Please feel free to reach out we look forward to speaking with you again next quarter.
Ladies and gentlemen, thank you for your participation you may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.
Yes.
Yes.
This is everywhere.
And lastly, rod.
Great.
Right.
This is Chris <unk>.
Ladies and gentlemen.