Q1 2024 DigitalBridge Group Inc Earnings Call
Good day and welcome to digital Bridge Group Inc's first quarter 2000, Twenty's pool earnings call.
Operator: G'day and welcome to Digitalbridge Group Inc.'s first quarter 2024 earnings call. At this time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I would now like to turn the conference over to Severin White. Humane Beginnings.
At this time, all participants are in listen only mode.
A question and answer session will follow the formal presentation.
If anyone should require operator assistance joined the conference piece basically zero on your telephone keypad.
Please note this conference is being recorded.
I would now like to turn the country. So could you just ship them the wipes.
Speaker Change: You may begin sir.
Speaker Change: Good morning, everyone and welcome to the digital bridge as first quarter 2024 earnings Conference call.
Severin White: Good morning, everyone, and welcome to Digitalbridge's first quarter 2024 earnings conference call. Speaking on the call today from the company are Marc Ganzi, our CEO, and Tom Mayrhofer, our CFO. I'll quickly cover the safe harbor.
Speaker Change: Speaking on the call today from the company as Marc Ganzi, our CEO and Tom Mair offer our CFO.
Severin White: Some of the statements that we make today regarding our business operations and financial performance may be considered forward-looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. All information discussed on this call is as of today, April 30, 2024, and Digitalbridge does not intend and undertakes no duty to update it for future events or circumstances. For more information, please refer to the risk factors discussed in our most recent Form 10-K filed with the SEC for the year ending December 31, 2023, and our Form 10-Q to be filed with the SEC for the quarter ending March 31, 2024.
Tom Mair: I'll quickly cover the safe Harbor some of the statements that we make today regarding our business operations and financial performance may be considered forward looking.
Tom Mair: Such statements involve a number of risks and uncertainties.
Tom Mair: Cause actual results to differ materially.
Tom Mair: All information discussed on this call is as of today April 32024, and digital bridge does not intend and undertakes no duty to update it for future events or circumstances.
Tom Mair: For more information please refer to the risk factors discussed in our most recent Form 10-K filed with the SEC for the year ending December 31, 2023, and our Form 10-Q to be filed with the SEC for the quarter ending March 31 2024.
Severin White: So, it's the new year, and in connection with the completion of our business transformation, we've advanced and further simplified the format of our earnings presentation. Going forward, we'll start with Marc providing a business update, highlighting key takeaways from the quarter, and covering themes that would have historically been incorporated in our third section, executing the digital playbook. Tom will cover the financial highlights in the second section, followed by Q&A. Another advance that you'll notice is that we've condensed our earnings presentation and supplemental financial report into one document.
Speaker Change: Great. So it's the new year and in connection with the completion of our business transformation, we've advanced and further simplified the format of our earnings presentation.
Speaker Change: Going forward, we'll start with mark providing a business update highlighting key takeaways from the quarter and covering fanatics that would've historically been incorporated in our third section executing the digital playbook, Tom will cover the financial highlights in the second section followed by Q&A.
Another advance that Youll notice as we condensed our earnings presentation and supplemental financial report into one document. The goal here is to make it easier for investors to access a single Doc that captures the highlights as well as some of the important detail behind the numbers.
Severin White: The goal here is to make it easier for investors to access a single document that captures the highlights as well as some of the important detail behind the numbers. We look forward to your feedback on this new format. I also want to highlight our second Investor Day coming up in a couple of weeks on Monday, May 13th at the New York Stock Exchange. Some of you will be joining us in person, others via webcast.
Speaker Change: Look forward to your feedback on this new format.
Speaker Change: I also want to highlight our second Investor day coming in a couple of weeks on Monday may 13th at the New York Stock Exchange.
Speaker Change: Some of you will be joining us in person others on the webcast either way, we're looking forward to outlining our simplified business profile discussing the state of private markets digital infrastructure and AI and how we continue scaling our highly differentiated platform in.
Severin White: Either way, we're looking forward to outlining our simplified business profile, discussing the state of private markets, digital infrastructure, and AI, and how we continue scaling our highly differentiated platform. In addition to our senior management, we'll be joined by some of our operating partners as we give you color on what's happening on the ground in digital infrastructure. With that, let's get started, and I'll turn the call over to Marc Ganzi, our CEO. Thanks, Severin.
Speaker Change: In addition to our senior management will be joined by some of our operating partners as we give you color on what's happening on the ground in digital infrastructure.
Speaker Change: Let's get started and I'll turn the call over to Marc Ganzi our CEO.
Speaker Change: Mark.
Marc Christopher Ganzi: Thanks, Kevin.
Marc Christopher Ganzi: Let's start this call with our progress on P M.
Marc Christopher Ganzi: Let's start this call with our progress on FIEM, which, as you all know, is our key revenue and earnings driver and the solid growth that we continue to see here. As you can see on the left, PM grew 17% year-over-year to $32.5 billion at the end of the first quarter in 2024. Importantly, fume growth was driven not only by our flagship strategy, Digitalbridge Partners 3, and the corresponding co-invest, but also via our expanding multi-strat offerings, which include contributions from Credit and Liquid this quarter. In fact, if we hadn't had a step down and separately capitalized Porco's,
Marc Christopher Ganzi: Which as you all know is our key revenue and earnings driver and the solid growth that we continue to see here.
Marc Christopher Ganzi: As you can see on the left P. M grew 17% year over year to $32 5 billion at the end of the first quarter in 2024.
Marc Christopher Ganzi: Importantly, the growth was driven not only by our flagship strategy did your bridge partner III and the corresponding coming back, but also via our expanding multi strat offerings, which include contributions from credit and liquid this quarter.
Marc Christopher Ganzi: In fact, if we hadn't had a step down in separately capitalized parkas.
Marc Christopher Ganzi: Has Vantage DEDCO moved from our latest flagship fund? PM actually would have been up over 20% year over year. That transaction, which we announced in January, is similar to the vertical bridge deal we did in Digitalbridge Partners, too, which created some short-term PM pressure but, over the long term, allows us to maintain exposure to the best growth platform. In this case, Vantage is one of the best global hyperscale data center platforms, building large campuses at scale with what we think is the best management team in the world, led by our CEO, Cyril Csaps
Marc Christopher Ganzi: As vantage deadpan moved from our latest flagship fund fee and actually would have been up over 20% year over year.
Marc Christopher Ganzi: That transaction, which we announced in January it's similar to the vertical bridge deal, we did and did you rich partners to which.
Marc Christopher Ganzi: Created some short term P M pressure.
Marc Christopher Ganzi: But over the long term allows us to maintain exposure to the best growth platforms.
Marc Christopher Ganzi: In this case vantage is one of the best Global Hyperscale data center platforms building large campuses at scale with what we think is the best management team in the World led by our CEO cereal Chatzky.
Marc Christopher Ganzi: In partnership with Silver Lake, we're planning on building over three gigawatts of capacity to meet the growing demand for cloud and AI infrastructure.
Marc Christopher Ganzi: In partnership with Silver Lake, we're planning on building over 3 gigawatts of capacity to meet the growing demand for cloud and AI infrastructure. And at the same time, Digitalbridge shareholders will now earn carry as we create incremental value on that platform versus just a straight historic management fee, which is what investors were getting in the original investment vehicle that we built at Vantage. Bottom line, fee and growth year-over-year remain solid, and next quarter, you'll continue to see this metric march higher as we close incremental capital across all of our strategies.
Marc Christopher Ganzi: And at the same time did you read shareholders will now earn carry as we create incremental value at that platform versus just a straight historic management fee, which is what investors, we're getting and the original investment vehicle that we built at vantage.
Marc Christopher Ganzi: Bottom line <unk> growth year over year remained solid and next quarter, you'll continue to see this metric March higher as we close incremental capital across all of our strategies.
Marc Christopher Ganzi: Next slide, please. Next up is new capital formation. This quarter we closed on $1.1 billion in new capital commitments, that's up 47% over the prior year. So taking a step back, in summation, Q1 was good. And, frankly, it could have even been better.
Marc Christopher Ganzi: Next slide please.
Marc Christopher Ganzi: Next up is new capital formation. This quarter, we closed on $1 1 billion in new capital commitments.
Marc Christopher Ganzi: That's up 47% over the prior year.
Marc Christopher Ganzi: So taking a step back.
Marc Christopher Ganzi: In summary, Q1 was good and frankly, it could have even been better.
Marc Christopher Ganzi: We held back some commitments from some of our clients that are working on a multi-strategy play with us that will play out over the next few months. We're really starting to have these more holistic conversations with our partners and LPs as our fund strategies expand. We'll talk a bit more about that on Investor Day, but it's great. I would say it's a great strategic development for the firm.
Marc Christopher Ganzi: We held back some commitments from some of our clients that are working on a multi strategy play with us that will play out over the next few months.
Marc Christopher Ganzi: We're really starting to have these more holistic conversations with our partners in El piece as our fund strategies expand.
Marc Christopher Ganzi: We'll talk a bit a little bit more about that on investor day, but it's great I would say, it's a great strategic development for the firm we have multiple products in the digital infrastructure space that are meeting our clients' objectives, whether it's credit core liquid securities late stage venture growth our flagship funds co investment vehicles.
Marc Christopher Ganzi: We have multiple products in the digital infrastructure space that are meeting our clients' objectives. Whether it's credit, core, liquid securities, late-stage venture growth, our flagship funds, convension vehicles, and continuation funds, we're really building out that multi-strategy platform where we take advantage of that digital infrastructure flywheel that we maintain here at Digitalbridge. In Q1, we received continuing commitments of over $600 million to Digitalbridge Partners 3. Subsequent to our 4Q23 report in February, we also brought in commitments to our second credit strategy, and also contributions from Liquid and Co-Investments as well.
Marc Christopher Ganzi: And continuation funds, we're really building out that multi strategy platform, where we take advantage of that digital infrastructure flywheel that we maintain your dessert rich.
Marc Christopher Ganzi: In Q1, we received continuing commitments of over $600 million Gingerbread partners three.
Marc Christopher Ganzi: Subsequent tour <unk> 'twenty three report in February.
Marc Christopher Ganzi: <unk> brought in commitments to our second credit strategy and I'd also contributions from liquid and co investments as well.
Marc Christopher Ganzi: The key here again is multi-strategy, which will increasingly even out fundraising over time. As you know, we hold periodic closings for our strategies over the course of the year. And I'd say today, with Q1 closed and a good line of sight on capital formation over the course of the year, we feel very good about our ability to meet or exceed our fundraising targets we laid out for 2024 last quarter. Next slide, please.
Marc Christopher Ganzi: The key here again is multi strategy.
Marc Christopher Ganzi: Which will increasingly even out fundraising over time.
Marc Christopher Ganzi: As you know we hold periodic closings for our strategies over the course of the year and I'd say today with Q1 closed and good line of sight on capital formation over the course of the year, we feel very good about our ability to meet.
Marc Christopher Ganzi: Or exceed our fundraising targets, we laid out for 2024 last quarter.
Marc Christopher Ganzi: Next slide please.
Marc Christopher Ganzi: As Severin mentioned earlier, we've made some changes to the format of the presentation.
Marc Christopher Ganzi: As Severin mentioned earlier, we've made some changes to the format of the presentation, bringing what used to be the third section up front to address some of the top of mind issues and strategic initiatives that we're executing on to build our business going forward. Today, data centers and AI are front and center, not just in digital infrastructure, but across an increasingly digital global economy. And in this sector, the number one topic today is power. This is why you're seeing tech CEOs like Sam Altman and Mark Zuckerberg.
Marc Christopher Ganzi: What used to be the third section upfront to address some of the top of mind issues and strategic initiatives that we're executing on to build our business going forward.
Marc Christopher Ganzi: Today, Datacenters and AI are front and center not just in digital infrastructure.
Marc Christopher Ganzi: Cross and increasingly digital global economy.
Marc Christopher Ganzi: And in this sector the number one topic today is power.
Marc Christopher Ganzi: This is why Youre seeing tech Ceos like Sam Altman Mark Zuckerberg.
Marc Christopher Ganzi: Satya Nadella is all out there publicly talking about how to access power in order to meet the demand coming down from generative AI workloads. I'd like to bring some perspective from our end, as an owner, operator, and manager of some of the largest data center platforms globally, to understand this challenge and some of the ways that we're trying to address it as a firm. I'll start by highlighting that it's actually power generation that's the issue.
Marc Christopher Ganzi: So tired nadella all out there publicly talking about how to access power in order to meet the demand coming down from generative AI workloads.
Marc Christopher Ganzi: I'd like to bring some perspective from our end as an owner operator and manager of some of the largest data center platforms globally.
Marc Christopher Ganzi: Understand the challenge in some of the ways that we're trying to address it as a firm.
Marc Christopher Ganzi: I'll start by highlighting that it's actually power generation.
Marc Christopher Ganzi: It's power transmission and distribution that are constrained. Transmission Grids or Capacity Challenge? And imagine, if you think it's hard to get a new cell tower permitted, think about building new transmission towers or substations. There's a lot of friction in the system around this right now. In fact, the growing contribution from renewables, which is an important development, introduces additional complexities to the grid, especially as it relates to data centers. Next slide, please. For those of you that know us well, we don't spend much time complaining about problems.
Marc Christopher Ganzi: That's not the issue it's power transmission and distribution that are constrained.
Marc Christopher Ganzi: Transmission grids or capacity challenged and imagine if you think it's hard to get a new cell tower permitted think about building new transmission towers or substations.
Marc Christopher Ganzi: There's a lot of friction in the system around this right now in fact growing contribution from renewables, which is an important development introduces additional complexities did the grid, especially as it relates to data centers.
Marc Christopher Ganzi: Next slide please.
Speaker Change: For those of you that know us well, we don't spend much time complaining about problems, we pivoted pretty quickly and our goal as a management team is to figure out solutions.
Marc Christopher Ganzi: We pivot pretty quickly, and our goal as a management team is to figure out solutions. So to solve the bottlenecks the grid is presenting, we're helping our port codes get creative and find ways to execute on a different kind of COLO, bringing power generation and data centers closer together. On the one hand, it's building data centers closer to new or existing power generation. We're doing that on a number of our platforms, whether it's hydro, solar, natural gas, or wind. This actually fits AI training models quite well since these workloads are less latency sensitive.
Marc Christopher Ganzi: So it's all of the bottlenecks the grid is presenting we're helping our partners get creative and find ways to execute on a different kind of Colo brings.
Marc Christopher Ganzi: Bringing power generation and data centers closer together.
Marc Christopher Ganzi: On one side, it's building data centers closer to new or existing power generation.
Marc Christopher Ganzi: We're doing that at a number of our platforms, whether it's hydro solar natural gas or wind.
Marc Christopher Ganzi: It's actually fits AI training models quite well since these workloads or less latency sensitive.
Marc Christopher Ganzi: They can be located further away from enterprises or consumers during the AI model training phase. On the flip side, we're also figuring out how to bring power closer to where you need data centers. You can see we're doing that at our databank and switch platforms today. This will be increasingly important as we move to the AI inference phase, where trained AI models are deployed at scale by enterprises and in apps used by consumers. Here you need compute closer to the end user, not only in hyperscale but also at the edge.
Marc Christopher Ganzi: They can be located further away from enterprises or consumers during the AI model training phase.
Marc Christopher Ganzi: On the flip side, we're also figuring out how to bring power closer to where you need data centers.
Marc Christopher Ganzi: You can see we're doing that at our data bank and switch platforms today.
Marc Christopher Ganzi: This will be increasingly important as we move to the AI inference phase were trained AI models are deployed at scale by enterprises and in apps used by consumers.
Marc Christopher Ganzi: Here, you need compute closer to the end user.
Marc Christopher Ganzi: Not only in Hyperscale, but also in edge.
Marc Christopher Ganzi: Frankly, both of these approaches are going to be necessary to meet the demand that we're seeing across the portfolio for new power capacity. We believe it's not going to be one technology or one strategy that's going to be the silver bullet to solve the problem. So we're increasingly focused on this today, and you'll hear us talk more about this as the year progresses.
Marc Christopher Ganzi: Frankly, both of these approaches are going to be necessary to meet the demand that we're seeing across the portfolio for new power capacity.
Marc Christopher Ganzi: We believe it's not going to one technology or one strategy, that's going to be the silver bullet to solve the problem.
Marc Christopher Ganzi: So we are increasingly focused on this today and you hear us talk more about this as the year progresses.
Marc Christopher Ganzi: Next slide please.
Marc Christopher Ganzi: A big piece of the power puzzle centers around renewables. This is an area of intense interest from our portfolio company customers again, it's a customer driven opportunity and solution.
Marc Christopher Ganzi: A big piece of the power puzzle centers around renewable energy, and this is an area of intense interest from our portfolio company customers. Again, it's a customer-driven opportunity and solution. They all have aggressive net zero targets for their compute and connectivity footprints, and from our institutional LPs as well. They want to see green electrons increasingly power their data center investment, not just directly through PPAs but actually bringing that power directly behind the meter into the data center.
Marc Christopher Ganzi: Who've all have aggressive net zero targets for their compute and connectivity footprints.
Marc Christopher Ganzi: And from our institutional out piece as well.
Marc Christopher Ganzi: They want to see green electrons increasingly power their data center investments not just through directly through ppas, but actually bringing that power directly behind the meter into the data center.
Marc Christopher Ganzi: As you can see here, we're making a lot of progress with two of our six data center portfolio is already 100% renewable.
Marc Christopher Ganzi: As you can see here, we're making a lot of progress, with two of our six data center portfolios already 100% renewable, with Switch powered here in the U.S. principally by wind and solar, and Scala, which is powered by hydro in Brazil. Data Bank Advantage is making very good progress as well, increasingly building or procuring renewable energy, as you saw in the prior slide. On the last panel here, another component of solving the power challenge is building and operating data centers that operate more efficiently, which is measured by PUE or power usage effectiveness. This means the ratio of power into a facility relative to the amount of use to run the servers directly. Here, lower PUE values are desirable because they significantly use less energy.
Marc Christopher Ganzi: With switch powered here in the U S principally by wind and solar.
Marc Christopher Ganzi: And Scala, which is powered by hydro in Brazil.
Marc Christopher Ganzi: Databank advantage, you're making very good progress as well increasingly building or procuring renewable energy as you saw on the prior slide.
Marc Christopher Ganzi: And the last thing here another component of solving the power challenge is building and operating data centers that operating more efficiently.
Marc Christopher Ganzi: Which is measured by PV, where power usage effectiveness.
Marc Christopher Ganzi: This means the ratio of power into facility relative to the amount of used to run the servers directly.
Marc Christopher Ganzi: They're more energy efficient. Also, here, AI is actually part of the solution. A number of our platforms are experimenting with new technology powered by AI that operates data centers more efficiently. We don't just build for AI. We're also investing in AI for our infrastructure and for our customers. Next page, please.
Marc Christopher Ganzi: Tier lower P values are desirable because they significantly.
Marc Christopher Ganzi: Use less energy Theyre more energy efficient.
Marc Christopher Ganzi: Also hear AI is actually part of the solution.
Marc Christopher Ganzi: Number of our platforms are experimenting with new technology powered by AI.
Marc Christopher Ganzi: Operates data centers more efficiently.
Marc Christopher Ganzi: We don't just building for AI, we're also investing in AI for our infrastructure and for our customers.
Marc Christopher Ganzi: Next page please.
Marc Christopher Ganzi: So, let's step back and understand why we're so focused on power.
Marc Christopher Ganzi: So let's step back and understand why we're so focused on power, and see how that aligns with one of the foundations of the Digitalbridge Roadmap. Invest. Last quarter, I highlighted our portfolio companies are budgeted to invest over $11 billion in data center CapEx globally in 2024 based on the bookings that came in last year and also this year. Just yesterday, one of our portfolio companies signed a 100 plus megawatt lease.
Marc Christopher Ganzi: And see how that aligns with one of the foundations of the <unk> roadmap.
Marc Christopher Ganzi: Best.
Marc Christopher Ganzi: Last quarter I highlighted our portfolio companies are budgeted to invest over $11 billion and datacenter capex globally in 2024 based on the bookings that came in last year and also in this year.
Marc Christopher Ganzi: Just yesterday, one of our portfolio companies signed 100 plus megawatt lease.
Marc Christopher Ganzi: That'll be roughly another $1 billion in incremental capex. Today, with over 2 gigawatts under construction at $10 million a megawatt, that's over $20 billion over the next few years in new CapEx commitment. Those are big blocks. And we've already got the power lined up for that 2.2 gigawatts of under-construction capacity. But here's the issue. Looking ahead, looking around corners.
Marc Christopher Ganzi: That'll be roughly another 1 billion in incremental Capex.
Marc Christopher Ganzi: Day with over two Gigawatts under construction at $10 million a megawatt that's over $20 billion over the next few years and new Capex commitments.
Marc Christopher Ganzi: Those are big blocks and we've already got the tower lined up for that 2.2 gigawatts of under construction capacity.
Marc Christopher Ganzi: But here's the issue looking ahead looking around corners, our pipeline is over five gigawatts today and growing.
Marc Christopher Ganzi: Our pipeline is over five gigawatts today and growing, and I would say growing quite fast. To turn that pipeline into bookings, you've got to be able to deliver the power, and power density at scale. This is a key differentiator into the foreseeable future, and while you're here, you'll hear from us continuing to cover this topic, including more insights at our Investor Day around data centers and renewable power and the convergence of those two topics together. So with that, I'll wrap up our business and strategic update and turn it over to Tom to cover the financials.
Marc Christopher Ganzi: And I would say growing quite fast.
Marc Christopher Ganzi: That pipeline into bookings.
Marc Christopher Ganzi: Got to be able to deliver the power.
Marc Christopher Ganzi: Power density at scale.
Marc Christopher Ganzi: This is a key differentiator into the foreseeable future and while you're here as you'll hear from us continuing to cover this topic, including more insights at our Investor day around data centers and renewable power and the convergence of those two topics together.
Marc Christopher Ganzi: So with that I'll wrap up our business and strategic update and turn it over to Tom to cover the financials.
Tom Mayrhofer: Thank you, Marc, and good afternoon, everyone. As a reminder, this earnings presentation is available in the shareholder section of our website. And this quarter, we've combined the previously separate supplemental financial report with the earnings presentation for your convenience. Starting on page 15, our key operating and financial metrics have seen significant year-over-year growth. Fee revenues, fee-related earnings, and distributable earnings have continued to demonstrate positive trends year-over-year, and we expect this growth trajectory to continue as we progress through 2024.
Tom Mair: Thank you Mark and good afternoon, everyone. As a reminder, this earnings presentation is available within the shareholder section of our website and this quarter. We've combined the previously separate supplemental financial report with the earnings presentation for your convenience.
Unknown Attendee: Starting on page 15, our key operating and financial metrics has seen significant year over year growth.
Unknown Attendee: So your revenues fee related earnings and distributable earnings have continued to demonstrate positive trends year over year and we expect this growth trajectory to continue as we progress through 2024.
Tom Mayrhofer: In the first quarter, we also generated year-over-year growth and new capital formation, as Marc discussed. As the year progresses, we expect momentum to build, and full year results to align with our guidance targets. Our fee-earning equity under management was $32.5 billion as of March 31st, a 17% increase from the same period last year, driven by organic capital formation in the DPP series, co-investments, and credit strategies. This increase is partially offset by an anticipated fee-based reduction as Vantage data centers transitioned from our prior separately capitalized vehicle structure into our latest flagship fund, Digitalbridge Partners 3, or DBP3, which extends our exposure to Vantage through its next phase of growth.
Tom Mair: In the first quarter, we also generated a year over year growth in new capital formation as Mark discussed.
Tom Mair: As the year progresses, we expect momentum to build and full year results to align with our guidance targets.
Tom Mair: Our fee, earning equity under management is $32 $5 billion as of March 31st.
Marc Christopher Ganzi: A 17% increase from the same period last year.
Marc Christopher Ganzi: Driven by organic capital formation in the D V P series co investments and credit strategies.
Marc Christopher Ganzi: This increase was partially offset by an anticipated fee based reduction as vantage data centers transitioned from our prior separately capitalized vehicle structure into our latest flagship fund digital bridge partners III or D V. P. Three which extends our exposure to vantage through its next phase of growth.
Marc Christopher Ganzi: Moving to page 16.
Tom Mayrhofer: Moving to page 16, the company continues to simplify its financial reporting to align with our alternative asset management peers, specifically in our presentation of fee-related earnings. Beginning in the first quarter, the company introduced fee-related earnings on a company-wide basis, which now incorporates corporate expenses and is not equivalent to the metric reported prior to 2024 investment management fee-related earnings. FRE metrics discussed in this earnings presentation for prior periods have been updated to reflect company-wide fee-related earnings and are suitable for period-over-period comparison.
Marc Christopher Ganzi: The company continues to simplify its financial reporting to align with our alternative asset management peers specifically.
Marc Christopher Ganzi: Specifically in our presentation of fee related earnings and Mr. Learnings.
Marc Christopher Ganzi: Beginning of the first quarter the company introduced fee related earnings on a companywide basis, which now incorporates corporate expenses and is not equivalent to the metric reported prior to 2020 for investment management fee related earnings.
Marc Christopher Ganzi: FRE metrics discussed in this earnings presentation for prior periods have been updated to reflect companywide fee related earnings and are suitable for period over period comparison.
Marc Christopher Ganzi: Starting with fee revenues, the company reported $72 $8 million in the first quarter.
Tom Mayrhofer: Starting with fee revenues, the company reported $72.8 million in the first quarter, marking a 21% increase from the same period last year. As we progress through 2024, we continue to anticipate additional fee revenue growth, including catch-up fees driven by fundraising for DBP3, which had its initial close on November 1st of last year. Fee-related earnings were $19.6 million in the first quarter, up 28% year-over-year. While cash compensation was up due to the inclusion of a full quarter of the InfraBridge acquisition and continued investments in the platform, general and administrative costs were flat year over year, allowing us to improve operating leverage and expand FRE margins. We expect this trend to continue over the course of the year, with growth in revenue and growth in earnings exceeding growth in compensation and G&A expenses.
Marc Christopher Ganzi: Marking a 21% increase from the same period last year.
Marc Christopher Ganzi: As we progress through 2024, we continue to anticipate additional fee revenue growth, including catch up fees driven by fund raising for D V Peachtree, which had its initial close on November 1st of last year.
Marc Christopher Ganzi: Fee related earnings were $19 $6 million in the first quarter up 28% year over year.
Marc Christopher Ganzi: While cash compensation was up due to the inclusion of a full quarter of privilege acquisition and continued investments in the platform general and administrative costs were flat year over year allow.
Marc Christopher Ganzi: Allowing us to improve operating leverage and expand FRE margins.
Marc Christopher Ganzi: We expect this trend to continue over the course of the year with growth in revenue exceeding the growth in compensation and G&A expenses.
Marc Christopher Ganzi: Distributable earnings were $2 $2 million in the first quarter with the progress we're making at the corporate level.
Tom Mayrhofer: Distributed earnings were $2.2 million in the first quarter, with the progress we were making at the corporate level de-levering on display with continued reduction of interest expense. The LTM figures on the right, I think, give you a good sense of the operating leverage that is starting to materialize in our operating margin, which has expanded from under 20% to just over 30% on an LTM basis. We turn to page 17.
Marc Christopher Ganzi: The library on display with continued reduction of interest expense.
Marc Christopher Ganzi: Yeah.
Marc Christopher Ganzi: The LTM figures on the right I think give you a good sense of the operating leverage that is starting to materialize in our FRE margin.
Marc Christopher Ganzi: <unk> has expanded from under 20% to just over 30% on an LTM basis.
Marc Christopher Ganzi: Turning to page 17.
Tom Mayrhofer: We reported a reversal of $2.7 million in carried interest income for the first quarter. The company accrues carried interest based on quarterly changes in the fair value of our funds investment. The reversal in the first quarter stemmed mainly from net increases in fair value during the quarter, which came in below the preferred return hurdle on certain funds, resulting in a reduction on a mark-to-market basis of a small amount of accrued care interest.
Marc Christopher Ganzi: We reported a reversal of $2 $7 million in carried interest income for the first quarter.
Marc Christopher Ganzi: Cruise carried interest based on quarterly changes in the fair value of our fund investments.
Marc Christopher Ganzi: The reversal in the first quarter stemmed mainly from net increases in fair value during the quarter, which came in below the preferred return hurdle on certain funds, resulting in a reduction on the mark to market basis.
Marc Christopher Ganzi: A small amount of accrued carried interest.
Tom Mayrhofer: Notably, carried interest compensation expense tracks these changes, and there was a commensurate reversal of a small amount of unrealized carried interest compensation. Principal investment income, which is accrued and or realized income primarily earned on the company's GP investments in our various funds, was $2.8 million in the quarter, with $2.3 million in realized distributions from our funds. Turn to page 18.
Marc Christopher Ganzi: Notably carried interest compensation expense tracks. These changes and there was a commensurate reversal at a small amount of unrealized carried interest compensation.
Marc Christopher Ganzi: Principal investment income, which is a crude and our realized income primarily earned on the Companys G. P investments in our various funds was $2 $8 million in the quarter with $2 3 million in realized distributions for our funds.
Marc Christopher Ganzi: Turning to page 18.
Tom Mayrhofer: You'll see that the company continues to maintain ample liquidity and has continued to deleverage its balance sheet, including the completion of the full exchange and redemption of its $78 million of 2025 exchangeable notes in April, reducing corporate level debt that will result in approximately $4.5 million of annual interest savings. With that, I'll wrap up the financial results section of our presentation. It's shorter and, I hope, easier to follow given our simplified business profile.
Marc Christopher Ganzi: You'll see that the company continues to maintain ample liquidity and has continued to delever its balance sheet.
Marc Christopher Ganzi: Including the completion of the full exchange of redemption of $78 million of 2025 exchangeable notes in April reducing corporate level debt that will result in approximately $4 $5 million of annual interest savings.
Marc Christopher Ganzi: With that I'll wrap up with the financial results section of our presentation, it's shorter and I hope easier to follow given our simplified business profile.
Tom Mayrhofer: Before handing it over to Marc, I want to express my gratitude to everyone on the finance team and across the firm, especially Jacky Wu, for welcoming me to Digitalbridge and helping my transition over the last few months. I'm really excited to be here and look forward to connecting with our shareholders at Investor Day and over the course of the rest of the year. With that, I'll turn it back to Marc for his final remarks.
Speaker Change: Before handing it over to Mark I want to express my gratitude to everyone on the finance team and across the firm, especially Jacky Lo for welcoming me to digital bridge and helping my transition over the last few months I'm really excited to be here and look forward to connecting with our shareholders at Investor day and over the course of the rest of the year.
Speaker Change: With that I'll turn it back to Mark for his final remarks.
Mark Zuckerberg: Thank you Tom and again, thank you to Jackie ruin, our entire finance team for making your transition so seamless.
Marc Christopher Ganzi: Thank you, Tom. And again, thank you to Jacky Wu and our entire finance team for making your transition so seamless. Well, look, we're going to wrap it up.
Marc Christopher Ganzi: I want to thank everyone for their time and attention today. I think we've continued to lay out the foundations for how we're building, we believe, one of the most powerful alternative asset managers tied to some of the most exciting secular themes on the planet today. We're looking forward to welcoming all of you to our Investor Day. And with that, I'm going to turn it over to the operator for Q&A. Thank you.
Mark Zuckerberg: Look we're going to wrap it up I want to thank everyone for their time and attention today.
Mark Zuckerberg: We've continued to lay out the foundations for how we're building we believe one of the most powerful alternative asset managers tied to some of the most exciting secular themes on the planet today.
Mark Zuckerberg: We're looking forward to welcoming all of you to our Investor day.
Speaker Change: And with that I'm going to turn it over to the operator for Q&A. Thank you.
Speaker Change: Thank you, Sir ladies and gentlemen, we will now be conducting the question and answer session.
Operator: Thank you, sir. Ladies and gentlemen, we will now be conducting a question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that Rahmani is in the question queue. You may press star 2 to leave the question queue. For participants making use of speaker equipment, it may be necessary to lift up your handsafe before pressing the star keys. Our first question comes from Michael Elias of Cohen and Company. Please go ahead.
Speaker Change: Hossa Christian piece with stalled and one on your.
Speaker Change: Telephone keypad.
Speaker Change: A confirmation tone will indicate that the money is in the question Kim.
Operator: You May press star two to leave the question queue.
Operator: For participants, making use of SDK equipment, it may be necessary to lift up your handset.
Speaker Change: Before placing the stockings.
Michael: Our first question comes from Michael any other sort of Cowen and company. Please go ahead.
Michael Elias: Great. Thanks for taking the questions Mark I, just wanted to double click on your comments related to power, which I. Appreciate the framework you laid out you know.
Michael Elias: Great, thanks for taking the questions. Marc, I just want to double-click on your comments related to PowerWitch.
Marc Christopher Ganzi: I appreciate the framework you laid out. You know, one of the things that you talked about is that data centers, in part, need to move to where the power is. To that point, I'm seeing a lot of activity in the Midwest of the United States. I'm curious how you're thinking about, or how your view of markets has evolved, particularly, you know, are you looking at places where, historically, there haven't been data center opportunities?
Michael Elias: Well one of the things that you talked about is that data centers and partner to move to where the power is to that point I'm seeing a lot of activity in the Midwest of the United States curious, how youre thinking about or how your view of markets has evolved particularly you know are you looking at places where historically there haven't been data center opportunities that's my.
Michael Elias: First question and then second question is part of that is as I think of the locations whether is power, but they arent datacenter was currently one of the things that I think is missing is network you've talked about convergence in the past what I'm curious about is how you think about the interplay between data center platform, Lifevantage and switch and Zale.
Marc Christopher Ganzi: That's my first question. And then, as part of that, as I think of the locations where there is power but there aren't data centers currently, one of the things that I think is missing is a network. You know, you've talked about convergence in the past. What I'm curious about is how you think about the interplay between a data center platform like Vantage and Switch and ZAO, a fiber company, in terms of delivering a holistic solution to the hyperscaler as we look to bring data centers to new markets where there is power. I know that's a lot, but I hope that makes sense.
Michael Elias: <unk> fiber company in terms of delivering a holistic solution to the hyperscale or as we look to bring data centers to new markets, whether it's power I know, that's a lot, but I hope that makes sense.
Speaker Change: No no you always makes sense and I think you're skating to where the puck is going not to where the puck is.
Marc Christopher Ganzi: No, no, you always make sense. And I think you're skating to where the puck is going, not where the puck is. I want to sort of break your question down into two pieces, Michael. One is just to talk about the direction of travel on power. And then, second, I do want to talk about connectivity, because you've nailed it, right? Connectivity is really critical. The capillaries that connect, obviously, interconnection to data centers and then how this correlates to AI and where are those big, you know, language-based models being built.
Speaker Change: I wanted to sort of break your question down into two pieces. Michael one is just to talk about the direction of travel on power.
Speaker Change: And then the second I do want to talk about connectivity because you've you've nailed it right connectivity is really critical the capillaries that connect obviously interconnection to data centers and then how this correlates to AI and where are those big language based models being built and ultimately when we moved from from you know from training into inference.
Marc Christopher Ganzi: And ultimately, when we move from, you know, from training to inference, those locations become more latency sensitive. So, we can explore that for a second. And I want to be mindful; there are other people in the queue that have questions. This is a topic you and I could talk a lot about.
Speaker Change: Those locations become more latency sensitive. So we can we can explore that for a second and I'll be mindful. It's a there's other people in the queue that have questions. This is a topic you and I could talk a lot about.
Marc Christopher Ganzi: Remember, data centers have... There's kind of two screens to this. The first is... you know, do our customers trust us to build their data centers and to continue to lease capacity from us? And what kind of workloads are they leasing? Coming out of this quarter, we had contributions from all six of our major data center platforms globally. So, we spent a lot of time this last week aggregating that data and understanding what our customers are doing.
Speaker Change: Remember Datacenters had.
Speaker Change: Sort of there's kind of two screens to this the first is.
Speaker Change: You know do our customers trust us to build their data centers.
Speaker Change: And to continue to lease capacity from us and what kind of workloads are they leasing from us coming out of this quarter. We had contributions from all six of our major data center platforms globally. So we spent a lot of time. This last week aggregating that data and understanding what our customers are doing and so what's really interesting to me is that.
Marc Christopher Ganzi: And so, what's really interesting to me is that there is such segmentation now between cloud and AI in those workloads, and ultimately, workloads that are latency sensitive and workloads that actually are very location sensitive from an Arizona perspective. And so, private cloud, public cloud, edge workloads, enterprise workloads, all of those workloads, Michael, are evolving in real time. And data centers are evolving too. And so, I think that some of these locations that are less latency sensitive are some of these locations that can be 200, 400, 800 megawatts, and those are the training models in AI. And, you know, provided you have good fiber connectivity, those locations can be a little less, shall we say, latency sensitive.
Speaker Change: Theres, such segmentation now between cloud and AI and those workloads and ultimately workloads that are latency sensitive workloads that actually are very location sensitive from a Z perspective, and so private cloud public cloud edge workloads enterprise workloads all of those workloads, Michael are evolving in real time and.
Speaker Change: Data centers are evolving too and so I think that.
Speaker Change: Some of these locations that are less latency sensitive.
Speaker Change: Are some of these locations that can be 200, 400, 800 megawatts and those are those training models in AI and provided you have good fiber connectivity those locations can be a little less shall we say latency sensitive.
Marc Christopher Ganzi: Then there are, as you move into generative AI, and you get into active workloads and active applications, it starts to follow the same model that the cloud followed, which, as you and I both know, we're in the 11th to 12th year of the cloud. And so we're seeing a lot of those locations, and those AZs are now really important in places like Goodyear, Arizona, in Atlanta, Georgia, in Columbus, Ohio, and certainly in Reno, Nevada, as an alternative to Santa Clara.
Speaker Change: And then there are as you move into degenerative AI and you get into active workloads inactive applications.
Speaker Change: It starts to follow the same model that the cloud followed which is you and I both nowhere in the 11 to 12 here.
Speaker Change: Of the cloud and so we're seeing a lot of those locations in those disease are now really important in places like Goodyear, Arizona, and Atlanta, Georgia, and Columbus, Ohio, and certainly like Reno, Nevada, as an alternative to Santa Clara and so there's this whole next generation of cloud workloads that are showing up big and at scale, but there.
Marc Christopher Ganzi: And so there's this whole next generation of cloud workloads that are showing up big and at scale, but they're not traditionally in Virginia, they're not traditionally in Santa Clara, and you see that customers are moving to different places.
Speaker Change: Traditionally in Virginia, they're not traditionally in Santa Clara and and you see that the customers are navigating to different places.
Speaker Change: And then obviously you see what's happening at Databank on the edge side, you know the data bank had a had a fantastic quarter I'm one of the best quarters in history and that company continues to debate didn't deliver what we call hyper edge workloads that have megawatts to 10 megawatt workloads, where the cloud is obviously moving to secondary and tertiary markets we see.
Marc Christopher Ganzi: And then obviously, you see what's happening at Data Bank on the edge side. Data Bank had a fantastic quarter, one of the best quarters in history. And that company continues to deliver what we call hyper-edge workloads, that half megawatt to 10 megawatt workloads, where the cloud is obviously moving to secondary and tertiary markets. We see AI following a similar footprint. But the challenge for how you build AI is very much correlated to where you can get power.
Speaker Change: A I following a similar footprint, but the challenge against how you build AI is very much correlated to where you can get power.
Marc Christopher Ganzi: And then, of course, there's the self-perform, where our customers are going to perform their own work and ultimately the work that we're going to perform. This is a very complex matrix because, at the end of the day, Michael, the way I think about it, and the first decision is, are our customers going to trust us to build the workload, or are they going to self-perform?
Speaker Change: And then of course, there's the self perform where our customers are going to perform their own work and ultimately the work that we're going to perform.
Speaker Change: This is a very complex matrix because it's a decision tree at the end of the day, Michael the way I think about it on the first decision is our customers can trust us to build the workload or are they going to self perform check second screen is is this really for their for their for their cloud products or is this for their AI product and then of course, the engineering standards and ultimately did you.
Marc Christopher Ganzi: The second screen is, is this really for their cloud products, or is this for their AI products? And then, of course, the engineering standards and, ultimately, the GPU standards and the design standards and the cooling standards change and deviate a little bit. And then, ultimately, do people really value sort of having a Tier 5 experience where those workloads need to be highly secure and perhaps even in a private cloud, a.k.a. what Switch is doing? Switch had a phenomenal first quarter, and the second quarter is even lining up to be better.
Speaker Change: Use standards in the design standards and the cooling standards change and deviate a little bit and then ultimately do people really value sort of having a tier five experience where that those workloads need to be highly secure and perhaps even in private cloud AK. What switch is doing switches had a phenomenal first quarter and the second quarters, even lining up to be better. The good news is in our <unk>.
Marc Christopher Ganzi: The good news is, in our world, we don't have to choose. When we own powerful platforms like Vantage, Atlas Edge, Data Bank, Scala in Brazil, which had a great quarter, we're seeing all of these workloads manifest themselves all across the globe. As you saw in our slide, you see photographs of data centers from all around the world. I don't see that the customer is the constraining factor, Michael.
Speaker Change: Well, we don't have to choose when we own powerful platforms like vantage Atlas edge data bank Skol in Brazil, which had a great quarter. We're seeing all of these workloads manifest itself all across the globe as you saw in our slide you see photographs of datacenter small around the world.
Speaker Change: I don't see that the customer is the constraining factor Michael I see that power is really the constraining factor and that's going to become more evident to you and to the rest of the investor community over the next two years, it's not obviously from my perspective, Michael It's not new news, we started talking about this over two years ago with the Berlin.
Marc Christopher Ganzi: I see that power is really the constraining factor, and that's going to become more evident to you and to the rest of the investor community over the next two years. It's not, obviously, from my perspective, Michael, it's not new news. We started talking about this over two years ago at the Berlin Infrastructure Conference, when I told the investor world that we were running out of power in five years. Well, I was wrong about that.
Speaker Change: Your conference when I told the Investor World, We're running out of power in five years, while I was wrong about that we're kind of running out of power in the next 18 to 24 months. So we started two years ago working on this power problem. So it's not new information to us and as I said on our call today. The two point plus gigawatts that we're building today shovels in the ground all of those commitments with our customers have.
Marc Christopher Ganzi: We're kind of running out of power in the next 18 to 24 months. So we started two years ago working on this power problem, so this is not new information to us.
Marc Christopher Ganzi: And as I said on our call today, the two-point-plus gigawatts that we're building today, shovels in the ground, all of those commitments with our customers have power. Power in place will serve letters. Those aren't HOPE data centers. Those are actually data centers that are committed, being constructed, and customers are moving into them. I do look around the corner, and I look at the next five-plus gigawatts of opportunity, and we're going to have to get more creative.
Speaker Change: Power power in place will serve letters those arent hope datacenters those are actually data centers that are committed being constructed and customers are moving into it I do look around the corner and I look at that next five plus gigawatts of opportunity and we're gonna have to get more creative in the way, we get more creative as one we try to locate certain of those you know.
Marc Christopher Ganzi: And the way we get more creative is, one, we try to locate certain of those big AI data centers and locations that maybe are less latency sensitive. We try to co-locate those opportunities closer to renewable energy, and we try to create energy independence or grid independence. And those are the things that we're thinking about. So the next generation of datacenters is perhaps going to be in different locations. Now, how do we create that customer experience? We create those customer experiences with low latency, you know, big, big, big pipes in terms of the dark fiber that we're bringing to those datacenters. And I'm not talking about four pairs; I'm talking about 12 pairs.
Speaker Change: Big AI data centers in locations that maybe are less latency sensitive we tried to co locate those opportunities closer to renewable energy when we try to create energy independence or grid independence and those are the things that we're thinking about so the next generation of data centers are perhaps going to be a different locations now how do we create that customer experience, we create those customer.
Speaker Change: For instance, with low latency.
Speaker Change: You know big Big Big pipes in terms of the dark fiber that we're bringing to those data centers and I'm not talking about for Paris toile pairs, we're talking about hundreds of pairs of fiber with redundant routes and this is where as you've highlighted zale comes into the mix and what gives us a lot of confidence to sit with some of our key customers and say look.
Marc Christopher Ganzi: We're talking about hundreds of pairs of fiber with redundant routes. And this is where, as you've highlighted, Xeo comes into the mix. And what gives us a lot of confidence to sit with some of our key customers and say, look, we'll deliver the datacenter. We can deliver the fiber. And then the next sort of key is, can we deliver the power? Now, if I can wrap that all up in one sentence, we actually have InfraBridge, which, you know, as you know, is an infrastructure provider.
Speaker Change: We'll deliver you the data center, we can deliver the fiber and the.
Speaker Change: Then the next sort of key is can we deliver the power now if I can wrap that all up in one BOE, we actually had been forbidden, which you know as you know as an infrastructure provider, we actually engage in renewable energy already as a firm and so our opportunity set is fusing the hard work that we did at them for bridge some of the hard work that we've done to do the.
Marc Christopher Ganzi: We actually engage in renewable energy already as a firm. And so our opportunity set is fusing the hard work that we did at InfraBridge, some of the hard work that we've done at Xeo, the hard work that we've done across all of our hyperscale and private cloud datacenter operators to bring a holistic solution to customers. And now that's finally manifesting itself.
Speaker Change: Our hard work, we've done across all of our Hyperscale and private cloud data center operators to bring a holistic solution to customers and now that's finding manifesting itself now the real key is that the asset manager level, we gotta make that manifests itself in the capital reform the fees that we generate in the carried interest that comes commiserate with creating these great ideas and bringing it altogether.
Marc Christopher Ganzi: Now, the real key is that at the asset manager level, we've got to make that manifest itself in the capital we form, the fees that we generate, and the carried interest that comes commensurate with creating these great ideas and bringing them all together. I am very happy with what's going on at Xeo. We've seen a significant uptick in bookings there, particularly for the hyperscalers and some of the web scale routes. There's great opportunity there, and they're going to need us.
Speaker Change: I am very happy with what's going on at Zale, we've seen a significant uptick in the bookings there, particularly with the Hyperscale ours and some of the web scale routes, there's great opportunity, there and they're going to need us.
Marc Christopher Ganzi: And it's not just for Xeo; the whole fiber industry in general is going to need, you know, more new routes, low latency routes, and, of course, heavy strand counts. And that's the way you bridge the gap in terms of creating low latency environments for AI workloads. So it's a combination of a lot of things.
Speaker Change: And it's not just Brazil, it's the whole fiber industry in general is going to need more new routes low latency routes and of course heavy strand count.
Marc Christopher Ganzi: This is this situation, Michael, and I'm sorry, this is a long winded answer, but you asked a complicated question. And we're going to dig into this on our investor day. It's more complicated to build a data center today than it was two, three years ago. And it's going to get increasingly more complicated, and I've been saying that for the last couple of years, but now, finally, everyone's paying attention, and it won't get easier.
Speaker Change: And that's the way you bridge the gap in terms of creating low latency environments for AI workloads. So it's a combination of a lot of things. This is this the situation Michael and I'm. Sorry. This is a long winded answer, but you asked a complicated question and we're going to dig into this in our Investor day.
Speaker Change: It's more complicated to build a data center today than it was two three years ago and.
Speaker Change: And it's going to get increasingly more complicated and I've been saying that for the last couple of years, but now finally everyone's paying attention.
Speaker Change: And it won't get easier I can I can I can share with you that it'll get harder, but I like it when things get harder when it was harder to build towers 20 years ago, we were up for that challenge.
Marc Christopher Ganzi: I can share with you that it'll get harder, but I like it when things get harder. When it was harder to build towers 20 years ago, we were up for that challenge. When it was harder to build small cells, you know, 15 years ago, we were up for that challenge. So we've got a management team that understands how to work through challenges, and the key was identifying those challenges over two years ago, which we did. So stay tuned, and I think we've got a great story about how we solve problems for our customers.
Speaker Change: When it was harder to build small cells. You know 15 years ago, we were up for that challenge. So we got a management team that understands how to work through challenges and the key was identifying those challenges over two years ago, which we did so stay.
Speaker Change: Stay tuned and I think we've got a great a great story on how we how we solve problems for our customers.
Michael Elias: Awesome. I really appreciate that color. We could talk about this forever, but I'll pass it on to the next person.
Speaker Change: Awesome really appreciate that color, we can talk about this forever, but I'll pass it onto the next person.
Operator: Thank you, Michael. I appreciate it as well. Our next question comes from Jade Rahmani of KBW. Please go ahead.
Speaker Change: Thank you Mike I appreciate it as well.
Speaker Change: Our next question comes from Jade Rahmani of K B W. Keith go ahead.
Jade Rahmani: Thank you very much I appreciate the comment around the carried interest reversal.
Jade Rahmani: Thank you very much. I appreciate the comment around the carrot interest reversal. Do you have any...
Jade Rahmani: Do you have any.
Jade Rahmani: Estimate of what distributable earnings would have been excluding that either.
Keith: The carrier vessels and mark to market, so that doesn't impact just your learnings.
Unknown Executive: The carrier reversal is a mark-to-market process, so that doesn't impact distributed learning. Okay.
Jade Rahmani: Okay.
Jade Rahmani:
Jade Rahmani: How do you feel about the outlook to achieve full year U N. In your prior outlook of 36 to 38 billion from the 33 billion at year end 'twenty three.
Speaker Change: Yeah, I think Tom and I remain completely convicted in the numbers, we have no changes to our guidance at all.
Marc Christopher Ganzi: Yeah, I think Tom and I remain completely convinced in the numbers. We have no changes to our guidance at all. We're seeing exactly, we feel like we are where we want to be through the first quarter. And again, I want to reiterate, no change to our guidance that Tom and I have reiterated in the previous quarterly call.
Speaker Change: Were seeing exactly we feel like we are where we want to be through the first quarter.
Speaker Change: And again want to reiterate no change to our guidance that Tom and I have reiterated in the previous quarterly call.
Speaker Change: Chad.
Chad: Thank you.
Chad: Our next question comes from Ric Prentiss of Raymond James. Please go ahead.
Operator: Our next question comes from Rick Prentiss of Raymond James. Please go ahead.
Richard Prentiss: Thanks, Severin, everybody. A couple of questions. I want to follow along with Jay's question there too.
Richard Prentiss: Hi, good afternoon everybody.
Richard Prentiss: Couple of questions or follow along Jades question, there too so obviously the outlook.
Unknown Executive: So obviously, the Outlook, Confirmed on the capital formation, $36 to $38 billion for ending CUM, helps us understand the pacing. Obviously, it's still pretty tough out there.
Richard Prentiss: Confirmed on the capital formation 36 to 38 billion for Enzo to help us understand the pacing, obviously, there's still pretty tough out there.
Unknown Executive: And what's kind of like the gross funding versus net funding and the pacing for those returns as well? First, and then I'll have a follow-up question.
Richard Prentiss: And what's the kind of like the gross funding versus net funding.
Richard Prentiss: The pacing for for those returns as well first.
Speaker Change: Follow up question.
Speaker Change: So let me take the first one on capital formation, and Hi, Rick how are you.
Marc Christopher Ganzi: So, let me take the first one on capital formation. Hi Rick. How are you?
Rick: So look it certainly you know one could extrapolate it's tough out there but.
Marc Christopher Ganzi: So, look, you know, one could extrapolate. It's tough out there, but honestly, Q1 in our line of work is always tough, Rick. LPs are defining their allocation strategy for the year. Not a lot of allocations are historically made in the first quarter. This is not germane to Digitalbridge.
Speaker Change: Honestly Q1 in our line of work is always tough Rick L. PS are defining their allocation strategy for the year not a lot of allocations are historically made in the first quarter. This is not germane to digital bridge, you've looked across the alternative the alt space and you'll see that fundraising historically is pretty tepid.
Marc Christopher Ganzi: You look across the alternative, the alternative space, and you'll see that fundraising historically is pretty tepid in the first quarter. But, you know, we outperformed last year. We outperformed 2022, and our outlook actually remains optimistic. We are in the middle of closing, you know, multiple clients across multiple strategies. I think that was something I was trying to infer in our call this quarter, which is that the multi-strat approach to what we're doing is working, Rick, which is that people understand our proposition, not just in our flagship fund, not only in co-investments, but they understand what we're doing in core, in credit, in liquid, and in continuation vehicles.
Speaker Change: In the first quarter, but you know, we we outperformed last year, we outperformed 2022, and our outlook actually remains optimistic.
Speaker Change: We are are in the middle of closing you know multiple clients across multiple strategies I think that was something I was trying to infer in our call. This this quarter is that the multi strat approach to what we're doing is working rig which is that people understand our proposition not just in our flagship on not only in co investments, but they understand what we are.
Speaker Change: Doing in core and credit and liquid.
Speaker Change: In continuation vehicles, and so we're seeing more repeat activity without piece than we've ever seen.
Marc Christopher Ganzi: And so we're seeing more repeat activity with LPs than we've ever seen. I think as it relates to our flagship fund, we're certainly where we want to be. We remain unchanged in our guidance around the third flagship fund.
Speaker Change: I think as it relates to our flagship fund, where certainly where we want to be we remain unchanged in our guidance around the the third flagship fund and I think it's exciting that we got credit two launched earlier than we thought so that strategy is now in flight a little earlier than expected and certainly some of the co investment vehicles are having a very strong.
Marc Christopher Ganzi: And I think it's exciting that we got Credit2 launched earlier than we thought. So that strategy is now in flight a little earlier than expected. And certainly some of the co-investment vehicles are having a very strong quarter as well as we form capital around great companies like Switch and like Vantage and some of our other companies that we're out forming capital for right now. As we continue to build out the AI strategy.
Speaker Change: As well.
Speaker Change: As we formed capital around great companies like switch and my vantage and some of our other companies that were out forming capital for right now as we continue to build into the AI strategy. So we're lagging in our Lps are lagging in.
Marc Christopher Ganzi: So we're stepping in, our LPs are stepping in. Certainly, some of the commitments related to flagship, as I inferred on the call, are tied to some other investment vehicles. So we slowed them down a little bit, and now we're getting them over the goal line. But again, I want to reiterate, no change to our guide. We feel really good about our ability to raise capital. The clients are happy with what we're doing. And we anticipate a strong year. Your second question, Rick, I don't I don't think I fully appreciated it. Can you reframe it for me?
Speaker Change: Certainly some of the commitments related to flagship design for it on the call are tied to some other investment vehicles. So we slowed them down a little bit and now we're we're getting them over the goal line, but again I want to reiterate no change to our guide.
Speaker Change: We feel really good about our ability to raise the capital or the clients are happy with what we're doing and we anticipate a strong year.
Speaker Change: Your second question, Rick I don't I don't think I fully appreciated it can you reframe it for me.
Richard Prentiss: Well, just there's some return of capital involved, too, right? I mean, you have the Vantage. Yeah, yeah. So, absolutely, you are correct. In the first quarter, we did return some capital. We had some exits, and we created some DPI, good outcomes for investors. And at the same time, we formed capital.
Richard Choe: Well just there's some return of capital involved too right. I mean, you have the vantage yeah. Yeah. So absolutely you are correct. So in the first quarter. We did return some capital we had some some exits and we created some DPI good outcomes for investors at the same time, we form capital. So you know part of the Magic is you know we do return capital from time to time.
Marc Christopher Ganzi: So, you know, part of the magic is that we do return capital from time to time. And I mean, the great news about Vantage is that we return capital, but we then put that capital to work with our friends at Silver Lake. And as I mentioned, we have a big co-investment vehicle that's getting ready to close there, which is exciting. And we love the fact that we retain that management team, we retain that asset, and we're deploying new capital that bears economics.
Richard Choe: And I mean, the great news about vantage is we return capital, but we then put capital to work.
Richard Choe: With our friends at Silver Lake and as I Intimated, you know we have a big co investment vehicle that is getting ready to close there, which is exciting and we love. The fact that we retain that management team, we retain that asset and we're deploying new capital that bears economics. So on it on a net basis, we actually think much like vertical bridge.
Marc Christopher Ganzi: So, on a net basis, we actually think, much like Vertical Bridge, our exposure in terms of fees will rise over time, but here's the best part. We're getting, you know, you as public investors get carry now on Vantage and it now sits in our fund product, and so investors now get to participate in the success of what's happening at Vantage with Surreal and the team, and that should be a really good day for public investors.
Speaker Change: Our exposure in terms of fees will rise over time, but here's the best part.
Speaker Change: We're getting you as public investors get carry now advantage and now sits in our fund product and so investors now get to participate in the success of whats happening advantage with cereal and the team and that should be a really good a really good day for public investors I know Rick you like cereal I know every analysts on the street likes of real makes what vantage does so now our public shareholders get to.
Marc Christopher Ganzi: I know, Rick, you like Surreal. I know every analyst on the street likes Surreal and likes what Vantage does, so now our public shareholders get to ride sidecar with us and get to enjoy the profits of that hard work, and Surreal's absolutely, you know, doing a great job for us.
Speaker Change: Right sidecar with us and get to enjoy the profits of.
Richard Choe: Of that hard work and thrills, absolutely you know doing a great job for us.
Tom Mayrhofer: And the final question for me is obviously reaffirming the capital formation targets. Tom, you've made some changes in the way you present the financials and report. You mentioned the company-wide fee. How should we think about where you're headed with helping the street understand financial guidance? And what are you looking specifically to benchmark against the peer group? Because obviously, this change, I think, sounds like you're trying to line it up so it's much more comparable to the peer group.
Speaker Change: Great and final question for me is obviously reaffirming the capital formation targets, Tom you've made some changes in the way we present the financials and the Port you mentioned you know the company wide.
Speaker Change: <unk>.
Speaker Change: How should we think about where you're headed on helping the street understand financial guidance and what are you looking specifically the benchmark against the peer group because obviously this change I think it sounded like you were trying to line it up some so it's much more comparable to the peer group.
Speaker Change: Yeah, I think we've tried to make it quite simple to follow.
Tom Mayrhofer: Yeah, I think, you know, we've tried to make it quite simple to follow. You know, I think our financials are, you know, fairly almost self-explanatory. They drive, you know, as Marc talked about raising fees, that converts directly into fee revenue. And, you know, the expense side of the equation is relatively simple and straightforward as well. So, you know, we hope we'll be able to deliver really clear, clean, and, you know, the kind of results that you can follow, model, and predict.
Speaker Change: You know I think our financials are.
Speaker Change: Fairly it's almost self explanatory. They drive you know as Mark talked about the C raising that converts directly into fee revenue and the expense side of the equation is relatively simple and straightforward as well. So you know we hope we'll be able to deliver really clear clean and you know kind of results that you can follow and modeling.
Speaker Change: <unk>.
Speaker Change: And I think you'd called out the margin improvement was outside.
Tom Mayrhofer: And I think you called out the margin improvement was outside. Is there a target of where you want to get the FRA margins? And is there an important size of scale that you want to try and achieve also? That's one for me, I swear.
Speaker Change: You can see them there.
Speaker Change: Is there a target of where you want to get the FRE margins.
Speaker Change: And is there is there are important size of scale that you want them trying to achieve also last one for me as well.
Speaker Change: Yeah, I think look I think the scale is not you know kind of binary I think it is you have kind of gradual and as we continue to grow will continue to achieve scale I don't think there's a step function change you know I think as we continue to grow which particularly when you have multiple products in our family. So you know you get D V. T. Three D V. Two D. D. D. One that gives you a lot of scale.
Tom Mayrhofer: Yeah, I think look, I think the scale is not, you know, kind of binary; I think it is, you know, kind of gradual. And as we continue to grow, we'll continue to achieve scale. I don't think there's a step function change, you know. I think as we continue to grow, particularly when you have multiple products in a family, so you get dbp3, dbp2, dbp1, that gives you a lot of scale.
Speaker Change: So we I don't think we're going to set a target on FRE margins that you know every new dollar of revenue that we bring in and we feel like improves the margin.
Marc Christopher Ganzi: Yeah, and I'll just, I'll come behind you on that, Tom. I think we are seeing as that incremental capital dollar comes in on Flagship 3 and incremental dollars come in on Credit 2, we do see the opportunity for margin expansion. I think in the first quarter, we had some new FTEs that came on. We did some hiring as we are expanding into some other strategies, which we'll certainly talk about at investor day.
Tom Mayrhofer: So, you know, we, I don't think we're going to set a target for FRA margins, but, you know, every new dollar of revenue that we bring in, we feel like it improves the margin. Yeah, and I'll just I'll come behind you on that, Tom.
Speaker Change: Yeah, and I'll, just I'll come behind you on that Tom I think we are seeing as that incremental capital dollar comes in on flagship three incremental dollars coming on on credit too we do see the opportunity for margin expansion I think in the first quarter. We had some new ftes. It came on we did some hiring as we are expanding into some other strategies, which will.
Speaker Change: We'll certainly talk about Investor day, but we've been really good at it sort of being able to home grow our own our own best ideas around products and as those products scale. We ultimately they turned the corner and they create efficiencies and we get we get margin expansion.
Marc Christopher Ganzi: But we've been really good at sort of growing our own best ideas and our own products. And as those products scale, they ultimately turn the corner, they create efficiencies, and we get margin expansion, not margin compression. So I think as the year goes on, Rick, in the second, third, and fourth quarters, as we close capital again, it's kind of like a wedding cake. That capital comes on with very little to no incremental G&A.
Speaker Change: Expansion not margin compression, so I think as the year goes on Rick in the second third and fourth quarter as we closed capital again, it's kind of like a wedding cake that capital comes on with very little to no incremental G&A and so I think what you'll see is not only the revenue contribution expands on a run rate basis throughout the year, that's the way our business works.
Marc Christopher Ganzi: And so I think what you'll see is not only the revenue contribution expands on a run rate basis throughout the year because that's where our business works, but you'll see a revenue contribution expansion as well because there's not a lot of incremental heads associated with, Tom, our second credit strategy or our Fund 3. And the co-investment vehicles that we're raising right now and certainly some of the other products we'll be unveiling this year.
Speaker Change: But also you'll see a revenue contribution expansion as well because theres not a lot of incremental heads Tom associated with.
Speaker Change: Our second credit strategy, nor our fund III and the co investment vehicles that we're raising right now and certainly some of the other products, where we're at we'll be unveiling this year. So.
Marc Christopher Ganzi: So I think, in large part, we remain, you know, very convicted about the guide. And more importantly, we remain convicted about the ability for us to improve revenues and margin as the year goes on, Rick, much similar to what happened last year.
Speaker Change: And in large we remain very convicted about the guide and more importantly, we remain convicted about the ability for us to improve revenues and margins as the as the year goes on rec much much similar to what happened last year.
Speaker Change: Okay. Thanks, guys.
Speaker Change: Thanks, Rick I appreciate it.
Speaker Change: Our next question comes from Richard Choe of J P. Morgan. Please go ahead.
Operator: Our next question comes from Richard Choe of J.P. Morgan. Please go ahead.
Richard Choe: Hi, thank you. I just wanted to follow up on Rick's questions a little bit. With the fee guidance being reiterated, is the fee revenue guidance also being reiterated, and how much of that is coming from catch-up fees? And then following on with that, is the FRE guidance, I guess, now that it's a consolidated number, not digital IM related, is that 150 to 165 still a good number for the year?
Richard Choe: Hi, Thank you I just wanted to follow up on Rick's question, a little bit with affirm guidance being reiterated as the fee revenue guidance also being reiterated and how much of that is coming from catch up fees and then following on with that.
Speaker Change: F R E.
Speaker Change: Yes, no that is.
Speaker Change: Our consolidated number not digital I am related.
Speaker Change: 150 to 165 is still a good number for the year.
Speaker Change: Hey, Richard how are you first of all thank you one that I think I would just go yes, yes, yes. If we were just Wanna be quick about your questions. Let me give you a little more color behind it I think on the fund raising piece there will be inevitably be catch up piece right that always happens there'll be catch up fees in Q2, Q3 and Q4.
Marc Christopher Ganzi: Hey, Richard, how are you? First of all, thank you. One, I think I would just go yes, yes, yes. If we just want to be quick about your questions, let me give you a little more color behind it. I think on the fundraising piece, there will inevitably be catch-up fees, right? That always happens.
Marc Christopher Ganzi: There'll be catch-up fees in Q2, Q3, and Q4, and the timing of that is always a little bit tricky. So, some quarters may have a little more catch-up fees than others. I don't think we're exactly going to be able to handicap how much catch-up fees we're going to have over the three quarters at this point in time. But suffice to say, your assumption is correct, and the assumption remains accurate as we bring in that $7 to $8 billion of incremental capital this year.
Speaker Change: And the timing of that always has a little bit tricky. So some quarters may have a little more catch up fees and others. I don't think we're exactly going to handicap, how much catch up piece, we're going to have over the three quarters at this point in time, but suffice to say your assumption is correct.
Marc Christopher Ganzi: You can anticipate that all three quarters coming will have catch-up fees in the flagship and, certainly, to a lesser extent, credit. Obviously, continuation funds and co-investments get the fees immediately. So, we do anticipate there being some velocity in that, and it'll pick up as we go throughout the year. I think the other two answers to your questions were yes and yes. We're not changing the guidance. And obviously, now that everything's all rolled up in one consolidated number, hopefully, it's easy for you guys to all digest. And if it isn't, we're always available to talk about it and give you any more granular information you need.
Speaker Change: And the assumption remains accurate as we bring on that $7 billion to $8 billion of incremental capital. This year you can anticipate that all three quarters coming we'll have we'll have catch up fees in flagship.
Speaker Change: And certainly to a lesser extent credit.
Speaker Change: Obviously continuation funds and co investments, we get the fees immediately so we do anticipate there being some velocity in that and it will pick up as we go throughout the year I think the other two answers to your questions, where we're yes, and yes, we're not changing the guidance.
Speaker Change: And obviously now that everything's all rolled up into one consolidated number hopefully it's easy for you guys saw digest and up it isn't where we're always available to talk about it in and give you any more granular information you need.
Marc Christopher Ganzi: The guidance was created on a company-wide basis, so it's not a change. It's not an IM versus operating; it's all just one company now.
Speaker Change: The guidance was created on a company wide basis. So it's not a it's not changed it's not and I am versus operating it's all just one company now.
Marc Christopher Ganzi: Great, just wanted to clarify that. And then, going back to the strategy presentation earlier, do you expect to just benefit from kind of the data center growth? Or can there be, I guess, incremental returns being generated from, I guess, the transmission and power solutions that you come up with? And how big could that be? And would that require, I think we've talked about in the past, kind of different, maybe teams or funds? Or can this all be captured in the existing, I guess, with the existing infrastructure?
Speaker Change: Just wanted to clarify that and then going back to the strategy presentation earlier do you expect to just benefit from kind of the datacenter growth or can there be incremental.
Speaker Change: Turns being generated from the transmission and power solutions that you've come up with and how big could that be and would that require I think you've talked about in the past kind of a different maybe teams or funds or can this all be captured in the existing.
Speaker Change: I guess so.
Speaker Change: With the existing infrastructure.
Speaker Change: Yes, it's a great question I'm going to break the answer down into three components, one applied learnings over the last 36 months have been really happening at our portfolio of companies and so the good news about having a global footprint and having six powerful platforms is we do business literally with every power provider on the planet.
Marc Christopher Ganzi: Yeah, it's a great question. I'm going to break the answer down into three components. One, applied learnings over the last 36 months have really been happening at our portfolio company. And so the good news about having a global footprint and having six powerful platforms is that we do business with literally every power provider on the planet. So we have great insights into, you know, what's happening in Compeanus and Tambor, what's happening in Kuala Lumpur, what's happening in Tokyo, what is happening in places like, certainly like Berlin or Cardiff or London, and then, of course, here in the U.S. and Canada.
Speaker Change: So we have great insights into what's.
Speaker Change: What's happening in convenience and Tambor.
Speaker Change: What's happening in Kuala Lumpur, what's happening in Tokyo.
Speaker Change: What happens in places like certainly like Berlin, or Cardiff for London, and then of course here in the U S and Canada. So it's been great to have had these great management teams that have been out executing some of these renewable solutions like a switch and Scala, which are 100% renewable already it's really exciting what we've done at scholar that's all hydro we lease transfer.
Marc Christopher Ganzi: So it's been great to have these great management teams that have been out executing some of these renewable solutions, like at Switch and Scala, which are 100% renewable already. It's really exciting what we've done at Scala. That's all hydro.
Marc Christopher Ganzi: We lease transmission infrastructure. We have our own substation. We've created our own grid in Compeanus.
Speaker Change: In infrastructure, we ever own substation, we've created around grid and convenience, we sell power obviously to ourselves, we certainly could sell power to other data center operators, we don't but that was a great learning experience for us Richard over the last three years really exciting what we've been able to do it switch certainly the Reno campus as a model for the future given the amount of exposure to Seoul.
Marc Christopher Ganzi: We sell power, obviously, to ourselves. We certainly could sell power to other data center operators, but we don't.
Marc Christopher Ganzi: But that was a great learning experience for us, Richard, over the last three years. Really exciting what we've been able to do at Switch. Certainly, the Reno campus is a model for the future, given the amount of exposure to solar there and hydro.
Speaker Change: They're in hydro.
Marc Christopher Ganzi: Our partnership with Envato Power & Light and a few other utility companies has taught us a few things. And the best way to really drive this stuff, Richard, is to drive it at the portfolio company level and drive those experiences with customers. And that's what we've been doing. And so having exposure to great management teams, great customers, and creating great solutions has been what it does. And that stuff percolates back up to us here at the asset manager level. Now, it was no accident that we bought A&P Capital.
Speaker Change: Our partnership with and bought a power and light and a few other utility companies has taught US a few things in the best way to really drive this stuff Richard is to drive it at the portfolio company level and drive those experiences with customers and that's what we've been doing and so having exposure to great management teams great customers, creating great solutions has been what it does is that stuff percolate.
Speaker Change: Back up to us here at the asset manager level no no accident that we bought A&P capital no accident that we renamed it Infra bridge and that we decided to put a team focused on renewable energy. We've done that we have a dedicated group of folks that are working on that and we believe there is a really big big opportunity not only to deliver powered scale you know for art.
Marc Christopher Ganzi: It was no accident that we renamed it InfraBridge and that we decided to put together a team focused on renewable energy. We've done that. We have a dedicated group of folks that are working on that, and we believe there is a really big, big opportunity not only to deliver power at scale, you know, for our data centers, but even to some of our friends that are in the business. And so we're working on a bunch of ideas and solutions.
Speaker Change: Datacenters, but even to some of our friends that are in the business and so we're working on a bunch of <unk>.
Marc Christopher Ganzi: Those ideas and solutions will manifest themselves quite soon. What I can tell you is we've never shied away from developing new strategies at Digitalbridge. We've gone out and hired, we think, the best team to go prosecute these ideas. We've been working on them for two years. This has been a lot of hard work, and I think what you're seeing is that, again, at the portfolio company level, we're creating these ideas and creating these solutions. Is there something to do that's bigger? Of course, there is, right?
Speaker Change: Ideas and solutions those ideas and solutions will manifest themselves quite soon what I can tell you is we've never shied away from developing new strategies that did a rich we've gone out and hired we think the best team to go prosecute these ideas we'd been working on it for two years, it's been a lot of hard work and I think what you're seeing is again at the portfolio company level.
Speaker Change: We're creating these ideas and creating these solutions.
Speaker Change: Is there something to do that bigger of course, there is right. If you think about how much power remains on the U S created on the European grid.
Marc Christopher Ganzi: If you think about how much power remains on the U.S. grid and on the European grid, we're down to less than 7 gigawatts on the U.S. grid, and we're probably down to less than 2.8 to 3 gigawatts in Europe. And as I said earlier in the call today, we think we will run out of transmission infrastructure for power dedicated to data centers in 24 months. And so to go to the next place, we've got to be proactive.
Speaker Change: The lesson seven gigawatts on the U S grid, we're probably down to less than 2.8 to three gigawatts in Europe and as I said earlier in the call. Today, we think we've run out of transmission infrastructure poor power dedicated to data centers in 24 months and so to go to the next places we've gotta be proactive we've got to work hard down at the portfolio company, we got to work with us.
Marc Christopher Ganzi: We've got to work hard down at the portfolio company. We've got to work with other utility providers that are our friends that we've worked with in the past, and we have to create those good outcomes. So it's a little bit of foreshadowing, but that's what we're doing.
Speaker Change: Their utility providers that our friends that we've worked with in the past and we have to create those good outcomes. So it's a little bit of foreshadowing, but that's what we're doing and we do think it's a huge opportunity given our backlog we're executing on two gigawatts and our backlog is over five gigawatt if.
Marc Christopher Ganzi: And we do think it's a huge opportunity. Given our backlog, we're executing on 2 gigawatts, and our backlog is over 5 gigawatts. If we were to execute 5 gigawatts of leasing, that's $50 billion in AUM in terms of data center spend. Talk about $0.50 on the dollar in creating new renewable power, that's another $25 billion of AUM that we could produce in renewable energy if we chose to go that path. So we have a lot of alternatives.
Speaker Change: We were to execute five gigawatts of leasing that's 50 billion in AUM in terms of data center spend talk about 50 cents on the dollar and creating new renewable power. That's another 25 billion of AUM that we could produce and renewable energy. If we chose to go that path. So we have a lot of alternatives. We have a big backlog, we've got great customers. We've got great Ceos, we've got.
Marc Christopher Ganzi: We have a big backlog. We've got great customers. We've got great CEOs, and we've got great partners in the power industry. So I would just tell you there's a lot to be done there, and we absolutely anticipate being a part of the narrative.
Speaker Change: Great partners in the power industry. So.
Speaker Change: I would just tell you there's a lot to be done there and we are absolutely anticipate being a part of the narrative.
Speaker Change: Great look forward to the Investor day, where we can go over this stuff in more detail. Thank you.
Richard Choe: Great. Look forward to the investor day where we can go over these stuff in more detail. Thank you. I'm looking forward to it as well. Thanks, Richard.
Marc Christopher Ganzi: Looking forward to it as well. Thanks, Richard. See you in New York.
Speaker Change: Going forward as well thanks, Richard So you're up in New York.
Speaker Change: The next question comes from Eric Love Chop off Oh.
Operator: The next question comes from Eric Luebchow of Wells Fargo. Please go ahead.
Speaker Change: Well stock Pease go ahead.
Eric Luebchow: Great. Thanks for taking the question. So, Marc, maybe I just wanted to get the latest pulse on the M&A market, where you're finding maybe some relative value today. It seems like data centers and kind of developed market towers are still priced pretty aggressively. So, are you finding any better value in fiber, whether it's residential or enterprise?
Speaker Change: Great. Thanks for taking the questions. So mark maybe I just wanted to get the latest pulse on the M&A market, where you're finding maybe some relative value today. It seems like data centers and kind of developed market towers are still priced pretty aggressively. So are you finding any better value and and fiber whether its residential or enterprise.
Speaker Change: Yeah.
Mark Zuckerberg: So yeah, I would say look the value proposition on on fiber is you are correct. As initially starting in residential resin fiber is has got some really interesting platforms that you know we think some sponsors perhaps paid too much put too much leverage on them and so there's an opportunity to play.
Marc Christopher Ganzi: So, yeah, I would say, look, the value proposition on Fiverr is, you are correct, initially starting in residential. Residue Fiverr has got some really interesting platforms that, you know, we think some sponsors perhaps paid too much, put too much leverage on them. And so there's an opportunity to play, you know, either through our credit fund or through our third flagship fund. I think we have got a significant amount of new pipeline ideas.
Speaker Change: You know either through our credit fund or a place where our third flagship fund.
Speaker Change: I think we have got a significant amount of new pipeline of ideas. We're prosecuting over 20, new ideas and our third flagship fund you know a couple of those ideas are in the fiber space, where we are seeing significant value.
Marc Christopher Ganzi: We're pursuing over 20 new ideas in our third flagship fund. You know, a couple of those ideas are in the Fiverr space, where we are seeing significant value. I think, you know, the deals that were once priced in the 18 to 25 times EBITDA range are now priced in the, you know, call it, 10 to 14 times range. And we're even seeing some interesting opportunities in other verticals of residential Fiverr where we think those could price down into the single digits. So I think there's value to be found, but you have to be careful, right?
Speaker Change: Thank you know the deals that were once priced in the 18 to 25 times EBITDA range are now pricing in the you know call. It 10 to 14 times range and we're even seeing some some interesting opportunities and in other verticals of residential fiber, where you think those could price down into the single digits. So I think there's value to be found.
Speaker Change: But you have to be careful right theres pitfalls with that the entry price is just one part of the proposition. When you have an investment committee. There's follow on Capex, you've got to continue to invest in these in these networks and some of these businesses in the residential fiber space are underinvested.
Marc Christopher Ganzi: There are pitfalls with that. The entry price is just one part of the proposition when you're an investment committee. There's follow-on CapEx. You've got to continue to invest in these networks. And some of these businesses in the residential Fiverr space are underinvested because they're competing against well-capitalized cable companies or RBOX. So we've looked at a lot of stuff. We've said no to a lot of stuff.
Speaker Change: Because they're competing against well capitalized cable companies or our box so.
Speaker Change: We've looked at a lot of stuff, we've said no to a lot of stuff. We green light you know one deal already in the in the fiber space. We're looking at another one in our third flagship fund, but again, it's it's there's a lot to do out there. It's not just in the fiber space not in the resi fiber space, but we also see opportunities certainly in the enterprise fiber space and then most import.
Marc Christopher Ganzi: We've greenlit, you know, one deal already in the Fiverr space. We're looking at another one in our third flagship fund. But again, there's a lot to do out there.
Eric Luebchow: It's not just in the Fiverr space, not in the retail Fiverr space, but we also see opportunities in the enterprise Fiverr space. And, most importantly, we really like the data center connectivity space. So that's really long-haul metro rings and data center connectivity or AI connectivity where we're integrating that with a data center solution and a power solution to a customer. There's a lot going on in connectivity right now, but one thing is for certain, as we said on the call today, fiber is critical.
Speaker Change: We really like the datacenter connectivity space. So that's really long haul metro rings, and datacenter connectivity or AI connectivity, where we're integrating that with the data center solution and a power solution to a customer there's a lot happening in connectivity right now, but one thing is for certain as we said on the call today fiber is critical fibers critical to AI.
Eric Luebchow: Fiber is critical to AI, fiber is critical to ultimately connecting the edge, and fiber is critical to bringing ultimately, you know, low latency, you know, high-speed solutions to IoT networks, and small cells. Everything we're doing and everything we're touching does involve that connectivity in the fiber. So, we don't see the vertical going away. We do see value, but I actually think some of that value will be more pronounced next year. You know, there's close to $80 billion of LBO debt that's rolling in the next 36 months. Some of that is in the fiber space, and so we're looking forward to taking a look at some of those opportunities and, you know, and being a helpful partner to companies that need capital.
Speaker Change: Fiber is critical to ultimately connecting the edge and fiber is critical to bringing ultimately you know low latency high speed solutions Iot networks small cells everything we're doing and everything we're touching does involve that connectivity in the fiber. So we don't see the vertical going away, we do see value, but I actually think some of that value will be more pronounced next year.
Speaker Change: You know, there's close to $80 billion of L. B O debt. That's rolling in the next 36 months some of that is in the fiber space and so we're looking forward to taking a look at some of those opportunities and and and and being a helpful partner to companies that need capital.
Speaker Change: Yeah.
Speaker Change: I appreciate that Martin just a just a follow up I know it was touched on data centers a lot, but maybe you could just give us an update on what you're seeing in terms of where kind of market rents have gone and data centers, we talked a lot about the supply demand imbalance.
Marc Christopher Ganzi: I appreciate that, Marc. And just a follow-up.
Eric Luebchow: I know we've touched on data centers a lot, but maybe you can just give us an update on what you're seeing in terms of where the kind of market rents have gone for data centers. We talked a lot about the supply, demand, and balance. Have they continued to move higher this year? And kind of where does that take unlevered returns today, just given where the cost of construction and lead times are? And I guess, you know, is there a breaking point at which we're going to see pricing growth start to slow down, or a point at which the hyperscalers might try to bring more in-house if the industry keeps raising prices? Thanks.
Speaker Change: Have they continued to move higher this year and kind of.
Martin: Where does that take Unlevered returns today, just given where cost of construction and lead times are and I guess, you know is there a breaking point at which we're going to see.
Martin: Pricing growth starts to slow down or appointed which the hyperscale or as my tried to bring more in house as the industry keeps raising pricing.
Speaker Change: Yeah.
Marc Christopher Ganzi: That's a dangerous question, right? Certainly, I don't love to talk about pricing on our calls, but what I would tell you is, broadly speaking, we continue to believe that there is a really good opportunity to continue to work with our partners and get paid for the risks that we take. And what I mean by that is that, obviously, there is a big opportunity. And look, if our customers could self-perform, they would. And we never tell a customer that they can't self-perform.
Speaker Change: That's a that's a dangerous question right certainly I don't love to talk about pricing on our on our calls, but what what I would tell you is as broadly speaking.
Speaker Change: We continue to believe that there is a you know a really good opportunity to.
Speaker Change: <unk> continued to work with our partners and get paid for.
Speaker Change: The risks that we take.
Speaker Change:
Speaker Change: And what I mean by that is that obviously, there is a big opportunity and look if our customers could self performed they would.
Speaker Change: And we never tell a customer that they can't self perform that'd be the last person in the world to tell any of the hyperscale or is that they cannot build their own data centers and can't self perform.
Marc Christopher Ganzi: I'd be the last person in the world to tell any of the hyperscalers that they cannot build their own data centers and can't self-perform. I think the challenge today, if you're looking and taking a step back, is there is that constraint of power. And there is that constraint of resources, of land, and building permits. And just it's a question of focus at the end of the day.
Speaker Change: The challenge today, if you're if you're looking at taking a step back is there is that can train of power.
Speaker Change: And there is that constrained our resources of land and building permits and just it's a question of focus at the end of the day what is the best use of Microsoft time, or Amazon sign or met his time or Google's time.
Marc Christopher Ganzi: What is the best use of Microsoft's time, or Amazon's time, or Meta's time, or Google's time? We think they will self-perform some of their workloads, 30 to 40 percent. And we continue to believe 70 to 60 percent of the time they're going to work with folks like us that have the inventory, that have the land, that have the permits, and have the WillServe letters. So, as I said before, we're lighting up 2 gigawatts right now. So, we're pretty busy.
Speaker Change: We think they will self perform some of their workloads, 30% to 40% and we continue to believe 70% to 60% of the time, they're going to work with folks like us that have the inventory.
Speaker Change: The land, but have the permits and have the will serve letters as I said before we're lighting up two gigawatts right now so we're pretty busy that's on top of the one eight to one nine gigawatts are already have online today. So we think on an aggregate basis across all of our platforms, where one of the largest we think the largest data center operator in the world in terms of certainly power online.
Marc Christopher Ganzi: That's on top of the 1.8 to 1.9 gigawatts we already have online today. So, we think on an aggregate basis across all of our platforms, we're one of the largest, we think the largest data center operator in the world in terms of certainly power online, square footage, number of data centers, and certainly the ability to service private cloud, public cloud, and edge, which is something quite unique to the Digitalbridge platform.
Speaker Change: Square footage number of data centers and certainly the build of the service private cloud public cloud and edge, which is something quite unique to the digital platform.
Speaker Change: I would say that you know without being specific or announced on pricing we've.
Marc Christopher Ganzi: I would say that, you know, without being specific or announced on pricing, we've had two really good years, right? The uptick from 21 to 22 was strong, rents were up over 21 percent. The uptick from 22 to 23, depending on which market you're in, was sort of 13 to 16 percent.
Speaker Change: Had two really good years right, but the uptick from 'twenty one to 'twenty. Two was strong rents were up over 21%. The uptick from you know 2022 to 'twenty, three depending on which market you're in sort of 13% to 16% and so far through the first quarter, we are seeing that.
Marc Christopher Ganzi: And so far through the first quarter, we are seeing that pricing power remains with the, you know, with the landlord. I never believe we have pricing power. And by the way, our CEOs that run our data center companies subscribe to my view and my logic, which is that we need to work with customers. We don't want to be the price setter; we want to have a partnership. And that comes from my 31 years of doing this and building towers and building fiber and small cells and data centers: if you take every bit of flesh out of a customer, they don't come back.
Speaker Change: <unk> power remains with with the you know with the landlord I never believe we have pricing power.
Speaker Change: And by the way are our Ceos that run our data center companies. They subscribe to my my view in my logic, which is.
Speaker Change: We need to work with customers, we don't want to be the price setter, we want to have partnerships and that comes from my 31 years of doing this and building towers and building fiber and small cells in data centers is if you take every bit of flesh out of a customer they don't come back.
Marc Christopher Ganzi: And so, I think we've been very careful about how we price. We're very focused on the return nature and the repeat nature of our customer relationships. And so, we're very sensitive to making sure that we create the right value for our customers. What I can tell you is, you know, our leasing backlog has never been bigger across all of our data center companies. It's the largest pipeline of opportunity we've ever seen.
Speaker Change: And so I think we've been very careful about how we price.
Speaker Change: Very focused on the return nature and the repeat nature of our customer relationships and so we're very sensitive to making sure that we create the right value for our customers. What I can tell you is you know our leasing backlog has never been bigger across all of our data center companies with the largest pipeline of opportunity we've ever seen and so we got to balance that with pricing.
Marc Christopher Ganzi: And so, we've got to balance that with pricing it correctly and also making sure, as you said, we get the right return. Construction is expensive. We've got to make sure we get the right anchor build, return on invested capital on a cash on cash basis. And remember, most of the things that we are building are campuses. So we are looking to bring that second, third, or fourth customer into a campus setting when we build a new facility.
Speaker Change: Correctly and also making sure as you said, we get the right returns.
Speaker Change: Construction is expensive we got to make sure we get the right anchor build return on invested capital on a cash on cash basis and remember most of the things that we are building our campuses. So we are looking to bring that second third or fourth customer.
Speaker Change: Intuit campus setting.
Speaker Change: From when we build a new facility, there's a lot going on I think I think Severin said it earlier.
Marc Christopher Ganzi: There's a lot going on. I think Severin said it earlier, you know; we look forward to welcoming everyone to Investor Day. I think we'll do a little bit of a deeper dive on this and certainly dive deeper into edge, private, and public cloud, and what's happening across those three customer sets and where we see workloads going, where we see yields going, and ultimately how we see our TAM and AUM growing over the next five to ten years.
Eric Luebchow: All right. Great. I look forward to it.
Speaker Change: Earlier, we look forward to welcome you on Investor Day, I think we'll do a little bit of a deeper dive on this and certainly dive deeper into edge and private cloud and public cloud and what's happening across those those three customer sets and where we see workloads going and where we see yields going in ultimately how we see our Tam in AUM growing over the next five to 10 years.
Speaker Change: Alright, great look forward to it thanks Mark.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Jon Atkin of RBC capital markets. Please go ahead.
Operator: Our next question comes from Jon Atkin of RBC Capital Markets. Thank you for coming in.
Jonathan Atkin: Thanks. I was interested in maybe drilling down on towers, thinking about the US and maybe LATAM and opportunities that you might see for consolidation to increase your presence in that sector. And then I've got a follow-up.
Jonathan Atkin: Thanks, I was interested in maybe drilling down on towers.
Jonathan Atkin: About the U S and maybe Latam and in opportunities that you might see for for consolidation.
Jonathan Atkin: To increase your presence in that in that sector, and then I've got a follow up.
Jonathan Atkin: So your first question is just around tower M&A.
Marc Christopher Ganzi: So, your first question is just around Tower M&A. Yeah.
Speaker Change: Yeah, I think look we we continue to be very acquisitive on the tower front, Jonathan you know the four theaters that we operate in Asia Europe and.
Marc Christopher Ganzi: I think, look, we continue to be very acquisitive on the Tower front, Jonathan. You know, the four theaters that we operate in, Asia, Europe, North America, and Latin America, are all certainly active from an M&A perspective. And we've been looking at Tower transactions in all four theaters this quarter, interestingly enough. You know, the one theater that I think did resonate the most in this quarter was the U.S. We continue to be really bullish about the U.S. tower market. Maybe, perhaps you can tell from the way the stock's traded today; maybe public investors weren't.
Speaker Change: North American Latin America, all certainly active from an M&A perspective, and we've been looking at tower transactions in all four theaters inside this quarter Interestingly enough you know the one theater that that I think did resonate the most in this quarter was the U S. We continue to be really bullish about the U S tower market, maybe perhaps you can tell from the way.
Speaker Change: The stocks traded today, maybe public investors werent, but I wouldn't bet against the tower industry. So we did an acquisition at vertical bridge, we did a tuck in Chantelle, we liked that tower footprint, we like where the central assets are really difficult to zone towers, and you know carrier owned portfolio that now we've turned in in one go.
Marc Christopher Ganzi: But I wouldn't bet against the Tower industry. So, we did an acquisition at Vertical Bridge. We did a tuck in Chantel.
Marc Christopher Ganzi: We like that Tower footprint. We like where the Chantel assets are. Really difficult to zone towers and, you know, carry your own portfolio that now we've turned, and we're going to migrate onto our platform, which creates a lot of good opportunity and a lot of good lease-up. We've continued to look at tuck-ins in Europe across our three different European platforms. We have FreshWave.
Speaker Change: And migrate onto our platform, which creates a lot of good opportunity and a lot of good lease up.
Speaker Change: We've continued to look at tuck ins in Europe across our three different European platforms, we have fresh wave Belgian tower partners and we are G D towers, and our partnership with Deutsche Telekom again, there we've been very acquisitive, we'd been looking at everything but ultimately in this quarter. The stuff that we saw trade in the quarter was too expensive for us.
Marc Christopher Ganzi: We have Belgian Tower Partners. And we have GD Towers and our partnership with Deutsche Telekom. Again, there, we've been very acquisitive. We've been looking at everything. But ultimately, in this quarter, the stuff that we saw trade in the quarter was too expensive for us, with Ireland being a great comp.
Speaker Change: Ireland being a great comp, we just couldn't get to a mid twenties multiple for towers that were fairly mature in Ireland.
Marc Christopher Ganzi: We just couldn't get to, you know, a mid-20s multiple for Towers that were fairly mature in Ireland. And also, when a sophisticated seller like Celnex sells, obviously, our antenna is up. We really respect Marco. He's a good friend of mine.
Speaker Change: And also went up when it's sophisticated seller like sell next cells. We we obviously you know our our antennas up [laughter], we we really respect Marco he's a good friend of mine and sell next is a great company. So when theyre selling assets, we tend to be pretty careful about where those assets are selling and at what price at that price point, we were not a buyer.
Marc Christopher Ganzi: And Celnex is a great company. So when they're selling assets, we tend to be pretty careful about where those assets are selling and at what price. At that price point, we were not a buyer.
Marc Christopher Ganzi: But that doesn't prohibit us from keeping looking. We own, you know, a lot of different tower platforms around the world. We remain excited about what we're doing in Southeast Asia. EdgePoint has a lot of really good opportunities. We're looking at other opportunities in the Asia theater.
Speaker Change: But that doesn't prohibit us from keep looking.
Speaker Change: We own you know a lot of different tower platforms around the world. We remain excited about what we're doing in South East Asia Edge point has a lot of really good opportunity. We're looking at other opportunities in the Asia Theater. Some things are coming through investment Committee right. Now so towers remain top of mind, why we think towers ultimately or the delivery mechanism for generative edge.
Marc Christopher Ganzi: Some things are coming through the investment committee right now, so towers remain top of mind. Why?
Marc Christopher Ganzi: We think towers ultimately are the delivery mechanism for generative AI. And so, ultimately, as those applications, Jonathan, move to the mobile edge, and they move to the device, you're going to see absolutely more data consumed at the cell site level; you're going to see more pressure on the handset. And you're going to see these applications migrate from the enterprise, from the office, to the edge, to IoT networks, to mobility, to cars, and all things related to logistics and transport. The only way that you can make generative AI work in a mobile framework is through towers.
Speaker Change: Jay AI and so ultimately as those applications, Jonathan moved to mobile edge and they moved to the device youre going to see absolutely more data consumed at the cell site level youre going to see more pressure on the handset and youre going to see these applications migrate from the enterprise from the office to the edge to Iot networks to mobility.
Speaker Change: <unk> two cars and all things related to logistics and transport the only way that you can make generative AI work in a mobile framework is through towers.
Marc Christopher Ganzi: And so, whilst that's maybe two, three years down the road, we're very optimistic about the long-term implications of what that means for not only towers here in the U.S., but inevitably, Latin America, Europe, and Asia are the theaters that we're focused on. So, I'm, you know, maybe this is the part of the call where I'm the cheerleader for the tower industry, but 31 years of doing this, there's a whole new investment cycle that's going to have to happen, Jonathan and towers, and you just literally cannot avoid data gravity.
Speaker Change: And so whilst that's maybe two three years down the road, we're very optimistic about the long term implications for what that means for not only towers here in the U S, but inevitably Latam Europe and Asia are the theaters that were focused on so I'm. You know maybe this is the part of the call around the cheerleader for the tower industry, but.
Speaker Change: 31 years of doing this and there's a whole another investment cycle, that's going to have to happen Jonathan in towers and you just literally cannot avoid data gravity. The data ends up on the handset and ultimately those applications reside on the handset and the ability to pull the enterprise to the edge and to consumer relies.
Marc Christopher Ganzi: The data ends up on the handset, and ultimately, those applications reside on the handset, and the ability to pull the enterprise to the edge and to the consumer relies on the handset. We've seen this play out from 2G to 3G, 3G to 4G, and 4G to 5G. Jonathan, you and I have known each other for 20 years. At every technology migration path, you know this happens. We know this happens, so I would not be shorting the tower sector. And again, we're very bullish on this third fund around towers, and you'll see us invest in towers, and that's part of our strategy.
Speaker Change: On the handset we've seen this play out from two to three G. Three Judah <unk>, Jonathan you're not known each other for 20 years at every technology migration path. You know this happens we know this happens so.
Speaker Change: I would not be shorting the tower sector and again, we're very bullish in this third fund around towers, and you'll see us invest in towers and that's part of our strategy.
Jonathan Atkin: Well, I appreciate those comments. And then maybe just turning to fiber and small cells. I know you talked about it earlier in the call, but, you know, any ways in which you could see maybe augmenting, you know, the exonet activities, and then doing domestically, any kind of capital opportunities, whether it's M&A or just increasing your development capital, how do you view those opportunities? Well, look, we have three small cell operators, Freshwave and the U.K.
Jonathan Atkin: Well I appreciate those comments and then and then maybe just turning to fiber and small cells.
Jonathan Atkin: You talked about it earlier on the call but.
Jonathan Atkin: Any any ways in which you could see maybe augmenting.
Jonathan Atkin: The extranet activities, and then J O domestically any any kind of.
Jonathan Atkin: Capital opportunities are whether it's M&A or just increasing your development capital how do you view those opportunities.
Jonathan Atkin: Well look we have three small cell operators fresh wave in the U K continues to deliver you know workloads for our customers indoors and outdoors, a boingo does a great job on Wi Fi side in indoor networks, extranet largest private provider of outdoor small cell infrastructure in and look we're busy right. We're building we're taking.
Marc Christopher Ganzi: Well, look, we have three small cell operators. FreshWave in the UK continues to deliver, you know, workloads for our customers, indoors and outdoors. Boingo does a great job on the Wi-Fi side and indoor networks. XNet, you know, is the largest private provider of outdoor small cell infrastructure. And look, we're busy, right?
Marc Christopher Ganzi: We're building, we're taking on bookings. We are seeing momentum as, obviously, the overlay in 5G starts to move to densification. And we think that densification for 5G really exists kind of in 25, 26, 27, and 28. That follows a similar migration path to, you know, ultimately to 3G and what we did in LTE and LTE+. Our customers are telling us they still need small cell infrastructure. They still need an out
Jonathan Atkin: On bookings.
Jonathan Atkin: We are seeing momentum as obviously, the overlay and five G starts to move to Densification.
Jonathan Atkin: And we think that Densification for five G really exist kind of in 'twenty five 'twenty six 'twenty seven and 28 that follows a similar migration path to you know ultimately the three G and what we did in L. T and L. T plus our customers are telling us they still need small cell infrastructure, they still need an outsourced solution.
Marc Christopher Ganzi: And so, you know, again, we remain long-term bullish about the fact that, ultimately, a lot of this infrastructure needs to support generative AI needs to support those workloads. Macros get a lot of it done, but ultimately, the proliferation of true generative edge AI sits down at the handset. And so we really talk about data gravity a lot, Jonathan, and how those workloads start in those learning models. They're moving into training. They're moving into inference.
And so you know again, we remain long term bullish about the fact that ultimately a lot of this infrastructure.
Jonathan Atkin: Needs to support generative AI.
Jonathan Atkin: I need to support those workloads macros get a lot of it done, but ultimately the proliferation to true generative edge AI sits down at the handset and so we we really talk about data gravity a lot Jonathan how those workloads start in those in those in those learning models, they're moving into training, they're moving into your inference than they are.
Jonathan Atkin: Move into into really resident in the public cloud then they moved to edge then we moved to mobile edge and then we moved to near edge, which is the handset. This is the direction of travel of data. This is how the cloud was built ultimately AI will follow a similar architecture.
Marc Christopher Ganzi: Then they move into really being resident in the public cloud. Then they move to the edge. Then we move to the mobile edge. And then we move to the near edge, which is the handset. This is the direction of travel of data. This is how the cloud was built. Ultimately, AI will follow a similar architecture over the next, let's call it the next three to 10 years. So we're excited about it, and investors have to be a little patient, but we do believe in the long-term nature of small cell infrastructure, Wi-Fi 6, private 5G networks, and the opportunity to offload those networks.
The next let's call. It the next three to 10 years. So we're excited about it and investors have to be a little patient, but we do believe in the long term nature of small cell infrastructure Wi Fi six private <unk> networks and the opportunity to offload those networks.
Speaker Change: Thanks very much.
Speaker Change: Thanks, Jonathan.
Speaker Change: Thank you ladies and gentlemen, we have reached the end of our question and answer session. I will now hand back to Mackenzie looks at you at all.
Marc Christopher Ganzi: Thank you. Ladies and gentlemen, we have reached the end of our question and answer session. I will now hand the floor back to Marc Ganzi for closing remarks.
Mackenzie: Well look thank you everyone for tuning into our our Q1 call.
Marc Christopher Ganzi: Well, look, thank you, everyone, for tuning in to our Q1 call. You know, we've laid out four simple tenants for you to think about as an owner of Digitalbridge or a prospective owner of Digitalbridge. There are four things that we're focused on this year. One, we're building capital behind our best ideas. I think we've laid that case out today, what our best ideas are, and that we remain convicted in our ability to form that capital and then to deploy that capital. Second, we're investing. We're investing in the best secular ideas today that exist on the planet. Generative AI
Mackenzie: So we've laid out sports simple tenants for you to think about as an owner of Bridgewater prospective owner Desert Ridge.
Mackenzie: There are four things that we're focused on this year, one we're forming capital behind our best ideas.
We've laid that case out today, what our best ideas are and that we remain convicted in our ability to form that capital and then to deploy that capital.
Mackenzie: Second we're investing.
Mackenzie: We're investing in the best secular ideas today that exists on the planet.
Generally of AI.
Mackenzie: Mobile infrastructure and ultimately.
Marc Christopher Ganzi: Mobile Infrastructure. And ultimately, the ecosystem and the power that supports that are all the key tenets and the foundation of our economy today. So investing in these tailwinds and investing in these secular thematics is critical and necessary. Number three, we're focused on scaling our platform. Scaling means either acquiring existing platforms, like we did with A&P Capital, or building out new products, like we did with Core, our Late Stage Venture Growth Fund, our Liquid Strategies, and other alternative asset management strategies that we've been very good and skilled at building those capabilities in-house.
Mackenzie: Ecosystem and the power that supports that are all the key tenants and the foundation of our economy today, so investing in needs <unk> and investing in these secular thematic are critical and necessary.
Mackenzie: Number three we're focused on scaling our platform.
Scaling means either acquiring existing platforms like we did with E&P capital or building out new products like we did with core are late stage venture growth fund, our liquid strategies and other alternative asset management strategies that we've been very good and skilled in terms of building those capabilities in house.
Marc Christopher Ganzi: And then ultimately, we've got to asset manage, we've got to continue to perform at the portfolio company level. We've laid out some anecdotal cases for that, how some of our portfolio companies are delivering for customers, and they're delivering the future of networks for those customers. We appreciate your support. We're looking forward to hosting all of you on May 13th in New York at our Investor Day. We're going to talk about these strategies in greater detail and how we plan to change the digital economy through some of these strategies and certainly through some of the investments that we're making to forge a new digital path and new digital infrastructure for the future.
Mackenzie: And then ultimately we've got to asset manage we've got to continue to perform at the portfolio company level. We've laid out some anecdotal cases for that how some of our portfolio companies are delivering for customers and they're delivering the future of networks for those customers.
Mackenzie: We appreciate your support we're looking forward to hosting all of you may 13th in New York at our Investor Day, we're going to talk about these strategies in greater detail and how we plan to change the digital economy through some of the strategies and certainly through some of the investments that we're making to forge a new digital path and new digital infrastructure of the future. It's an important.
Marc Christopher Ganzi: It's an important moment for us. We hope you'll join us. Again, thank you for your support and interest in Digitalbridge. We look forward to seeing you soon. Thank you, sir.
Mackenzie: [noise] moment for Us we hope you'll join US again, thank you for your support and interest in Desert Ridge, We look forward to seeing you soon have a great day.
Mackenzie: Yeah.
Speaker Change: Thank you, Sir ladies and chance to lose that concludes todays event. Thank you for attending and you may now disconnect your lines.
Operator: Thank you, sir. Ladies and gentlemen, that concludes today's event. Thank you for attending, and you may now disconnect your line.
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