Q2 2024 GCM Grosvenor Inc Earnings Call

August 8, 2024

Operator: Please stand by. Good day and welcome to the GCM Grosvenor second quarter 2024 results webcast. Later, we will conduct a question and answer session. If you are interested in asking a question, please ensure you dial in using the numbers you have been provided for this call and press star 1 on your keypad to join the queue. If anyone should require operator assistance, please press star then 0 on your telephone. As a reminder, this call will be recorded. I would now like to hand the call over to Stacie Selinger, Head of Investor Relations. You may begin.

Please stand by.

Operator: Good day and welcome to the GCM Grosvenor second quarter 2024 results webcast. Later, we will conduct a question-and-answer session. If you are interested in asking a question, please ensure you dial in using the numbers you have been provided for this call and press star 1 on your keypad to join the queue.

Please stand by.

Operator: And welcome to the GCM Grosvenor second quarter 2024 results webcast. Later, we will conduct a question and answer session. If you are interested in asking a question, please ensure you dial in using the numbers you have been provided for this call and press star 1 on your keypad to join the queue. If anyone should require operator assistance, please press star then 0 on your telephone. As a reminder, this call will be recorded. I would now like to hand the call over to Stacie Selinger, Head of Investor Relations. You may begin.

Operator: and welcome to the GCM Grosvenor second quarter 2024 results webcast. Later we will conduct a question and answer session. If you are interested in asking a question, please ensure you dial in using the numbers you have been provided for this call and press star 1 on your keypad to join the queue. If anyone should require operator assistance, please press star then 0 on your telephone. As a reminder, this call will be recorded. I would now like to hand the call over to Stacie Selinger, Head of Investor Relations. You may begin.

Speaker Change: Good day and welcome to the GCM Grosvenor second quarter 2024 results webcast.

Later, we will conduct a question and answer session. If you are interested in asking a question, please ensure you dial in using the numbers you have been provided for this call and press star 1 on your keypad to join the queue. If anyone should require operator assistance, please call 1-866-422-4232.

Operator: If anyone should require operator assistance, please press star then zero on your telephone. As a reminder, this call will be recorded.

Stacie Selinger: Please press star then zero on your telephone. As a reminder, this call will be recorded. I would now like to hand the call over to Stacie Selinger, Head of Investor Relations. You may begin.

Stacie Selinger: I would now like to hand the call over to Stacie Selinger, Head of Investor Relations. You may begin.

Stacie Selinger: Thank you. Good morning and welcome to GCM Grosvenor second quarter 2024 earnings call. Today I am joined by GCM Grosvenor's Chairman and Chief Executive Officer, Michael Sacks, President, John Levin, and Chief Financial Officer, Pam Bentley.

Stacie Selinger: Thank you. Good morning, and welcome to GCM Grosvenor's second quarter 2024 earnings call. Today I am joined by GCM Grosvenor's Chairman and Chief Executive Officer Michael Sacks, President Jon Levin, and Chief Financial Officer Pam Bentley. Before we discuss this quarter's results, a reminder that all statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements. This includes statements regarding our current expectations for the business, our financial performance, and projections. However, these statements are neither promises nor guarantees.

Stacie Selinger: Thank you. Good morning and welcome to GCM Grosvenor's second quarter 2024 earnings call. Today I am joined by GCM Grosvenor's Chairman and Chief Executive Officer Michael Sacks, President Jon Levin, and Chief Financial Officer Pam Bentley. Before we discuss this quarter's results, a reminder that all statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements. This includes statements regarding our current expectations for the business, our financial performance, and projections. These statements are neither promises nor guarantees.

Stacie Selinger: Before we discuss this, quarters results are a reminder that all statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements. This includes statements regarding our current expectations for the business, our financial performance, and projections. These statements are neither promises nor guarantees. They involve known and unknown risks, uncertainties, and other important factors that may cause our actual results to differ materially from those indicated by the forward-looking statements on this call.

Stacie Selinger: They involve known and unknown risks, uncertainties, and other important factors that may cause our actual results to differ materially from those indicated by the forward-looking statements on this call. Please refer to the factors in the risk factors section of our Time K, our other filings with the Securities and Exchange Commission, and our earnings release, all of which are available on the public shareholder section of our website. We'll also refer to non-GAP measures that we view as important in assessing the performance of our business.

Stacie Selinger: They involve known and unknown risks, uncertainties, and other important factors that may cause our actual results to differ materially from those indicated by the forward-looking statements on this call. Please refer to the factors in the risk factors section of our Time K, our other filings with the Securities and Exchange Commission, and our earnings release, all of which are available on the public shareholder section of our website. We'll also refer to non-GAAP measures that we view as important in assessing the performance of our business.

Speaker Change: Before we discuss this quarter's results, a reminder that all statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements. This includes statements regarding our current expectations for the business, our financial performance, and projections.

Speaker Change: These statements are neither promises nor guarantees. They involve known and unknown risks, uncertainties, and other important factors that may cause our actual results to differ materially from those indicated by the forward-looking statements on this call.

Stacie Selinger: Please refer to the factors in the risk factor section of our time in K, our other filings with the Securities and Exchange Commission, and our earnings release. All of which are available on the public shareholder section of our website.

Speaker Change: Please refer to the factors in the risk factors section of our Time K, our other filings with the Securities and Exchange Commission, and our earnings release.

Speaker Change: All of which are available on the public shareholder section of our website.

Stacie Selinger: We will also refer to non-GAAP measures that we view as important in assessing the performance of our business. Reconciliation of non-GAAP metrics for the nearest GAAP metric can be found in our earnings presentation and earnings supplement, both of which are available on our website.

Speaker Change: We'll also refer to non- GAAP measures that we view as important in assessing the performance of our business.

Stacie Selinger: Reconciliation of non-gap metrics to the nearest gap metric can be found in our earnings presentation and earnings supplement, both of which are available on our website. Our goal is to continually improve how we communicate with and engage with our shareholders. And in that spirit, we look forward to your feedback. Thank you again for joining us.

Speaker Change: Reconciliation of non-GAP metrics to the nearest GAP metric can be found in our earnings presentation and earnings supplement, both of which are available on our website.

Stacie Selinger: Our goal is to continually improve how we communicate with and engage with our shareholders, and in that spirit, we look forward to your feedback.

Speaker Change: Our goal is to continually improve how we communicate with and engage with our shareholders. And in that spirit, we look forward to your feedback. Thank you again for joining us. And with that, I'll turn the call over to Michael.

Michael Sacks: Thank you again for joining us, and with that, we'll turn the call over to Michael. Thanks, Stacey. We had a strong second quarter, building on our recent momentum. During the quarter, fee related earnings increased 20% and adjusted net income increased 29% over the prior year. Our private market strategies continue to grow, with second quarter management fees growing 11% year over year. Private markets now comprise 71% of our total assets under management. Our fee related earnings margin was 40% for the quarter compared to 31% at the end of 2020. We continue to believe that we have opportunity for further FRE margin expansion in the future.

Michael Sacks: Thanks, Stacie. We had a strong second quarter building on our recent momentum. During the quarter, fee-related earnings increased 20% and adjusted net income increased 29% over the prior year. Our private market strategies continue to grow, with second quarter management fees growing 11% year over year; private markets now comprise 71% of our total assets under managed. Our fee-related earnings margin was 40% for the quarter compared to 31% at the end of 2020.

Michael Sacks: Thanks, Stacie. We had a strong second quarter building on our recent momentum. During the quarter, fee-related earnings increased 20% and adjusted net income increased 29% over the prior year. Our private market strategies continue to grow, with second quarter management fees growing 11% year over year; private markets now comprise 71% of our total assets under management. Our fee-related earnings margin was 40% for the quarter, compared to 31% at the end of 2020.

Michael Sacks: Thanks, Stacie. We had a strong second quarter building on our recent momentum. During the quarter, fee-related earnings increased 20% and adjusted net income increased 29% over the prior year. Our private market strategies continue to grow with second quarter management fees growing 11% year over year, private markets now comprises 71% of our total assets under managed, Our fee-related earnings margin was 40% for the quarter, compared to 31% at the end of 2020.

Michael: Thanks, Stacie. We had a strong second quarter building on our recent momentum.

Michael: During the quarter, fee-related earnings increased 20% and adjusted net income increased 29% over the prior year. Our private market strategies continue to grow, with second quarter management fees growing 11% year-over-year.

Michael: Private markets now comprises 71% of our total assets under management.

Michael: Our fee-related earnings margin was 40% for the quarter, compared to 31% at the end of 2020. We continue to believe that we have opportunity for further FRE margin expansion in the future.

Michael Sacks: We continue to believe that we have opportunity for further FRE margin expansion in the future. The fundraising environment continued to improve in the second quarter. We raised $1.8 billion, a 26% year-over-year increase, and that brought first half new capital raised to $3.4 billion, a 45% increase from the first half of 2023. Our pipeline has grown nicely throughout the year, and we expect fundraising in the second half of the year to exceed that of the first half.

Michael Sacks: We continue to believe that we have opportunity for further FRE margin expansion in the future. Fundraising environment continued to improve in the second quarter. We raised $1.8 billion, a 26% year over year increase, and that brought first half new capital raised to $3.4 billion, a 45% increase from the first half of 2023. Our pipeline has grown nicely throughout the year, and we expect fundraising in the second half of the year to exceed that of the first half.

Michael Sacks: The fundraising environment continued to improve in the second quarter. We raised $1.8 billion, a 26% year-over-year increase, and that brought first half new capital raised to $3.4 billion, a 45% increase from the first half of 2023. Our pipeline has grown nicely throughout the year, and we expect fundraising in the second half of the year to exceed that of the first half. We've spoken often about the strength of our diversified platform and recently about our confidence in demand for infrastructure and credit strategies. Infrastructure was again the greatest contributor to our quarterly fundraising, with over 600 million raised for this strategy in the quarter, followed by private equity and private credit.

Speaker Change: The fundraising environment continued to improve in the second quarter.

Speaker Change: We raised $1.8 billion, a 26% year-over-year increase, and that brought first half new capital raised to $3.4 billion, a 45% increase from the first half of 2023.

Speaker Change: Our pipeline has grown nicely throughout the year, and we expect fundraising in the second half of the year to exceed that of the first half.

Michael Sacks: We've spoken often about the strength of our diversified platform and recently about our confidence in demand for infrastructure and credit strategies. Infrastructure was again the greatest contributor to our quarterly fundraising, with over $600 million raised for this strategy in the quarter, followed by private equity and private credit. Year-to-date, we've raised $750 million for dedicated credit programs, and we expect our credit platform to see significant growth going forward. Our private markets specialized fundraising of a billion dollars so far this year is a great start, and we are well on pace to see materially higher fundraising levels there than we saw in both 2022 and 2023.

Michael Sacks: We've spoken often about the strength of our diversified platform and recently about our confidence in demand for infrastructure and credit strategy. Infrastructure was again the greatest contributor to our quarterly fundraising, with over $600 million raised for this strategy in the quarter, followed by private equity and private credit. Year-to-date, we've raised $750 million for dedicated credit programs, and we expect our credit platform to see significant growth going forward. Our private markets specialized fundraising of a billion dollars so far this year is a great start, and we are well on pace to see materially higher fundraising levels there than we saw in both 2022 and 2023.

Speaker Change: We've spoken often about the strength of our diversified platform and recently about our confidence in demand for infrastructure and credit strategies.

Speaker Change: Infrastructure was again the greatest contributor to our quarterly fundraising with over 600 million raised for this strategy in the quarter, followed by private equity and private credit.

Speaker Change: Year-to-date, we've raised $750 million for dedicated credit programs, and we expect our credit platform to see significant growth going forward.

Michael Sacks: Our private market specialized fundraising of a billion dollars so far this year is a great start, and we are well on pace to see materially higher fundraising levels there than we saw in both 2022 and 2023. All of our private market strategies delivered competitive performance, and we believe clients remain appreciative of our value add. Absolute return strategies investment performance was again strong, building on the very solid first quarter. Our multi strategy composite generated a 2.4% gross return in the second quarter, outperforming indices and peers. Gross returns for our composite are 7.4% year-to-date and 12.3% over the last 12 months, and we realized 10 million dollars in performance fees so far this year.

Speaker Change: Our private markets specialized fundraising of a billion dollars so far this year is a great start and we are well on pace to see materially higher fundraising levels there than we saw in both 2022 and 2023.

Michael Sacks: All of our private market strategies deliver competitive performance, and we believe clients remain appreciative of our value-add. Absolute return strategies' investment performance was again strong, building on the very solid first quarter. Our multi-strategy composite generated a 2.4% gross return in the second quarter, outperforming indices and peers. Gross returns for our composite are 7.4% year-to-date and 12.3% over the last 12 months, and we have realized $10 million in performance fees so far this year.

Michael Sacks: All of our private market strategies deliver competitive performance, and we believe clients remain appreciative of our value-add. Absolute return strategies investment performance was again strong, building on the very solid first quarter. Our multi-strategy composite generated a 2.4% gross return in the second quarter, outperforming indices and peers. Gross returns for our composite are 7.4% year-to-date and 12.3% over the last 12 months, and we realized $10 million in performance fees so far this year.

Speaker Change: All of our private market strategies deliver competitive performance, and we believe clients remain appreciative of our value add.

Speaker Change: Absolute return strategies investment performance was again strong building on the very solid first quarter.

Speaker Change: Our multi-strategy composite generated a 2.4% gross return in the second quarter, outperforming indices and peers.

Speaker Change: Gross returns for our composite are 7.4% year-to-date and 12.3% over the last 12 months, and we realized $10 million in performance fees so far this year.

Michael Sacks: As a result of the good performance, our ARS pipeline has expanded meaningfully over the past year, during which we raised a billion dollars for the strategy. We did have net ARS outflows during the quarter, which resulted from the partial restructuring of one client portfolio. The outflows were to lower the average management fee, leading to an uptick in our average ARS management fee rate. We expect total ARS management fees for Q3 will be roughly flat compared to the third quarter of last year. The recent volatile markets of the type were absolute return strategies typically show well.

Michael Sacks: As a result of the good performance, our ARS pipeline has expanded meaningfully over the past year, during which we raised a billion dollars for the strategy. We did have net ARS outflows during the quarter, which resulted from the partial restructuring of one client portfolio. The outflows were at a lower-than-average management fee, leading to an uptick in our average ARS management fee rate. We expect total ARS management fees for Q3 will be roughly flat compared to the third quarter of last year.

Speaker Change: As a result of the good performance, our ARS pipeline has expanded meaningfully over the past year, during which we raised a billion dollars for the strategy.

Speaker Change: We did have net ARS outflows during the quarter, which resulted from the partial restructuring of one client portfolio.

Speaker Change: The outflows were at a lower-than-average management fee, leading to an uptick in our average ARS management fee rate.

Speaker Change: We expect total ARS management fees for Q3 will be roughly flat compared to the third quarter of last year.

Michael Sacks: The recent volatile markets are the type where absolute return strategies typically perform well. Having been through a number of market cycles over the past 35 years, I have great confidence in our ability to add value in difficult market environments. Over the past three years, we've raised $1.8 billion from individual investors. Earlier this year, I told you that expanding our products and distribution in that channel was a strategic priority. We made good progress in that regard this quarter.

Michael Sacks: The recent volatile markets are the type where absolute return strategies typically show well. Having been through a number of market cycles over the past 35 years, I have great confidence in our ability to add value in difficult market environments. Over the past three years, we've raised $1.8 billion from the individual investors. Earlier this year, I told you that expanding our products and distribution in that channel was a strategic priority. We made good progress in that regard this quarter.

Speaker Change: The recent volatile markets are the type where absolute return strategies typically show well.

Michael Sacks: Having been through a number of market cycles over the past 35 years, I have great confidence in our ability to add value in difficult market environments. Over the past three years, we raised 1.8 billion dollars from the individual investor channel. Earlier this year, I told you that expanding our products and distribution in that channel was a strategic priority. We made good progress in that regard this quarter. First, we are excited to share that we will serve as core independent manager for a private equity interval fund focused on private equity co-investments and secondaries. In addition, we secured a $300 million anchor commitment that we expect will seed an infrastructure product targeting the individual investor channel.

Speaker Change: Having been through a number of market cycles over the past 35 years, I have great confidence in our ability to add value in difficult market environments.

Speaker Change: Over the past three years, we've raised $1.8 billion from the individual investor channel.

Speaker Change: Earlier this year I told you that expanding our products and distribution in that channel was a strategic priority. We made good progress in that regard this quarter.

Michael Sacks: First, we're excited to share that we will serve as a core independent manager for a private equity interval fund focused on private equity co-investments and secondary. In addition, we secured a $300 million anchor commitment that we expect will seed an infrastructure product targeting the individual investor channel. We look forward to telling you more about these efforts in the future. Whether it is the strong long-term demand outlook, our history of high re-up rates, our expanded pipeline, or our operating leverage, there are a number of factors that lead to our confidence regarding the back half of this year and our longer-term goals, which John will address now. We have a lot of ways to win and are confident in our value proposition for clients, shareholders, and team members. And with that, John, take it over.

Michael Sacks: First, we're excited to share that we will serve as a core independent manager for a private equity interval fund focused on private equity co-investments and secondary. In addition, we secured a $300 million anchor commitment that we expect will seed an infrastructure product targeting the individual investor channel. We look forward to telling you more about these efforts in the future. Whether the strong long-term demand outlook, our history of high re-up rates, our expanded pipeline, or our operating leverage, there are a number of factors that lead to our confidence regarding the back half of this year and our longer-term goals, which John will address now. We have a lot of ways to win and are confident in our value proposition for clients, shareholders, and team members. And with that, John, take it over.

Speaker Change: First, we're excited to share that we will serve as a core independent manager for a private equity interval fund focused on private equity co-investments and secondaries.

Speaker Change: In addition, we secured a $300 million anchor commitment that we expect will seed an infrastructure product targeting the individual investor channel.

Michael Sacks: We look forward to telling you more about these efforts in the future. Whether the strong long-term demand outlook or history of high re-up rates are expanded pipeline for our operating leverage, there are a number of factors that lead to our confidence regarding the back half of this year.

Speaker Change: We look forward to telling you more about these efforts in the future.

Speaker Change: Whether the strong long-term demand outlook, our history of high re-up rates, our expanded pipeline, or our operating leverage, there are a number of factors that lead to our confidence regarding the back half of this year and our longer-term goals which John will address now.

Michael Sacks: And our longer-term goals, which John will address now. We have a lot of ways to win and are confident in our value proposition for clients, shareholders, and team members.

Speaker Change: We have a lot of ways to win and are confident in our value proposition for clients, shareholders, and team members. And with that, John , take it over.

John Levin: And with that, John, take it over. Great. Thank you, Michael.

Jonathan Levin: Great. Thank you, Michael.

John Levin: Great. Thank you, Michael.

Jonathan Levin: This quarter, I will address our previously stated goal of doubling our 2023 fee-related earnings in five years. For historical context, from 2020 to 2023, we grew our fee-related earnings at a 14% compound annual growth rate. And our platform is stronger, and the opportunity set is even more compelling now than it was back in 2020.

Jonathan Levin: This quarter, I will address our previously stated goal of doubling our 2023 fee-related earnings in five years. For historical context, from 2020 to 2023, we grew our fee-related earnings at a 14% compound annual growth rate. And our platform is stronger and the opportunity set is even more compelling now than it was back in 2020.

John Levin: This quarter, I will address our previously stated goal of doubling our 2023 fee-related earnings in five years. For historical context, from 2020 to 2023, we grew our fee-related earnings at a 14% compound annual growth rate, and our platform is stronger, and the opportunity set is even more compelling now than it was back in 2020. There are five pillars to our growth. Capital deployment, expanding with our existing clients, new clients acquisition, scaling new initiatives, and margin expansion. Starting with our embedded growth from capital deployment. Over the last three years, on average, three billion of our annual F-POM growth has been simply from turning on fees and existing programs where the capital had already been raised.

John: Great, thank you Michael. This quarter I will address our previously stated goal of doubling our 2023 fee-related earnings in five years.

John: For historical context, from 2020 to 2023, we grew our fee-related earnings at a 14 percent compound annual growth rate, and our platform is stronger and the opportunity set is even more compelling now than it was back in 2020.

Jonathan Levin: There are five pillars to our growth. Capital Deployment, expanding with our existing clients, new client acquisition. Scaling New Initiatives, and Margin Expansion. Starting with our Embedded Growth from Capital Deployment. Over the last three years, on average, $3 billion of our annual FPUM growth has been simply from turning on fees in existing programs where the capital had already been raised. Going forward, embedded growth will come from converting our $7.3 billion of contracted not-yet-fee-paying AUM into fee-paying AUM.

Jonathan Levin: There are five pillars to our growth: capital deployment, expanding with our existing clients, new client acquisition. Scaling New Initiatives and Margin Expansion, Starting with our Embedded Growth from Capital Deployment Over the last three years, on average, $3 billion of our annual FPUM growth has been simply from turning on fees in existing programs where the capital had already been raised. Going forward, embedded growth will come from converting our $7.3 billion of contracted not-yet-fee-paying AUM into fee-paying AUM.

John Levin: There are five pillars to our growth: capital deployment, expanding with our existing clients, new client acquisition. Scaling New Initiatives and Margin Expansion, Starting with our Embedded Growth from Capital Deployment Over the last three years, on average, $3 billion of our annual FPUM growth has been simply from turning on fees in existing programs where the capital had already been raised. Going forward, embedded growth will come from converting our $7.3 billion of contracted not-yet-fee-paying AUM into fee-paying AUM.

Speaker Change: There are five pillars to our growth. Capital deployment, expanding with our existing clients, new client acquisition, scaling new initiatives, and margin expansion.

Speaker Change: Starting with our Embedded Growth from Capital Deployment.

Speaker Change: Over the last three years, on average, $3 billion of our annual FPUM growth has been simply from turning on fees in existing programs where the capital had already been raised.

John Levin: Going forward, embedded growth will come from converting our $7.3 billion of contracted, not yet fee-paying AUM into fee-paying AUM. We are particularly excited about putting client capital to work in what is an increasingly compelling investment environment. Turning to our existing clients, we have a proven track record of expanding our existing client relationships through successful re-ups and through the broadening of the relationship. Last quarter, I spoke about how re-ups provide embedded growth as they occur at 90% rates, how they have almost average 30% increase in size. In addition, we've consistently had success earning our clients' trust and expanding with them into new areas.

Speaker Change: Going forward, embedded growth will come from converting our 7.3 billion dollars of contracted not-yet-fee-paying AUM into fee-paying AUM.

John Levin: We are particularly excited about putting client capital to work in what is an increasingly compelling investment environment. Turning to our existing clients, we have a proven track record of expanding our existing client relationships through successful re-ups and through the broadening of the relationship. Last quarter, I spoke about how re-ups provide embedded growth, as they occur at 90% rates, and how that almost averaged a 30% increase in size.

Jonathan Levin: We are particularly excited about putting client capital to work in what is an increasingly compelling investment environment. Turning to our existing clients. We have a proven track record of expanding our existing client relationships through successful re-ups and through the broadening of the relationship. Last quarter, I spoke about how re-ups provide embedded growth. As they occur at 90% rates, how that almost averaged 30% increase in size.

Jonathan Levin: We are particularly excited about putting client capital to work in what is an increasingly compelling investment environment. Turning to our existing clients, we have a proven track record of expanding our existing client relationships through successful re-ups and through the broadening of the relationship. Last quarter, I spoke about how re-ups provide embedded growth, as they occur at 90% rates, and how that almost averaged a 30% increase in size.

Speaker Change: We are particularly excited about putting client capital to work in what is an increasingly compelling investment environment.

Speaker Change: Turning to our existing clients, we have a proven track record of expanding our existing client relationships through successful re-ups and through the broadening of the relationship.

Speaker Change: Last quarter I spoke about how re-ups provide embedded growth as they occur at 90% rate out at almost average 30% increase in size.

John Levin: In addition, we've consistently had success earning our clients' trust and expanding with them into new areas. Currently, we're seeing great traction with our existing clients around high-growth areas, such as infrastructure and private credit, and into direct-oriented investment strategies. Approximately 50% of our top clients work with us in more than one investment vertical. Third, we are entering harvest mode on strategic investments we've made in recent years. One example is our private market specialized fund franchises, as highlighted on slide 17 of the presentation.

Jonathan Levin: In addition, we've consistently had success earning our clients' trust and expanding with them into new areas. Currently, we're seeing great traction with our existing clients around high-growth areas such as infrastructure and private credit and into direct-oriented investment strategies. Approximately 50% of our top clients work with us in more than one investment vertical. Third, we are entering harvest mode on strategic investments we've made over recent years. One example is our private market specialized fund franchises, as highlighted on slide 17 of the presentation.

Jonathan Levin: In addition, we've consistently had success earning our clients' trust and expanding with them into new areas. Currently, we're seeing great traction with our existing clients around high-growth areas, such as infrastructure and private credit, and into direct-oriented investment strategies. Approximately 50% of our top clients work with us in more than one investment vertical. Third, we are entering harvest mode on strategic investments we've made in recent years. One example is our private market specialized fund franchises, as highlighted on slide 17 of the presentation.

Speaker Change: In addition, we've consistently had success earning our clients' trust and expanding with them into new areas.

John Levin: Currently, we're seeing great traction with our existing clients around high growth areas such as infrastructure and private credit and into direct-oriented investment strategies. Approximately 50% of our top clients work with us in more than one investment vertical.

Speaker Change: Currently we're seeing great traction with our existing clients around high growth areas such as infrastructure and private credit and into direct oriented investment strategies.

Speaker Change: Approximately 50% of our top clients work with us in more than one investment vertical.

John Levin: Third, we are entering harvest mode on strategic investments we've made over recent years. One example is our private market specialized fund franchises, as highlighted on slide 17 of the presentation. Since 2020, we have grown these private market specialized fund franchises by 23% annualized growth rate as measured by capital commitments. And the opportunity persists going forward in both the more mature and the newer fund series. We're fortunate to have such great loyalty from existing clients. More than 80% of our fundraising each year typically comes from those relationships.

Speaker Change: Third, we are entering harvest mode on strategic investments we've made over recent years.

Speaker Change: One example is our private market specialized fund franchises, as highlighted on slide 17 of the presentation.

Jonathan Levin: Since 2020, we have grown these private market specialized fund franchises by a 23% annualized growth rate as measured by capital commitment. And the opportunity persists going forward in both the more mature and the newer fund series. We're fortunate to have such great loyalty from existing clients. More than 80% of our fundraising each year typically comes from those relationships.

John Levin: Since 2020, we have grown these private market specialized fund franchises by a 23% annualized growth rate as measured by capital commitment. And the opportunity persists going forward in both the more mature and the newer fund series. We're fortunate to have such great loyalty from existing clients. More than 80% of our fundraising each year typically comes from those relationships.

Speaker Change: Since 2020, we have grown these private market specialized fund franchises by a 23% annualized growth rate as measured by capital commitments.

Speaker Change: And the opportunity persists going forward in both the more mature and the newer fund series.

Speaker Change: We're fortunate to have such great loyalty from existing clients. More than 80% of our fundraising each year typically comes from those relationships.

John Levin: However, we also have had success with new client acquisition both in markets where we already have a presence and over time in markets and channels where we are seeking to build our business. We've invested in our teams and seen early success in Europe, Australia, and Canada, but we've only scratched the surface of the opportunities that in those regions. Additionally, insurance and individual investors represent a massive opportunity for the alternatives industry, and we're in an ideal position to capture share in both of those channels.

John Levin: However, we also have had success with new client acquisition, both in markets where we already have a presence and, over time, in markets and channels where we are seeking to build our business. We've invested in our teams and seen early success in Europe, Australia, and Canada, but we've only scratched the surface of the opportunities in those regions. Additionally, insurance and individual investors represent a massive opportunity for the alternatives industry, and we're in an ideal position to capture a share in both of those channels.

Jonathan Levin: However, we also have had success with new client acquisition, both in markets where we already have a presence, and over time in markets and channels where we are seeking to build our business. We've invested in our teams and seen early success in Europe, Australia, and Canada, but we've only scratched the surface of the opportunities set in those regions. Additionally, insurance and individual investors represent a massive opportunity for the alternatives industry and we're in an ideal position to capture share in both of those channels.

Jonathan Levin: However, we also have had success with new client acquisition, both in markets where we already have a presence and, over time, in markets and channels where we are seeking to build our business. We've invested in our teams and seen early success in Europe, Australia, and Canada, but we've only scratched the surface of the opportunities in those regions. Additionally, insurance and individual investors represent a massive opportunity for the alternatives industry, and we're in an ideal position to capture a share in both of those channels.

Speaker Change: However, we also have had success with new client acquisition, both in markets where we already have a presence.

Speaker Change: and over time in markets and channels where we are seeking to build our business.

Speaker Change: we've invested in our teams and seen early success in europe australia in canada we've only scratch the surface of the opportunities set in those regions

Speaker Change: Additionally, insurance and individual investors represent a massive opportunity for the alternatives industry and we're in an ideal position to capture share in both of those channels.

John Levin: Finally, while revenue growth will be a key driver to reaching our 5-year FRE goal, it was margin expansion from the operating leverage embedded in our business. Achieving our goal assumes continued FRE margin expansion. Extending the margin enhancement we've enjoyed since going public. Beyond our FRE growth potential, we also have massive incremental incentive for opportunity. It is unique in that it's two-fold, both annual performance fees and through carried interest. Both of these earning streams have been suppressed over the past couple of years, and while the exact timing is hard to predict, if we are successful in achieving our FRE growth targets, our growth outcomes in adjusted EBITDA and adjusted should exceed that of FRE.

Jonathan Levin: Finally, while revenue growth will be a key driver to reaching our five-year FRE goal, so will margin expansion from the operating leverage embedded in our business. Achieving our goal assumes continued FRE margin expansion. Extending the Margin Enhancement we've enjoyed since going public. Beyond our FRE growth potential, we also have a massive incremental incentive fee opportunity. It is unique in that it's twofold, both annual performance fees and carried interest. Both of these earning streams have been suppressed over the past couple of years.

John Levin: Finally, while revenue growth will be a key driver to reaching our five-year FRE goal, so will margin expansion from the operating leverage embedded in our business. Achieving our goal assumes continued FRE margin expansion. Extending the Margin Enhancement we've enjoyed since going public. Beyond our FRE growth potential, we also have a massive incremental incentive fee opportunity. It is unique in that it's twofold, in both annual performance fees and through carried interest. Both of these earnings streams have been suppressed over the past couple of years, and while the exact timing is hard to predict, if we are successful in achieving our FRE growth targets, our growth outcomes in adjusted EBITDA and adjusted A&I should exceed that of FRE. We enjoy Industry Tailwinds in a platform that has the breadth and flexibility to compete effectively in this exciting market. With that, I'll turn the call over to Pam.

Jonathan Levin: Finally, while revenue growth will be a key driver to reaching our five-year FRE goal, so is margin expansion from the operating leverage embedded in our business. Achieving our goal assumes continued FRE margin expansion. Extending the Margin Enhancement we've enjoyed since going public. Beyond our FRE growth potential, we also have massive incremental incentive fee opportunity. It is unique in that it's twofold, both annual performance fees and through carried interest. Both of these earning streams have been suppressed over the past couple of years.

Speaker Change: Finally, while revenue growth will be a key driver to reaching our five-year FRE goal, so is margin expansion from the operating leverage embedded in our business.

Speaker Change: Achieving our goal assumes continued FRE margin expansion.

Speaker Change: Extending the Margin Enhancement we've enjoyed since going public.

Speaker Change: Beyond our FRE growth potential, we also have massive incremental incentive fee opportunity.

Speaker Change: It is unique in that it's two-fold, in both annual performance fees and through carried interest.

Speaker Change: Both of these earning streams have been suppressed over the past couple of years, and while the exact timing is hard to predict, if we are successful in achieving our FRE growth targets, our growth outcomes in adjusted EBITDA and adjusted A&I should exceed that of FRE.

Jonathan Levin: And while the exact timing is hard to predict, if we are successful in achieving our FRE growth targets, our growth outcomes in adjusted EBITDA and adjusted A&I should exceed that of FRE. We enjoy Industry Tailwinds in a platform which has the breadth and flexibility to compete effectively, in this exciting market. With that, I'll turn the call over to Pam.

Jonathan Levin: And while the exact timing is hard to predict, if we are successful in achieving our FRE growth targets, our growth outcomes in adjusted EBITDA and adjusted A&I should exceed that of FRE. We enjoy Industry Tailwinds in a platform that has the breadth and flexibility to compete effectively in this exciting market. With that, I'll turn the call over to Pam.

John Levin: We enjoy industry tailwinds and a platform which has the breadth and flexibility to compete effectively in this exciting market.

Speaker Change: We enjoy Industry Tailwinds in a platform which has the breadth and flexibility to compete effectively.

Pamela Bentley: With that, I'll turn the call over to Pam. Thanks, John. We are pleased with our strong results in the second quarter. Asets under management were $79 billion as a quarter end, a 4% increase from a year ago, and fee-paying AUM also increased 4% year-over-year, ending the quarter at $63 billion. Contracted not yet fee-paying AUM ended the quarter at $7.3 billion, a 9% increase from a year ago due to stronger fundraising over the last 12 months. Private markets was once again a keyed growth driver, with private markets fee-paying AUM growing by 7% year-over-year. As of quarter end, our private markets business represents 71% of total AUM and 66% of our fee-paying AUM.

Speaker Change: this exciting market. With that I'll turn the call over to Pam.

Pam Bentley: Thanks, John. We are pleased with our strong results in the second quarter. Assets under management were $79 billion as of quarter end, a 4% increase from a year ago, and fee-paying AUM also increased 4% year-over-year, ending the quarter at $63 billion. Contracted not-yet-fee-paying AUM ended the quarter at $7.3 billion, a 9% increase from a year ago due to stronger fundraising over the last 12 months. Private markets were once again a key growth driver, with private market fee-paying AUM growing by 7% year over year.

Pamela Bentley: Thanks, John. We are pleased with our strong results in the second quarter. Assets under management were $79 billion as of quarter end, a 4% increase from a year ago, and fee-paying AUM also increased 4% year-over-year, ending the quarter at $63 billion, contracted not-yet-fee-paying AUM, ended the quarter at $7.3 billion, a 9% increase from a year ago due to stronger fundraising over the last 12 months. Private markets was once again a key growth driver, with private markets fee-paying AUM growing by 7% year over year.

Pamela Bentley: Thanks, John. We are pleased with our strong results in the second quarter. Assets under management were $79 billion as of quarter end, a 4% increase from a year ago, and fee-paying AUM also increased 4% year-over-year, ending the quarter at $63 billion. Contracted not-yet-fee-paying AUM ended the quarter at $7.3 billion, a 9% increase from a year ago due to stronger fundraising over the last 12 months. Private markets were once again a key growth driver, with private market fee-paying AUM growing by 7% year-over-year.

Pam: thanks john we are pleased with our strong results in the second quarter assets under management were set venty nine billion dollars as a quarter-end a four percent increase from a year ago and fee paying a m also increaseed four percent year-over-year ending the quarter at sixty three billion dollars

Pam: contracted not-yet-fee-paying AUM, ended the quarter at $7.3 billion, a 9% increase from a year ago due to stronger fundraising over the last 12 months.

Pam: Private markets was once again a key growth driver, with private markets fee-paying AUM growing by 7% year-over-year.

Pam Bentley: As of quarter end, our private markets business represents 71% of total AUM and 66% of our fee-paying AUM. We expect the double-mix shift in our business to continue, first, towards private markets, and second, towards direct-oriented strategies, which comprise more than half of our private markets AUM as of quarter end.

Pamela Bentley: As of quarter end, our private markets business represents 71% of total AUM and 66% of our fee paying AUM. We expect the double mix shift in our business to continue, first, towards private markets, and second, towards direct-oriented strategies, which comprise more than half of our private markets AUM as of quarter end.

Pamela Bentley: As of quarter end, our private markets business represents 71% of total AUM and 66% of our fee-paying AUM. We expect the double-mix shift in our business to continue, first, towards private markets, and second, towards direct-oriented strategies, which comprise more than half of our private markets AUM as of quarter end.

Pam: As of quarter end, our private markets business represents 71% of total AUM and 66% of our fee-paying AUM.

Pamela Bentley: We expect the double-mix shift in our business to continue, first towards private markets and second towards direct oriented strategies, which comprise more than half of our private markets AUM as of quarter end. Private markets management fees grew 11% year-over-year due to strong specialized fund fundraising and catch-up fees of $2.6 million in the quarter. Private markets management fees excluding catch-up fees in the quarter grew 6% year-over-year, in line with our guiding flash quarter. We expect a similar year-over-year growth rate in private markets management fees excluding catch-up fees in the third quarter. For the full year 24, we reaffirm our expectation of double-digit private market management fee growth excluding catch-up fees.

Pam: We expect the double-mix shift in our business to continue, first towards private markets, and second, towards direct-oriented strategies, which comprise more than half of our private markets AUM as of quarter end.

Pam Bentley: Private markets management fees grew 11% year over year due to strong specialized fund fundraising and catch-up fees of $2.6 million in the quarter. Private markets management fees excluding catch-up fees in the quarter grew 6% year-over-year, in line with our guidance last quarter. We expect a similar year-over-year growth rate in private markets management fees, excluding catch-up fees, in the third quarter. For the full year, we reaffirm our expectation of double-digit private market management fee growth, excluding catch-up fees.

Pamela Bentley: Private markets management fees grew 11% year over year due to strong specialized fund fundraising and catch-up fees of $2.6 million in the quarter. Private markets management fees excluding catch up fees in the quarter grew 6% year over year in line with our guidance last quarter. We expect a similar year-over-year growth rate in private markets management fees, excluding catch-up fees, in the third quarter. For the full year 24, we reaffirm our expectation of double-digit private market management fee growth, excluding catch-up fees.

Pamela Bentley: Private markets management fees grew 11% year-over-year due to strong specialized fund fundraising and catch-up fees of $2.6 million in the quarter. Private markets management fees excluding catch-up fees in the quarter grew 6% year-over-year, in line with our guidance last quarter. We expect a similar year-over-year growth rate in private markets management fees, excluding catch-up fees, in the third quarter. For the full year, we reaffirm our expectation of double-digit private market management fee growth, excluding catch-up fees.

Pam Bentley: Private markets management fees grew 11% year-over-year due to strong specialized fund fundraising and catch-up fees of $2.6 million in the quarter.

Pam: Private markets management fees excluding catch-up fees in the quarter grew 6% year-over-year, in line with our guidance last quarter.

Pam: We expect a similar year-over-year growth rate in private markets management fees, excluding catch-up fees, in the third quarter.

Pam: For the full year 24, we reaffirm our expectation of double-digit private markets management fee growth, excluding catch-up fees.

Pamela Bentley: At the beginning of the year, we spoke about our expectation that our absolute return strategies management fees would stabilize in 24, and we are still on track to meet that goal. Second quarter ARS management fees increased 3% year-over-year, and we expect third quarter ARS management fees to be consistent with the third quarter of last year. As Michael noted, investment performance has been very strong, positioning us to generate meaningful potential performance fees this year, and client interest in the strategy has grown. Turning to incentives fees, we realize $16 million in the quarter, comprised of $4 million of ARS performance fees and $12 million of carried interest.

Pam Bentley: At the beginning of the year, we spoke about our expectation that our absolute return strategies management fees would stabilize in 24, and we are still on track to meet that goal. Second quarter ARS management fees increased 3% year-over-year, and we expect third quarter ARS management fees to be consistent with the third quarter of last year.

Pam: At the beginning of the year, we spoke about our expectation that our absolute return strategies management fees would stabilize in 2024, and we are still on track to meet that goal.

Pam: Second quarter ARS management fees increased 3% year over year, and we expect third quarter ARS management fees to be consistent with the third quarter of last year.

Pam Bentley: As Michael noted, investment performance has been very strong, positioning us to generate meaningful potential performance fees this year, and client interest in the strategy has grown. Turning to incentive fees, we realized $16 million in the quarter, comprised of $4 million of ARS performance fees and $12 million of carried interest. Our growth unrealized carried interest grew approximately 4% year over year to $810 million at quarter end.

Pamela Bentley: As Michael noted, investment performance has been very strong, positioning us to generate meaningful potential performance fees this year, and client interest in the strategy has grown. Turning to incentive fees, we realized $16 million in the quarter, comprised of $4 million of ARS performance fees and $12 million of carried interest. Our growth unrealized carried interest grew approximately 4% year over year to $810 million as a quarter end.

Pamela Bentley: As Michael noted, investment performance has been very strong, positioning us to generate meaningful potential performance fees this year, and client interest in the strategy has grown. Turning to incentive fees, we realized $16 million in the quarter, comprised of $4 million of ARS performance fees and $12 million of carried interest. Our growth on realized carried interest grew approximately 4% year over year to $810 million as of quarter end.

Pam: As Michael noted, investment performance has been very strong, positioning us to generate meaningful potential performance fees this year, and client interest in the strategy has grown.

Michael: Turning to incentive fees, we realized $16 million in the quarter, comprised of $4 million of ARS performance fees and $12 million of carried interest.

Pamela Bentley: Our growth unrealized carried interest grew approximately 4% year-over-year to $810 million as a quarter end. As John noted, we believe our incentive fees provide significant embedded earning potential, which we look forward to being unlocked as the capital markets and M&A environment improves. As we realize both higher performance fees and increased carried interest, we believe that we have a compelling opportunity to increase the margin on the firm share of incentive fees to levels at or above last year. Turning to our expenses, as expected, second quarter FRE compensation was $38 million, and we expect a similar level in the third quarter.

Pam: Our Growth Unrealized Carried Interest grew approximately 4% year-over-year to $810 million as of quarter end.

Pamela Bentley: As John noted, we believe our incentive fees provide significant embedded earning potential, which we look forward to being unlocked as the capital markets and M&A environment improves. As we realize both higher performance fees and increased carried interest, we believe that we have a compelling opportunity to increase the margin on the firm's share of incentive fees to levels at or above last year. Turning to our expenses, as expected, second-quarter FRE compensation was $38 million, and we expect a similar level in the third quarter.

Pam Bentley: As John noted, we believe our incentive fees provide significant embedded earning potential, which we look forward to being unlocked as the capital markets and M&A environment improves. As we realize both higher performance fees and increased carried interest, we believe that we have a compelling opportunity to increase the margin on the firm's share of incentive fees to levels at or above last year. Turning to our expenses, as expected, second-quarter FRE compensation was $38 million, and we expect a similar level in the third quarter.

Pamela Bentley: As John noted, we believe our incentive fees provide significant embedded earning potential, which we look forward to being unlocked as the capital markets and M&A environment improves. As we realize both higher performance fees and increased carried interest, we believe that we have a compelling opportunity to increase the margin on the firm's share of incentive fees to levels at or above last year. Turning to our expenses, as expected, second quarter FRE compensation was $38 million, and we expect a similar level in the third quarter.

Michael: As John noted, we believe our incentive fees provide significant embedded earning potential, which we look forward to being unlocked as the capital markets and M&A environment improve.

John: As we realize both higher performance fees and increased carried interest, we believe that we have a compelling opportunity to increase the margin on the firm's share of incentive fees through levels at or above last year.

Pam Bentley: Returning to our expenses, as expected, second quarter FRE compensation was $38 million, and we expect a similar level in the third quarter.

Pamela Bentley: We remain disciplined in managing expenses and non-GAAP general administrative and other expenses. We're $20 million in the quarter, again in line with our expectations. We expect similar levels next quarter. Pulling together these factors on a year-over-year basis, your related earnings grew a healthy 20% in the quarter and 22% year-to-date. Adjusted net income grew 29% in the quarter and 34% year-to-date on a year-over-year basis. Our FRE margin grew from 36% in the second quarter of 23% to 40% this quarter. While there may be quarterly margin fluctuations, we enjoy significant operating leverage and still expect our overall FRE margin for 24 to exceed last year.

Pam Bentley: We remain disciplined in managing expenses and non-GAAP, general, administrative, and other expenses. We're $20 million in the quarter, again, in line with our expectations. We expect similar levels next quarter. Pulling together these factors on a year-over-year basis, fee-related earnings grew a healthy 20% in the quarter and 22% year-to-date. Adjusted net income grew 29% in the quarter and 34% year-to-date on a year-over-year basis.

Pamela Bentley: We remain disciplined in managing expenses and non-GAAP, general, administrative, and other expenses. We're $20 million in the quarter, again, in line with our expectations. We expect similar levels next quarter. Pulling together these factors on a year-over-year basis, fee-related earnings grew a healthy 20% in the quarter and 22% year-to-date. Adjusted net income grew 29% in the quarter and 34% year-to-date on a year-over-year basis.

Pam: We remain disciplined in managing expenses and non-GAAP , general, administrative, and other expenses. We're $20 million in the quarter, again, in line with our expectation.

Pam Bentley: We expect similar levels next quarter.

Pamela Bentley: Our FRE margin grew from 36% in the second quarter of 2023 to 40% this quarter. While there may be quarterly margin fluctuations, we enjoy significant operating leverage, and we still expect our overall FRE margin for 2024 to exceed last year. Our balance sheet is strong, and during the quarter, we successfully took advantage of constructive capital markets to extend our term loan by two years to February 2030, while decreasing the spread on our debt by 25 basis points from 250 to 225 and upsizing the aggregate principal by $50 million.

Pam Bentley: Our FRE margin grew from 36% in the second quarter of 2023 to 40% this quarter. While there may be quarterly margin fluctuations, we enjoy significant operating leverage, and we still expect our overall FRE margin for 2024 to exceed last year. Our balance sheet is strong, and during the quarter, we successfully took advantage of constructive capital markets to extend our term loan by two years to February 2030, while decreasing the spread on our debt by 25 basis points from 250 to 225 and upsizing the aggregate principal by $50 million.

Pamela Bentley: Our FRE margin grew from 36% in the second quarter of 2023 to 40% this quarter. While there may be quarterly margin fluctuations, we enjoy significant operating leverage and still expect our overall FRE margin for 2024 to exceed last year. Our balance sheet is strong, and during the quarter, we successfully took advantage of constructive capital markets to extend our term loan by two years to February 2030, while decreasing the spread on our debt by 25 basis points from 250 to 225, and upsizing the aggregate principal by $50 million.

Pamela Bentley: Our balance sheet is strong, and during the quarter, we successfully took advantage of constructive capital markets to extend our term loan by two years to February 2030. While decreasing the spread on our debt by 25 basis points from 250 to 225 and upsizing the aggregate principle by $50 million. The incremental cash will be used for general corporate purposes, continued investments in the business, and opportunistic stock repurchases. We are maintaining a healthy quarterly dividend of 11 cents per share or an annualized yield of more than 4% as of last Friday. There is room for future dividend growth as we enjoy positive momentum in our earnings.

Pam: Our balance sheet is strong and during the quarter. We successfully took advantage of constructive capital markets to extend our term loan by two years to February 2030, while decreasing the spread on our debt by 25 basis points from 250 to $2 25, and upsizing the aggregate principle.

Pam: $50 million.

Pam Bentley: The incremental cash will be used for general corporate purposes, continued investments in the business, and opportunistic stock repurchases. We are maintaining a healthy quarterly dividend of $0.11 per share, or an annualized yield of more than 4% as of last Friday. There is room for future dividend growth as we enjoy positive momentum in our earnings. We also continue to repurchase shares under our repurchase authorization plan and our focus on managing delusion from our stock compensation program.

Pamela Bentley: The incremental cash will be used for general corporate purposes, continued investments in the business, and opportunistic stock repurchases. We are maintaining a healthy quarterly dividend of $0.11 per share, or an annualized yield of more than 4% as of last Friday. There is room for future dividend growth as we enjoy positive momentum in our earnings. We also continue to repurchase shares under our repurchase authorization plan and are focused on managing dilution from our stock compensation program.

Pam: The incremental cash will be used for general corporate purposes continued investments in the business and opportunistic stock repurchases.

Pam: We are maintaining a healthy quarterly dividend of <unk> 11 per share or an annualized yield of more than 4% as of last Friday.

Pam: There is room for future dividend growth as we enjoy positive momentum in our earnings.

Pamela Bentley: We also continue to repurchase shares under our Repurchase Authorization Plan and our focus on managing dilution from our stock compensation program. In the quarter, we repurchase $30 million of stock, leaving $35 million in our share repurchase program as a quarter end.

Pam: We also continue to repurchase shares under our repurchase authorization plan and are focused on managing dilution from our stock compensation program and.

Pam Bentley: In the quarter, we repurchased $30 million of stock, leaving $35 million in our share repurchase program at quarter end. And to close, we have confidence in our 24 financial objectives and look forward to the opportunities ahead to deliver value to our clients and shareholders. Thank you again for joining us, and we're now happy to take your questions.

Pamela Bentley: In the quarter, we repurchased $30 million in stock, leaving $35 million in our share repurchase program as a quarter end. And to close, we have confidence in our 24 financial objectives and look forward to the opportunities ahead to deliver value to our clients and shareholders. Thank you again for joining us, and we're now happy to take your questions.

Pamela Bentley: In the quarter, we repurchased $30 million in stock, leaving $35 million in our share repurchase program at quarter end. And to close, we have confidence in our 24 financial objectives and look forward to the opportunities ahead to deliver value to our clients and shareholders. Thank you again for joining us, and we're now happy to take your questions.

Pam: In the quarter, we repurchased $30 million in stock, leaving $35 million and our share repurchase program as of quarter end.

Pamela Bentley: To close, we have confidence in our 24 financial objectives and look forward to the opportunities ahead to deliver value to our clients and shareholders.

Pam: To close we have confidence in our 24 financial objectives and look forward to the opportunities ahead to deliver value to our clients and shareholders.

Operator: Thank you again for joining us, and we're now happy to take your questions. Thank you. If you would like to ask a question at this time, please press star one or your telephone keypad. If you are using a speaker phone, please ensure your mute function is turned off. Again, that function is Star One.

Speaker Change: Thank you again for joining us and we're now happy to take your questions.

Operator: Thank you. If you would like to ask a question at this time, please press star 1 on your telephone keypad. If you are using a speakerphone, please ensure your mute function is turned off. Again, that function is star 1. And our first question will come from Bill Katz with TD Calendars.

Speaker Change: Thank you if you would like to ask a question at this time. Please press star one on your telephone keypad. If you argue today speaker phone. Please ensure your mute function is turned off.

Speaker Change: In that function is star one.

William Katz: And our first question will come from Bill Katz with TD Count. Okay, thank you very much. Just coming back to ARS for a moment, thank you for the disclosure that it was sort of one large withdrawal that impacted the quarter.

Speaker Change: And our first question will come from Bill Katz with TD Cowen.

Bill Katz: Okay, thank you very much. Just coming back to ARS for a moment, thank you for the disclosure that it was sort of one large withdrawal that impacted the quarter. As you look ahead to the residual platform, can you size or sense what kind of concentration risk you might have just in terms of other potential outsized withdrawals regardless of reason? Maybe the top five, top ten clients; what does that account for in terms of the AUM and then any sort of sight line to withdrawals as you look into the second half of the year?

William Katz: Okay, thank you very much. Just coming back to ARS for a moment, thank you for the disclosure that it was sort of one large withdrawal that impacted the quarter. As you look ahead to the residual platform, can you size or sense what kind of concentration risk you might have just in terms of other potential outsized withdrawals regardless of reason, maybe top five, top ten clients? What does that account for in terms of the AUM and then any sort of sight line to withdrawals as you look into the second half of the year?

William Katz: Okay, thank you very much. Just coming back to ARS for a moment, thank you for the disclosure that it was sort of one large withdrawal that impacted the quarter. As you look ahead of the residual platform, can you size or sense what kind of concentration risk you might have just in terms of other potential outsized withdrawals regardless of reason, maybe top five, top ten clients, what does that account for in terms of the AUM and then any sort of sight line to withdrawals as you look into the second half of the year?

Bill Katz: Okay. Thank you very much just coming back to rest for a moment. Thank you for the disclosure that it was sort of one large.

Speaker Change: Withdrawal that impacted the quarter.

William Katz: As you look ahead of the residual platform, can you size or sense what kind of concentration risk you might have just in terms of other potential outsized withdrawals regardless of reason? And maybe top five, top 10 clients, what does that account for in terms of the AUM and then any sort of sight line to withdrawals is looking to the second half of the year?

Bill Katz: As you look ahead of the residual platform can you size or a sense what kind of concentration risk you might have just in terms of other potential outsized withdrawals because of reason maybe top five top 10 clients, where does that account for in terms of the.

Speaker Change: And then any sort of a sideline to withdrawals he's looking to the second half of the year.

Speaker Change: Okay.

Bill Katz: Yes.

Michael Sacks: Michael, we don't have a concentration risk in terms of revenue at all, and I think, as we've talked about it, as you saw here, we do have some large accounts where it's large AUM, but as the account size gets bigger, the revenue, the fees are down. So we have, as a firm, we have a high level of diversity and kind of low levels of concentration with regard to revenues, and it's one of the things that actually makes us feel very good. And then when you think about the fact that even within ARS, you have different strategies, and then, of course, you have ARS for private markets.

Michael Sacks: That's Michael. We don't have a concentration risk in terms of revenue, at all, and I think as we've talked and as you saw here, we do have some large accounts where it's a large AUM, but as the account size gets bigger, the, you know, revenue, the fees are, you know, down. So we have a, as a firm, we have a high level of diversity and kind of low levels of concentration with regard to revenues. And it's one of the things that actually makes us, you know, feel very good.

Michael Sacks: Michael. We don't have a concentration risk in terms of revenue, at all, and I think as we've talked And as you saw here, you know, we do have some large accounts where it's large AUM, but as the account size gets bigger, the, you know, revenue, the fees are, you know, down. So we have a, as a firm, we have a high, you know, level of diversity and kind of low levels of concentration with regard to revenues. And it's one of the things that actually makes us, you know, feel very good.

Bill Katz: It's Michael we don't have.

Michael: Concentration risk.

Michael: In terms of revenue.

Speaker Change: At all and I think as we've talked to them.

Speaker Change: And as you saw here, yes, we do have some large accounts, where it's largely a U M. But as the account size gets bigger the revenue the fees are down. So we have a as a firm we have I you know level of.

Bill Katz: Diversity and kind of low levels of concentration.

Michael Sacks: With regard to our revenues and it's one of the things that actually makes us.

Michael Sacks: And then when you think about the fact that even within ARS, you have different strategies. And then, of course, you have ARS versus private markets. When you look at our revenue mix by client, there's just a lot of diversification there, not a lot of concentration. And so, you know, our goal for ARS for this year was to see stabilization there. We, I think we're pretty much there. We told you, you know, it was just one client.

Bill Katz: Very good and then when you think about the fact that even with an E. R. S. You have different strategies and then of course, you have a R S versus private markets. When you look at our revenue mix by clients.

Michael Sacks: When you look at our revenue mix by client, there's just a lot of diversification there, not a lot of concentration, and so our goal for ARS for this year was to see stabilization there. I think we're pretty much there. We told you it was one client, we told you it was low fee in the average fee tipped up, and we told you that Q3, we expect management fee revenue to be equal to what it was a year ago, and on our numbers, we actually think 1-1-25 F-POM in ARS will be higher than 1-1-24 F-POM.

Bill Katz: Theres just a lot of diversification there not a lot of concentration.

Bill Katz: And so you know our goal for a R. S. For this year was to see stabilization there.

Bill Katz: We.

Bill Katz: I think we're we're pretty much there.

Speaker Change: We told you. It was one client we told you was low fee and the average fee ticked up and we told you that Q3, we expect management fee revenue to be <unk>.

Michael Sacks: We told you it was a low fee, and the average fee ticked up. And we told you that in Q3, we expect management fee revenue to be equal to what it was a year ago. And, you know, on our numbers, we actually think 1,125 FBOM in ARS will be higher than 1,124 FBOM. You know, performance will matter, obviously. You know, there's still some time left on flows, but that's kind of what we see. And we think that goal of ARS stabilizing in 24, giving us the ability for that business to actually grow going forward is, you know, we've got.

Michael Sacks: We told you it was low fee and the average fee ticked up. And we told you that Q3, we expect management fee revenue to be equal to what it was a year ago. And, you know, on our numbers, we actually think 1,125 FBOM in ARS, you know, will be higher than 1,124 FBOM. You know, performance will matter, obviously. You know, there's still some time left on flows, but that's kind of what we see. And we think that goal of ARS stabilizing in 24, giving us the ability for that business to actually grow going forward is, you know, we've gotten.

Bill Katz: <unk> to what it was a year ago and on.

Michael Sacks: On our numbers, we actually think one 125 F N E. R. S. Yeah, it will be higher than 124 F bomb performance will matter obviously.

Michael Sacks: Performance will matter, obviously. There's still some time left on flows, but that's kind of what we see, and we think that goal of ARS stabilizing in 24, giving us the ability for that business to actually grow going forward is we've gotten there.

Bill Katz: They'll have some time left.

Speaker Change: On flows, but that's kind of what we see and we think that goal of stabilizing in 'twenty for giving us the ability for that business to actually grow going forward as you know we've gotten there.

Operator: Please stand by. Good day and welcome to the GCM Grosvenor Second Quarter 2024 Results Webcast. Later we will conduct a question and answer session. If you are interested in asking a question, please ensure you dial in using the numbers you have been provided for this call and press star 1 on your keypad to join the queue. If anyone should require operator assistance, please press star than zero on your telephone. As a reminder, this call will be recorded.

William Katz: I don't know if I get it as a follow-up, but I'm going to throw it in anyway. John, thanks for the sort of the pathway to how you think you can double the F-Ree between now and 28.

Jonathan Levin: I don't know if I get it as a follow-up, but I'm going to throw it anyway. John, thanks for the sort of the pathway to how you think you can double the FRE between now and 28, very helpful. Can you break that down maybe one more layer between how you sort of see the dynamics between the assumptions for private markets versus ARS within that construct? Thank you.

Jonathan Levin: I don't know if I'll get it as a follow-up, or I'm going to throw it anyway. John, thanks for the sort of pathway to how you think you can double the FRE between now and 28, very helpful. Can you break that down maybe one more layer between how you sort of see the dynamics between the assumptions for private markets versus ARS within that construct? Thank you.

John Levin: I don't know if I can get it as a follow-up, but I'm going to throw it anyway. John, thanks for the sort of pathway to how you think you can double the FRE between now and 28. It's very helpful. Can you break that down maybe one more layer between how you sort of see the dynamics between the assumptions for private markets versus ARS within that construct? Thank you.

Speaker Change: Hi, I don't forget it is a follow up brothers throw it anyway, John Thanks for the sort of the pathway to how you think you can double the FRE between now and 'twenty eight very helpful. Can you break that down maybe one more layer.

John Levin: Sorry, helpful. Can you break that down maybe one more layer between how you sort of see the dynamics between the assumptions for private markets versus ARS within that construct? Thank you.

Speaker Change: Between how you sort of see the dynamics between the assumptions for private markets versus E. R. S within that construct it. Thank you.

Stacie Selinger: I would now like to hand the call over to Stacie Selinger, Head of Investor Relations. You may begin. Thank you.

Speaker Change: Yeah.

John Levin: Sure, Bill. Happy to do that.

Jonathan Levin: Sure, Bill. Happy to do that.

John Levin: Sure, Bill. Happy to do that.

Bill Katz: Sure Bill happy to do that I think that.

John Levin: I think that the way we would think about that math is not the similar from how we've talked about what we look at internally from a budgeting and a forecasting perspective, which is a neutral flows environment on the ARS side of getting growth from compounding. We've talked about the fact that, generally speaking, we use a kind of a high single digit number for growth returns, depending on the specific strategy, and then continuing the trend of what we've seen in private markets, which has been low double digit to almost low teens growth on the private market's revenue side of things.

Stacie Selinger: Good morning and welcome to GCM Grosvenor Second Quarter 2024 earnings call. Today I am joined by GCM Grosvenor's Chairman and Chief Executive Officer Michael Sacks, President John Levin, and Chief Financial Officer Pam Bentley.

Speaker Change: The way we would.

Bill Katz: Think about that math is not dissimilar from how we've talked about but we look at.

Bill Katz: Kind of internally from a budgeting and forecasting perspective, which is.

John Levin: I think that the way we would think about that map is not dissimilar from how we've talked about what we look at kind of internally from a budgeting and a forecasting perspective, which is a neutral flows environment on the ARS side, but growth from compounding. We've talked about the fact that, generally speaking, we use, you know, kind of a high single-digit number for gross returns, depending on the specific strategy. And then continuing the trend of what we've seen in private markets, which has been, you know, low double-digit to, you know, kind of almost low-teens kind of growth on the private markets revenue side of things.

Jonathan Levin: I think that the way we would think about that map is not dissimilar from how we've talked about what we look at kind of internally from a budgeting and a forecasting perspective, which is a neutral flows environment on the ARS side, but getting growth from compounding. We've talked about the fact that, generally speaking, we use, you know, kind of a high single-digit number for gross returns, depending on the specific strategy, and then continuing the trend of what we've seen in private markets, which has been, you know, low double-digit to, you know, kind of almost low-teens kind of growth on the private markets revenue side of things.

Bill Katz: A.

Bill Katz: Neutral flows environment on the ore side, we're getting growth from compounding we've talked about the fact that generally speaking we use.

Stacie Selinger: Before we discuss this, quarters results are a reminder that all statements made on this call that do not relate to matters of historical fact should be considered forward looking statements. This includes statements regarding our current expectations for the business, our financial performance and projections. These statements are neither promises nor guarantees. They involve known and unknown risks, uncertainties, and other important factors that may cause our actual results to differ materially from those indicated by the forward looking statements on this call.

Bill Katz: Kind of a high single digit.

Bill Katz: Number four gross returns depending on the specific strategy and then continuing the trend of what we've seen in private markets, which has been.

Jonathan Levin: And then continuing the trend of what we've seen in private markets, which has been, you know, low double-digit to, you know, kind of almost low team kind of growth on the private markets revenue side of things. And so I think that longer-term, those kinds of assumptions we use to budget and forecast the business on a longer-term basis would be similar to how we would look at it over a five-year period.

Bill Katz: You know low double digit to you know kind of almost a low teens kind of growth.

John Levin: On the on the private markets.

Bill Katz: Revenue side of things.

Jonathan Levin: And so I think that longer term, those kind of assumptions we use to budget and forecast the business on a longer term basis would be similar to how we would look at it over a five-year period. I think once you get into breaking down how those numbers get there, it's a lot of what I talked about on the prepared remarks in terms of embedded growth we have from CNY FOM, embedded growth we have from the relationships that we have, as well as the broadening of those relationships, the new client acquisition opportunity.

John Levin: And so I think that longer term, those kinds of assumptions we use to budget and forecast the business on a longer term basis would be similar to how we would look at it over a five-year period. I think once you get into breaking down how those numbers get there, it's a lot of what I talked about in the prepared remarks in terms of embedded growth we have from CNY FOM, embedded growth we have from the re-up relationships that we have, as well as the broadening of those relationships, and the new client acquisition opportunity.

John Levin: So I think that longer term, those assumptions we use to budget and forecast the business on a longer-term basis would be similar to how we would look at it over a five-year period. I think once you get into breaking down how those numbers get there, it's a lot of what I talked about on the prepared remarks in terms of embedded growth we have from CNY AppPOM, embedded growth we have from the real relationships that we have, as well as the broadening of those relationships, the new client acquisition opportunity.

Stacie Selinger: Please refer to the factors in the risk factor section of our time in K, our other filings with the Securities and Exchange Commission and our earnings release. All of which are available on the public shareholder section of our website.

Bill Katz: And so I think that longer term.

John Levin: Are those kind of assumptions, we use to budget and forecast the business on a longer term basis is it would be similar to how we would look at it over a five year period.

Jonathan Levin: I think once you get into breaking down how those numbers get there, it's a lot of what I talked about in the prepared remarks in terms of embedded growth we have from CNYF and embedded growth we have from the relationships that we have, as well as the broadening of those relationships, and the new client acquisition opportunity. And I don't think that when we talk about these outcomes, we're really giving up or counting on what I would call some of the more outsized opportunities you might have from things like real explosive growth in the individual investor market and things of that nature.

Stacie Selinger: We will also refer to non-gap measures that we view as important in assessing the performance of our business. Reconciliation of non-gap metrics for the nearest gap metric can be found in our earnings presentation and earnings supplement, both of which are available on our website.

Bill Katz: Once you get into breaking down how those numbers get there with a lot of what I talked about on the prepared remarks in terms of embedded growth we have from cys.

Bill Katz: Embedded growth we have from the re up relationships that we have as well as the broadening of those relationships the new client acquisition.

Stacie Selinger: Our goal is to continually improve how we communicate with and engage with our shareholders and in that spirit we look forward to your feedback.

Jonathan Levin: And I don't think that when we talk about these outcomes, we're really giving or counting on what I would call kind of some of the more outsized opportunities you might have from things like real explosive growth in the individual investor market and things of that nature.

Bill Katz: Opportunity.

John Levin: And I don't think that when we talk about these outcomes we're really giving or counting on what I would call kind of some of the more outsized opportunities you might have from things like real explosive growth in the individual investor market and things of that nature. Thank you.

John Levin: And I don't think that when we talk about these outcomes, we're really giving up or counting on what I would call some of the more outsized opportunities you might have from things like real explosive growth in the individual investor market and things of that nature.

John Levin: Don't think that when we talk about these outcome we're really.

Michael Sacks: Thank you again for joining us and with that, we'll turn the call over to Michael. Thanks, Stacey. We had a strong second quarter building on our recent momentum. During the quarter, fee related earnings increased 20% and adjusted net income increased 29% over the prior year. Our private market strategies continue to grow with second quarter management fees growing 11% year over year. Private markets now comprises 71% of our total assets under management.

Bill Katz: Giving or counting on.

Bill Katz: What I would call kind of some of the more outsized opportunity you might have.

Bill Katz: From things like real explosive growth in the individual investor market and things of that nature.

Speaker Change: Thank you.

Kenneth Worthington: And the next question will come from Ken Worthington with J.P. Morgan. Good morning, thank you for taking the question. So maybe digging a little deeper into wealth management and sort of your growing and deepening presence there. Can you talk about how you see Grosvenor as being different in terms of either product design or product focus versus what the market already sees and what's sort of resonating with the distribution channels. You mentioned Infra sort of the latest here. In my mind, it's really sustainability and impact investing where you seem to be different than peers. And what is the opportunity set there in wealth?

Kenneth Worthington: And the next question will come from Ken Worthington with J.P. Morgan.

Kenneth Worthington: And the next question will come from Ken Worthington, with J.P. Morgan.

Ken Worthington: And the next question will come from Ken Worthington, with J.P. Morgan.

Bill Katz: And the next question will come from Ken Worthington with Jpmorgan.

Michael Sacks: Good morning, thanks for taking the question. So maybe digging a little deeper into wealth management and sort of your growing and deepening presence there. Can you talk about how you see Grosvenor as being different in terms of either product design or product focus versus what the market already sees and what's sort of resonating with the distribution channels? You mentioned Infra as sort of the latest here. In my mind, it's really sustainability and impact investing where you seem to be different than peers and what is the opportunity set there in wealth?

Michael Sacks: Good morning, thanks for taking the question. Maybe we could dig a little deeper into wealth management and sort of your growing and deepening presence there. Can you talk about how you see Grosvenor as being different in terms of either product design or product focus versus what the market already sees and what's sort of responding with the distribution channels? You mentioned Infra as sort of the latest here. In my mind, it's really sustainability and impact investing where you seem to be different than peers, and what is the opportunity set there in terms of wealth?

Ken Worthington: Good morning, Thanks for taking the question.

Ken Worthington: So maybe digging a little deeper into wealth management and sort of your growing.

Michael Sacks: Our fee related earnings margin was 40% for the quarter compared to 31% at the end of 2020. We continue to believe that we have opportunity for further FRE margin expansion in the future. The fundraising environment continued to improve in the second quarter. We raised $1.8 billion, a 26% year over year increase, and that brought first half new capital raised to $3.4 billion, a 45% increase from the first half of 2023. Our pipeline has grown nicely throughout the year and we expect fundraising in the second half of the year to exceed that of the first half.

Ken Worthington: Growing and deepening presence there can you talk about how you see grosvenor as being different in terms of either product design or product focus versus what the market already sees and what sort of resonating with the distribution channels.

Speaker Change: You mentioned sort of the latest latest here.

Speaker Change: In my mind, it's really.

Speaker Change: Sustainability and impact investing where you seem to be different than than peers, and what is the opportunity set there and in wealth.

Michael Sacks: So, Ken, it's Michael. I think that the opportunity in wealth, and generally, and frankly, the opportunity in wealth kind of specifically for us is pretty significant. And it's not at all like pigeonholes or, you know, it's a significant opportunity and it's an opportunity across a range of different types of products and strategies. Obviously, it's a huge channel. It's an under-penetrated channel for alternatives in a pretty serious way, and the penetration that is there, you know, meaning the balance sheet allocation, if you will, and the balance sheet allocation that is there is going to rise, and there's, you know, kind of near unanimity on this view that balance sheet allocation is concentrated today in a relatively, you know, somewhat small number of big brand names.

Michael Sacks: So, Ken, it's Michael. I think.., that the opportunity in wealth and generally, and frankly, the opportunity in wealth kind of specifically for us is pretty significant and it's not at all like pigeonholes or, you know, it's a significant opportunity and it's an opportunity across a range of different types of products and strategies. Obviously, it's a huge channel. It's a under-penetrated channel for alternatives in a pretty serious way. And the penetration that is there, you know, meaning the balance sheet allocation, if you will, and the balance sheet allocation that is there that is going to rise, and there's, you know, kind of near unanimity on this view, that balance sheet allocation is concentrated today in a relatively, you know, somewhat small number of big brand names.

Michael Sacks: So, Ken, it's my goal. I think that the opportunity in wealth and generally, and frankly, the opportunity in wealth kind of specifically for us is pretty significant, and it's not at all pigeonholed, or it's significant opportunity, and it's an opportunity across a range of different types of products and strategies. Obviously, it's a huge channel.

Michael Sacks: So Ken, it's Michael. I think that the opportunity in wealth, and generally, and frankly, the opportunity in wealth kind of specifically for us is pretty significant. And it's not at all like pigeonholes or, you know, it's a significant opportunity, and it's an opportunity across a range of different types of products and strategies. Obviously, it's a huge channel. It's an under-penetrated channel for alternatives in a pretty serious way. And the penetration that is there, you know, meaning the balance sheet allocation, if you will, and the balance sheet allocation that is there that is going to rise, and there's, you know, kind of near unanimity on this view that balance sheet allocation is concentrated today in a relatively, you know, somewhat small number of big brand names.

Michael Sacks: We've spoken often about the strength of our diversified platform and recently about our confidence in demand for infrastructure and credit strategies. Infrastructure was again the greatest contributor to our quarterly fundraising with over 600 million raised for this strategy in the quarter, followed by private equity and private credit. Our private market specialized fundraising of a billion dollars so far this year is a great start and we are well on pace to see materially higher fundraising levels there than we saw in both 2022 and 2023.

Speaker Change: Sure So Ken it's Michael I think.

Speaker Change: That the opportunity in wealth.

Speaker Change: Generally and frankly, the opportunity and well kind of specifically for us is pretty significant.

Speaker Change: And it's not at all.

Speaker Change: Like pigeon holes or.

Michael Sacks: It's a significant opportunity and it's an opportunity across a range of different types of products and strategies, obviously, it's a huge channel.

Michael Sacks: It's an underpenetrated channel for alternatives in a pretty serious way, and the penetration that is there, meaning the balance sheet allocation, if you will, and the balance sheet allocation that is there that is going to rise, and there's kind of near unanimity on this view, that balance sheet allocation is concentrated today in a relatively somewhat small number of big brand names. So while we see real opportunity in Infra, while you mentioned correctly opportunity that we could have in sustainability, there's actually opportunity in private equity and there's actually opportunity in credit and yield products because it is a channel that will, five years out, ten years out, have a lot more diversification inside of it and a lot more larger number of names on platforms in the future than there are today where the lion's share of the Alts, you know, names are pretty highly concentrated with, you know, one to two handfuls, one to one and a half handfuls of the biggest best known players.

Speaker Change: It's a underpenetrated channel for alternatives in a pretty serious way and the penetration that is there you know meeting meaning the the balance sheet allocation. If you will in the balance sheet allocation that is there that is going to rise and there's kind of near unanimity on this.

Michael Sacks: All of our private market strategies delivered competitive performance and we believe clients remain appreciative of our value add. Absolute return strategies investment performance was again strong building on the very solid first quarter. Our multi strategy composite generated a 2.4% gross return in the second quarter outperforming indices and peers. Gross returns for our composite are 7.4% year-to-date and 12.3% over the last 12 months and we realized 10 million dollars in performance fees so far this year.

Michael Sacks: View that.

Speaker Change: That balance sheet allocation is concentrated today in a relatively you know some somewhat small number of big brand names. So while we see real opportunity in infra, while you mentioned correctly opportunity that we could have in.

Michael Sacks: So while we see real opportunity in infrastructure, while you mentioned correctly the opportunity that we could have in sustainability, you know, there's actually opportunity in private equity, and there's actually opportunity in credit and yield products because this is a channel that will, five years out, 10 years out, have a lot more diversification inside of it, and a lot larger number of names on platforms in the future than there are today, where the lion's share of the So we see a lot of opportunity.

Michael Sacks: So while we see real opportunity in infra, while you mentioned correctly opportunity that we could have in sustainability, there's actually opportunity in private equity and there's actually opportunity in credit and yield products because it is a channel that will five years out, 10 years out, have a lot more diversification inside of it and a lot more larger number of names on platforms in the future than there are today where the lion's share of the alts names are pretty highly concentrated with one to two handfuls, one to one and a half handfuls of the biggest best known players. So we see a lot of opportunity.

Kenneth Worthington: Okay. Great. Thank you.

Speaker Change: The sustainability.

Speaker Change: No, there's actually opportunity in private equity and there's actually opportunity in credit and yield products because it is a it is a.

Michael Sacks: As a result of the good performance, our ARS pipeline has expanded meaningfully over the past year during which we raised a billion dollars for the strategy. We did have net ARS outflows during the quarter which resulted from the partial restructuring of one client portfolio. The outflows were to lower the average management fee leading to an uptick in our average ARS management fee rate. We expect total ARS management fees for Q3 will be roughly flat compared to the third quarter of last year.

Michael Sacks: Channel that will five years out 10 years out to have a lot more diversification inside of it and a lot more a larger number of names on platforms in the future than there are today, where the lion's share of it.

Speaker Change: All right.

Michael Sacks: Names are pretty highly concentrated with you know one the one one to two handfuls, one to one and a half handfuls of the biggest best known players. So we see a lot of opportunity there.

Michael Sacks: So we see a lot of opportunity there.

Michael Sacks: The recent volatile markets of the type were absolute return strategies typically show well. Having been through a number of market cycles over the past 35 years, I have great confidence in our ability to add value in difficult market environments. Over the past three years we raised 1.8 billion dollars from the individual investor channel. Earlier this year I told you that expanding our products and distribution in that channel was a strategic priority.

Operator: Okay, great. Thank you.

Michael Sacks: Okay, great. Thank you. And then just on the absolute return business, you highlighted the concentration redemption from that one client. Was that the vast majority? Was it half? What portion of the elevated redemption? No, it was a very, very significant majority.

Kenneth Worthington: Okay, great. Thank you.

Speaker Change: Okay, great. Thank you and then just on the absolute return business.

William Katz: And then just on the absolute return business, you highlighted the concentration redemption from that one client. Was that the vast majority? Was it half? What portion of the elevator redemption? No, it was, it was, it was, it was a very, very significant majority. The client remains the client continues to work with us. We're, you know, some of that we could see come back in different strategies over time.

Michael Sacks: And then, just on the absolute return business, you highlighted the concentration redemption from that one client. Was that the vast majority? Was it half? What portion of the elevated redemption? No.

Michael Sacks: And then just on the absolute return business, you highlighted the concentration redemption from that one client. Was that the vast majority? Was it half? What portion of the elevated redemption? No, it was a very, very significant majority.

Speaker Change: You highlighted the concentration redemption from that one client.

Speaker Change: That.

Speaker Change: The vast majority was it half what portion of the elevated redemption. It was it was it was it was a very very significant majority.

Michael Sacks: It was a very, very significant majority. The client remains a client, continues to work with us, were some of that we could see come back in different strategies over time. And that was, as we described it, it was a restructuring and reallocation of a client portfolio. It wasn't a, you know, it was a top-down kind of macro thing at a client that we still work with and want to continue to work with as we go forward.

Michael Sacks: The client remains a client, continues to work with us, and you know, some of that we could see come back in different strategies over time. And that was, as we described it, it was a restructuring and reallocation of the client portfolio. It wasn't a, you know, and it wasn't, you know, that's, it was a top-down kind of macro thing at a client that we still work with and want to continue to work with as we go forward. Thank you.

Michael Sacks: The client remains a client, and continues to work with us. We're, you know, some of that we could see come back in different strategies over time. And that was, as we described it, it was a restructuring and reallocation of a client portfolio. It wasn't, you know, and it wasn't, you know, it was a top-down kind of macro thing at a client that we still work with and want to continue to work with as we go forward.

Speaker Change: Client remains the client continues to work with us.

Michael Sacks: You know some of that we could see come back in different strategies over time.

Michael Sacks: We made good progress in that regard this quarter. First we are excited to share that we will serve as core independent manager for a private equity interval fund focused on private equity co-investments and secondaries. In addition, we secured a $300 million anchor commitment that we expect will seed an infrastructure product targeting the individual investor channel. We look forward to telling you more about these efforts in the future.

Michael Sacks: And that was, as we described it, it was a restructuring and reallocation of a client portfolio; it wasn't a, you know, and it wasn't, you know, that it was a, it was a top down kind of macro thing at a client that we still work with and want to continue to work with as we go forward. Thank you. And the, the contributions are still at close contributions are still at very low levels. I think you mentioned the past. You had a number of strategies that are performing really well. And I think you thought that they might start to attract assets.

Speaker Change: And that was it was.

Speaker Change: As we described it it was a restructuring.

Speaker Change: And and reallocation of our client portfolio. It wasn't a you know it.

Speaker Change: And and and.

Speaker Change: It wasn't that it.

Michael Sacks: It was a it was a top down kind of macro thing that a client.

Speaker Change: We still work with and want to continue to work with as we go forward.

Michael Sacks: Whether the strong long-term demand outlook or history of high re-up rates are expanded pipeline for our operating leverage, there are a number of factors that lead to our confidence regarding the back half of this year.

Michael Sacks: And the contributions are still at, gross contributions are still at very low levels. I think you mentioned in the past that you had a number of strategies that were performing really well, and I think you thought that they might start to attract assets. What do you feel about this? Is this something where we should see gross contributions?

Michael Sacks: Thank you. And the contributions are still at, gross contributions are still at very low levels. I think you mentioned in the past, you had a number of strategies that are performing really well. And I think you thought that they might start to attract assets. What do you feel here? Is this something where we should see the gross? contributions.

Michael Sacks: And the contributions are still at, gross contributions are still at very low levels. I think you mentioned in the past that you had a number of strategies that were performing really well. And I think you thought that they might start to attract assets. What do you feel here? Is this something where we should see gross? contributions. Yeah, we

Speaker Change: Thank you.

Speaker Change: The contributions are still at gross contributions are still at very low levels. I think you mentioned in the past you had a number of strategies that are performing really well and I think he thought that they might start to attract assets.

John Levin: And our longer-term goals which John will address now. We have a lot of ways to win and are confident in our value proposition for clients, shareholders and team members.

Michael Sacks: What, what do you feel here is, is this something where we should see the gross contributions? Yeah, we, yeah, as I said, like trying to time inflows and outflows quarter to quarter is not, you know, worthwhile. You should have a, my opinion, you should have a simplifying. We, you know, we do our very best to budget. But, you know, it's hard to, you know, it's hard to do that. You have to have a simplifying assumption and build your models. And we're obviously happy to help you do that.

Speaker Change: What what do you feel here is is this something where we should see the gross contributions yeah. We.

John Levin: And with that, John, take it over.

Michael Sacks: Yeah, as I said, look, trying to time inflows and outflows quarter to quarter is not, you know, worthwhile. You should have a, in my opinion, you should have a simplified, we do our very best to budget, but, you know, it's hard to, you know, it's hard to do that. You should have a simplifying assumption and build your models, and we're obviously happy to help you do that

Michael Sacks: Yeah, as I said, look, trying to time inflows and outflows quarter to quarter is not, you know, worthwhile. You should have a, my opinion, you should have a simplified, we do our very best to budget, but, you know, it's hard to do that. You should have a simplifying assumption and build your models, and we're obviously happy to help you do that.

Speaker Change: Yeah.

Speaker Change: I said look trying to time inflows and outflows quarter to quarter as is not.

John Levin: Great. Thank you, Michael.

Speaker Change: Worthwhile you should have a my opinion you should have a simplified we you know we do our very best to budget, but.

Michael Sacks: It's a hard to it's hard to do that yet, but she's got a simplifying assumption and build your models and we're obviously happy to help you do that we I said I think earlier that a they don't think it was in the script that we think one one.

Michael Sacks: As we, I said, I think earlier that they don't think was in the script that, that we think one, one, 25, paying AUM and ARS, we believe that will be higher than one, one, 24. We got to get through the end of the year. Performance will matter on that, but that's our, you know, that's; we see that now, we think this has stabilized. And I personally believe that, you know, we will see growth over the next several years. It's not going to be linear, per se. It's not going to be, you know, every quarter, you know, like a stuck function.

Michael Sacks: I said earlier that I don't think it was in the script that we think 1-1-25-9. APENG-AUM and ARS, we believe that will be higher than 1-1-24. We have got to get through the end of the year.

Michael Sacks: I said earlier that I don't think it was in the script that we think 1-1-25-0. APENG-AUM and ARS, we believe that will be higher than 1-1-24. We have got to get through the end of the year.

Michael Sacks: I said, I think earlier that, I don't think it was in the script, that we think 1-1-25. APENG-AUM and ARS, we believe that will be higher than 1-1-24. We got to get through the end of the year.

Speaker Change: 25 <unk>.

Speaker Change: Paying a U M N E. R. S. We believe that will be higher than one 124, we got to get through the end of the year performance matters on that but that's our.

Michael Sacks: Performance will matter in that, but that's our, you know, we see that now. We think this has stabilized. And I personally believe that, you know, we will see growth over the next, you know, several years. It's not going to be linear, per se. It's not going to be, you know, every quarter, like a step function. But, you know, we have been through a lot of cycles in this space. And I, that's my belief too.

Michael Sacks: Performance will matter on that, but that's our, you know, we see that now. We think this has stabilized. And I personally believe that, you know, we will see growth over the next, you know, several years. It's not going to be linear per se. It's not going to be, you know, every quarter, you know, like a step function. But, you know, we have been through a lot of cycles in this space. And I, that's my belief.

John Levin: Starting with our embedded growth from capital deployment. Over the last three years, on average, three billion of our annual F-POM growth has been simply from turning on fees and existing programs where the capital had already been raised. Going forward, embedded growth will come from converting our $7.3 billion of contracted not yet fee-paying AUM into fee-paying AUM. We are particularly excited about putting client capital to work in what is an increasingly compelling investment environment.

Michael Sacks: Performance will matter in that, but that's what we see now. We think this has stabilized, and I personally believe that, you know, we will see growth over the next, you know, several years. It's not going to be linear per se. It's not going to be, you know, every quarter, you know, like a step function, but, you know, we have been through a lot of cycles in this space, and I, that's my belief.

Speaker Change: We see that now we think this has stabilized and I personally believe that we will see growth over the next you know.

Kenneth Worthington: Great, thank you.

Operator: Great. Thank you.

Speaker Change: Several years it was not going to be linear per se, it's not going to be you know.

Michael Sacks: Every quarter, you know like a step function, but you know we have been through a lot of cycles in this space.

Michael Sacks: But, you know, we have been through a lot of cycles in this space. And I, that's my, that's my belief. Great, thank you.

Michael Sacks: And I, that's my that's my belief.

Michael Sacks: Great. Thank you.

Speaker Change: Great. Thank you.

Crispin Love: And the next question comes from Crispin Love with Piper Sandberg.

Crispin Love: And the next question comes from Crispin Love with Piper Sampson.

Crispin Love: And the next question comes from Crispin Love with Piper Sandberg.

Crispin Love: And the next question comes from Crispin Love with Piper Sandler. Thanks, Mark, everyone. I appreciate taking my questions. Just first on, on fundraising, PE has been pretty stable here for a few quarters. Infrastructure improving, but I'm just to discuss the outlook for the back half of the year. You mentioned the second half being better than the first. Just curious if you could drill a little bit deeper there, the key areas of opportunity across private markets. And then just has had the pipeline changes all compared to the numbers you just discussed last quarter. I think I might have missed that in the prepared marks that you mentioned.

John Levin: Turning to our existing clients, we have a proven track record of expanding our existing client relationships through successful re-ups and through the broadening of the relationship. Last quarter, I spoke about how re-ups provide embedded growth as they occur at 90% rates, how they have almost average 30% increase in size. In addition, we've consistently had success earning our clients trust and expanding with them into new areas. Currently, we're seeing great traction with our existing clients around high growth areas such as infrastructure and private credit and into direct-oriented investment strategies. Approximately 50% of our top clients work with us in more than one investment vertical.

Michael Sacks: And the next question comes from Crispin Love with Piper Sandler.

Crispin Love: Thanks. Good morning, everyone.

Crispin Love: Thanks, Good morning, everyone and appreciate you taking my questions. Just first on Unreason GE has been pretty stable here for a few quarters infrastructure, improving but can you just discuss the outlook for the back half of the year you mentioned the second half being.

Crispin Love: I appreciate you taking my questions. Just first on fundraising, PE has been pretty stable here for a few quarters, and infrastructure is improving. But can you just discuss the outlook for the second half of the year? You mentioned the second half being better than the first. I'm just curious if you could drill a little bit deeper on the key areas of opportunity across private markets, and then just how has the pipeline changed at all compared to the numbers you discussed last quarter? I think I might have missed that in the prepared remarks that you mentioned. Thanks.

Crispin Love: I appreciate you taking my questions. Just first on fundraising, PE has been pretty stable here for a few quarters, and infrastructure is improving, but can you just discuss the outlook for the back half of the year? You mentioned the second half being better than the first. I'm just curious if you could drill a little bit deeper there, the key areas of opportunity across private markets. And then, just has the pipeline changed at all compared to the numbers you discussed last quarter? I think I might have missed that in the prepared remarks that you mentioned. Thanks.

Crispin Love: I appreciate you taking my questions. Just first on fundraising, PE has been pretty stable here for a few quarters, infrastructure improving. But can you just discuss the outlook for the back half of the year? You mentioned the second half being better than the first. I'm just curious if you could drill a little bit deeper there, the key areas of opportunity across private markets. And then just has the pipeline changed at all compared to the numbers you discussed last quarter? I think I might have missed that in the prepared remarks that you mentioned.

Crispin Love: Better than the first but just curious if you could drill a little bit deeper there are key areas of.

Speaker Change: Opportunity across private markets and then just I'll tell you the pipeline changed at all compared to the numbers you discussed last quarter I think I might have missed that.

Speaker Change: Repaired remarks, a key metric.

Michael Sacks: Thanks. Pipeline is pipeline's full. We did, we did mention that. And, you know, it's, that's obviously a good thing. Last quarter, John talked about us having four billion or so of reups in sight. We, three of those, first of all, take a step back. You know, we raised 3.4 billion in the first half. We've said clearly, second half will be higher. We have of the reups, John mentioned last quarter. We've got about 3 billion of those that are still in the pipeline. So that's a nice start right there. We've got a number of specialized funds that are in market.

Michael Sacks: Sure. The pipeline is full. We did mention that, and that's obviously a good thing. Last quarter, John talked about us having $4 billion or so of re-ups in sight. First of all, take a step back.

Speaker Change: Sure pipeline is pipeline full we did we did mention that and you know it's that that's obviously a good thing.

John Levin: Third, we are entering harvest mode on strategic investments we've made over recent years. One example is our private market specialized fund franchises as highlighted on slide 17 of the presentation. Since 2020, we have grown these private market specialized fund franchises by 23% annualized growth rate as measured by capital commitments. And the opportunity persists going forward in both the more mature and the newer fund series. We're fortunate to have such great loyalty from existing clients more than 80% of our fundraising each year typically comes from those relationships.

Speaker Change: Last quarter, John talked about us, having 4 billion or so of re ups in sight.

Michael Sacks: We.

Michael Sacks: We raised $3.4 billion in the first half. We've said clearly that the second half will be higher. We have, of the re-ups John mentioned last quarter, we've got about $3 billion of those that are still in the pipeline, so that's a nice start right there. We've got a number of specialized funds that are in the market that we're raising money for, and we talked about the fact that we were already off to a quite good start on specialized fundraising for the year, and we think that that's going to continue, and we're going to have a good year of specialized fundraising.

Michael Sacks: Three of those first of all take a step back we raised 3.4 billion.

Michael Sacks: We raised $3.4 billion in the first half. We've said clearly second half will be higher. We have, of the re-ups John mentioned last quarter, we've got about $3 billion of those that are still in the pipeline, so that's a nice start right there. We've got a number of specialized funds that are in market that we're raising money for, and we talked about the fact that we're already off to a quite good start on specialized fundraising for the year, and we think that that's going to continue, and we're going to have a good year of specialized fundraising.

Michael Sacks: In the first half we've said clearly second half will be higher we have of the rehab as John mentioned last quarter. We've got about 3 billion of those that are still in the pipeline. So that's a nice start right. There. We've got a number of specialized funds that are in market that were raising money for and we talked about the fact that.

Michael Sacks: We've got a number of specialized funds that are in market that we're raising money for. And we talked about the fact that we're already off to a quite good start on specialized fundraising for the year. And we think that that's going to continue. And we're going to have a good year of specialized fundraising. And obviously we pick up, you know, you pick up new clients. And you deploy capital, you pick up new clients and you have existing clients that work, move with you into new strategies. And so we are, you know, confident in the back half of the year with regard to our fund rate.

John Levin: However, we also have had success with new client acquisition both in markets where we already have a presence and over time in markets and channels where we are seeking to build our business. We've invested in our teams and seen early success in Europe, Australia and Canada, but we've only scratched the surface of the opportunities that in those regions. Additionally, insurance and individual investors represent a massive opportunity for the alternatives industry and we're in an ideal position to capture share in both of those channels.

Michael Sacks: We're already off to a quite good start on specialized fund raising for the year and we think that that's going to continue.

Michael Sacks: Obviously, you pick up new clients, and you deploy capital. You pick up new clients, and you have existing clients that move with you into new strategies, and so we are confident in the back half of the year with regard to our fundraising.

Michael Sacks: Obviously, you pick up new clients, and you deploy capital. You pick up new clients, and you have existing clients that move with you into new strategies. We are confident in the back half of the year with regard to our fundraising.

Michael Sacks: And we're gonna have a goodyear a specialized fund raising and.

Michael Sacks: Obviously, we pick up you pick up new clients.

Michael Sacks: And you deploy capital.

Michael Sacks: You you know you pick up new clients and you have existing clients that move with you into new strategies and so we are we are you know.

Michael Sacks: Confident in.

Speaker Change: In the back half of the year with regard to our fund raising.

John Levin: Finally, while revenue growth will be a key driver to reaching our 5-year FRE goal, it was margin expansion from the operating leverage embedded in our business. Achieving our goal assumes continued FRE margin expansion. Extending the margin enhancement we've enjoyed since going public. Beyond our FRE growth potential, we also have massive incremental incentive for opportunity. It is unique in that it's two fold, both annual performance fees and through carried interest. Both of these earning streams have been suppressed over the past couple of years, and while the exact timing is hard to predict, if we are successful in achieving our FRE growth targets, our growth outcomes in adjusted EBITDA and adjusted and I should exceed that of FRE. We enjoy industry tailwinds and a platform which has the breadth and flexibility to compete effectively in this exciting market.

Jonathan Levin: And I would just add to the last point Michael was making around kind of new client acquisition. We have a number of different what I would call I guess leading indicators for lack of a better word around the activity levels there whether it's RFPs that are out in the market or the amount of marketing presentations that we're preparing or the general kind of busy nature of our sales team and like all those metrics point to a more certainly a more active environment now that you would have had you know a year ago and certainly it seems the activity levels are higher kind of across the board.

John Levin: And I would just add to the last point Michael was making around kind of new client acquisition. We have a number of different what I would call I guess leading indicators for lack of a better word around the activity levels there whether it's RFPs that are out in the market or the amount of marketing presentations that we're preparing or the general kind of busy nature of our sales team and like all those metrics point to a more certainly a more active environment now than you would have had you know a year ago and so certainly it seems the activity levels are higher kind of across the board.

John Levin: I would just add to the last point Michael was making around kind of new client acquisition. We have a number of different what I would call I guess leading indicators for lack of a better word around the activity levels there whether it's RFPs that are out in the market or the amount of marketing presentation that we're preparing or the general kind of busy nature of our sales team. And like all those metrics point to a more certainly a more active environment now that you would have had you know a year ago and certainly it seems the activity levels are higher kind of across the board.

Speaker Change: I mean, I would just add to the last point, Michael was making around kind of new client acquisition.

Crispin Love: Great. Thank you. I appreciate that.

Speaker Change: We have a number of different what I would call I guess, leading indicators for lack of a better word around the activity levels. There, whether it's rfps that are out in the market or the amount of marketing presentation. There were preparing or the general kind of busy nature of our sales team and all of those metrics.

John Levin: Point to a more certainly a more active environment now.

Speaker Change: Now then you would've had a year ago.

John Levin: And so certainly it seems that activity levels are higher kind of across the board.

Crispin Love: Great. I appreciate that.

John Levin: Great. Thank you. I appreciate that.

Crispin Love: Great. Thank you. I appreciate that.

Michael Sacks: And then just one last question for me, mostly on the macro side. We've seen plenty of volatility in the past week or so, mostly concentrated late last week and early this. Credit spreads have widened, and recession talk has renewed. And then with just rate cuts coming, likely 100 bits or so before year-end. But when you think about it and put this all together, can you discuss kind of how it impacts, if at all, your outlook or potential for deal activity in this space and then knock-on effects for GCM, whether it's kind of pros and cons across private markets or ARS, or if you just view it kind of more of a blip than anything else. But just appreciate any color there. Thank you.

Speaker Change: Great. Thank you I appreciate that and then just one last question for me the Mercury on the.

Michael Sacks: And then just one last question for me, mostly on the macro side. We've seen plenty of volatility in the past week or so, mostly concentrated late last week in early this credit spread that widened. Recession talk renewed, but and then with just rate cuts coming, coming likely hundreds or so before a year and but when you think about it and put this all together, can you discuss kind of how it impacts, if at all, your outlook or potential for deal activity in the space and then knock on effects for GCM whether it's kind of pro just on to cross private markets or ARS.

Speaker Change: The macro side.

Crispin Love: And then just one last question for me, mostly on the macro side. We've seen plenty of volatility in the past week or so, mostly concentrated late last week and early this. Credit spreads have widened. Recession talk renewed. And then with just rate cuts coming, likely 100 bits or so before year end. But when you think about it and put this all together, can you discuss kind of how it impacts, if at all, your outlook or potential for deal activity in this space and then knock on effects for GCM, whether it's kind of pros or cons across private markets or ARS, or if you just view it kind of more of a blip than anything else. But just appreciate any color there. Thank you.

Michael Sacks: And then just one last question for me, mostly on the macro side. We've seen plenty of volatility in the past week or so, mostly concentrated late last week in early bids. Credit spreads have widened, and recession talk has renewed. And then with just rate cuts coming, likely 100 bids or so before year-end. But when you think about it and put this all together, can you discuss kind of how it impacts, if at all, your outlook or potential for deal activity in this space, and then knock-on effects for GCM, whether it's kind of pros or cons across private markets or ARS, or if you just view it kind of more of a blip than anything But just appreciate any color there. Thank you.

Speaker Change: We've seen plenty of volatility in the past week or so mostly concentrated late last week and early death credit spreads had widened recession talk renewed but.

Pam Bentley: With that, I'll turn the call over to Pam. Thanks, John. We are pleased with our strong results in the second quarter. Asets under management were $79 billion as a quarter end, a 4% increase from a year ago and fee-paying AUM also increased 4% year-over-year ending the quarter at $63 billion. Contracted not yet fee-paying AUM ended the quarter at $7.3 billion, a 9% increase from a year ago due to stronger fundraising over the last 12 months.

Michael Sacks: And then with just rate cuts come in coming likely 100 bps or so before year end, but when you think about it and put this altogether can you discuss kind of how it impacts if at all your outlook or potential for deal activity in the space and then knock on effects for <unk>, whether it's kind of probably get ponds across private markets or <unk>.

Michael Sacks: Or if you just do a kind of more of a uplift than anything else, would just appreciate any color there. Thank you. So, in general, volatile markets tend to reinforce the attractiveness of alternative strategies. I honestly, I think that's the biggest takeaway. When you have real extreme volatile markets, your alt strategies are, you know, have higher levels of appreciation from your client base. And I think that's an important; that's just what we've experienced, and I think that matters a lot. As far as you know, the impact of you know, rate cuts over the next two, three quarters, you know, slow down in the economy.

Speaker Change: Or if you just do a kind of more of a uplift than anything else. We're just I appreciate any color there. Thank you.

Michael Sacks: So, in general.., volatile markets, tend to reinforce the attractiveness of alternative strategy. I honestly, I think that's the biggest, takeaway, when you have real extreme volatile markets, your alt strategy is are, you know, have, higher levels of appreciation from your client. And I think that's just what we've experienced, and I think that matters a lot. Uh, you know, the impact of, of, you know, rate cuts over the next two, three quarters, you know, slowdown in the economy, the chance of a you know, recession, some, you know, people writing has, you know, gone up from 25% to 35% from, 15% to 25% over the last few weeks, that doesn't have a particularly significant impact on how we operate and on how we see opportunity or we see short-term, intermediate-term results, and nothing in that realm has any real impact or makes any real change to our longer-term sort of five-year outlook.

Michael Sacks: So, I, in general... Volatile markets tend to reinforce the attractiveness of alternative strategies. I honestly, I think that's the biggest.

Michael Sacks: So, in general.., volatile markets, tend to reinforce, the attractiveness of alternative strategy. I honestly, I think that's the biggest, takeaway, when you have real extreme volatile markets, your alt strategy is are, you don't have- higher levels of appreciation from your client.

Pam Bentley: Private markets was once again a keyed growth driver with private markets fee-paying AUM growing by 7% year-over-year. As of quarter end, our private markets business represents 71% of total AUM and 66% of our fee-paying AUM. We expect the double-mix shift in our business to continue, first towards private markets and second towards direct oriented strategies which comprise more than half of our private markets AUM as of quarter end. Private markets management fees grew 11% year-over-year due to strong specialized fund fundraising and catch-up fees of $2.6 million in the quarter.

Speaker Change: Yeah, So in general.

Speaker Change: Volatile markets.

Michael Sacks: Tend to reinforce.

Speaker Change: The attractiveness of alternative strategies.

Speaker Change: I honestly I think that's the biggest.

Michael Sacks: Takeaway: when you have real extreme volatile markets, all your strategies are, you know, have higher levels of appreciation from your clients. And I think that's just what we've experienced, and I think that matters a lot. As far as, you know, the impact of, you know, rate cuts over the next two, three quarters, you know, slowdown in the economy, the chance of a, you know, recession, some people writing have, you know, gone up from 25% to 35% from 15% to 25% over the last few weeks.

Michael Sacks: Takeaway when you have real extreme volatile markets your alt strategies.

Speaker Change: Are they don't have.

Michael Sacks: Higher levels of appreciation from your client base.

Michael Sacks: And I think that's just what we've experienced, and I think that matters a lot. As far as, Uh, you know, [inaudible] the impact of, of, you know, Rate cuts over the next two-three-quarters, slow down in the economy, the chance of a recession some people writing has gone up from 25% to 35% from, 15% to 25% over the last few weeks. That doesn't have a particularly significant impact on how we operate and on how we see opportunity or we see short-term, intermediate-term results, and nothing in that realm has any real impact or makes any real change to our longer-term five-year outlook.

Michael Sacks: And I think that's that that's just what we've experienced and I think that matters a lot.

Michael Sacks: As far as.

Pam Bentley: Private markets management fees excluding catch-up fees in the quarter grew 6% year-over-year in line with our guiding flash quarter. We expect a similar year-over-year growth rate in private markets management fees excluding catch-up fees in the third quarter. For the full year 24, we reaffirm our expectation of double digit private market management fee growth excluding catch-up fees. At the beginning of the year, we spoke about our expectation that our absolute return strategies management fees would stabilize in 24 and we are still on track to meet that goal.

Michael Sacks: The impact of of you know.

Michael Sacks: Rate cuts over the next two three quarters.

Speaker Change: <unk>.

Michael Sacks: You know a slowdown in the economy the chance of a recession some people writing has.

Michael Sacks: The chance of a, you know, recession some, you know, people writing has, you know, gone up from 25% to 35% from 15% to 25% over the last few weeks. You know, that, that, that doesn't have a pretty, you know, particularly significant impact on, you know, on how we operate. And on, you know, how we see opportunity or we see, you know, short term, intermediate term results and nothing. You know, like in that realm, as, you know, any real impact or, you know, makes any real change to our longer term sort of five year outlook. Thanks, I got appreciate all the, all the color there and about one.

Speaker Change: <unk> gone up.

Michael Sacks: 25% to 35% from.

Michael Sacks: That doesn't have a particularly significant impact on how we operate and on how we see opportunity or we see short-term, intermediate-term results, and nothing in that realm has any real impact or makes any real change to our longer-term five-year outlook.

Michael Sacks: 15% to 25% over the last few weeks.

Speaker Change: With that that that that doesn't have a pretty you know, particularly.

Michael Sacks: Significant impact on how we operate.

Speaker Change: And you know, how we see opportunity or we see short term intermediate term results and nothing.

Pam Bentley: Second quarter ARS management fees increased 3% year-over-year and we expect third quarter ARS management fees to be consistent with the third quarter of last year. As Michael noted, investment performance has been very strong, positioning us to generate meaningful potential performance fees this year and client interest in the strategy has grown. Turning to incentives fees, we realize $16 million in the quarter comprised of $4 million of ARS performance fees and $12 million of carried interest.

Speaker Change: Like the.

Michael Sacks: In that realm, as any real impact or.

Speaker Change: Makes any real change to our longer term sort of five year outlook.

Crispin Love: Thanks, Michael. I appreciate all the color there in the background. Thank you.

Michael Sacks: Thanks, Michael. I appreciate all the color there in the background. Thank you.

Michael Sacks: Thanks, Michael I appreciate all the color and getting the BOP Windsor. Thank you.

Operator: So thank you.

Stephanie Ma: Again, if you have a question, please press star and then one on your touchstone tell.

Operator: Again, if you have a question, please press star and then 1, on your touchstone tell. And our next question will come from Stephanie Ma with Morgan Stanley.

Operator: Again, if you have a question, please press star and then one on your Touchstones Health. And our next question will come from Stephanie Ma on Morgenstern.

Operator: Again, if you have a question, please press star and then one on your touchstone tell. And our next question will come from Stephanie Ma with Morgenstern.

Speaker Change: Again, if you have a question. Please press star and then one.

Pam Bentley: Our growth unrealized carried interest grew approximately 4% year-over-year to $810 million as a quarter end. As John noted, we believe our incentive fees provide significant embedded earning potential which we look forward to being unlocked as the capital markets and M&A environment improves. As we realize both higher performance fees and increased carried interest, we believe that we have a compelling opportunity to increase the margin on the firm share of incentive fees to levels at or above last year.

Speaker Change: On your Touchtone telephone.

Stephanie Ma: and our next question will come from Stephanie Ma with Morgan Stanley. Hi, thanks for taking my question. Just wanted to get your latest thoughts on private credit. How do you think about that asset class as we head into potential rate cuts and against the changing macro and rate backdrop? How do you think about expanding origination capabilities or other interesting areas of opportunities? Thank you.

Speaker Change: And our next question will come from Stephanie MA with Morgan Stanley.

Stephanie Ma: Hi, thanks for taking my question. Just wanted to get your latest thoughts on private credit. How do you think about that asset class as we head into potential rate cuts? And against the changing macro and interest rate backdrop, how do you think about expanding origination capabilities or other interesting areas of opportunities? Thanks.

Stephanie Ma: Hi, thanks for taking my question. Just wanted to get your latest thoughts on private credit. How do you think about that asset class as we head into potential rate cuts? And against the changing macro and rates backdrop, how do you think about expanding origination capabilities or other interesting areas of opportunities? Thanks.

Hi, Thanks for taking my question just wanted to get your latest thoughts on private credit how do you think about that asset class as we head into potential rate cuts.

Speaker Change: And against the changing macro backdrop, how are you thinking about expanding origination capabilities or other interesting areas of opportunities.

Michael Sacks: Thank you. Thanks for the question. I think, you know, we've said it in our prepared remarks that, you know, and you've seen it in fundraising, private credit is going to continue to grow. It's not, none of these things that we talk about that are why we think we have a very good business, and it has a very good outlook for the next half decade are affected by these sort of, you know, short-term things.

Michael Sacks: Thank you. Thanks for the question. I think, you know, we've said it in our prepared remarks that, you know, and you've seen it in fundraising, private credit is going to continue to grow. It's not, none of these things that we talk about that are why we think we have a very good business, it has a very good outlook for the next half decade are, you know, affected by these sort of, you know, short term items, private credits, a growth sector, it's going to grow, you're going to see it, have more of a share of Global Balance Sheet in five years than it does today.

Michael Sacks: Thank you. Thanks for the question. I think, you know, we've said it in our prepared remarks that, you know, and you've seen it in fundraising, private credit is going to continue to grow. It's not, none of these things that we talk about that are why we think we have a very good business, it has a very good outlook for the next half decade are, you know, affected by these sort of, you know, short-term things, private credits, a growth sector, it's going to grow, you're going to see it, have more of a share of the Global Balance Sheet in five years than it does today.

Speaker Change: Yeah. Thank you. Thanks for the question I think we said it in the in the in the prepared remarks that you know and you've seen it in fund raising private credit is going to continue to grow.

Michael Sacks: Thanks for the question. I think, you know, we set it in the prepared remarks that, you know, and you've seen it and fun raising private credit. It's going to continue to grow. It's not; none of these things that we talk about are why we think we have a very good business. It has a very good outlook for the next half decade are, you know, affected by these sort of, you know, short term items, private credits, a growth sector. It's going to grow. You're going to see it have more of a share of global balance sheet in five years than it does today.

Pam Bentley: Turning to our expenses, as expected, second quarter FRE compensation with $38 million, and we expect a similar level in the third quarter. We remain disciplined in managing expenses and non-gap general administrative and other expenses. We're $20 million in the quarter, again in line with our expectations. We expect similar levels next quarter. Pulling together these factors on a year-over-year basis to your related earnings grew a healthy 20% in the quarter and 22% year-to-date.

Speaker Change: It's not none of these things that we talk about that or why we think we have a very good business. It has a very good outlook for the next half decade or you know are.

Michael Sacks: Private credit's a growth sector. It's going to grow. You're going to see it, have more of a share of the global balance sheet in five years than it does today. And we, you know, nothing changes our view there, and we think it will continue. I think I said specifically in the remarks, you know, our pipeline has a bunch of private credit in it for the remainder of the year and for next year.

Speaker Change: Affected by these sort of.

Speaker Change: Short term items private credits a growth sector, it's going to grow youre going to see it.

Speaker Change: Have more of a share of global balance sheet in five years than it does today and we know nothing changes our view there and we think it will continue I think I said specifically in the in the remarks, you will we our pipeline has a bunch of private credit in it for the remainder of the year for next year, we're enthusiastic.

Pam Bentley: Adjusted net income grew 29% in the quarter and 34% year-to-date on a year-over-year basis. Our FRE margin grew from 36% in the second quarter of 23% to 40% this quarter. While there may be quarterly margin fluctuations, we enjoy significant operating leverage and still expect our overall FRE margin for 24 to exceed last year. Our balance sheet is strong, and during the quarter we successfully took advantage of constructive capital markets to extend our term loan by two years to February 2030.

Michael Sacks: And we, you know, nothing changes our view there, and we think it will continue. I think I said specifically in the remarks, you know, we, our pipeline has a bunch of private credit in it for the remainder of the year for next year. We're enthusiastic about that. And, you know, as far as they're, you know, that's in every, I think it grows in all the channels. I think it grows in the individual investor channel. It grows in the institutional channel. I think it grows across private credit strategies. And, you know, we're, we're enthusiastic about that channel and our opportunities there.

Michael Sacks: And we, you know, nothing changes our view there, and we think it will continue. I think I said specifically in the remarks, you know, our pipeline has a bunch of private credit in it for the remainder of the year and for next year.

Michael Sacks: We're enthusiastic about that. And, you know, as far as there, you know, that's in every channel. I think it grows in the individual investor channel. I think it grows in the institutional channel. I think it grows across private credit strategies. And we're, you know, we're enthusiastic about that channel and our opportunities there. That asset, that vertical, and our opportunities.

Speaker Change: <unk> about that.

Michael Sacks:

Speaker Change: And.

Michael Sacks: We're enthusiastic about that. And, you know, as far as their, you know, that's in every, I think it grows in all the channels. I think it grows in the individual investor channel. I think it grows in the institutional channel. I think it grows across private credit strategies. And we're, you know, we're enthusiastic about that, channel and our opportunities there. That asset, that vertical and our opportunity.

Speaker Change: As far as.

Michael Sacks: There you know.

Michael Sacks: That's in every I think he grows in all the channels I think it grows in the individual investor channels and it grows in the institutional channel I think it grows across private credit strategies, and and where we're at.

Pam Bentley: While decreasing the spread on our debt by 25 basis points from 250 to 225 and up sizing the aggregate principle by $50 million. The incremental cash will be used for general corporate purposes, continued investments in the business, and opportunistic stock repurchases. We are maintaining a healthy quarterly dividend of 11 cents per share or an annualized yield of more than 4% as of last Friday. There is room for future dividend growth as we enjoy positive momentum in our earnings.

Michael Sacks: We're enthusiastic about.

Michael Sacks: That's.

Michael Sacks: Channel and our opportunities there that asset that vertical and our opportunities there.

Michael Sacks: That that that that vertical and our opportunities there.

Stephanie Ma: Great. Thank you.

Stephanie Ma: Great, thank you. Maybe just one on FRE margins, appreciate your aspirations over time, but any other color you can provide on cadence or trajectory? What are some of the steps to get there between ongoing makeshift of the business and realizing benefits of scale? And then also, maybe you can tie into there some ongoing areas where you continue to invest behind. Thank you.

Stephanie Ma: Great, thank you. Maybe just one on FRE margins, I appreciate your aspirations over time, but any other color you can provide on cadence or trajectory, what are some of the steps to get there between ongoing mixed shift of the business and realizing benefits of scale? And then also, maybe you can tie into there some ongoing areas where you continue to invest behind. Thank you.

Stephanie Ma: Great, thank you. Maybe just one on FRE margins, I appreciate your aspirations over time, but any other color you can provide on cadence or trajectory, what are some of the steps to get there between ongoing transformation of the business and realizing benefits of scale? And then also, maybe you can tie into there some ongoing areas where you continue to invest behind. Thank you.

Speaker Change: Great. Thank you maybe just one on FRE margins I appreciate your aspirations over time, but any other color you can provide on cadence or trajectory what are some of the steps to get there between ongoing mix shift of the business and realizing benefits of scale and then also maybe you cannot tie in.

Speaker Change: There is some ongoing areas, where you continue to invest behind it. Thank you.

Pam Bentley: We also continue to repurchase shares under our Repurchase Authorization Plan and our focus on managing dilution from our stock compensation program. In the quarter, we repurchase $30 million of stock, leaving $35 million in our share repurchase program as a quarter end.

John Levin: Sure, I don't know if Pam, if you want to take the margin question, because I think you addressed it to some extent in your comments. You know, to be clear, we, we think we've got like solid good strong margin performance with some operating leverage this year. And then I think we were, we were, and you picked up on that we were trying to highlight that we believe we have continued operating leverage and margin looking out over the next several years, and I touched on that. John touched on that. The, you know, we continue to, you know, manage our expenses tightly, we continue to manage head count well, we continue to try to align interests between, you know, team and shareholders, and I think all of these things, you know, lead to our some contribute to our margin opportunity.

Michael Sacks: Sure, I don't know if Pam, if you want to take the margin question because I think you addressed it to some extent in your comments, you know, to be clear, we think we've got like solid, good, strong margin performance with some operating leverage this year. And then I think we were, we were, and you picked up on that we were trying to highlight that we believe we have continued operating leverage and margin.

Michael Sacks: Sure. I don't know, Pam, if you want to take the margin question, because I think you addressed it to some extent in your comments. To be clear, we think we've got solid, good, strong margin performance with some operating leverage this year. And then I think we were, and you picked up on, trying to highlight that we believe we have continued operating leverage and margin growth looking out over the next several years. And I touched on that; John touched on that.

Michael Sacks: Pam, if you want to take the margin question, because I think you addressed it to some extent in your comments. To be clear, we think we've got solid, good, strong margin performance with some operating leverage this year. And then I think we were, and you picked up on, trying to highlight that we believe we have continued operating leverage and margin looking out over the next several years. And I touched on that. John touched on that.

Stephanie Ma: Sure I don't know Pam if you want to take the margin question, because I think you addressed it to some extent.

Speaker Change: In your in your comments.

Michael Sacks: To be clear, we think we have got like solid good strong margin performance with some operating leverage this year.

Pam Bentley: To close, we have confidence in our 24 financial objectives and look forward to the opportunities ahead to deliver value to our clients and shareholders.

Michael Sacks: Then I think we were we were and you picked up on that we were trying to highlight that we believe we have continued operating leverage and margin looking out over the next several years and I touched on that John touched on that.

Stacie Selinger: Thank you again for joining us, and we're now happy to take your questions. Thank you.

Operator: If you would like to ask a question at this time, please press star one or your telephone keypad. If you are using a speaker phone, please ensure your mute function is turned off. Again, that function is star one.

Michael Sacks: The, you know, we continue to, you know, manage our expenses tightly. We continue to manage headcount well. We continue to try to align interests between, you know, shareholders. And I think all of these things lead to some or contribute to our margin opportunity. I don't know, Pam, John, if you have anything you want to add.

Michael Sacks:

Michael Sacks: The.

Speaker Change: You know.

John Levin: We continue to manage our expenses tightly. We continue to manage our headcount well. We continue to try to align interests between the team and shareholders, and I think all of these things lead to, or contribute to, our margin opportunity. I don't know, Pam, John, if you have anything you want to add.

Michael Sacks: We continue to.

John Levin: Manage our expenses tightly we continue to manage head count well, we continue to try to align interests between team and shareholders and I think all of these things lead to.

John Levin: Some of it will contribute to our margin opportunity I don't know Pam John If you have anything you want to add.

Pamela Bentley: I don't know Pam shot if you've anything you want to add. Yeah, I was just on another point which is, you know, these businesses, and you've seen it obviously not just in our business and the margin enhancement we've had over the last few years, but I think you see it generally in the marketplace. Our businesses that are good businesses, they benefit from the tailwinds, they benefit from the revenue trends, and they allow you to take care of your existing people appropriately from a compensation perspective. While also investing in your business and still have operating leverage and margin enhancement, so I don't think it's the type of thing where you go from one quarter to the next quarter and all the sudden hit your margin goal. I think it's the type of trajectory that you've seen over the last few years where you get it as you're having revenue growth.

Michael Sacks: As you look ahead of the residual platform, can you size or sense what kind of concentration risk you might have just in terms of other potential outsized withdrawals regardless of reason? And maybe top five, top 10 clients, what is that account for in terms of the AUM and then any sort of sight line to withdrawals is looking to the second half of the year? Michael, we don't have a concentration risk in terms of revenue at all, and I think as we've talked about it, as you saw here, we do have some large accounts where it's large AUM, but as the account size gets bigger, the revenue, the fees are down, so we have, as a firm, we have a high level of diversity and kind of low levels of concentration with regard to revenues, and it's one of the things that actually makes us feel very good, and then when you think about the fact that even within ARS, you have different strategies, and then of course you have ARS for private markets.

John Levin: Yeah, I would just add one other point, which is, you know, these businesses, and you've seen it obviously not just in our business and the margin enhancement we've had over the last few years, but I think you see it generally in the marketplace, are businesses that are good businesses. They benefit from the tailwinds, they benefit from the revenue trends, and they allow you to take care of your existing people appropriately from a compensation perspective, while also investing in your business and still have operating leverage and margin enhancement.

Jonathan Levin: Yeah, I would just add one other point, which is, you know, these businesses, and you've seen it obviously not just in our business and the margin enhancement we've had over the last few years, but I think you see it generally in the marketplace, are businesses that are good businesses. They benefit from the tailwinds, they benefit from the revenue trends, and they allow you to do, to take care of your existing people appropriately from a compensation perspective, while also investing in your business, and still have operating leverage and margin enhancement.

Jonathan Levin: Yeah, I would just add one other point, which is, you know, these businesses, and you've seen it obviously not just in our business and the margin enhancement we've had over the last few years, but I think you see it generally in the marketplace, are businesses that are good businesses. They benefit from the tailwinds, they benefit from the revenue trends, and they allow you to take care of your existing people appropriately from a compensation perspective, while also investing in your business and still have operating leverage and margin enhancement.

Pam Bentley: Yeah, I would just add one other point, which is.

John Levin: These businesses and you've seen it obviously not just in our business and the margin enhancement. We've had over the last few years, but I think you see are generally in the marketplace are businesses that are.

John Levin: Good businesses they benefit from the tailwind they benefit from the revenue trends and they allow you to do to take care of your existing people appropriately from a compensation perspective, while also investing in your business.

John Levin: So I don't think it's the type of thing where you go from one quarter to the next quarter and all of a sudden hit your margin goal. I think it's the type of trajectory that you've seen over the last few years where you get it as you're having revenue growth and get it kind of ratably or, you know, somewhat linearly or, you know, somewhat linearly over time. And I think if you look at us relative to other businesses in our space, you can get a sense for where margins can kind of go over time.

Jonathan Levin: So I don't think it's the type of thing where you go from one quarter to the next quarter, and all of a sudden hit your margin goal. I think it's the type of trajectory that you've seen over the last few years where you get it as you're having revenue growth, and get it kind of ratably or, you know, somewhat linearly, linearly over time. And I think if you look at us relative to other businesses in our space, you can get a sense for where margins can kind of go over time.

John Levin: Still have operating leverage and margin enhancements. So I don't think it's the type of thing where you go from one quarter to the next quarter and all of a sudden hit your margin goal I think its the type of trajectory that you've seen over the last few years, where you get it as you are.

Jonathan Levin: So, I don't think it's the type of thing where you go from one quarter to the next quarter and all of a sudden hit your margin goal. I think it's the type of trajectory that you've seen over the last few years, where you get it as you're having revenue growth and get it kind of ratably or, you know, somewhat linearly over time. And I think if you look at us relative to other businesses in our space, you can get a sense for where margins can kind of go over time.

John Levin: You're having revenue growth.

John Levin: And get it kind of radically or, you know, somewhat linearly, linearly over time. And I think if you look at us relative to other businesses in our space, you can get a sense for where margins can kind of go over time.

John Levin: And get it kind of ratably or.

John Levin: Somewhat literally linearly over time and I think if you look at us relative to our.

John Levin: The other businesses in our space and you can get a sense for where margins can kind of go over time I think.

John Levin: I think the important part of what we're speaking to in terms of a five-year perspective is just the different vectors of growth, the multiple ways to win, the optionality you have. You can't predict everything five years out, but I think as we look across the board of all the different things that are going on at the business, feel good about the revenue growth and therefore feel good about the ability to continue to have the operating leverage in the business. And in terms of what we're investing behind, we've talked about the individual investor channel, we've talked about other distribution channels that we have invested, you know, invested into and will continue to invest into. We've seen us invest in credit, you know, credit investment capability over the last several quarters.

Jonathan Levin: I think the, you know, important part of what we're speaking about in terms of a five-year perspective is just the different vectors of growth, the multiple ways to win, the optionality you have. You can't predict everything five years out. But I think as we look across the board at all the different things that are going on in the business, we feel good about the revenue growth, and therefore feel good about the ability to continue to have operating leverage in the business.

John Levin: I think the, you know, important part of what we're speaking about in terms of a five-year perspective is just the different vectors of growth, the multiple ways to win, the optionality you have. You can't predict everything five years out. But I think as we look across the board at all the different things that are going on in the business, we feel good about the revenue growth, and therefore feel good about the ability to continue to have operating leverage in the business.

Jonathan Levin: I think the, you know, important part of what we're speaking to in terms of a five-year perspective is just the different vectors of growth, the multiple ways to win, the optionality you have. You can't predict everything five years out. But I think as we look across the board of all the different things that are going on at the business, feel good about the revenue growth, and therefore feel good about the ability to continue to have the operating leverage in the business.

Speaker Change: An important part of what we're speaking to in terms of a five year perspective is just the different vectors of growth the multiple ways to win the Optionality. You have you can predict everything packagers out, but I think as we look across the board of all the different things that are going out of the business feel good about the revenue growth and therefore feel good about the ABA.

John Levin: To continue to have the operating leverage in the business.

Stephanie Ma: In terms of what we're investing behind, we've talked about the individual investor channel. We've talked about other distribution channels that we have invested into and will continue to invest into. You've seen us invest in credit investment capability over the last several quarters. We've been clear that we think that's a fruitful growth opportunity. I think we're investing in a number of places where we think we can see real results from those investments.

Stephanie Ma: In terms of what we're investing in, we've talked about the individual investor channel. We've talked about other distribution channels that we have invested in and will continue to invest in. You've seen us invest in credit investment capability over the last several quarters, and we've been clear that we think that's a fruitful growth opportunity. So I think we're investing in a number of places where we think we can see real results from those investments.

John Levin: And in terms of what we're investing behind we've talked about the individual investor channel, we've talked about other distribution channels that we have invested.

Stephanie Ma: <unk> invested into and we will continue to invest into we you've seen us invest in credit.

Stephanie Ma: You know the credit investment capability over the last several quarters.

William Katz: I don't know if I get it as a follow-up, but I'm going to throw it in anyway.

John Levin: And we've been clear that we think that's a, you know, a fruitful growth opportunity, so I think we're investing in a number of places where we think we can, you know, see real, real results from those investments. I appreciate all the color. Thank you.

Stephanie Ma: And we've we've we've been clear that we think that's a.

Stephanie Ma: Fruitful growth opportunity. So I think we're investing in a number of places where we think we can.

Speaker Change: I see.

Stephanie Ma: Real.

Stephanie Ma: Real results from those investments.

William Katz: John, thanks for the sort of the pathway to how you think you can double the F-Ree between now and 28. Sorry, helpful.

Bill Katz: Appreciate all the color. Thank you.

Operator: I appreciate all the color. Thank you.

Bill Katz: I appreciate all the color. Thank you.

Speaker Change: I appreciate all the color. Thank you.

Bill Katz: Yes.

William Katz: And the next question will come from Bill Katz with TD County. Okay, thank you very much, particularly extra questions. Just zoning in on the opportunity for performance fees. So one, if you can answer a couple questions. Any, I appreciate Mark has been particularly violent last week, so we're putting that aside. How should we be thinking about any kind of cadence in terms of line of sight of activities that you might be seeing? Which portfolios do you think it comes out of as just sort of array between sort of 2013 and current?

Bill Katz: And the next question will come from Bill Katz with TD County.

Bill Katz: And the next question will come from Bill Katz with TD Calendar.

Bill Katz: And the next question will come from Bill Katz with TD Cowen.

John Levin: Can you break that down maybe one more layer between how you sort of see the dynamics between the assumptions for private markets versus ARS within that construct? Thank you. Sure, Bill. Happy to do that. I think that the way we would think about that math is not the similar from how we've talked about what we look at internally from a budgeting and a forecasting perspective, which is a neutral flows environment on the ARS side of getting growth from compounding.

Bill Katz: Okay.

Bill Katz: Okay, thank you very much for taking the extra questions. I'm just zoning in on the opportunity for performance fees. So I'm wondering if you could answer a couple questions. Any, I appreciate markets have been particularly volatile in the last week or so, but putting that aside, how should we be thinking about any kind of cadence in terms of the line of sight of activities that you might be seeing? Which portfolios do you think it comes out of as you sort of array between sort of 2013 and current?

Bill Katz: Okay, thank you very much for taking the extra questions. I'm just zoning in on the opportunity for performance fees, so I'm wondering if you could answer a couple questions. Any, I appreciate that markets have been particularly volatile.

Bill Katz: Okay. Thank you very much taking the extra questions.

Bill Katz: Zoning in on the opportunity for performance fees. So I'm wondering if you could answer a couple of questions.

John Levin: We've talked about the fact that, generally speaking, we use a kind of a high single digit number for growth returns, depending on the specific strategy, and then continuing the trend of what we've seen in private markets, which has been low double digit to almost low teens growth on the private market's revenue side of things. So I think that longer term, those assumptions we use to budget and forecast the business on a longer-term basis would be similar to how we would look at it over a five-year period.

Bill Katz: Any I appreciate it's been particularly volatile the last week, so, but putting that aside how should we be thinking about any kind of cadence in terms of line of sight of activities that you might be seeing.

Speaker Change: Which portfolios do you think it comes out of it just sort of array between sort of 2013 and to current and then find Pam you may have said this I apologize I may have missed it how do you sort of see the aggregate comp ratio on the variable incentive migrating as the quantum of dollars, which increase thank you.

William Katz: And then finally, Pam, you may have said it's my apologies; I may have missed it. How do you sort of see the, the average account ratio on the variable incentive migrating as the quantum of dollars, which increase? Thank you.

Bill Katz: And then finally, Pam, you may have said this, and I apologize; I may have missed it. How do you sort of see the aggregate comp ratio on the variable incentive migrating as the quantum of dollars were to increase?

Bill Katz: Yeah.

Michael Sacks: So let's make the last one first. Yeah, yeah. Sorry, I apologize. Let's take the last one first, which is that that margin, and Pam did say this. It's in the, it's in her remarks. But as the revenues in that incentive line grow, the margin will grow from the levels you saw in the last couple quarters. And, you know, there's an element, and we did address that directly, and you'll see that. Most of the ARS portfolios have some element of a performance fee that, along with the private markets carry, contributes to our incentive line. Most of that, some of that's crystallized, you know, from last year, a little bit this year already, but most of that crystallizes at the fourth quarter year end.

Michael Sacks: So let's take the last one first, which is that margin, and Pam did say this, it's in her remarks, but as the revenues in that incentive line grow, the margin will grow from the levels you saw in the last couple of quarters. And, you know, there's an element, and we did address that directly, and you'll see that most of the ARS portfolios have some element of a performance fee that, along with the private markets carry, contributes to our incentive fee line.

John Levin: Thank you. So, let me take the last one first. Oh, yeah, yeah. Go ahead. I'm sorry, John.

Michael Sacks: Let's take the last one first. Let's take the last one first, which is that margin and Pam did say this. It's in her remarks. But as the revenues in that incentive line grow, the margin will grow from the levels you saw that in the last couple of quarters. There's an element and we did address that directly. And you'll see that most of the ARS portfolios have some element of a performance fee that along with the private markets carry contributes to our incentive line.

Pam Bentley: So let me take the last one first.

Speaker Change: Sorry, Jonathan let's take the last one first which is that that that margin and and and Pam did say this it's in the it's in her remarks, but as the revenues in that incentive line grow the margin will grow from the levels you saw that in the last couple of quarters and you know there's.

John Levin: An element of it.

John Levin: And we and you did address that directly and you'll you'll see that.

John Levin: I think once you get into breaking down how those numbers get there, it's a lot of what I talked about on the prepared remarks in terms of embedded growth we have from CNY AppPOM, embedded growth we have from the real relationships that we have as well as the broadening of those relationships, the new client acquisition opportunity. And I don't think that when we talk about these outcomes we're really giving or counting on what I would call kind of some of the more outsized opportunities you might have from things like real explosive growth in the individual investor market and things of that nature. Thank you.

Speaker Change: Most of the <unk> portfolios have some element of a performance.

Speaker Change: Performance fee that along with the private markets carry contributes to our incentive fee line.

Michael Sacks: Most of that, some of that's crystallized, you know, from last year a little bit this year already, but most of that crystallizes at the fourth quarter year end, and so you, you know, you don't count, we don't count that until we get that, but there is for sure a revenue opportunity there for 2024, and ignoring the last week or so, as you, as you instructed us to, it's a, you know, it's not a, it's not a trivial revenue opportunity, and I think we put in our earnings deck the earnings power at like a base case assumption there, and we were obviously outperforming that base case assumption, you know, as of the end of the second quarter. So, you know, there's some revenue there, but it's not there until it is, and you've got to, you know, we'll see where things land on 1231.

Speaker Change: Most of that some of that has crystallized from last year, a little bit this year already but most of that crystallizes at the fourth quarter year end.

John Levin: and so we don't count that until we get that, but there is for sure a revenue opportunity there for 2024, and ignoring the last week or so as you instructed us to, it's not a trivial revenue opportunity. I think we put in our earnings deck the earnings power at like a base case assumption there, and we were obviously outperforming that base case assumption, you know, as of the end of the second quarter. So, you know, there's some revenue there, but it's not there until it is, and you have to, you know, we'll see where things land in 1231.

Michael Sacks: And so you, you know, you don't count; we don't count that until we get that. But there is for sure a revenue opportunity there for 2024, and ignoring the last week or so, as you instructed us to, it's a, you know, it's not a, it's not a trivial revenue opportunity. And I think we put in our earnings deck, the earnings power it like a base case assumption there, and we were obviously outperforming that base case assumption, you know, as of the end of the second quarter. So, you know, there's some revenue; there's some revenue there, but it's not there until it is.

Speaker Change: And so you you know you don't count, we don't count that until we get that.

John Levin: But.

John Levin: There is for sure a revenue opportunity there for 'twenty 'twenty four.

John Levin: And.

John Levin: Ignoring the last week or so as you as you instructed us to it's a you know it's not a it's not a trivial revenue opportunity and.

John Levin: We put in our earnings deck, the the earnings power at like a base case assumption there and we we're obviously outperforming that base case assumption.

John Levin: As of the end of the second quarter.

John Levin: So you know theres some revenue there's some revenue there, but it's not there until it is and you got a.

Pamela Bentley: And you got to, you know, we'll see where things land on 12/31. Yeah, I mean, Michael said this bill, but just to, you know, it's for us how they see it intuitive. We live it every day, but to the extent you see performance fees that are crystallizing sometimes not in the fourth quarter, it just happens to be the one-off portfolio that might have a fiscal year that's not lined up with the calendar year. But, as Michael said, most of the portfolios are calendar year portfolios for the measurement of performance fees, which is why you see most of the crystals.

John Levin: We'll see where things land on 12 31.

Jonathan Levin: Yeah, I mean, Michael said this, Bill, but just to, you know, it's for us, obviously, it's intuitive, we live it every day, but... To the extent you see performance fees that are crystallizing, sometimes not in the fourth quarter, it just happens to be the one-off portfolio that might have a fiscal year that's not lined up with the calendar year. But, as Michael said, most of the portfolios are calendar-year portfolios for the measurement of performance fees, which is why you see most of the crystallization happen in the fourth quarter.

John Levin: Yeah, I mean, Michael said this, Bill, but just to, you know, it's for us, obviously, it's intuitive, we live it every day, but... To the extent you see performance fees that are crystallizing, sometimes not in the fourth quarter, it just happens to be the one-off portfolio that might have a fiscal year that's not lined up with the calendar year. But, as Michael said, most of the portfolios are calendar-year portfolios for the measurement of performance fees, which is why you see most of the crystallization happen in the fourth quarter.

Jonathan Levin: Yeah, I mean, Michael said this, Bill, but just to, you know, it's for us, obviously, it's intuitive. We live it every day.

John Levin: Yeah, I mean, Michael said this bill, but just to.

John Levin: It's for US obviously with intuitive we live it every day, but.

Jonathan Levin: To the extent you see performance fees that are crystallizing, sometimes not in the fourth quarter, it just happens to be the one-off portfolio that might have a fiscal year that's not lined up with the calendar year, but as Michael said, most of the portfolios are calendar year portfolios for the measurement of performance fees, which is why you see most of the crystallization happen in the fourth quarter. The only other point I would add to what Michael said is most of our ARS portfolios that we manage for clients are what we would think of as multi-strategy portfolios.

Speaker Change: To the extent you see performance fees that are crystallizing, sometimes not in the fourth quarter. It just happens to be the <unk>.

John Levin: One off portfolio that might have a a.

Bill Katz: Fiscal year, that's not lined up with the calendar year.

John Levin: But as Michael said most of the portfolios are calendar year portfolios for the measurement of performance fees, which is why you see most of the crystallization.

Michael Sacks: So Ken, it's my goal. I think that the opportunity in wealth and generally and frankly, the opportunity in wealth kind of specifically for us is pretty significant and it's not at all pigeonholes or it's significant opportunity and it's an opportunity across a range of different types of products and strategies. Obviously it's a huge channel. It's an underpenetrated channel for alternatives in a pretty serious way and the penetration that is there, meaning the balance sheet allocation, if you will, and the balance sheet allocation that is there that is going to rise and there's kind of near unanimity on this view, that balance sheet allocation is concentrated today in a relatively somewhat small number of big brand names.

Pamela Bentley: Socialization happened in the fourth quarter. The only other point I would add to what Michael said is most of our ARS portfolios that we manage for clients are what we would think of as multi-strategy portfolios. So there are some that are maybe equity specific or credit specific or whatever it might be, but the vast majority of the multi-strategy portfolios, meaning they have equity strategies and credit strategies and the relative value macro strategies, etc.

John Levin: In the fourth quarter.

Jonathan Levin: The only other point I would add to what Michael said is that most of our ARS portfolios that we manage for clients are what we would think of as multi-strategy portfolios. So there are some that are maybe equity specific or credit specific or whatever it might be, but the vast majority of them are multi-strategy portfolios, meaning they have equity strategies in them, credit strategies in them, relative value, macro strategies, et ce And so the positive performance we're seeing year to date and even the capital protection that we're seeing through these more difficult markets over the last couple of weeks is kind of broad-based positive performance and broad-based, pretty strong alpha production.

John Levin: The only other point I would add to what Michael said is that most of our ARS portfolios that we manage for clients are what we would think of as multi-strategy portfolios. So there are some that are maybe equity-specific or credit-specific or whatever it might be, but the vast majority of them are multi-strategy portfolios, meaning they have equity strategies in them, credit strategies in them, relative value, macro strategies, e And so the positive performance we're seeing year-to-date and even the capital protection that we're seeing through these more difficult markets over the last couple of weeks is kind of broad-based positive performance and broad-based, pretty strong alpha production.

Speaker Change: The other point I would add.

Bill Katz: Okay, thank you very much.

Speaker Change: To what Michael said is most of our <unk> portfolios that we manage for clients.

John Levin: Okay, thank you very much.

John Levin: What we would think of as multi strategy portfolios. So there are some that are maybe equity specifically credit specific or whatever it might be but the vast majority of the room multi strategy portfolios, meaning they have equity strategies and in credit strategies and the relative value of macro strategies et cetera. So.

Jonathan Levin: So there are some that are maybe equity-specific or credit-specific or whatever it might be, but the vast majority of them are multi-strategy portfolios, meaning they have equity strategies in them, credit strategies in them, relative value, macro strategies, etc. And so the positive performance we're seeing year-to-date and even the capital protection that we're seeing through these more difficult markets over the last couple weeks is kind of broad-based positive performance and broad-based pretty strong alpha production.

Bill Katz: Okay, thank you very much.

Pamela Bentley: And so the positive performance we're seeing year to date, and even the capital protection that we're seeing through these more difficult markets over the last couple of weeks, is kind of broad based positive performance and broad based pretty strong output production.

John Levin: The positive performance we're seeing.

John Levin: Year to date and even the capital protection that we're seeing through these more difficult markets over the last.

John Levin: A couple of weeks is kind of broad based positive performance in broad based pretty strong output production.

Operator: Okay, thank you very much. Thank you.

John Levin: Okay. Thank you very much.

Operator: Thank you, and that does conclude the question and answer session. I'll now turn the conference back over to you.

Operator: Thank you and that does conclude the question and answer session. I'll now turn the conference back over.

Speaker Change: Thank you and that does conclude the question and answer session I will now turn the conference back over to you.

Operator: And that does conclude the question-and-answer session.

Michael Sacks: I'll now turn the conference back over to you. Thank you. Thank you again for joining us today. We appreciate the questions and the engagement, and we look forward to either following up or talking to you again next quarter. Thank you.

Operator: Thank you. Thank you again for joining us today. We appreciate the questions and the engagement, and we look forward to either following up or talking to you again next quarter.

Operator: Thank you. Thank you again for joining us today. We appreciate the questions and the engagement and we look forward to either following up or talking to you again next quarter.

Speaker Change: Thank you and thank you again for joining US today, we appreciate the questions and the engagement and we look forward to either following up or are they talking to you again next quarter.

Michael Sacks: So while we see real opportunity in Infra, while you mentioned correctly opportunity that we could have in sustainability, there's actually opportunity in private equity and there's actually opportunity in credit and yield products because it is a channel that will five years out, ten years out, have a lot more diversification inside of it and a lot more larger number of names on platforms in the future than there are today where the Lions share of the Alts, you know, names are pretty highly concentrated with, you know, one to two handfuls, one to one and a half handfuls of the biggest best known players. So we see a lot of opportunity there.

Operator: Thank you. And ladies and gentlemen, thank you for participating in today's

Operator: Thank you. And, ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. We hope everyone has a great day. You may all disconnect.

Operator: Thank you and.

Operator: And ladies and gentlemen, thank you for participating in today's conference.

Speaker Change: Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. We hope everyone has a great day you may all disconnect.

Operator: This concludes today's program. We hope everyone has a great day. You may all disconnect.

Operator: [music].

Kenneth Worthington: Okay, great. Thank you. And then just on the absolute return business, you highlighted the concentration redemption from that one client. Was that the vast majority? Was it half? What portion of the elevator redemption? No, it was, it was, it was, it was a very, very significant majority. The client remains the client continues to work with us. We're, you know, some of that we could see come back in different strategies over time.

Operator: Okay.

Kenneth Worthington: And that was as we described it, it was a restructuring and reallocation of a client portfolio, it wasn't a, you know, and it wasn't, you know, that it was a, it was a top down kind of macro thing at a client that we still work with and want to continue to work with as we go forward.

Kenneth Worthington: Thank you. And the, the contributions are still at close contributions are still at very low levels. I think you mentioned the past. You had a number of strategies that are performing really well. And I think you thought that they might start to attract assets. What, what do you feel here is, is this something where we should see the gross contributions? Yeah, we, yeah, as I said, like trying to time inflows and outflows quarter to quarter is, is not, you know, worthwhile.

Kenneth Worthington: You should have a, my opinion, you should have a simplifying, we, you know, we do our very best to budget. But, you know, it's, it's hard to, you know, it's hard to do that. You have to have a simplifying assumption and build your models. And we're obviously happy to help you do that. As we, I said, I think earlier that they don't think was in the script that, that we think one, one, 25, paying AUM and ARS, we believe that will be higher than one, one, 24.

Kenneth Worthington: We got to get through the end of the year. Performance will matter on that, but that's our, you know, that's, we see that now, we think this has stabilized. And I personally believe that, you know, we will see growth over the next, you know, several years. It's not going to be linear per se. It's not going to be, you know, every quarter, you know, like a stuck function. But, you know, we have been through a lot of cycles in this space.

Kenneth Worthington: And I, that's my, that's my belief.

Kenneth Worthington: Great, thank you.

Crispin Love: And the next question comes from Crispin Love with Piper Sandler. Thanks, Mark, everyone. I appreciate taking my questions.

Michael Sacks: Just first on, on fundraising, PE has been pretty stable here for a few quarters infrastructure improving, but I'm just to discuss the outlook for the back half of the year. You mentioned the second half being better than the first. Just curious if you could drill a little bit deeper there, the key areas of opportunity across private markets. And then just has had the pipeline changes all compared to the numbers you just discussed last quarter.

Michael Sacks: I think I might have missed that in the prepared marks that you mentioned. Thanks. Pipeline is pipeline's full. We did, we did mention that. And, you know, it's, that's obviously a good thing. Last quarter, John talked about us having four billion or so of reups in sight. We, three of those, first of all, take a step back, you know, we raised 3.4 billion in the first half. We've said clearly second half will be higher.

Michael Sacks: We have of the reups, John mentioned last quarter. We've got about 3 billion of those that are still in the pipeline. So that's a nice start right there. We've got a number of specialized funds that are in market. We've got a number of specialized funds that are in market that we're raising money for. And we talked about the fact that we're already off to a quite good start on specialized fundraising for the year.

Michael Sacks: And we think that that's going to continue. And we're going to have a good year of specialized fundraising. And obviously we pick up, you know, you pick up new clients. And you deploy capital, you know, you pick up new clients and you have existing clients that work, move with you into new strategies. And so we are, you know, confident in the back half of the year with regard to our fund rate.

John Levin: I would just add to the last point Michael was making around kind of new client acquisition. We have a number of different what I would call I guess leading indicators for lack of a better word around the activity levels there whether it's RFPs that are out in the market or the amount of marketing presentation that we're preparing or the general kind of busy nature of our sales team and like all those metrics point to a more certainly a more active environment now that you would have had you know a year ago and certainly it seems the activity levels are higher kind of across the board. Great. I appreciate that.

Crispin Love: And then just one last question for me mostly on the macro side.

Crispin Love: We've seen plenty of volatility in the past week or so, mostly concentrated late last week in early this credit spread that widened recession talk renewed but and then with just rate cuts coming, coming likely hundreds or so before a year and but when you think about it and put this all together, can you discuss kind of how it impacts if at all your outlook or potential for for deal activity in the space and then knock on effects for GCM whether it's kind of pro just on to cross private markets or ARS. Or if you just do a kind of more of a uplift than anything else would just appreciate any color there. Thank you.

Michael Sacks: So in general volatile markets tend to reinforce the attractiveness of alternative strategies. I honestly, I think that's the biggest takeaway when you have real extreme volatile markets, your alt strategies are, you know, have higher levels of appreciation from your client base. And I think that's an important, that's just what we've experienced and I think that matters a lot.

Crispin Love: As far as, you know, the impact of, you know, rate cuts over the next two, three quarters, you know, slow down in the economy. The chance of a, you know, recession some, you know, people writing has, you know, gone up from 25% to 35% from 15% to 25% over the last few weeks. You know, that, that, that doesn't have a pretty, you know, particularly significant impact on, you know, on how we operate.

Crispin Love: And on, you know, how we see opportunity or we see, you know, short term, intermediate term results and nothing. You know, like in that realm, as, you know, any real impact or, you know, makes any real change to our longer term sort of five year outlook. Thanks, I got appreciate all the, all the color there and about one. So thank you. Again, if you have a question, please press star and then one on your touchstone tell.

Michael Sacks: and our next question will come from Stephanie Ma with Morgan Stanley. Hi, thanks for taking my question. Just wanted to get your latest thoughts on private credit. How do you think about that asset class as we head into potential rate cuts and against the changing macro and rate backdrop? How do you think about expanding origination capabilities or other interesting areas of opportunities? Thank you. Thanks for the question. I think, you know, we set it in the prepared remarks that, you know, and you've seen it and fun raising private credit.

Michael Sacks: It's going to continue to grow. It's not, none of these things that we talk about that are why we think we have a very good business. It has a very good outlook for the next half decade are, you know, affected by these sort of, you know, short term items, private credits, a growth sector. It's going to grow. You're going to see it have more of a share of global balance sheet in five years than it does today.

Michael Sacks: And we, you know, nothing changes our view there and we think it will continue. I think I said specifically in the remarks, you know, we, we, our pipeline has a bunch of private credit in it for the remainder of the year for next year. We're enthusiastic about that. And, you know, as far as they're, you know, that's in every, I think it grows in all the channels. I think it grows in the individual investor channel. It grows in the institutional channel. I think it grows across private credit strategies. And, you know, we're, we're enthusiastic about that channel and our opportunities there. That that that that vertical and our opportunities there.

John Levin: Great. Thank you.

John Levin: Maybe just one on F re margins, appreciate your aspirations over time, but any other color you can provide on cadence or trajectory. What are some of the steps to get there between ongoing makeshift of the business and realizing benefits of scale. And then also maybe you cannot tie into there some ongoing areas where you continue to invest behind. Thank you. Sure, I don't know if Pam, if you want to take the margin question, because I think you addressed it to some extent in your in your comments, you know, to be clear, we, we think we've got like solid good strong margin performance with some operating leverage this year.

John Levin: And then I think we were, we were, and you picked up on that we were trying to highlight that we believe we have continued operating leverage and margin looking out over the next several years, and I touched on that John touched on that. The, you know, we continue to, you know, manage our expenses tightly, we continue to manage, head count well, we continue to try to align interests between, you know, team and shareholders, and I think all of these things, you know, lead to our some contribute to our margin opportunity.

John Levin: I don't know Pam shot if you've anything you want to add. Yeah, I was just on another point which is, you know, these businesses and you've seen it obviously not just in our business and the margin enhancement we've had over the last few years, but I think you see it generally in the marketplace, our businesses that are good businesses, they benefit from the tailwinds, they benefit from the revenue trends, and they allow you to do to take care of your existing people appropriately from a compensation perspective.

John Levin: While also investing in your business and still have operating leverage and margin enhancement, so I don't think it's the type of thing where you go from one quarter to the next quarter and all the sudden hit your margin goal, I think it's the type of trajectory that you've seen over the last few years where you get it as you're having revenue growth. And get it kind of radically or, you know, somewhat linearly, linearly over time, and I think if you look at us relative to other businesses in our space, you can get a sense for where margins can kind of go over time.

John Levin: I think the important part of what we're speaking to in terms of a five year perspective is just the different vectors of growth, the multiple ways to win, the optionality you have, you can't predict everything five years out, but I think as we look across the board of all the different things that are going on at the business, feel good about the revenue growth and therefore feel good about the ability to continue to have the operating leverage in the business. And in terms of what we're investing behind, we've talked about the individual investor channel, we've talked about other distribution channels that we have invested, you know, invested into and will continue to invest into, we've seen us invest in credit, you know, credit investment capability over the last several quarters.

William Katz: Which portfolios do you think it comes out of as just sort of array between sort of 2013 and current? And then finally, Pam, you may have said it's my apologies, I may have missed it. How do you sort of see the, the average account ratio on the variable incentive migrating as the quantum of dollars, which increase? Thank you.

Michael Sacks: So let's make the last one first. Yeah, yeah. Sorry, I apologize. Let's take the last one first, which is that that margin and Pam did say this. It's in the, it's in her remarks. But as the revenues in that incentive line grow, the margin will grow from the levels you saw that in the last couple quarters. And, you know, there's an element and we did address that directly and you'll see that.

Michael Sacks: Most of the ARS portfolios have some element of a performance fee that along with the private markets carry contributes to our incentive line. Most of that, some of that's crystallized, you know, from last year, a little bit this year already, but most of that crystallizes at the fourth quarter year end. And so you, you know, you don't count, we don't count that until we get that. But there is for sure a revenue opportunity there for 2024 and ignoring the last week or so as you, as you instructed us to, it's a, you know, it's not a, it's not a trivial revenue opportunity.

Michael Sacks: And I think we put in our earnings deck, the earnings power it like a base case assumption there, and we were obviously outperforming that base case assumption, you know, as of the end of the second quarter. So, you know, there's some revenue, there's some revenue there, but it's not there until it is. And you got to, you know, we'll see where things land on 1231. Yeah, I mean, Michael said this bill, but just to, you know, it's for us how they see it intuitive.

Michael Sacks: We live it every day, but to the extent you see performance fees that are crystallizing sometimes not in the fourth quarter, it just happens to be the one off portfolio that might have a fiscal year that's not lined up with the calendar year. But as Michael said, most of the portfolios are calendar year portfolios for the measurement of performance fees, which is why you see most of the crystals. Socialization happened in the fourth quarter.

Michael Sacks: The only other point I would add to what Michael said is most of our ARS portfolios that we manage for clients are what we would think of as multi strategy portfolios. So there are some that are maybe equity specific or credit specific or whatever it might be, but the vast majority of the multi strategy portfolios, meaning they have equity strategies and credit strategies and the relative value macro strategies, etc. And so the positive performance we're seeing year to date and even the capital protection that we're seeing through these more difficult markets over the last couple of weeks is kind of broad based positive performance and broad based pretty strong output production.

Michael Sacks: Okay, thank you very much. Thank you.

Stacie Selinger: And that does conclude the question and answer session.

Stacie Selinger: I'll now turn the conference back over to you. Thank you. Thank you again for joining us today. We appreciate the questions and the engagement and we look forward to either following up or talking to you again next quarter. Thank you.

Operator: And ladies and gentlemen, thank you for participating in today's conference.

Operator: This concludes today's program. We hope everyone has a great day. You may all disconnect.

Michael Sacks: And looking out over the next several years, and I touched on that, John touched on that. The, you know, we continue to, you know, manage our expenses tightly, we continue to manage head count well, we continue to try to align interests between, you know, team and shareholders, and I think all of these things, you know, lead to our some contribute to our mind. And the margin opportunity, I don't know Pam, shot if you've anything you want to add.

Michael Sacks: Most of that, some of that's crystallized from last year a little bit this year already, but most of that crystallizes at the fourth quarter year end. And so we don't count that until we get that. But there is for sure a revenue opportunity there for 2024 and ignoring the last week or so as you as you instructed us to, it's not a trivial revenue opportunity. I think we put in our earnings deck the earnings power at like a base case assumption there, and we were obviously outperforming that base case assumption, you know, as of the end of the second quarter. So, you know, there's some revenue there, but it's not there until it is, and you've got to, you know, we'll see where things land on 1231.

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