What Management Said

Read the full Q1 2026 transcript ↗

Earlier this morning, we issued a press release and a detailed earnings presentation, which is available on our investor relations website. We have provided reconciliation of these measures to GAAP in our earnings release to the extent reasonably available. In order to ensure participation by all those on the line today, please limit yourself to one question and then return to the queue for any additional follow-ups. buyout realizations, a high level of inflows, fee-related earnings of $300 million and a 47% margin.

Geopolitical uncertainty and splintering are front of mind for investors and are influencing capital allocation and investment decisions. As a result, there are two subjects that every government official I meet with wants to discuss: national security and stimulating economic growth. The focus on economic growth and competition across regions is intense, with a focus on reindustrialization and onshoring top of mind. Underpinning all of this change is an increasing need for capital and innovative client solutions.

As you have seen in prior quarters, we continue to return capital to investors at a faster pace than the industry. Realizations were more than $12 billion, reflecting the high quality of our portfolio and continued prioritization of returning capital to our fund investors. These transactions should also contribute to a pickup in transaction fee revenue in the coming quarters. On inflows, we had a great start to the year, attracting $13 billion of new capital.

What went well
  • Carlyle delivered record U.S. buyout realizations, returning a record $7 billion in proceeds to U.S. buyout fund investors, a rate more than 40% higher than the prior record set in 2021.
  • Fee-related earnings were $300 million at a 47% margin, up from $290 million in the fourth quarter.
  • Distributable earnings were $327 million, or $0.89 per share.
  • Total realizations were more than $12 billion, and realized proceeds of $12 billion represented the firm's third-best quarter ever.
  • The firm closed a first-of-its-kind investment solution anchored by a $5 billion commitment secured for its next vintage U.S. buyout fund at full fees.
  • Inflows were $13 billion for the quarter, with Carlyle AlpInvest raising nearly $7 billion (a record $6.8 billion of quarterly inflows) and global credit raising $4 billion.
  • Carlyle AlpInvest reached record total AUM of $107 billion, up 20% year-over-year, and net accrued performance revenues rose 13% year-over-year to $643 million.
  • Fee-related performance revenues of $45 million were 15% higher year-over-year, driven by evergreen wealth strategies where AUM now stands at $19 billion, 4x the level from three years ago.
  • Dry powder reached a record $96 billion, up 13% year-over-year.
  • The new closed-end asset-backed finance strategy now tops $12 billion, up more than 30% compared to last year.
  • Direct lending's current non-accrual rate is only 1%, with an inception-to-date loss rate of just eight basis points per annum over 13 years, and structured credit's default rate of about 50 basis points remains at half the industry average.
What went wrong
  • Net realized performance revenue of $21 million was lower year-over-year, as most of the first quarter exits were in funds not yet realizing carry, notably CP VII and CP VIII.
  • Fund management fees of $545 million were up only 4% year-over-year, and base fees were relatively flat year-over-year without the benefit of catch-up fees this quarter.
  • Carlyle AlpInvest FRE of $68 million was achieved despite having $13 million less in catch-up fees for the quarter.
  • Global credit transaction fees were modestly lower, and credit management fee growth has been more stagnant in recent quarters.
  • The CTAC wealth product saw elevated redemptions last quarter, and management expects this period of redemptions across the industry may persist for a little while.

Guidance Changes

MetricPeriodCurrent guidance
Fee-Related Earnings targetby end of 2028$1.9 billion, fully expect to achieve or exceed
Inflows targetby end of 2028$200 billion, fully expect to achieve or exceed
Distributable Earnings per share targetby end of 2028$6 or more per share, fully expect to achieve or exceed
Transaction feesQ2 2026expected to increase, driven by completion of several transactions already signed or closed
Quarterly dividendQ1 2026$0.35 per common share, in line
FRE growthfull year 2026management remains confident in that trajectory

Performance Breakdown

MetricYoYNote
Fund management fees +4% continued growth in Carlyle AlpInvest and global credit
Fee-related performance revenues +15% growth in evergreen wealth strategies, where AUM now stands at $19 billion
Carlyle AlpInvest total AUM +20% record quarterly inflows of $6.8 billion driven by broad-based institutional and wealth activity
Carlyle AlpInvest net accrued performance revenues +13% continued momentum across the platform
Global credit management fees +6% growth across the diversified credit platform
Global credit total AUM +5% inflows of $3.9 billion led by the $1.5 billion first close of the new asset-backed finance fund
Net realized performance revenue lower a matter of composition, as most first quarter exits were in funds not yet realizing carry (CP VII and CP VIII)
Dry powder +13% record level at $96 billion heading into the second quarter
Global private equity FRE in line with Q1 last year FRE of $140 million with strong momentum in fundraising and realizations

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Carlyle AlpInvest solutions businessoften thought of secondhand as just a secondaries businesspositioned as a full solutions platform spanning secondaries, co-invest, primary and portfolio finance, enabling the first-of-its-kind $5 billion U.S. buyout structure—
Wealth channel and CTAC redemptionssustained inflows in wealth vehicles including CAPM and CAPSCTAC saw elevated redemptions and management expects the redemption period may persist for a little while, though advisor engagement remains robust—
Credit platform durabilityseven or eight years ago it was really only a CLO businessnow incredibly diversified across direct lending, CLOs, asset-backed finance and opportunistic credit with strong credit metrics—
Geopolitical and macro environmentnavigated COVID, Ukraine-Russia war and the Middle East war over the past five yearsgeopolitical uncertainty and splintering are front of mind, driving demand for private capital, national security and economic growth—
AI deployment across portfolio companiesnot previously quantifiedadoption is steady with high CEO buy-in, becoming table stakes, though value creation will take a little longer than people expect—

Q&A Summary

Alex Blostein of Goldman Sachs asked how the newly announced $5 billion U.S. buyout structure was originated, how assets come into the SPV and how it is funded, and about financial implications for Fund VII, VIII or IX economics.
Harvey Schwartz explained the structure grew out of Carlyle AlpInvest's growing solutions business, letting the capital-light firm optimize its capital while giving strategic LPs increased U.S. buyout exposure; it is a cornerstone financing of $5-plus billion at full fees with no impact and perfect alignment with the fund, and demand to replicate it has been strong.
Ken Worthington of JPMorgan asked about cash carry in Carlyle Japan Partners IV and Global Financial Services Partners while waiting for CP VII and VIII, and whether AlpInvest carry is coming from funds with better economics.
Justin Plouffe said AlpInvest has a European-style waterfall that is hard to predict but returns remain strong, and a variety of signed or in-process deals in Japan Buyout and Europe Tech should come through in the next few quarters and definitely within the rest of 2026.
Brendan O'Brien of Wolfe Research asked about scrutiny of day-one markups in wealth products following a competitor's retail outflows and whether Carlyle is considering changes.
Harvey Schwartz said Carlyle is not changing any practices, the team historically buys higher-performing assets closer to par rather than deep-discounted aged assets, and advisor reception and performance remain very strong.
Brennan Hawken of BMO asked how base fee growth will progress through the active back-half fundraising super cycle.
Justin Plouffe said base fees were up 4% year-over-year and 7% on an LTM basis, and he expects growth to accelerate as AlpInvest, private equity and opportunistic credit fundraising ramps in the super cycle.
Michael Brown of UBS asked why the diversified-credit CTAC fund saw elevated redemptions and whether redemptions could differentiate going forward.
Harvey Schwartz said CTAC is highly diversified with over 900 names and is marked daily, redemptions built through the quarter as expected with Carlyle later in the queue, and the redemption period may persist a while but the long-term trajectory looks good.
Bill Katz of TD Cowen asked about the credit AUM opportunity, the insurance channel, and the durability of the CLO business after a peer's pointed CLO commentary.
Justin Plouffe said credit fundraising momentum is good with nearly $4 billion raised, CLO resets have stabilized base fees, defaults are half the industry level over 25 years, and CLOs and private credit have reached exit velocity as established asset classes.
Daniel Fannon of Jefferies asked about credit management fee growth, the ins and outs of fundraising versus outflows, and the fee mix.
Justin Plouffe said credit management fees are up 10% on an LTM basis, CLO runoff has stabilized after many resets, and the mix will improve as higher-fee opportunistic and direct lending BDC products come to market.
Patrick Davitt of Autonomous Research asked whether the path to mid-to-high single-digit FRE growth this year is still achievable after a slower Q1 and what levers get there.
Harvey Schwartz said management feels confident about those numbers given fundraising momentum and expects things to accelerate, and would update if anything changed.
Michael Cyprys of Morgan Stanley asked where AI is driving revenue uplift versus cost savings across portfolio companies and how to quantify the benefits.
Harvey Schwartz said adoption is steady, strongest in high-scale rule-based functions like accounting and processing, that data science and AI are becoming table stakes at the point of investment with high CEO buy-in, and while it will take longer than expected it is a step-function change.
Ben Rubin of Evercore asked about software exposure in the secondaries business and how AlpInvest manages concentration and vintage-year risk.
Justin Plouffe said AlpInvest is thoughtful about diversification by manager, position and vintage, its software exposure is low-to-mid teens (market weight or below), and 25 years of experience across cycles positions it well for the 2022-2023 vintages.
Brian Bedell of Deutsche Bank asked about the short- and long-term trajectory of transaction fees and whether Q2 could approach a record.
Justin Plouffe said he did not know if Q2 would be a record but feels good about the trajectory given activity in the first month, noting the capital markets business is derived from Carlyle's own deals and will grow alongside the broader platform.

More on Carlyle Group Inc.

Company

Carlyle Group Inc. overview
Facet

Financials
Transcript

Q1 2026 call
Reported 2026-05-07 · figures from the Carlyle Group Inc. Q1 2026 earnings call.

See how VectorShift works for your firm

Request Demo