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 everyone on the line today, please limit yourself to one question and return to the queue for any additional follow-ups. We delivered an outstanding second quarter with record results across our diversified global platform.
Highlights in the quarter include our highest level of distributable earnings in nearly four years, at $472 million, which includes record distributable earnings in both Carlyle AlpInvest and Global Credit. Record FRE of $358 million, up 11% year-over-year, driven by record fee-related performance revenue and record capital markets fees. Our fundraising momentum is exceptional, with $56 billion of inflows over the last 12 months, a 10% increase from the prior year. As we enter our fundraising super cycle, we've already attracted $30 billion of organic inflows in the first half of 2026, another firm record.
We raised an anchor commitment of $5 billion towards the first close of our U.S. We launched a dedicated defense and industrials platform and announced its first transaction, the acquisition of Secturion Systems, an NSA-certified hardware data encryption provider. Looking forward, we expect to have nearly all of our core strategies in the market raising capital over the next few years. This will support accelerating revenue and earnings across our platform, underpinning our conviction in our three-year strategic plan.
| Metric | Period | Current guidance |
|---|---|---|
| Compensation ratio | FY2026 | ~47% (roughly consistent with 2025 as the firm invests for growth) |
| FRE margin | 2027-2028 | Expected to tick up as super-cycle fundraising flows through the financials |
| Fundraising super cycle | Multi-year | Reaffirmed ~$200 billion; nearly all core/flagship strategies in market over the next ~24 months |
| Unum block reinsurance | Later in 2026 | Expected to close later this year, adding more than $5 billion to Global Credit AUM |
| Share repurchases | Ongoing | $1.6 billion remaining after a record $304 million deployed in the quarter |
| Metric | YoY | Note |
|---|---|---|
| Distributable earnings | $472M ($1.07/share) | Best pre-tax DE quarter in nearly four years, powered by record FRE and a substantial step-up in net realized performance revenue. |
| Fee Related Earnings | Record $358M (+11%, 47% margin) | Record fee-related performance revenue and record capital markets/transaction fees across the platform. |
| GAAP total revenues | $1,123.5M (-28.6%) | Lower unrealized performance allocations versus the prior-year quarter; GAAP revenue is volatile for alternative managers. |
| GAAP diluted EPS | $0.37 (vs $0.87) | GAAP net income attributable to Carlyle of $137 million; pre-tax margin of 24.4%. |
| Transaction/capital markets fees | Record $111M (>2x) | Repositioning of the capital markets business three years ago now capturing higher transaction fees; high-quality, low-risk earnings tied to platform activity. |
| Carlyle AlpInvest | Record DE $96M; FRE $87M (+27%); AUM $112B (+16%) | Secondaries and portfolio finance strategies plus evergreen inflows; second single-asset secondary fund closed 4x its predecessor. |
| Global Credit | Record DE $158M (+30%); record FRE $138M | Record transaction fees of $93 million and record fee-related performance revenue of $54 million; AUM $211 billion (+4%). |
| Global Private Equity | FRE $134M; DE $219M (+~50% QoQ) | Significant increase in net realized performance revenue from Japan buyout and the sixth U.S. buyout fund; realized proceeds $3.9 billion. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Fundraising super cycle | Approaching super cycle | Just started; a firm-record $30 billion of organic H1 inflows achieved before leaning into flagship strategies, with nearly all core funds (U.S. buyout, secondaries, portfolio finance, credit) in market over the next two years; ~$200 billion target reaffirmed. | — |
| Realizations leadership | Industry-leading | Returned ~$7 billion to clients in the quarter and $37 billion over the past year; U.S. buyout returned 23% of fair value (>2x industry), with a strong forward pipeline supporting continued realizations. | — |
| Capital markets flywheel | Business repositioned three years ago | Record $111 million of transaction fees, now 'muscle memory' that scales with firm activity and new fund launches; lumpy quarter to quarter but a structural flywheel. | — |
| Wealth and retirement | Building the platform | Evergreen wealth AUM at a record $20 billion (+60%); selected by AllianceBernstein and SEI for 401(k)/target-date and CIT solutions expected to build in 2027; AlpInvest seen as uniquely suited to wealth. | — |
| Defense and industrials platform | Sector expertise within U.S. buyout | Launched a dedicated middle-market defense/industrials sleeve (first deal Secturion Systems), tapping ~$8 trillion of projected global defense spend over the decade; potential future wealth product under consideration. | — |
| AI and technology investment | — | As a ~2,500-person firm, Carlyle is investing in data science to improve investment outcomes and operations (not headcount reduction) and to enable its ~750,000 portfolio-company employees, viewing it as early innings over many years. | — |
| Capital-light model | Capital-light lean | Prefers capital-light but will deploy balance sheet selectively for maximum ROI (e.g., SPVs); treats balance-sheet capital as a scarce asset, always prioritizing business investment over buybacks. | — |