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The call conveyed strong operating performance across multiple metrics (FRE, management fees, monetizations, fundraising, embedded gains) and decisive capital allocation actions (buybacks, Arctos acquisition, dividend increase), demonstrating resilience and durable earnings power. At the same time, management signaled caution around 2026 ANI guidance due to a more challenging near-term monetization environment, increased competition/tight spreads in insurance, software mark pressure, and short-term wealth/redemption noise. Overall the positives (broad-based fee growth, record monetizations and fundraising, sizable embedded gains, disciplined buybacks) substantially outweigh the near-term challenges.
KKR reiterated confidence it will exceed targets for fundraising, strategic‑holdings operating earnings and FRE per share but said 2026 adjusted net income (ANI) is now more likely to land below the prior $7+ per‑share budgeted target given modestly less visibility on monetizations; Q1 highlights included FRE $1.13/sh (+23% YoY), total operating earnings $1.47/sh (+18% YoY), adjusted net income $1.39/sh (~$1.2B, +20% YoY), management fees $1.2B (+30% YoY; ex‑catch‑up ~>20%), transaction & monitoring fees $253M, capital markets fees $224M, fee‑related performance revenue $24M, FRE margin ~69%, fee‑related compensation ~17.5%, other operating expenses $195M, insurance segment operating earnings $260M (would be slightly north of $300M including marks) and strategic holdings OE $48M (tracking to $350+M in 2026); monetizations were ~$880M in Q1 (+50% YoY) with forward monetizations/signed deals >$1.2B, embedded gains $18.3B on $331B AUM (+11% YoY), direct lending $39B (5% AUM), private BDCs ~$3B (0.4% AUM), K‑Series AUM >$38B (up ~80% YoY), $28B raised in Q1 (credit $15B), North America 14 closed at $23B, repurchases $317M YTD at ~$91 avg with an added $500M authorization, and the annualized dividend was increased to $0.78.
Fee-related earnings (FRE) per share of $1.13, up 23% year-over-year; total operating earnings of $1.47 per share, up 18% YoY; adjusted net income (ANI) of $1.39 per share, up 20% YoY. FRE margin ~69% at March 31. Management described these as among the highest figures in firm history.
Management fees of $1.2 billion in the quarter, up 30% YoY (excluding catch-up fees growth a touch north of 20%). Fee base diversified: private equity, real assets and credit each contributed roughly one-third of total fees over the trailing 12 months.
Realized performance income >$750 million and realized investment income ~ $120 million, bringing total monetization to ~ $880 million (up >50% YoY). Realized carried interest $720 million (up 120% YoY). Recent exits included OneStream (4.5x cost), CoolIT Systems (~15x cost), Hyundai Marine Solution (7+ x), and two 2021 investments expected to sell at ~2x and ~3x.
Raised $28 billion of new capital in Q1 and $127 billion over the trailing 12 months. Credit fundraising was a bright spot with $15 billion raised in the quarter; asset-based finance now >$90 billion AUM. Final close of North America 14 at $23 billion (prior $19 billion). Across recent flagship vintages (Americas + Europe + Asia) $46 billion of capital to invest.
Total embedded gains (gross carry + gains across asset management and strategic holdings) of $18.3 billion, representing embedded value within total assets of $331 billion, up 11% YoY. Management reported healthy investment performance across asset classes despite volatility.
Insurance segment operating earnings of $260 million in Q1; on a marks-included basis would be slightly north of $300 million. Total insurance economics over the LTM were $1.9 billion (net of compensation), up 14% vs prior period. Strategic holdings operating earnings $48 million in Q1, tracking toward an expected $350+ million for 2026 (back-end weighted).
Repurchased/retired $317 million of stock through May 1 at an average price of ~$91; Board authorized an additional $500 million repurchase program. Management & directors purchased shares personally. Strategic M&A: closed acquisition of Arctos (approx. $16 billion AUM / $10 billion fee-paying AUM).
Annualized dividend increased to $0.78 beginning this quarter (7th consecutive annual increase since corporate structure change; from $0.50 to $0.78 over that period). Employee ownership programs in ~85 portfolio companies with ~200,000 non-management equity owners; highlighted CoolIT employee outcomes (~8x annual base salary for tenured employees at exit).
Direct lending platform size $39 billion (5% of AUM) and private BDC footprint ~$3 billion (0.4% of AUM). Asset-based finance remains large (> $90 billion AUM). Management noted renewed institutional inbound interest in direct lending given dislocations.
KKR has deployed over $40 billion across digital infrastructure themes, operates six global data center platforms and is pursuing disciplined, location- and terms-focused investing in the sector.
Ladies and gentlemen, thank you for standing by. Welcome to KKR's First Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the call over to Craig Larson, Partner and Head of Investor Relations for KKR. Craig, please go ahead.
Thank you, operator. Good morning, everyone. Welcome to our first quarter 2026 earnings call. This morning, as usual, I'm joined by Rob Lewin, our Chief Financial Officer; and Scott Nuttall, our Co-Chief Executive Officer. We would like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our press release, which is available on the Investor Center section at kkr.com. And as a reminder, we report our segment numbers on an adjusted share basis. This call will contain forward-looking statements, which do not guarantee future events or performance. Please refer to our earnings release as well as our SEC filings for cautionary factors about these statements.
So first, beginning with our results for the quarter. Fee-related earnings per share came in at $1.13. That's up 23% year-over-year. Total operating earnings of $1.47 are up 18% year-over-year and adjusted net income of $1.39 per share is up 20% compared to 1 year ago. All of these figures are among the highest we've reported in our firm's history. Now going into a little more detail. Management fees in the quarter were $1.2 billion. That's up 30% on a year-over-year basis.
driven both by continued fundraising momentum alongside deployment activity really across the platform. Excluding catch-up fees in both periods, ma...