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SEGMENT REPORTING
 3 Months Ended
Mar. 31, 2025
Segment Reporting [Abstract]  
SEGMENT REPORTING
14. SEGMENT REPORTING

The Company operates through its distinct operating segments. The Company operating segments are summarized below:

Credit Group: The Credit Group manages credit strategies across the liquid and illiquid spectrum, including liquid credit, alternative credit, opportunistic credit, direct lending and Asia-Pacific (“APAC”) credit.

Real Assets Group: The Real Assets Group manages comprehensive equity and debt strategies across real estate and infrastructure investments.

Private Equity Group: The Private Equity Group broadly categorizes its investment strategies as corporate private equity and APAC private equity.

Secondaries Group: The Secondaries Group invests in secondary markets across a range of alternative asset class strategies, including private equity, real estate, infrastructure and credit.

Other: Other represents a compilation of operating segments and strategic investments that seek to expand the Company’s reach and its scale in new and existing global markets but individually do not meet reporting thresholds. These results include activities from: (i) Ares Insurance Solutions (“AIS”), the Company’s insurance platform that provides solutions to insurance clients including asset management, capital solutions and corporate development; (ii) the SPACs sponsored by the Company; and (iii) a venture capital business with fund strategies that are focused on applied artificial intelligence, among others.

The Operations Management Group (the “OMG”) consists of shared resource groups to support the Company’s operating segments by providing infrastructure and administrative support in the areas of accounting/finance, operations, information technology, legal, compliance, human resources, strategy, relationship management, and distribution, including Ares Wealth Management Solutions, LLC (“AWMS”). AWMS facilitates the product development, distribution, marketing and client management activities for investment offerings in the global wealth management channel. Additionally, the OMG provides services to certain of the Company’s managed funds and vehicles, which may reimburse the OMG for expenses either equal to the costs of services provided or as a percentage of invested capital. The OMG’s revenues and expenses are not allocated to the Company’s operating segments but the Company does consider the financial results of the OMG when evaluating its financial performance.

Segment Profit Measure: Realized income (“RI”), which includes fee related earnings (“FRE”) as a component, supplements and should be considered in addition to, and not in lieu of, the Condensed Consolidated Statements of Operations prepared in accordance with GAAP.
RI, a non-GAAP measure, is an operating metric used by management to evaluate performance of the business based on operating performance and the contribution of each of the business segments to that performance, while removing the fluctuations of unrealized income and expenses, which may or may not be eventually realized at the levels presented and whose realizations depend more on future outcomes than current business operations. RI differs from income before taxes by excluding: (i) operating results of the Consolidated Funds; (ii) depreciation and amortization expense; (iii) the effects of changes arising from corporate actions; (iv) unrealized gains and losses related to carried interest, incentive fees and investment performance; and adjusts for certain other items that the Company believes are not indicative of operating performance. Changes arising from corporate actions include equity-based compensation expenses, the amortization of intangible assets, transaction costs associated with mergers, acquisitions and capital activities, underwriting costs and expenses incurred in connection with corporate reorganization. Placement fee adjustment represents the net portion of either expense deferral or amortization of upfront fees to placement agents that is presented to match the timing of expense recognition with the period over which management fees are expected to be earned from the associated fund for segment purposes but have been expensed in advance in accordance with GAAP. For periods in which the amortization of upfront fees for segment purposes is higher than the GAAP expense, the placement fee adjustment is presented as a reduction to RI. Management believes RI is a more appropriate metric to evaluate the Company’s current business operations.

FRE, a non-GAAP measure that is a component of RI, is used to assess core operating performance by determining whether recurring revenue, primarily consisting of management fees and fee related performance revenues, is sufficient to cover operating expenses and to generate profits. FRE differs from income before taxes computed in accordance with GAAP as it excludes net performance income, investment income from Ares Funds and adjusts for certain other items that the Company believes are not indicative of its core operating performance. Fee related performance revenues, together with fee related performance compensation, is presented within FRE because it represents incentive fees from perpetual capital vehicles that is measured and eligible to be received on a recurring basis and not dependent on realization events from the underlying investments.

The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer. The CODM makes operating decisions and assesses the performance of each of the Company’s business segments based on financial and operating metrics and other data that is presented before giving effect to the consolidation of any of the Consolidated Funds. Consequently, all segment data excludes the assets, liabilities and operating results related to the Consolidated Funds and non-consolidated funds. Total assets by segments is not disclosed because such information is not used by the Company’s CODM in evaluating the segments.
The following tables present the financial results for the Company’s operating segments, as well as the OMG:
Three months ended March 31, 2025
Credit GroupReal Assets GroupPrivate Equity Group
Secondaries Group
Other
Total SegmentsOMGTotal
Management fees$585,396 $130,453 $31,998 $57,650 $12,879 $818,376 $— $818,376 
Fee related performance revenues18,395 — — 9,656 — 28,051 — 28,051 
Other fees10,598 21,380 397 122 136 32,633 5,537 38,170 
Compensation and benefits(164,747)(56,702)(13,831)(18,371)(7,063)(260,714)(116,468)(377,182)
General, administrative and other expenses(41,048)(20,852)(4,257)(8,473)(1,483)(76,113)(64,026)(140,139)
Fee related earnings408,594 74,279 14,307 40,584 4,469 542,233 (174,957)367,276 
Performance income—realized54,112 65,305 6,031 — — 125,448 — 125,448 
Performance related compensation—realized(34,258)(46,807)(3,351)— — (84,416)— (84,416)
Realized net performance income19,854 18,498 2,680 — — 41,032 — 41,032 
Investment income (loss)—realized5,379 7,919 (4,602)138 2,530 11,364 331 11,695 
Interest income4,420 2,618 2,022 957 11,688 21,705 603 22,308 
Interest expense(1)
(6,308)(15,717)(4,180)(2,008)(7,918)(36,131)(256)(36,387)
Realized net investment income (loss)3,491 (5,180)(6,760)(913)6,300 (3,062)678 (2,384)
Realized income$431,939 $87,597 $10,227 $39,671 $10,769 $580,203 $(174,279)$405,924 
Three months ended March 31, 2024
Credit GroupReal Assets GroupPrivate Equity Group
Secondaries Group
Other
Total SegmentsOMGTotal
Management fees$510,966 $93,814 $34,933 $44,421 $9,231 $693,365 $— $693,365 
Fee related performance revenues755 — — 2,962 — 3,717 — 3,717 
Other fees9,911 5,075 439 4 114 15,543 4,333 19,876 
Compensation and benefits
(134,849)(37,918)(14,785)(12,714)(5,592)(205,858)(94,157)(300,015)
General, administrative and other expenses(34,366)(14,453)(5,216)(9,068)(1,690)(64,793)(50,480)(115,273)
Fee related earnings352,417 46,518 15,371 25,605 2,063 441,974 (140,304)301,670 
Performance income—realized16,766 3,677 2,738 — — 23,181 — 23,181 
Performance related compensation—realized(8,734)(2,228)(2,194)— — (13,156)— (13,156)
Realized net performance income8,032 1,449 544 — — 10,025 — 10,025 
Investment income—realized1,765 2,678 298 187 2,000 6,928 11 6,939 
Interest income2,767 700 6 23 4,409 7,905 441 8,346 
Interest expense(1)
(8,753)(7,406)(4,662)(8,229)(8,734)(37,784)(40)(37,824)
Realized net investment income (loss)(4,221)(4,028)(4,358)(8,019)(2,325)(22,951)412 (22,539)
Realized income$356,228 $43,939 $11,557 $17,586 $(262)$429,048 $(139,892)$289,156 

(1)    Interest expense was historically allocated among our segments based only on the cost basis of the Company’s balance sheet investments. Beginning in the first quarter of 2025, the Company changed its interest expense allocation methodology to consider the growing sources of financing requirements, including the cost of acquisitions in addition to the cost basis of its balance sheet investments. Prior period amounts have been reclassified to conform to the current period presentation.
The following table presents the components of the Company’s operating segments’ revenue, expenses and realized net investment income (loss):
Three months ended March 31,
20252024
Segment revenues
Management fees$818,376 $693,365 
Fee related performance revenues28,051 3,717 
Other fees32,633 15,543 
Performance income—realized125,448 23,181 
Total segment revenues$1,004,508 $735,806 
Segment expenses
Compensation and benefits$260,714 $205,858 
General, administrative and other expenses76,113 64,793 
Performance related compensation—realized84,416 13,156 
Total segment expenses$421,243 $283,807 
Segment realized net investment income (loss)
Investment income—realized$11,364 $6,928 
Interest income21,705 7,905 
Interest expense(36,131)(37,784)
Total segment realized net investment loss$(3,062)$(22,951)
The following table reconciles the Company’s consolidated revenues to segment revenue:
Three months ended March 31,
20252024
Total consolidated revenue$1,088,805 $707,363 
Performance (income) loss—unrealized(64,443)45,476 
Management fees of Consolidated Funds eliminated in consolidation9,894 12,453 
Performance income of Consolidated Funds eliminated in consolidation5,128 5,925 
Administrative, transaction and other fees of Consolidated Funds eliminated in consolidation124 113 
Administrative fees(1)
(19,728)(16,407)
OMG revenue(5,537)(4,333)
Principal investment income, net of eliminations(21,998)(7,050)
Net (revenue) expense of non-controlling interests in consolidated subsidiaries12,263 (7,734)
Total consolidation adjustments and reconciling items(84,297)28,443 
Total segment revenue$1,004,508 $735,806 
(1)Represents administrative fees from expense reimbursements that are presented within administrative, transaction and other fees within the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.
The following table reconciles the Company’s consolidated expenses to segment expenses:
Three months ended March 31,
20252024
Total consolidated expenses$1,014,328 $538,493 
Performance related compensation-unrealized(40,550)64,514 
Expenses of Consolidated Funds added in consolidation(16,684)(17,708)
Expenses of Consolidated Funds eliminated in consolidation10,028 12,995 
Administrative fees(1)
(19,728)(16,407)
OMG expenses(180,494)(144,637)
Acquisition and merger-related expense(34,608)(10,578)
Equity compensation expense(257,862)(92,422)
Acquisition-related compensation expense(2)
(21,999)(5,504)
Placement fee adjustment6 (5,540)
Depreciation and amortization expense(48,229)(36,644)
Expense of non-controlling interests in consolidated subsidiaries
17,035 (2,755)
Total consolidation adjustments and reconciling items(593,085)(254,686)
Total segment expenses$421,243 $283,807 
(1)Represents administrative fees from expense reimbursements that are presented within administrative, transaction and other fees within the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.
(2)Represents bonus payments, contingent liabilities (“earnouts”) and other costs recorded in connection with various acquisitions that are recorded as compensation expense and are presented within compensation and benefits within the Company’s Condensed Consolidated Statements of Operations. See “Note 8. Commitments and Contingencies” for a further description of the contingent liabilities related to the various acquisitions.

The following table reconciles the Company’s consolidated other income to segment realized net investment loss:

Three months ended March 31,
20252024
Total consolidated other income$66,561 $62,178 
Investment income—unrealized(21,638)(3,685)
Interest and other investment (income) loss—unrealized3,774 (602)
Other income, net from Consolidated Funds added in consolidation(86,422)(79,977)
Other expense, net from Consolidated Funds eliminated in consolidation1,800 902 
OMG other (income) expense4,197 (549)
Principal investment income (loss)26,839 (2,666)
Other expense, net
2,526 131 
Other (income) loss of non-controlling interests in consolidated subsidiaries(699)1,317 
Total consolidation adjustments and reconciling items(69,623)(85,129)
Total segment realized net investment loss$(3,062)$(22,951)
The following table presents the reconciliation of income before taxes as reported in the Condensed Consolidated Statements of Operations to segment results of RI and FRE:
Three months ended March 31,
20252024
Income before taxes$141,038 $231,048 
Adjustments:
Depreciation and amortization expense48,229 36,644 
Equity compensation expense257,862 92,421 
Acquisition-related compensation expense(1)
21,999 5,504 
Acquisition and merger-related expense34,608 10,578 
Placement fee adjustment(6)5,540 
OMG expense, net179,154 139,755 
Other expense, net
2,526 131 
Income before taxes of non-controlling interests in consolidated subsidiaries(5,471)(3,662)
Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations(57,979)(65,586)
Total performance (income) loss—unrealized(64,443)45,476 
Total performance related compensation—unrealized40,550 (64,514)
Total net investment income—unrealized(17,864)(4,287)
Realized income580,203 429,048 
Total performance income—realized(125,448)(23,181)
Total performance related compensation—realized84,416 13,156 
Total net investment loss—realized3,062 22,951 
Fee related earnings$542,233 $441,974 
(1)Represents bonus payments, earnouts and other costs recorded in connection with various acquisitions that are recorded as compensation expense and are presented within compensation and benefits within the Company’s Condensed Consolidated Statements of Operations. See “Note 8. Commitments and Contingencies” for a further description of the contingent liabilities related to the various acquisitions.