Decoding Apollo's Q2 2025 10-Q: A Tale of Two Engines

Apollo Global Management, a titan in the world of alternative investments and retirement services, recently released its financial results for the second quarter of 2025. For investors and market watchers, digging into the firm's 10-Q filing offers a clear view of its performance and strategic direction. Let's break down the key numbers and what they signal about the health of Apollo's sprawling enterprise.

For the second quarter ending June 30, 2025, Apollo reported total revenues of $6.8 billion, a solid increase from $6.0 billion in the same period last year. However, net income attributable to common stockholders saw a decline, landing at $605 million compared to $828 million in Q2 2024. This contrast highlights the complexity of Apollo's business, which is best understood by looking at its two primary engines: Asset Management and Retirement Services.

To better visualize how Apollo generates revenue and where that money goes, here is a flow diagram of their income statement for the six months ended June 30, 2025.

You may notice a significant "Unallocated" portion in the flow diagram. This represents revenues and costs that are not assigned to a specific business segment in Apollo's internal reporting. The unallocated revenue of nearly $2.0 billion includes a variety of items such as performance fees, principal investment income, and complex accounting adjustments for consolidated investment entities. Similarly, the unallocated cost of revenue of $1.7 billion largely reflects accounting differences between how costs are reported for the Retirement Services segment versus the consolidated company-wide statement.

Asset Management: A Fee-Generating Powerhouse

Apollo's Asset Management segment is the firm's traditional business of managing large pools of capital for institutional clients. The key metric here is Fee Related Earnings (FRE), which measures the stable, recurring income generated from management and advisory fees.

For the second quarter of 2025, FRE hit $627 million, a robust 21.5% increase from $516 million in the prior year. This strong performance was driven by a few key factors:

• Growing AUM: Total Assets Under Management (AUM) reached an impressive $840 billion, up significantly from $696 billion a year earlier. This growth is the lifeblood of an asset manager, signaling strong capital inflows and positive market activity.
• Higher Management Fees: As AUM grows, so do the fees. Management fees for the quarter climbed 26.2% to $583 million. Fee-Generating AUM, the specific slice of assets that Apollo earns fees on, swelled to $638 billion from $522 billion a year prior.

This segment demonstrates the strength and scalability of Apollo's core asset management platform, consistently converting asset growth into predictable earnings.

Retirement Services: The Spread Game

The Retirement Services segment, operated by Apollo's subsidiary Athene, is a leader in the annuities and retirement savings market. This business operates on a different model: it takes in premiums from policyholders and aims to earn a profitable "spread" by investing that capital.

The primary performance measure for this segment is Spread Related Earnings (SRE). In the second quarter of 2025, SRE reached $821 million, a healthy 15.6% increase from $710 million in the same quarter of 2024. The key drivers were:

• Strong Investment Income: Net investment income surged to $4.8 billion for the quarter, up from $3.8 billion, fueled by a larger asset base.
• Margin Pressure: While earnings grew, the Net Investment Spread, a crucial efficiency ratio, slightly tightened from 1.64% to 1.58%. This was primarily due to a higher "cost of funds"—the interest credited to policyholders—which grew faster than the returns generated on investments. This reflects the challenges of navigating the current interest rate environment.

It's also important to note the volatility of Investment related gains (losses), which can significantly swing quarterly GAAP profits. For the first six months of 2025, this line item showed a loss of $833 million, a sharp reversal from a $1.5 billion gain in the first half of 2024, largely explaining the year-over-year drop in consolidated net income.

Two Complementary Engines

Apollo's latest filing paints a picture of a company with two powerful, complementary business engines. The Asset Management segment provides stable, growing fee income, evidenced by its soaring AUM and FRE. Meanwhile, the Retirement Services segment is a massive and profitable enterprise that, while subject to interest rate sensitivities, continues to scale its earnings effectively.

The challenge for Apollo will be to continue attracting capital to fuel its AUM growth in a competitive market while carefully managing the investment spreads in its vast retirement services portfolio. Investors will be watching closely to see how the firm navigates these dynamics in the quarters to come.