Ares Management misses third-quarter earnings forecast despite revenue beat

Ares is in the middle of two large deals, one worth $2.9 billion and the other about $2.6 billion.

Ares Management reported third-quarter earnings of $1.26 per share, measured as after-tax realized income per share. That was $0.06 below expectations. Revenue came in at $1.43 billion, ahead of the $1.30 billion expected.

Chief Executive Officer Michael Arougheti said Ares expects another record year for fundraising, with a strong fourth quarter. He pointed to steady demand from its institutional and wealth channels.

Ares also declared a quarterly dividend of $1.35 per share on its Class A and non-voting common stock, payable on December 31, 2026. It declared a dividend of $0.84375 per share on its 6.75 per cent Series B mandatory convertible preferred stock, payable on January 1, 2027.

Ares is absorbing two large deals. The first is the $2.9 billion purchase of Infinity Transportation from KKR. The second is an agreement, signed on October 26, for Ares Capital Corporation to acquire MidCap Financial Investment Corporation in a stock-and-cash deal valued at about $2.6 billion. A subsidiary of Ares will fund the cash portion. Both deals weigh on near-term results, while management asks investors to look past them. The gap between a revenue beat and an earnings miss suggests rising costs or fee drag tied to integration, rather than weaker demand. That fits Arougheti's framing of record fundraising ahead. Investors will have to weigh that gap against management's outlook for a strong fourth quarter.