Overview of the Company’s Financial Performance

DigitalBridge Group, Inc. (DBRG) is a leading global digital infrastructure investment management firm. The company’s key business segments include Liquid Strategies, which manages fundamental long-only and long-short public equities strategies, and InfraBridge, which focuses on mid-market investments in the digital infrastructure and related sectors.

In the first half of 2024, DBRG reported strong financial results, with total revenues increasing by 256% year-over-year to $464.7 million. This was driven by a significant increase in unrealized carried interest allocation, which rose by $255.3 million. Fee revenue also grew by 21% to $151.6 million, reflecting a 12% increase in Fee Earning Equity Under Management (FEEUM) to $32.7 billion.

Revenue and Profit Trends

• Fee revenue increased due to new capital raised for DBRG’s third flagship fund, as well as additional deployments in other funds. However, this was partially offset by lower fees in the DBP II fund due to a change in fee basis and syndication of an investment.

• Carried interest allocation, which represents DBRG’s share of gross carried interest from its sponsored investment vehicles, increased significantly due to strong performance in the DBP II fund.

• Principal investment income, which reflects DBRG’s share of net income from investments in its sponsored funds, decreased by $15.1 million year-over-year due to lower unrealized gains.

• Other income decreased by $10.5 million, primarily due to lower interest and dividend income from a deconsolidated credit fund.

On the expense side, total expenses increased by 165% to $352.4 million, driven by a $172.5 million increase in compensation expense related to the higher carried interest allocation. Other expenses, such as administrative costs and interest expense, also increased but to a lesser extent.

Strengths and Weaknesses

Key strengths of DBRG include:

• Diversified investment management platform with strong performance across its Liquid Strategies and InfraBridge funds
• Significant growth in FEEUM, reflecting the company’s ability to raise capital for new and existing investment vehicles
• Reduced leverage through the exchange or redemption of higher-cost corporate debt

Potential weaknesses include:

• Reliance on variable and less predictable revenue streams such as carried interest and principal investment income
• Exposure to market volatility through its principal investments and consolidated liquid funds

Outlook

DBRG’s outlook remains positive, as the company continues to grow its investment management business and deploy capital into attractive digital infrastructure and technology-related opportunities. The company’s strong liquidity position, with $427 million in cash and available credit, provides flexibility to fund future growth initiatives and manage any market volatility.

However, the company’s financial performance will continue to be influenced by factors such as market conditions, the timing and magnitude of carried interest realizations, and the performance of its principal investments. Maintaining a disciplined approach to capital allocation and risk management will be crucial in navigating the evolving market environment.