Breaking Down The Carlyle Group Inc. (CG) Financial Health: Key Insights for Investors

You're looking at The Carlyle Group Inc. (CG) and seeing a lot of mixed signals, right? The direct takeaway is that while the market for private equity exits has been defintely slow-which hit realized performance revenues hard-the underlying fee-generating machine is incredibly resilient, so your focus needs to be on that core stability. As of September 30, 2025, the firm hit a record in Assets Under Management (AUM) at a staggering $474 billion, which is the bedrock for steady revenue. They've also generated $1.3 billion in Distributable Earnings year-to-date, proving they can still pay investors even as the deal environment stays choppy. The fee machine is running strong. Specifically, Fee-Related Earnings (FRE), the reliable part of the business, jumped 12% in the third quarter alone to $312 million, but you also need to see how they manage the volatility that led to a Q3 revenue miss at $782.5 million. We need to map out what that means for the dividend and where the next $17 billion in organic quarterly inflows is going, and that's exactly what we break down next.

Revenue Analysis

The Carlyle Group Inc. (CG)'s revenue picture for the 2025 fiscal year is a classic example of an alternative asset manager navigating a tough exit environment. While the Trailing Twelve Months (TTM) total revenue ending September 30, 2025, sat at approximately $3.91 billion, this actually represents a significant year-over-year decline of about 26.47%. This drop is less about the core business failing and more about the market's impact on realized performance fees, which are volatile.

The core of The Carlyle Group Inc.'s business is generating two primary revenue streams: predictable management fees, which drive Fee-Related Earnings (FRE), and performance-based revenues (or carried interest), which are highly dependent on successfully selling assets (exits) or investment appreciation. The good news is that Fee-Related Earnings (FRE) for the year-to-date period ending Q3 2025 actually grew by a solid 16%, reaching $946 million. That's the stable engine working hard.

Here's the quick math on where that TTM 2025 revenue came from, broken down by its three major segments. This shows you exactly which parts of the firm are pulling the most weight right now.

The most significant change in the revenue mix is the strategic pivot toward less-volatile, fee-centric businesses. Global Credit and Carlyle AlpInvest (part of Global Investment Solutions), which focuses on secondaries and fund-of-funds, now account for roughly 55% of the firm-wide Fee-Related Earnings. That's a huge shift from five years ago when it was only about 25%. This diversification is defintely a key risk mitigation strategy.

What this segment data hides is the composition of the revenue itself. The Global Private Equity segment still contributes the largest share of the total revenue at over 53%, but its performance is highly sensitive to the exit market, which explains the overall TTM revenue decline. Conversely, the growth in Global Credit and Global Investment Solutions, fueled by organic inflows of nearly $60 billion over the past twelve months, is what's driving the stability in the fee-related side of the business. You should be tracking the FRE growth, not just the total revenue figure. For a deeper dive into who is betting on this strategic shift, you can check out Exploring The Carlyle Group Inc. (CG) Investor Profile: Who's Buying and Why?

• Focus on the 16% YTD FRE growth.
• Recognize that the 26.47% TTM revenue decline is largely due to fewer profitable exits.
• The Global Credit platform is the fastest-growing area, increasing its revenue contribution.

Your clear action here is to monitor the firm's capital deployment and realized proceeds, which were $11.8 billion and $6.1 billion, respectively, in Q3 2025. If those realized proceeds don't start climbing, the total revenue will continue to lag, even if the fee-based earnings remain strong.

Profitability Metrics

You're looking at The Carlyle Group Inc. (CG) because you need to know if their recent growth is sustainable, especially in a volatile market. The direct takeaway is this: The Carlyle Group Inc. (CG)'s profitability metrics for 2025 show strong margin expansion, largely driven by a significant jump in gross profit and disciplined cost management, but you need to be cautious about a one-off gain that inflated the headline net profit number.

The company's ability to generate profit from its core fee-earning assets, measured by its Fee-Related Earnings (FRE) margin, is defintely a bright spot. For the second quarter of 2025, the FRE margin hit a strong 48%, up from 46% in the same period last year. That's real operational efficiency at work.

Gross, Operating, and Net Profit Margins

When you break down the numbers, The Carlyle Group Inc. (CG)'s margins for the 2025 fiscal year (FY2025) are largely positive, though their nature as an alternative asset manager means some volatility is expected. Here's the quick math using the most recent Trailing Twelve Months (TTM) data:

• Gross Profit: The TTM ending June 30, 2025, saw gross profit at $6.214 billion, an 82.71% increase year-over-year. This massive jump shows their revenue growth is outpacing the cost of generating that revenue, which is a great sign for their core business model.
• Operating Margin: The TTM Operating Margin as of October 2025 stood at 44.90%. This is a solid improvement from the 40.96% recorded at the end of 2024, indicating better control over general and administrative expenses.
• Net Profit Margin: The reported net profit margin for a recent period surged to 20.6%. However, you need to know that this figure was significantly boosted by a $209.7 million one-off gain. This isn't recurring, so don't bank on a 20.6% margin every quarter. The Q2 2025 GAAP Net Profit Margin was a more sustainable-looking 20.34%.

Profitability Trends and Industry Comparison

The trend is clear: The Carlyle Group Inc. (CG) is improving its operational leverage, but the net result is still subject to market conditions. Analysts are projecting full-year 2025 annual earnings growth of 19.6% and revenue growth of 20.1%, which suggests the underlying business momentum is strong. Still, the Q3 2025 results showed a revenue miss and a negative operating margin of -4.8%, which management attributed to a quieter quarter for private equity exits (realizations). This is the nature of the private equity business-it's lumpy, but the long-term trend matters more.

Compared to the rest of the industry, The Carlyle Group Inc. (CG) is performing well on key efficiency metrics. The median industry operating margin was 32% in 2023. Your company's TTM Operating Margin of 44.90% is a full 12.9 percentage points higher, which shows a distinct competitive advantage in managing its cost base relative to its peers.

Here's a quick look at how The Carlyle Group Inc. (CG) stacks up against some competitors on a key efficiency metric:

The higher Gross Profit Margin for The Carlyle Group Inc. (CG) suggests its cost of revenue-primarily compensation tied to performance and fund expenses-is lower as a percentage of its total revenue compared to these peers. This is a sign of strong cost management and a better mix of higher-margin fee income. If you want to dive deeper into who is buying into this performance, check out Exploring The Carlyle Group Inc. (CG) Investor Profile: Who's Buying and Why?

Your next concrete step: Finance: Recalculate the projected FY2025 Net Profit Margin excluding the $209.7 million one-off gain to get a clearer picture of sustainable operating performance by the end of this week.

Debt vs. Equity Structure

You're looking at The Carlyle Group Inc. (CG)'s balance sheet to understand how they fund their massive operations, and the quick takeaway is this: they lean heavily on long-term debt, which is common for an asset-light private equity model, but their leverage ratio is notably higher than the industry average. Honestly, this is a calculated risk, but it's one you need to monitor closely.

As of June 2025, The Carlyle Group Inc. (CG) carried a substantial long-term debt load of $10,705 million. The good news is their short-term debt and capital lease obligations were effectively $0 million. This structure means their current liquidity risk is low; they aren't facing a near-term debt wall. Still, that long-term commitment is the primary driver of their leverage.

Here's the quick math on their financing mix, using the June 2025 figures: with total stockholders' equity at $5,861 million, their Debt-to-Equity (D/E) ratio stood at 1.83. This ratio measures how much debt a company uses to finance its assets relative to the value provided by shareholders' equity. For every dollar of equity, they are using $1.83 of debt.

To be fair, this is where you need a benchmark. The average D/E ratio for the broader Asset Management industry is around 0.95. The Carlyle Group Inc. (CG)'s ratio is nearly double that, which suggests a more aggressive financing strategy. What this estimate hides is that much of this debt is used to finance their own investments and to provide capital for their Global Credit and Global Private Equity segments, not just corporate overhead. They are using debt to amplify returns, a classic private equity move.

The company continues to use debt for general corporate purposes, which includes funding growth and acquisitions. For example, in September 2025, The Carlyle Group Inc. (CG) issued $800 million in 5.050% senior notes due 2035. This is a long-dated debt issuance, which locks in a cost of capital for a decade, a smart move in a high-interest-rate environment. S&P Global Ratings assigned an 'A-' issue rating to the proposed notes, which confirms their strong credit quality, even with the higher D/E. The firm's strategy is to balance this debt with a focus on fee-related earnings (FRE) growth, with S&P expecting them to operate with limited leverage near 1x on an adjusted basis over the next two years.

The balance is clear: The Carlyle Group Inc. (CG) uses its strong market position and credit rating to access debt capital at favorable rates, deploying it to drive higher returns on equity (ROE) for shareholders. They are defintely prioritizing debt over issuing new equity to avoid diluting existing shareholders, a common preference among alternative asset managers.

• Long-term debt is $10,705 million (June 2025).
• Debt-to-Equity ratio is 1.83 (June 2025).
• Industry average D/E is roughly 0.95.
• Recent debt: $800 million in senior notes due 2035.

For a deeper dive into the firm's overall financial picture, you can check out the full analysis: Breaking Down The Carlyle Group Inc. (CG) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You're looking at The Carlyle Group Inc. (CG) to understand if its operational strength translates to short-term financial safety, and the picture is nuanced. For a financial firm, liquidity often looks different than for a manufacturer, but the ratios still matter. The key takeaway is that while the core business generates strong fee-related earnings, the balance sheet shows significant negative working capital, a common but important risk factor in this sector.

As of late October 2025, The Carlyle Group Inc.'s liquidity positions are tight based on traditional metrics. The most recent data shows a Current Ratio of just 0.40, calculated from current assets of approximately $2.782 billion against current liabilities of $6.982 billion. A ratio below 1.0 means the firm's short-term, easily convertible assets cannot cover its short-term debts. The Quick Ratio, which excludes less liquid assets, is similarly low at around 0.40. This is defintely a red flag on paper, but you need to understand the context.

The negative working capital trend is the direct result of this ratio. Your working capital-Current Assets minus Current Liabilities-stands at approximately $-4.2 billion. This isn't a surprise for an alternative asset manager, as their current liabilities often include significant amounts of accrued performance fees and fund-related payables that are typically covered by future cash flows or specific fund assets, not general corporate cash. Still, it means they rely heavily on the continuous flow of capital and their ability to raise new funds to manage short-term obligations.

Looking at the cash flow statement for the 2025 fiscal year, the operating cash flow (CFO) is a major strength. The Carlyle Group Inc. reported a positive cash flow from operating activities of $882.30 million for the 2025 fiscal year. This demonstrates the underlying business-collecting management fees and performance allocations-is highly cash-generative. That operating cash is what ultimately mitigates the low current ratio risk.

The trends in the other cash flow sections show a firm actively managing its capital structure and investments:

• Cash Flow from Investing Activities (CFI): The TTM (Trailing Twelve Months) ending September 30, 2025, shows a net cash outflow from investing of $-84.1 million. This is a relatively minor outflow, mostly related to capital expenditures, indicating the firm is not making huge, non-core balance sheet investments.
• Cash Flow from Financing Activities (CFF): This is where the capital structure management happens. The TTM data shows significant activity, including substantial debt issuance, with Long-Term Debt Issued totaling $4.218 billion, alongside the regular payment of dividends. This aggressive use of debt capital is a calculated move to fund operations and investments, but it does add to the firm's overall leverage.

The core strength is the predictable, rising fee-related earnings (FRE), which reached $946 million year-to-date through Q3 2025. [cite: 12 in first search] The liquidity concern is structural, not operational, but the reliance on capital markets for funding and debt repayment is a real near-term risk if credit markets tighten unexpectedly. For a deeper dive into the firm's strategic direction, you should review the Mission Statement, Vision, & Core Values of The Carlyle Group Inc. (CG).

Valuation Analysis

You want to know if The Carlyle Group Inc. (CG) is a buy, hold, or sell, and the quick answer is that the market is sending mixed signals, but analysts see a clear upside. The stock currently trades at a significant discount to the average analyst price target, suggesting it is undervalued, but its valuation multiples are slightly above the industry median, which signals caution.

As of November 2025, The Carlyle Group Inc. (CG) is trading around $51.67 per share. Over the last 52 weeks, the stock has shown resilience, rising by about 5.85%, but it has also seen a wide range, from a low of $33.02 to a high of $69.85. This volatility is typical for a private equity firm, reflecting the broader slowdown in fundraising and exit activity in the private markets.

Here's the quick math on key valuation multiples:

• Price-to-Earnings (P/E) Ratio: The trailing twelve-month (TTM) P/E ratio is 15.33. This is slightly higher than the Asset Management industry median of 12.825, but the forward P/E for the 2025 fiscal year is projected to drop to a more attractive 12.8x.
• Price-to-Book (P/B) Ratio: The 2025 forecast P/B is 3.05x. This is a premium compared to many financial services firms, suggesting the market values the firm's assets and brand beyond their book value.
• Enterprise Value-to-EBITDA (EV/EBITDA): The TTM EV/EBITDA is around 15.44. This multiple is high, indicating that the company's enterprise value (market cap plus net debt) is a substantial multiple of its operating cash flow proxy (EBITDA), which is a point of concern for value investors.

The dividend picture is straightforward. The Carlyle Group Inc. (CG) maintains a steady annual dividend of $1.40 per share, which translates to a current dividend yield of approximately 2.63%. The payout ratio-the percentage of earnings distributed as dividends-is high at around 76.25%, meaning the company is returning most of its income to shareholders rather than reinvesting it. It's defintely a solid income play, but watch that high payout ratio.

Looking ahead, the analyst consensus is constructive, pointing to a potential recovery. The average 12-month price target from analysts is approximately $66.19. Compared to the current price, this implies a potential upside of nearly 29.37% over the next year. The consensus rating is mixed, with most analysts landing on a 'Hold' or 'Buy' recommendation, reflecting the tension between the current market headwinds and the firm's long-term growth potential.

For a deeper dive into the firm's strategic positioning and financial stability, check out the full post: Breaking Down The Carlyle Group Inc. (CG) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at The Carlyle Group Inc. (CG) and seeing strong growth in credit, but you defintely need to understand the structural risks lurking under the surface. The direct takeaway is that while management is successfully diversifying revenue, the firm's legacy private equity (PE) business and high leverage create near-term volatility, especially in a late-cycle economy.

External and Market Headwinds

The biggest external risk is the ongoing macroeconomic uncertainty, which includes the impact of tariffs and persistent high interest rates. This environment makes it harder to sell portfolio companies, which is why The Carlyle Group Inc. saw a 3% decline in private equity earnings in Q3 2025 due to a quieter quarter for exits. Still, management notes that over 80% of their portfolio companies are service-based, which limits their direct exposure to tariff risks. That's a smart structural hedge.

Market volatility is another clear risk. The Carlyle Group Inc.'s stock (CG) has a relatively high beta, around 1.687 to 2.0, meaning it tends to swing more violently than the overall market. Plus, the high-interest-rate environment makes managing highly leveraged portfolios tricky, as seen with the challenges around the potential $8 billion sale of portfolio company DigiCert, which carries a substantial $2.7 billion debt load. High rates make that debt more expensive.

Operational and Financial Vulnerabilities

The core financial risk is a combination of high leverage and a dependence on exit timing. The company's financial strength is rated as poor, largely because the debt-to-equity ratio sits at 2.25. That's a lot of debt for an asset manager. Also, the firm reported a negative free cash flow yield of -13.27% as of late 2025, which highlights potential liquidity challenges if capital returns slow down. Honesty, that negative cash flow yield is a red flag you can't ignore.

The private equity segment faces a near-term operational dip, as management fees are expected to decline until the launch of the next major U.S. buyout fund, which is planned for late 2025 but won't activate fees until 2026. This risk was visible in Q3 2025, where the firm missed analyst estimates, reporting revenue of $782.5 million against an estimated $987.3 million, and adjusted EBITDA was negative $23.4 million against an estimated positive $449.5 million. That's a huge miss.

Other operational and strategic risks include:

• Legal scrutiny from the Bluebird Bio acquisition.
• Elongated sales cycles in private equity, stressing client allocations.
• Increased regulatory burden from new SEC rules, like Form PF in 2025.

Mitigation Strategies and Clear Actions

Management is actively mitigating these risks through a deliberate and successful diversification strategy. They've aggressively shifted focus, and now Global Credit and Carlyle AlpInvest (Global Investment Solutions) account for 55% of the firm-wide Fee-Related Earnings (FRE), up from about 25% five years ago. This shift makes their fee income much more resilient.

Here's the quick math on their buffer and strategy:

They're also diversifying fundraising by launching a new wealth platform toward the end of 2025. This focus on credit and solutions is what allowed them to generate $312 million in FRE in Q3 2025, a 12% year-over-year growth, even as the PE segment was soft. If you want to dig deeper into who is buying in, you should read Exploring The Carlyle Group Inc. (CG) Investor Profile: Who's Buying and Why?

Growth Opportunities

The Carlyle Group Inc. (CG) is defintely repositioned for a strong 2025, driven by a strategic pivot toward more stable, fee-generating businesses like credit and investment solutions. The direct takeaway is that management has raised its full-year Fee-Related Earnings (FRE) growth outlook to approximately 10%, up from the prior 6% target, signaling confidence in their diversified model. They are effectively using their massive capital base to capture market share in high-growth, recurring revenue streams.

The firm's strategic focus has shifted its revenue composition significantly. Global Credit and Carlyle AlpInvest (Investment Solutions) now account for 55% of firm-wide FRE, compared to just 34% in 2023. This is a huge change. They are also aggressively expanding their Global Wealth platform, where Assets Under Management (AUM) has increased nearly sixfold, plus they secured an exclusive secondary solutions partnership with UBS for international wealth clients. This focus on wealth distribution is a key long-term driver.

Here's the quick math on their momentum: Total AUM hit a record $474.1 billion as of September 2025, with fee-earning AUM at $332.0 billion. They also raised their full-year inflow target to $50 billion, which is a clear sign of investor demand for their products. For the first half of 2025 alone, year-to-date FRE totaled $634 million.

• Credit Expansion: Global Credit is a massive growth engine, benefiting from strong capital markets activity and a focus on asset-backed finance.
• Evergreen Capital: Perpetual evergreen strategies are a source of sticky, long-term fees, growing 40% year-over-year to $30 billion in AUM.
• Market Expansion: The company is actively considering inorganic growth, such as the potential acquisition of Lukoil's international assets, which were valued at approximately $22 billion in 2024.

The competitive advantages that position The Carlyle Group Inc. for continued growth are clear. They are one of the world's largest alternative asset managers, with a global footprint of 29 offices that provides deep local market insights. Their diversified platform across private equity, credit, and investment solutions mitigates risk in volatile markets. What this estimate hides, though, is that their massive 'dry powder' (uninvested capital) of around $84 billion gives them a significant advantage to deploy capital into opportunistic deals while competitors might be constrained.

Looking at the full-year financial picture, analysts project 2025 revenue to land around $4.51 billion, with an Earnings Per Share (EPS) estimate of $4.25. These projections reflect the positive impact of the firm's strategic shift to higher-margin, recurring fee businesses. Their commitment to integrity and innovation is detailed in their Mission Statement, Vision, & Core Values of The Carlyle Group Inc. (CG).

The table below summarizes the key 2025 financial projections and actuals that underpin the growth story:

Your next step should be to monitor the Q4 2025 earnings call for an update on the $50 billion inflow target and any new details on the deployment of that $84 billion in dry powder. That's where the real alpha will be generated.