# The Carlyle Group Inc. (CG) — Financial Analysis

**Exchange:** NASDAQ  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-29  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/CG/thesis · /stocks/CG/memo

## Financial Snapshot

---
source: coverage-next-full
ticker: CG
step: 04
title: Financial Quality & Adversarial Sweep
date: 2026-05-29
---

### Step 04 — Financial Snapshot & Quality: The Carlyle Group Inc. (CG)

#### 1. Three-Year Financial Snapshot

*Note: CEO Harvey Schwartz joined February 15, 2023. FY 2023 represents a turnaround baseline; FY 2024 and FY 2025 are the Schwartz-era performance record.*

##### Economic Metrics (Primary — Non-GAAP)

| Metric | FY 2023 | FY 2024 | FY 2025 | 2-yr CAGR |
|--------|---------|---------|---------|-----------|
| Fee-Related Earnings (FRE) | ~$850M | $1,100M | $1,240M | +21% |
| FRE Margin | ~37% | 46% | 47% | +1,000bps total |
| Distributable Earnings (DE) | ~$900M | $1,525M | $1,690M | +37% |
| DE per Share (post-tax) | ~$2.35 | $3.66 | $4.02 | +31% |
| Total AUM | ~$382B | $441B | $477B | +12% |
| Fee-Earning AUM (FEAUM) | ~$287B | $305B | $337B | +8% |
| Perpetual Capital | — | — | $111B (33% FEAUM) | — |
| Annual Dividend (DPS) | $1.40 | $1.40 | $1.40 | Flat |

[S3][S4]

##### GAAP Metrics (Highly Volatile — Secondary)

| Metric | FY 2023 | FY 2024 | FY 2025 |
|--------|---------|---------|---------|
| Revenue | $2,964M | $5,426M | $4,780M |
| Operating Income | ($65M) | $2,055M | $1,789M |
| Net Income | ($608M) | $1,020M | $809M |
| EPS (Diluted) | ($1.68) | $2.77 | $2.18 |

[S1]

**GAAP Warning:** Revenue swings from $3B to $5.4B to $4.8B reflect mark-to-market investment gains/losses on consolidated fund investments, not economic performance changes. FY 2023 GAAP loss does not reflect economic deterioration — FRE was growing and DE was positive in FY 2023.

#### 2. Dividend Policy

- **Annual dividend:** $1.40/share ($0.35/quarter) — **unchanged since at least 2022** [S1]
- **Payout vs. DE:** FY 2025 DE = $4.02/share; dividend = $1.40 → **35% DE payout ratio** (conservative)
- **Yield at $45:** ~3.1% [S5]
- **Policy philosophy:** Fixed base dividend with capital return flexibility via buybacks; this mirrors BX's variable dividend model (though CG has not adopted BX's variable structure)
- **Sustainability:** Highly covered; FRE alone ($1.24B) covers dividends (~$505M) and buybacks ($687M) with room

#### 3. Capital Return Summary (FY 2025)

| Item | Amount |
|------|--------|
| Dividends paid | ~$505M |
| Share repurchases | ~$687M |
| **Total capital returned** | **~$1,192M** |
| vs. FRE | 96% of FRE |
| vs. DE | 71% of DE |

Carlyle returned over $1B to shareholders in FY 2025 — the first time crossing this threshold [S4].

#### 4. GAAP vs. Economic Earnings Reconciliation

The critical accounting adjustment for Carlyle:

| Item | GAAP Treatment | Economic Impact |
|------|---------------|-----------------|
| Unrealized investment gains/losses | Flows through P&L | Excluded from FRE/DE |
| Consolidated fund assets/liabilities | On-balance sheet | Not firm assets |
| Carry income (accrued) | Recognized when vested | Included when realized in DE |
| SBC expense | Recorded as expense | Partially added back in FRE |
| Depreciation/amortization (deal-related) | Amortized | Included in GAAP; excluded from FRE |

**Key takeaway:** Carlyle's economic performance in FY 2023 was positive (FRE ~$850M, DE ~$900M) despite a ($608M) GAAP net loss. Investors who focus on GAAP EPS without adjustment will systematically misread the business. [S1][S2]

#### 5. Accounting Quality Assessment

**Grade: B+ (Good with caveats)**

Strengths:
- Non-GAAP reconciliation is detailed and consistent quarter-to-quarter
- FRE and DE definitions are aligned with industry convention (BX, KKR, APO use same framework)
- 8-K earnings supplements are comprehensive (30+ page financial tables)
- SEC filing quality high; Big Four auditor (Deloitte)

Weaknesses:
- GAAP income statement is essentially uninformative for economic analysis
- Balance sheet consolidates fund investments, creating appearance of high leverage that doesn't reflect firm economics
- "Transaction fees" and "advisory fees" treatment varies; can shift between FRE and below-FRE categories
- Segment FRE allocation not fully transparent across the three segments in older quarters

#### 6. Adversarial Research Sweep

*Note: This analysis is based on filings, press releases, and web search. Earnings transcripts not reviewed (coverage-next-full path).*

##### Short Seller Reports / Critical Research
- **No major dedicated short reports identified** from 2022–2025 period
- Previous criticisms (pre-Schwartz era) focused on: governance conflicts, GP/LP conflicts of interest in fund deals, CEO succession uncertainty (Lee departure 2022)
- Short interest at ~6.6% of float (elevated vs. peer average ~3.6%) — suggests skepticism but not activist short activity [S5]

##### Regulatory Actions / Investigations
- **No material SEC enforcement actions** identified in search results
- SEC private fund rules (2023) created compliance burden; partially vacated 2024 — resolved favorably
- CFTC registration compliance for commodity pool operators — standard for PE firms
- DOL / ERISA pension fund rules applicable but not a source of material regulatory risk

##### Litigation
- Standard PE firm litigation (LP disputes, portfolio company litigation) — no identified material cases
- SEC Form 40-6B/A filing (2025) relates to fund exemption registration — routine

##### Governance Concerns
- **Founder concentration:** Rubenstein (7.5%), D'Aniello (9.1%), Conway (8.4%) still hold substantial stakes and board influence [S6]
- **CEO succession:** Kewsong Lee's sudden departure (August 2022) was a governance red flag; Harvey Schwartz hired February 2023 after a prolonged search
- **Related party transactions:** Standard for PE — Carlyle invests in funds it manages; conflicts managed via independent board committee
- **Compensation:** FY 2024 comp/FRE ratio targeted at "35% or less" — improvement from historical 45–50% levels [S4]

##### Earnings Quality Concerns
- FRE and DE definitions could theoretically be manipulated by reclassifying expenses — no evidence of this
- Transaction fees (disclosed as $164M in Q4 2024, $225M in FY 2025) are volatile and may be pulled forward or deferred
- Q2 2024: missed EPS consensus by $0.06 ($0.78 vs. $0.84 expected) — suggests carry timing is difficult to predict

#### 7. Historical Financial Quality Trend

| Year | Assessment | Key Event |
|------|-----------|-----------|
| FY 2021 | Artificially inflated | COVID recovery PE exits, peak carry realizations |
| FY 2022 | Deteriorating | Rate shock; unrealized losses; CEO departure |
| FY 2023 | Turnaround | New CEO; FRE recovery begins; GAAP loss |
| FY 2024 | Strong | FRE +30%; margin +900bps; record FEAUM |
| FY 2025 | Record | FRE +12%; margin 47%; DE +11%; AUM $477B |

**Summary:** Carlyle's FY 2023–2025 trajectory is a genuine financial quality improvement story, driven by FRE margin expansion (37%→47%) and FEAUM growth. The GAAP earnings volatility is structural to PE accounting, not a quality concern.

#### Source Index
- [S1] StockAnalysis.com — GAAP income statement, cash flow, ratios
- [S2] SEC EDGAR — 10-K FY2024 (CIK 0001527166)
- [S3] Investing.com — Q4 FY2025 earnings slides; FRE/DE data
- [S4] Insider Monkey / Yahoo Finance — Q4 2024 and Q4 2025 earnings highlights
- [S5] MarketBeat — Short interest data (May 2026)
- [S6] Web search — Institutional ownership, insider context, governance

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/CG/fundamental

## Navigation

- Overview: /stocks/CG
- Financials (this page): /stocks/CG/financials
- Thesis: /stocks/CG/thesis
- Investment Memo: /stocks/CG/memo
- Coverage universe: /stocks