The Carlyle Group Inc. (CG) executed a remarkable financial turnaround in 2024, swinging from a net loss of -$608.4 million in 2023 to a substantial net income of $1.02 billion. This dramatic reversal underscores a significant shift in the firm's operational efficiency and market positioning, moving beyond the challenges faced in the previous year and setting a new trajectory for profitability.
This pivot reflects not just a recovery from a challenging period but potentially the early results of strategic adjustments and market adaptations. Analyzing the drivers behind this stark contrast in performance, alongside recent corporate actions and forward-looking estimates, provides crucial insights into Carlyle's current standing and future potential in the competitive private equity landscape.
Financial Performance: A Dramatic Turnaround#
Carlyle's financial results for the fiscal year ending December 31, 2024, marked a significant departure from the previous year. Revenue saw an increase of +118.97%, climbing from $1.87 billion in 2023 to $4.09 billion in 2024. This substantial revenue growth was accompanied by an even more pronounced shift in profitability metrics. Operating income rebounded from a loss of -$600.9 million in 2023 to a gain of $1.39 billion in 2024. Similarly, EBITDA surged from -$420.3 million to $1.58 billion over the same period.
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The net income figures highlight the magnitude of the turnaround, moving from a loss of -$608.4 million to a profit of $1.02 billion. This +267.72% growth in net income year-over-year demonstrates improved performance across the firm's diverse segments. Looking at profitability margins, the net income margin shifted from -32.59% in 2023 to +24.96% in 2024. The operating income margin improved from -32.18% to +34.09%, while the EBITDA margin moved from -22.51% to +38.59%.
Despite the strong income performance, cash flow metrics presented a more complex picture. Net cash provided by operating activities was -$759.5 million in 2024, a significant decrease from the $204.9 million generated in 2023. Consequently, free cash flow also saw a sharp decline, registering -$837.2 million in 2024, a -705.35% decrease from the $138.3 million in 2023. This divergence between strong net income and negative operating and free cash flow warrants careful examination, often indicating shifts in working capital, investment timing, or the nature of earnings recognition in the asset management business. For example, changes in receivables or accrued performance fees can impact the timing of cash receipts relative to reported income.
Analyzing the balance sheet provides further context. Total assets increased from $21.18 billion in 2023 to $23.1 billion in 2024. Cash and cash equivalents also rose from $1.79 billion to $2.1 billion. Total debt increased from $9.26 billion to $9.5 billion. While total debt saw a modest increase, the firm's equity base grew from $5.19 billion to $5.61 billion, contributing to a stable financial structure. The current ratio TTM stands at 4.7x, indicating solid short-term liquidity. However, the net debt to EBITDA TTM is -0.73x, a metric that reflects the firm's overall debt burden relative to its earnings capacity, though the negative value here is influenced by the calculation method and the specific components included in net debt relative to EBITDA over the trailing twelve months.
Here is a summary of key historical financial performance metrics for Carlyle:
| Metric | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|
| Revenue | $5.82B | $3.68B | $1.87B | $4.09B |
| Operating Income | $4.03B | $1.57B | -$600.9MM | $1.39B |
| Net Income | $2.97B | $1.23B | -$608.4MM | $1.02B |
| EBITDA | $4.08B | $1.72B | -$420.3MM | $1.58B |
| Net Income Margin | +51.08% | +33.31% | -32.59% | +24.96% |
| Operating Margin | +69.16% | +42.76% | -32.18% | +34.09% |
| EBITDA Margin | +70.05% | +46.77% | -22.51% | +38.59% |
Source: Monexa AI, based on company financial filings
The volatility in Carlyle's top and bottom lines over the past four years is evident, reflecting the cyclical nature of the private equity business which is heavily influenced by deal flow, fundraising, and asset valuations. The sharp decline in 2023 and the subsequent recovery in 2024 highlight the sensitivity of results to market conditions and strategic execution during challenging periods. The 2024 rebound brings performance metrics closer to, though still below, the levels seen during the peak market conditions of 2021.
Strategic Initiatives and Execution#
Carlyle has been actively pursuing strategic initiatives aimed at optimizing its portfolio and positioning the firm for future growth. A notable focus in 2025 has been the intensification of efforts in European markets. Management, led by CEO Harvey Mitchell Schwartz, has highlighted potential opportunities in Europe, partly driven by expectations of easing monetary policies by the European Central Bank (ECB). Such policies could lead to more favorable financing conditions, potentially increasing deal activity and contributing to asset under management (AUM) growth in the region.
This strategic emphasis on Europe is part of a broader effort to diversify the firm's global footprint and capitalize on regional investment prospects. Carlyle's diversified global presence is intended to support cross-border investments, acting as a hedge against downturns in specific regions and facilitating access to opportunities across various sectors. The firm's Q1 2025 results, which showed global asset inflows of approximately $14 billion and a year-over-year AUM increase of +6% to roughly $453 billion, suggest that investors are responding positively to these expansion strategies.
Portfolio optimization has also been a key theme. Recent actions include asset sales, such as the divestment of the Newton Gold Project in British Columbia. Completed on June 3, 2025, this sale generated cash, shares, and warrants totaling over $2 million, according to Newsfile Corp. (Newsfile Corp.). Such divestitures are strategic moves to streamline the portfolio, realize value from mature assets, and enhance liquidity.
Simultaneously, Carlyle continues to deploy capital strategically. A recent example is the $1.3 billion strategic investment in Trucordia, announced on June 4, 2025, as reported by PR Newswire (PR Newswire). This investment is specifically aimed at reducing Trucordia's leverage and improving its governance structure, positioning the portfolio company for accelerated growth. These targeted investments and divestitures collectively aim to refine Carlyle's asset mix, improve the financial health of its portfolio companies, and enhance future earnings potential.
Fundraising efforts remain critical to AUM growth and fee income generation. Carlyle's AlpInvest division recently raised $4.1 billion for its ninth co-investment fund, as reported by Reuters on June 3, 2025 (Reuters). This successful fundraising round demonstrates continued investor confidence in Carlyle's ability to source and execute buyout deals, contributing to the firm's fee-earning asset base, which stood at $313.6 billion as of September 2024 (a significant portion of the total AUM).
Management's execution of these strategies appears to be contributing to the improved financial performance. The firm reported record fee-related earnings (FRE) of approximately $311 million in Q1 2025, achieving an FRE margin of 48%. Fee-related earnings are a crucial metric for alternative asset managers as they represent stable income derived from management fees, less operating expenses, providing a clearer view of core profitability insulated from the volatility of performance-related income. The strong FRE performance indicates operational efficiency and successful expansion of the fee-earning asset base.
Historically, management's ability to navigate market cycles has been tested, particularly evidenced by the challenging 2023 results following the robust performance in 2021 and 2022. The rebound in 2024 and the reported Q1 2025 FRE suggest a renewed focus on core operations and fee-based income streams, which tend to be more resilient than performance fees tied to asset valuations and exits. This shift could signal a strategic adaptation towards a more stable earnings profile.
Valuation and Earnings Outlook#
Following the significant improvement in financial performance, Carlyle's valuation metrics present an interesting picture. Based on the trailing twelve months (TTM), the price-to-earnings (P/E) ratio stands at 15.51x (Monexa AI). The current stock price of $46.82 and TTM EPS of $3.02 yield a P/E of approximately 15.47x. This compares to the forward P/E estimates which suggest a declining trend: 15.59x for 2024, 11.48x for 2025, 10.37x for 2026, and 8.65x for 2027 (Monexa AI). The decreasing forward P/E ratios indicate analyst expectations for continued earnings growth.
Other valuation metrics include a price-to-sales (P/S) ratio TTM of 4.08x and a price-to-book (P/B) ratio TTM of 2.64x. The enterprise value to EBITDA (EV/EBITDA) ratio TTM is 9.64x. Forward EV/EBITDA estimates are also projected to decrease from 20.26x for 2024 to 13.09x for 2027, further supporting the view of anticipated earnings and EBITDA expansion.
Analyst earnings estimates for Carlyle project continued growth. Average estimated revenue is expected to reach $4.03 billion for 2025, rising to $5.08 billion in 2026 and $5.71 billion in 2027. Estimated EPS is projected at $4.00 for 2025, increasing to $4.66 in 2026 and $5.17 in 2027 (Monexa AI). These estimates imply a forward EPS CAGR of approximately +13.02% and a forward revenue CAGR of roughly +15.86% over the next few years.
Here is a summary of key valuation and future earnings estimates:
| Metric | Value/Estimate |
|---|---|
| Current Stock Price | $46.82 |
| Market Cap | $16.91 billion |
| TTM EPS | $3.02 |
| TTM P/E Ratio | 15.51x |
| Forward P/E (2025) | 11.48x |
| Forward P/E (2027) | 8.65x |
| TTM EV/EBITDA | 9.64x |
| Estimated Revenue (2025) | $4.03 billion |
| Estimated Revenue (2027) | $5.71 billion |
| Estimated EPS (2025) | $4.00 |
| Estimated EPS (2027) | $5.17 |
| Projected EPS CAGR (Future) | +13.02% |
| Projected Revenue CAGR (Future) | +15.86% |
| TTM Dividend Per Share | $1.40 |
| TTM Dividend Yield | +2.99% |
Source: Monexa AI, based on stock quote, fundamentals, and analyst estimates
The firm also maintains a dividend policy, with the last declared dividend being $0.35 per share with a payment date of May 27, 2025, and a record date of May 19, 2025. The total dividend per share TTM is $1.40, resulting in a TTM dividend yield of +2.99%. The payout ratio TTM is 46.34%, suggesting that the dividend is currently well-covered by earnings.
Risks and Opportunities#
While Carlyle's recent performance and strategic initiatives point towards a positive trajectory, several risks and opportunities warrant consideration. Macroeconomic fluctuations remain a primary risk. Economic downturns can impact asset valuations, reduce deal flow, and affect the ability to exit investments profitably. Rising interest rates, while potentially easing in Europe, could still increase borrowing costs for portfolio companies and pressure valuations, particularly in the U.S.
Geopolitical tensions, including U.S.-China relations, can disrupt global supply chains and introduce market instability, impacting investment decisions and asset performance across Carlyle's diverse portfolio. The firm's credit arm, Carlyle Secured Lending, operates with leverage, although the regulatory leverage ratio of 1.04x as of March 31, 2025, remains below the 2.0x cap, suggesting manageable leverage levels within that specific segment.
Despite these risks, Carlyle benefits from significant opportunities. The strategic focus on European expansion aims to leverage potential macroeconomic tailwinds and capitalize on dislocations in the market. The firm's substantial dry powder, reported at $84 billion as of Q1 2025, provides considerable capacity for opportunistic investments even in uncertain market conditions. Portfolio optimization through targeted asset sales and strategic investments enhances the quality and resilience of the portfolio.
Furthermore, the expansion of fee-related revenue driven by diversified asset classes and new fund activations is a key opportunity. Management anticipates high-single-digit fee growth between 2025 and 2027, which could further support valuation upside and provide a more stable earnings base less dependent on performance fees.
What This Means For Investors#
For investors tracking CG, the significant financial turnaround in 2024 is a critical development, signaling improved operational execution after a challenging 2023. The rebound in revenue, operating income, and net income demonstrates the firm's capacity to recover and generate substantial profits under more favorable conditions or as a result of strategic adjustments. While the negative operating and free cash flow in 2024 bear watching, the strong net income and fee-related earnings suggest underlying profitability.
Carlyle's strategic emphasis on European markets and continued portfolio optimization efforts are key drivers for potential future growth. The successful fundraising for funds like AlpInvest's co-investment vehicle underscores continued investor confidence and provides capital for future deals, which should bolster AUM and fee income. The firm's substantial dry powder offers flexibility to pursue attractive investment opportunities.
Valuation metrics, particularly the declining forward P/E and EV/EBITDA estimates, suggest that analysts anticipate continued earnings and EBITDA growth. The current P/E ratio around 15.5x is below the projected P/E for 2024, indicating that the market may already be pricing in some of the expected near-term growth, but the further decline in forward multiples suggests potential for continued upside if earnings meet or exceed expectations.
Monitoring macroeconomic conditions, particularly interest rate trends and geopolitical developments, is essential, as these factors significantly influence the private equity environment. However, Carlyle's diversified platform and strategic focus on expanding fee-based income streams are designed to enhance resilience against such external pressures.
Conclusion#
The Carlyle Group Inc. has demonstrated a significant recovery in its financial performance in 2024, supported by strategic initiatives focused on European expansion, portfolio optimization, and robust fundraising. The dramatic swing from a net loss to substantial profitability highlights the operational leverage inherent in its business model when market conditions or internal strategies align effectively. While cash flow volatility remains a factor, the strength in net income and fee-related earnings provides a solid foundation.
The firm's strategic direction, including its push into Europe and ongoing asset management activities, positions it to potentially capitalize on future market opportunities and drive further AUM and earnings growth. The forward earnings estimates and valuation metrics suggest that analysts anticipate continued positive momentum. Navigating macroeconomic uncertainties and geopolitical risks will remain critical, but Carlyle's diversified structure and capital base appear to provide a degree of resilience. The firm's ability to consistently execute its strategic plan and translate AUM growth into sustainable fee-related earnings will be key determinants of its long-term performance.