BLUE OWL CAPITAL INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), should be read in conjunction with the Financial Statements. For a description of our business, please see “Item 1. Business” in the Annual Report. 2024 Third Quarter Overview Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2024 2023 2024 2023 Net Income Attributable to Blue Owl Capital Inc. $ 29,805 $ 15,109 $ 88,841 $ 36,285 Fee-Related Earnings (1) $ 326,862 $ 247,829 $ 913,035 $ 718,325 Distributable Earnings (1) $ 301,007 $ 229,523 $ 814,071 $ 665,553 (1) For the specific components and calculations of these Non-GAAP measures, as well as a reconciliation of these measures to the most comparable measure in accordance with GAAP, see “—Non-GAAP Analysis” and “—Non-GAAP Reconciliations.” Please see “—GAAP Results of Operations Analysis” and “—Non-GAAP Analysis” for a detailed discussion of the underlying drivers of our results. Acquisitions On July 1, 2024, we completed the KAM Acquisition (as defined in Note 1 to our Financial Statements). KAM is a boutique investment management firm focused on providing asset management services to the insurance industry. KAM’s capabilities in investment grade credit and real estate strategies supplement Blue Owl’s existing strength in these asset classes and further accelerate our ability to bring differentiated products and strategies to the market for insurance clients. Our acquisition of KAM enhances our ability to serve the insurance market at scale and marks the official launch of Blue Owl Insurance Solutions. Working seamlessly across our investment platforms, Blue Owl Insurance Solutions combines the focused alternatives approach with expanded industry capabilities to now serve insurance clients across a broader range of their needs. See Note 3 to our Financial Statements for additional information. On September 30, 2024, we completed the Atalaya Acquisition (as defined in Note 1 to our Financial Statements). Atalaya focuses primarily on asset-based credit investments across consumer and commercial finance, corporate and real estate assets. The completion of the acquisition of Atalaya’s business represents a significant expansion of Blue Owl’s alternative credit presence. See Note 3 to our Financial Statements for additional information. On October 7, 2024, we announced the IPI Acquisition (as defined in Note 14 to our Financial Statements). The aggregate consideration for the IPI Acquisition will be approximately $1.0 billion. We will fund the IPI Acquisition through a combination of approximately $788.6 million in Common Units and corresponding Class C Shares and approximately $203.8 million in cash, subject to certain closing consideration adjustments. In addition, in connection with the IPI Acquisition, we will enter into a services agreement with ICONIQ (as defined in Note 14 to our Financial Statements) (the “Services Agreement”), pursuant to which ICONIQ will provide certain services, including investment analysis and investor relations services to us or our subsidiaries. Under the terms of the Services Agreement, in 2026 we expect to issue 14,175,000 Incentive Units, subject to future targets. We also expect to issue in 2027 or 2028 a meaningful amount of additional Incentive Units pursuant to the Services Agreement, subject to the achievement of certain future targets. The Incentive Units will be fully vested upon issuance. The IPI Acquisition is expected to close in the fourth quarter of 2024 or first quarter of 2025, subject to certain closing conditions including third party consents. 7 Table of Contents Assets Under Management Blue Owl AUM: $234.6 billion FPAUM: $154.2 billion Credit AUM: $128.4 billion FPAUM: $89.3 billion GP Strategic Capital AUM: $62.0 billion FPAUM: $35.1 billion Real Estate AUM: $44.1 billion FPAUM: $29.8 billion Direct Lending AUM: $91.0 billion FPAUM: $57.5 billion GP Minority Stakes AUM: $58.4 billion FPAUM: $33.6 billion Net Lease AUM: $28.9 billion FPAUM: $16.1 billion Alternative Credit AUM: $10.6 billion FPAUM: $6.0 billion GP Debt Financing AUM: $2.7 billion FPAUM: $1.2 billion Real Estate Credit AUM: $15.2 billion FPAUM: $13.6 billion Investment Grade Credit AUM: $17.3 billion FPAUM: $16.3 billion Professional Sports Minority Stakes AUM: $0.9 billion FPAUM: $0.3 billion Liquid Credit AUM: $8.0 billion FPAUM: $8.0 billion Other AUM: $1.6 billion FPAUM: $1.5 billion All amounts shown as of September 30, 2024, totals may not sum due to rounding. As of September 30, 2024, our AUM was $234.6 billion, which included $154.2 billion of FPAUM. As of September 30, 2024, we have $21.7 billion in AUM not yet paying fees, providing over $260 million of annualized management fees once deployed. See “—Assets Under Management” for additional information, including important information on how we define these metrics. Business Environment Our business is impacted by conditions in the financial markets and economic conditions in the United States, and to a lesser extent, globally. We believe that our management-fee centric business model and base of Permanent Capital contribute to the resiliency of our earnings and the strength of our business growth, particularly during periods of market uncertainty and volatility, as we have seen over the past few years. During the third quarter of 2024, industry M&A and capital markets activity remained moderately constructive, a continuation of the improvement relative to late 2022 and early 2023. Over the past twelve months, 91% of our GAAP and FRE management fees were generated by Permanent Capital and the remainder was predominantly from long-dated capital, with no meaningful pressure to our asset base from redemptions. Fundraising and capital deployment contributed to management fee growth of over 25% over the last twelve months. We ended the third quarter of 2024 with substantial available capital to deploy, reporting approximately $21.7 billion of AUM not yet paying fees. We continued to execute on our strategic M&A plans in the third quarter, closing our acquisitions of Kuvare Asset Management and Atalaya Capital Management, adding over $30 billion to AUM. Subsequent to quarter end, we announced our intention to acquire IPI’s business, reflecting a significant step forward in Blue Owl’s presence in the digital infrastructure ecosystem. Pro-forma for IPI, our AUM exceeds a quarter of a trillion dollars. Together, these businesses further diversify our business and further expand Blue Owl’s strong positioning within the largest transformational shifts happening within financial markets. The third quarter of 2024 was once again a very active quarter for deployment, with $11 billion of originations, as direct lenders continued to play a significant role in new deals, add-ons and refinancings alongside the syndicated market. For Blue Owl, positive net deployment and ongoing capital raising remained key drivers of higher management fees and the credit quality of our portfolio remained strong. 8 Table of Contents We continue to see attractive deployment opportunities for our GP Strategic Capital products, as capital needs across the private alternative asset management sector remain elevated. We raised incremental capital in our GP minority stakes strategy from both the Institutional and Private Wealth channels. During the third quarter, Blue Owl GP Stakes III completed a strip sale of certain assets within the fund, providing liquidity for existing investors while offering a creative way for new investors to access to our pool of leading notable Partner Managers. In Real Estate, we continue to actively deploy capital in our net lease strategy at attractive cap rates behind our four major themes: digital infrastructure, onshoring, healthcare real estate and essential retail. The capital needs in each of these areas remains very significant, and we continue to see strong demand from investors in these products. During the third quarter, we held an early close for our Europe net lease strategy and deployed capital across net lease and real estate credit strategies. We are continuing to closely monitor developments related to the macroeconomic factors that have contributed to market volatility, and to assess the impact of these factors on financial markets and on our business. Our future results may be adversely affected by slowdowns in fundraising activity and the pace of capital deployment, which could result in delayed management fees. It is currently not possible to predict the ultimate effects of these events on the financial markets, overall economy and our Financial Statements. See “ Item 1A. Risk Factors — Risks Related to Macroeconomic Factors ” in our Annual Report. Additionally, we intend to continue pursuing strategic acquisitions and investments to accelerate our growth and broaden our product offerings. Our acquisition strategy is centered around driving additional scale or expanding capabilities that complement or augment our existing products. Assets Under Management We present information regarding our AUM, FPAUM and various other related metrics throughout this MD&A to provide context around our fee generating revenues results, as well as indicators of the potential for future earnings from existing and new products. Our calculations of AUM and FPAUM may differ from the calculation methodologies of other asset managers, and as a result these measures may not be comparable to similar measures presented by other asset managers. In addition, our calculation of AUM includes amounts that are fee exempt (i.e., not subject to fees). As of September 30, 2024, assets under management related to us, our executives and other employees totaled approximately $4.4 billion (including $1.8 billion related to accrued carried interest). A portion of these assets under management are not charged fees. Composition of Assets Under Management Our AUM consists of FPAUM, AUM not yet paying fees, fee-exempt AUM and net appreciation and leverage in products on which fees are based on commitments or investment cost. AUM not yet paying fees generally relates to unfunded capital commitments (to the extent such commitments are not already subject to fees), undeployed debt (to the extent we earn fees based on total asset values or investment cost, inclusive of assets purchased using debt) and AUM that is subject to a temporary fee holiday. Fee-exempt AUM represents certain investments by us, our employees, other related parties and third parties, as well as certain co-investment vehicles on which we never earn fees. 9 Table of Contents Management uses AUM not yet paying fees as an indicator of management fees that will be coming online as we deploy existing assets in products that charge fees based on deployed and not uncalled capital, as well as AUM that is currently subject to a fee holiday that will expire in the future. AUM not yet paying fees could provide over $260 million of additional annualized management fees once deployed or upon the expiration of the relevant fee holidays. All amounts shown as of September 30, 2024, totals may not sum due to rounding. Permanency and Duration of Assets Under Management Our capital base is heavily weighted toward Permanent Capital. We view the permanency and duration of the products that we manage as a differentiator in our industry and as a means of measuring the stability of our future revenues stream. The chart below presents the composition of our management fees by remaining product duration. Changes in these relative percentages will occur over time as the mix of products we offer changes. For example, our Real Estate products have a higher concentration in what we refer to as “long-dated” funds, or funds in which the contractual remaining life is five years or more, which in isolation may cause our percentage of management fees from Permanent Capital to decline. 10 Table of Contents Changes in AUM Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 (dollars in millions) Credit GP Strategic Capital Real Estate Total Credit GP Strategic Capital Real Estate Total Beginning Balance $ 95,104 $ 57,844 $ 39,208 $ 192,156 $ 73,793 $ 50,934 $ 24,826 $ 149,553 Acquisitions 27,803 — 4,324 32,127 1,645 — — 1,645 New capital raised 3,133 3,482 1,271 7,886 2,148 98 680 2,926 Change in debt 2,973 500 (39) 3,434 1,954 — — 1,954 Distributions (1,758) (660) (739) (3,157) (926) (47) (184) (1,157) Change in value / other 1,188 861 88 2,137 913 413 619 1,945 Ending Balance $ 128,443 $ 62,027 $ 44,113 $ 234,583 $ 79,527 $ 51,398 $ 25,941 $ 156,866 Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 (dollars in millions) Credit GP Strategic Capital Real Estate Total Credit GP Strategic Capital Real Estate Total Beginning Balance $ 84,632 $ 54,199 $ 26,856 $ 165,687 $ 68,607 $ 48,510 $ 21,085 $ 138,202 Acquisitions 27,803 — 15,174 42,977 1,645 — — 1,645 New capital raised 9,596 5,432 2,979 18,007 5,617 602 3,369 9,588 Change in debt 8,211 500 696 9,407 3,609 — 696 4,305 Distributions (4,676) (1,389) (1,207) (7,272) (2,531) (1,158) (600) (4,289) Change in value / other 2,877 3,285 (385) 5,777 2,580 3,444 1,391 7,415 Ending Balance $ 128,443 $ 62,027 $ 44,113 $ 234,583 $ 79,527 $ 51,398 $ 25,941 $ 156,866 Credit. The increase in AUM for the nine months ended September 30, 2024 was driven by the following: • $27.8 billion driven by the products added in connection with the KAM Acquisition and the Atalaya Acquisition. • $8.2 billion new capital raised in direct lending, primarily driven by continued private wealth fundraising in OCIC and OTIC, as well as additional fundraise in other recently launched products. • $8.2 billion of additional net debt commitments, primarily in direct lending as we continue to opportunistically manage leverage in our BDCs. • $4.7 billion offsetting decrease in distributions, which primarily relates to distributions paid from our BDCs and CLOs. Redemptions and repurchases from these products were not material. • $2.9 billion of overall appreciation across the platform, primarily in direct lending. GP Strategic Capital. The increase in AUM for the nine months ended September 30, 2024 was driven by new capital raised of $5.4 billion, primarily in our sixth flagship minority equity stakes product and our new mid-cap minority equity stakes product, and overall appreciation primarily in our GP minority stakes strategy of $3.3 billion. Real Estate. The increase in AUM for the nine months ended September 30, 2024 was driven by $15.2 billion of products added in connection with the Prima Acquisition (as defined in Note 1 to our Financial Statements) and the KAM Acquisition, as well as new capital raised of $3.0 billion across various products, primarily Blue Owl Real Estate Net Lease Trust (“ORENT”), our real estate investment trust, and Blue Owl Real Estate Fund VI (“OREF VI”), our triple net-lease drawdown product. 11 Table of Contents Changes in FPAUM Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 (dollars in millions) Credit GP Strategic Capital Real Estate Total Credit GP Strategic Capital Real Estate Total Beginning Balance $ 63,736 $ 32,788 $ 25,025 $ 121,549 $ 52,077 $ 28,462 $ 13,084 $ 93,623 Acquisitions 22,841 — 4,053 26,894 1,645 — — 1,645 New capital raised / deployed 3,500 2,420 1,425 7,345 603 161 997 1,761 Fee basis step down — — — — — (1) — (1) Distributions (1,621) (98) (824) (2,543) (860) — (179) (1,039) Change in value / other 845 6 86 937 835 — 197 1,032 Ending Balance $ 89,301 $ 35,116 $ 29,765 $ 154,182 $ 54,300 $ 28,622 $ 14,099 $ 97,021 Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 (dollars in millions) Credit GP Strategic Capital Real Estate Total Credit GP Strategic Capital Real Estate Total Beginning Balance $ 57,074 $ 31,075 $ 14,547 $ 102,696 $ 49,041 $ 28,772 $ 10,997 $ 88,810 Acquisitions 22,841 — 13,483 36,324 1,645 — — 1,645 New capital raised / deployed 11,350 4,133 3,283 18,766 3,625 387 3,354 7,366 Fee basis step down — — — — — (334) — (334) Distributions (4,325) (98) (1,292) (5,715) (2,357) (203) (471) (3,031) Change in value / other 2,361 6 (256) 2,111 2,346 — 219 2,565 Ending Balance $ 89,301 $ 35,116 $ 29,765 $ 154,182 $ 54,300 $ 28,622 $ 14,099 $ 97,021 Credit. The increase in FPAUM for the nine months ended September 30, 2024 was driven by the following: • $22.8 billion driven by the products added in connection with the KAM Acquisition and the Atalaya Acquisition. • $10.3 billion new capital raised in direct lending, primarily driven by continued private wealth fundraising in OCIC, OTIC. • $4.3 billion offsetting decrease in distributions, which primarily relate to dividends paid from our BDCs and CLOs. Redemptions and repurchases from these products were not material. • $2.4 billion of overall appreciation across the platform, primarily in direct lending. GP Strategic Capital. The increase in FPAUM for the nine months ended September 30, 2024 was driven by new capital raised of $4.1 billion, primarily in our sixth flagship minority equity stakes product and our new mid-cap minority equity stakes product. Real Estate. The increase in FPAUM for the nine months ended September 30, 2024 was driven by the $13.5 billion of products added in connection with the Prima Acquisition and the KAM Acquisition, as well as capital raised and deployed of $3.3 billion, primarily in ORENT and OREF VI. 12 Table of Contents Product Performance Product performance for certain of our products is included throughout this discussion with analysis to facilitate an understanding of our results of operations for the periods presented. The performance information of our products reflected is not indicative of Blue Owl’s performance. An investment in Blue Owl is not an investment in any of our products. Past performance is not indicative of future results. As with any investment, there is always the potential for gains as well as the possibility of losses. There can be no assurance that any of these products or our other existing and future products will achieve similar returns. Multiple of invested capital (“MoIC”) and internal rate of return (“IRR”) data has not been presented for products that have launched within the last two years as such information is generally not meaningful (“NM”). Credit MoIC IRR (dollars in millions) Year of Inception AUM Capital Raised (4) Invested Capital (5) Realized Proceeds (6) Unrealized Value (7) Total Value Gross (8) Net (9) Gross (10) Net (11) Direct Lending Blue Owl Capital Corporation (1) 2016 $ 15,071 $ 5,977 $ 5,977 $ 3,369 $ 5,994 $ 9,363 1.84x 1.59x 13.7 % 9.8 % Blue Owl Capital Corporation II (1)(2) 2017 $ 2,756 $ 1,228 $ 1,197 $ 503 $ 1,186 $ 1,689 NM 1.43x NM 7.4 % Blue Owl Capital Corporation III (1) 2020 $ 4,826 $ 1,841 $ 1,841 $ 555 $ 1,919 $ 2,474 1.43x 1.37x 13.9 % 12.0 % Blue Owl Credit Income Corp. (1)(2) 2020 $ 25,257 $ 12,436 $ 11,551 $ 1,428 $ 11,847 $ 13,275 NM 1.17x NM 11.2 % Blue Owl Technology Finance Corp. (1) 2018 $ 7,354 $ 3,350 $ 3,350 $ 890 $ 3,521 $ 4,411 1.45x 1.36x 11.8 % 9.1 % Blue Owl Technology Finance Corp. II (1) 2021 $ 7,890 $ 4,171 $ 2,292 $ 237 $ 2,408 $ 2,645 1.22x 1.16x 16.5 % 11.7 % Blue Owl Technology Income Corp. (1)(2) 2022 $ 5,681 $ 2,797 $ 2,578 $ 289 $ 2,641 $ 2,930 NM 1.15x NM 11.6 % Blue Owl First Lien Fund Levered (3) 2018 $ 1,636 $ 986 $ 912 $ 570 $ 677 $ 1,247 1.45x 1.38x 10.7 % 8.8 % Blue Owl First Lien Fund Unlevered (3) 2019 $ 84 $ 175 $ 156 $ 106 $ 84 $ 190 1.27x 1.22x 6.6 % 5.3 % (1) Information presented in the AUM through Total Value columns for these vehicles is presented on a quarter lag due to these vehicles being public filers with the SEC and not yet filing their quarterly information as of our filing date. Additional information related to these vehicles can be found in their filings with the SEC, which are not part of this report. (2) For the purposes of calculating Gross IRR, the expense support provided to the fund would be impacted when assuming a performance excluding management fees (including Part I Fees) and Part II Fees, and therefore is not meaningful for OBDC II, OCIC and OTIC. (3) Blue Owl First Lien Fund is comprised of three feeder funds: Onshore Levered, Offshore Levered and Insurance Unlevered. The gross and net MoIC and IRR presented in the chart are for Onshore Levered and Insurance Unlevered as those are the largest of the levered and unlevered feeder funds. The gross and net MoIC for the Offshore Levered feeder fund is 1.43x and 1.32x, respectively. The gross and net IRR for the Offshore Levered feeder is 10.1% and 7.4%, respectively. All other values for Blue Owl First Lien Fund Levered are for Onshore Levered and Offshore Levered combined. AUM is presented as the aggregate of the three Blue Owl First Lien Fund feeders. Blue Owl First Lien Fund Unlevered Investor equity and note commitments are both treated as capital for all values. (4) Includes reinvested dividends and share repurchases, if applicable. (5) Invested capital includes capital calls, reinvested dividends and periodic investor closes, as applicable. (6) Realized proceeds represent the sum of all cash distributions to investors. (7) Unrealized value represents the product’s NAV. There can be no assurance that unrealized values will be realized at the valuations indicated. (8) Gross MoIC is calculated by adding total realized proceeds and unrealized values of a product’s investments and dividing by the total amount of invested capital. Gross MoIC is calculated before giving effect to management fees (including Part I Fees) and Part II Fees, as applicable. (9) Net MoIC measures the aggregate value generated by a product’s investments in absolute terms. Net MoIC is calculated by adding total realized proceeds and unrealized values of a product’s investments and dividing by the total amount of invested capital. Net MoIC is calculated after giving effect to management fees (including Part I Fees) and Part II Fees, as applicable, and all other expenses. (10) Gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the product and the product’s residual value at the end of the measurement period. Gross IRRs are calculated before giving effect to management fees (including Part I Fees) and Part II Fees, as applicable. (11) Net IRRs are calculated consistent with gross IRRs, but after giving effect to management fees (including Part I Fees) and Part II Fees, as applicable, and all other expenses. An individual investor’s IRR may differ from the reported IRR based on the timing of capital transactions. 13 Table of Contents GP Strategic Capital MoIC IRR (dollars in millions) Year of Inception AUM Capital Raised Invested Capital (2) Realized Proceeds (3) Unrealized Value (4) Total Value Gross (5) Net (6) Gross (7) Net (8) GP Minority Stakes (1) Blue Owl GP Stakes I 2011 $ 785 $ 1,284 $ 1,266 $ 773 $ 585 $ 1,358 1.22x 1.07x 3.6 % 1.1 % Blue Owl GP Stakes II 2014 $ 2,987 $ 2,153 $ 1,961 $ 963 $ 2,230 $ 3,193 1.94x 1.63x 13.8 % 9.4 % Blue Owl GP Stakes III 2015 $ 9,878 $ 5,318 $ 3,275 $ 3,447 $ 5,545 $ 8,992 3.36x 2.75x 29.4 % 22.9 % Blue Owl GP Stakes IV 2018 $ 15,926 $ 9,041 $ 6,533 $ 4,884 $ 8,129 $ 13,013 2.40x 1.99x 59.4 % 38.8 % Blue Owl GP Stakes V 2020 $ 13,845 $ 12,852 $ 5,917 $ 2,196 $ 4,593 $ 6,789 1.30x 1.15x 31.7 % 14.5 % (1) Information presented in the Invested Capital through IRR columns for these vehicles is presented on a quarter lag and is exclusive of investments made by the related carried interest vehicles of the respective products. (2) Invested capital includes capital calls. (3) Realized proceeds represent the sum of all cash distributions to investors. (4) Unrealized value represents the product’s NAV. There can be no assurance that unrealized values will be realized at the valuations indicated. (5) Gross MoIC is calculated by adding total realized proceeds and unrealized values of a product’s investments and dividing by the total amount of invested capital. Gross MoIC is calculated before giving effect to management fees and carried interest, as applicable. (6) Net MoIC measures the aggregate value generated by a product’s investments in absolute terms. Net MoIC is calculated by adding total realized proceeds and unrealized values of a product’s investments and dividing by the total amount of invested capital. Net MoIC is calculated after giving effect to management fees and carried interest, as applicable, and all other expenses. (7) Gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the product and the product’s residual value at the end of the measurement period. Gross IRRs are calculated before giving effect to management fees and carried interest, as applicable. (8) Net IRR is an annualized since inception net internal rate of return of cash flows to and from the product and the product’s residual value at the end of the measurement period. Net IRRs reflect returns to all investors. Net IRRs are calculated after giving effect to management fees and carried interest, as applicable, and all other expenses. An individual investor’s IRR may differ from the reported IRR based on the timing of capital transactions. Real Estate MoIC IRR (dollars in millions) Year of Inception AUM Capital Raised Invested Capital (3) Realized Proceeds (4) Unrealized Value (5) Total Value Gross (6) Net (7) Gross (8) Net (9) Net Lease Blue Owl Real Estate Fund IV (1) 2017 $ 1,066 $ 1,250 $ 1,260 $ 1,493 $ 473 $ 1,966 1.73x 1.56x 22.7 % 18.8 % Blue Owl Real Estate Net Lease Property Fund 2019 $ 6,351 $ 3,587 $ 4,029 $ 1,457 $ 3,463 $ 4,920 1.25x 1.22x 9.8 % 8.7 % Blue Owl Real Estate Fund V (1) 2020 $ 4,163 $ 2,500 $ 2,500 $ 892 $ 2,504 $ 3,396 1.46x 1.36x 23.4 % 18.7 % Blue Owl Real Estate Net Lease Trust (2) 2022 $ 5,858 $ 3,732 $ 3,738 $ 143 $ 3,506 $ 3,649 NM NM NM NM Blue Owl Real Estate Fund VI (1) 2023 $ 6,625 $ 5,163 $ 818 $ 26 $ 791 $ 817 NM NM NM NM (1) Information presented in the Invested Capital through IRR columns for these vehicles is presented on a quarter lag. (2) Information presented in the AUM through Total Value columns for this vehicle is presented on a quarter lag due to the vehicle being a public filer with the SEC and not yet filing its quarterly information as of our filing date. Additional information related to this vehicle can be found in its filings with the SEC, which are not part of this report. (3) Invested capital includes investments by the general partner, capital calls, dividends reinvested, recallable capital which has been reinvested and periodic investor closes, as applicable. (4) Realized proceeds represent the sum of all cash distributions to all investors. (5) Unrealized value represents the fund’s NAV. There can be no assurance that unrealized values will be realized at the valuations indicated. (6) Gross MoIC is calculated by adding total realized proceeds and unrealized values of a product’s investments and dividing by the total amount of invested capital. Gross MoIC is calculated before giving effect to management fees and carried interest, as applicable. (7) Net MoIC measures the aggregate value generated by a product’s investments in absolute terms. Net MoIC is calculated by adding total realized proceeds and unrealized values of a product’s investments and dividing by the total amount of invested capital. Net MoIC is calculated after giving effect to management fees and carried interest, as applicable, and all other expenses. (8) Gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the product and the product’s residual value at the end of the measurement period. Gross IRRs are calculated before giving effect to management fees and carried interest, as applicable. (9) Net IRR is an annualized since inception net internal rate of return of cash flows to and from the product and the product’s residual value at the end of the measurement period. Net IRRs reflect returns to all investors. Net IRRs are calculated after giving effect to management fees and carried interest, as applicable, and all other expenses. An individual investor’s IRR may differ from the reported IRR based on the timing of capital transactions. 14 Table of Contents GAAP Results of Operations Analysis Three Months Ended September 30, 2024, Compared to the Three Months Ended September 30, 2023 Three Months Ended September 30, (dollars in thousands) 2024 2023 $ Change Revenues Management fees, net (includes Part I Fees of $140,676 and $97,621) $ 523,309 $ 386,009 $ 137,300 Administrative, transaction and other fees 77,289 43,641 33,648 Performance revenues 280 — 280 Total Revenues, Net 600,878 429,650 171,228 Expenses Compensation and benefits 271,107 213,976 57,131 Amortization of intangible assets 68,674 56,724 11,950 General, administrative and other expenses 121,329 65,485 55,844 Total Expenses 461,110 336,185 124,925 Other Loss Net gains (losses) on investments 3,748 (1,227) 4,975 Interest and dividend income 12,213 5,686 6,527 Interest expense (34,102) (19,672) (14,430) Change in TRA liability 6,849 35 6,814 Change in warrant liability (6,300) (2,050) (4,250) Change in earnout liability (10,056) (2,074) (7,982) Total Other Loss (27,648) (19,302) (8,346) Income Before Income Taxes 112,120 74,163 37,957 Income tax expense 12,796 10,652 2,144 Consolidated Net Income 99,324 63,511 35,813 Net income attributable to noncontrolling interests (69,519) (48,402) (21,117) Net Income Attributable to Blue Owl Capital Inc. $ 29,805 $ 15,109 $ 14,696 Revenues, Net Management Fees . The increase in management fees was primarily due to the drivers below. See Note 9 to our Financial Statements for additional details on our GAAP management fees by strategy. • Credit increased $99.3 million, including an increase in Part I Fees of $42.5 million, due to continued fundraising and deployment of capital primarily within new and existing direct lending products, as well as management fees from products relating to the KAM Acquisition of $13.3 million. • GP Strategic Capital increased $21.3 million, primarily driven by fundraising in our sixth flagship minority equity stakes product. • Real Estate increased $16.7 million, attributable to continued fundraising and deployment of capital within new and existing Real Estate products, primarily ORENT and OREF VI, as well as management fees from products relating to the Prima Acquisition of $4.9 million and the KAM Acquisition of $3.5 million. Administrative, Transaction and Other Fees . The increase in administrative, transaction and other fees was driven primarily by the following: • $15.5 million increase in fee income earned for services provided to portfolio companies, reflecting an increase in volume of transactions on which we earn such fees. • $9.4 million increase in dealer manager revenues, due primarily to growth in the distribution of OCIC and ORENT. • $8.4 million increase in administrative fees, driven by a higher level of reimbursable compensation expenses due to the growth of our products and business overall. 15 Table of Contents Expenses Compensation and Benefits. Compensation and benefits expenses increased primarily due to the following: • $61.1 million increase, driven by higher compensation to existing employees, as well as increased headcount due to our continued growth. • $2.6 million increase in equity-based compensation, primarily due to a $22.7 million increase in our recurring annual equity grants driven in part by additional grants made during the fourth quarter of 2023 in connection with year-end bonus compensation, partially offset by a $19.1 million decrease in acquisition-related equity-based compensation primarily due to the settlement of the Second Oak Street Earnout (as described in Note 3 to the financial statements in our Annual Report) in January 2024. • $6.6 million offsetting decrease in acquisition-related cash compensation, primarily due to the settlement of the Second Oak Street Earnout in January 2024. Amortization of Intangible Assets. Amortization of intangible assets increased $12.0 million reflecting the increase in intangible assets as a result of the KAM Acquisition and Prima Acquisition. General, Administrative and Other Expenses . General, administrative and other expenses increased primarily due to the following: • $35.2 million increase in Transaction Expenses, primarily due to the KAM Acquisition and Atalaya Acquisition. • $10.0 million increase in distribution costs, primarily related to our Credit and Real Estate Products. • $9.6 million increase in reimbursed expenses, primarily related to dealer manager expenses, due to growth in our products and business overall. • The remaining net change was across various categories, primarily in office-related and other expenses driven by our continued growth. Other Loss Interest and Dividend Income. The increase in interest and dividend income was driven by dividend income from the preferred equity investment made in April 2024 in Kuvare UK Holdings. Interest Expense . The increase in interest expense was driven by higher average debt outstanding due to the issuance of the 6.250% Senior Notes due 2034 (the “2034 Notes”) during the second quarter of 2024. Change in Earnout Liability. The change in the earnout liability for the current year period was driven by the change in the fair value of the KAM Earnouts (as described in Note 3 to our Financial Statements). Income Tax Expense The change in income tax expense was due to higher pre-tax income in the current period as a result of the drivers discussed above. Please see Note 11 to our Financial Statements for a discussion of the significant tax differences that impacted our effective tax rate. Net Income Attributable To Noncontrolling Interests Net income attributable to noncontrolling interests primarily represents the allocation to Common Units (as defined in Note 1 to our Financial Statements) of their pro rata share of the Blue Owl Operating Group’s post-Business Combination net income due to the drivers discussed above. The Common Units represent approximately 61% and 67% weighted average economic interest in the Blue Owl Operating Group for the three months ended September 30, 2024 and September 30, 2023, respectively. The decrease in the Common Units’ interest in the Blue Owl Operating Group was primarily due to exchanges of Common Units for Class A Shares, as well as Class A Shares issued in connection with the Prima and KAM Acquisitions. 16 Table of Contents Nine Months Ended September 30, 2024, Compared to the Nine Months Ended September 30, 2023 Nine Months Ended September 30, (dollars in thousands) 2024 2023 $ Change Revenues Management fees, net (includes Part I Fees of $390,279 and $275,423) $ 1,436,961 $ 1,116,663 $ 320,298 Administrative, transaction and other fees 224,592 120,404 104,188 Performance revenues 2,513 506 2,007 Total Revenues, Net 1,664,066 1,237,573 426,493 Expenses Compensation and benefits 723,001 619,875 103,126 Amortization of intangible assets 181,603 243,532 (61,929) General, administrative and other expenses 291,535 173,101 118,434 Total Expenses 1,196,139 1,036,508 159,631 Other Loss Net gains on investments 9,545 2,415 7,130 Interest and dividend income 30,755 16,081 14,674 Interest expense (89,301) (57,208) (32,093) Change in TRA liability 4,890 8,187 (3,297) Change in warrant liability (17,950) (3,550) (14,400) Change in earnout liability (10,711) (4,912) (5,799) Total Other Loss (72,772) (38,987) (33,785) Income Before Income Taxes 395,155 162,078 233,077 Income tax expense 45,764 22,494 23,270 Consolidated Net Income 349,391 139,584 209,807 Net income attributable to noncontrolling interests (260,550) (103,299) (157,251) Net Income Attributable to Blue Owl Capital Inc. $ 88,841 $ 36,285 $ 52,556 Revenues, Net Management Fees . The increase in management fees was primarily due to the drivers below. See Note 9 to our Financial Statements for additional details on our GAAP management fees by strategy. • Credit increased $233.7 million, including an increase in Part I Fees of $112.0 million, due to continued fundraising and deployment of capital primarily within new and existing Credit products. • GP Strategic Capital increased $42.7 million, primarily driven by fundraising in our sixth flagship minority equity stakes product. • Real Estate increased $43.9 million, attributable to continued fundraising and deployment of capital within new and existing Real Estate products, primarily OREF VI and ORENT, as well as management fees from products relating to the Prima Acquisition of $6.3 million and KAM Acquisition of $3.5 million. Administrative, Transaction and Other Fees . The increase in administrative, transaction and other fees was driven primarily by the following: • $54.4 million increase in fee income earned for services provided to portfolio companies, reflecting an increase in volume of transactions on which we earn such fees. • $27.2 million increase in dealer manager revenues, due primarily to growth in the distribution of OCIC and ORENT. • $22.1 million increase in administrative fees, driven by a higher level of reimbursable compensation expenses due to growth of our products and business overall. 17 Table of Contents Expenses Compensation and Benefits. Compensation and benefits expenses increased, primarily due to the following: • $138.1 million increase, driven by higher compensation to existing employees, as well as increased headcount due to our continued growth. • $15.8 million offsetting decrease in equity-based compensation, primarily reflecting a $56.4 million decrease in acquisition-related equity-based compensation primarily due to the settlement of the Second Oak Street Earnout (as described in Note 3 to the financial statements in our Annual Report) in January 2024, partially offset by an $41.2 million increase in our other recurring annual equity grants driven by the additional grants made during the fourth quarter of 2023 in connection with year-end bonus compensation. • $19.2 million offsetting decrease in acquisition-related cash compensation, primarily due to the settlement of the Second Oak Street Earnout in January 2024. Amortization of Intangible Assets. Amortization of intangible assets decreased $61.9 million, primarily due to increased trademarks amortization taken in the prior year period as a result of corporate actions that resulted in a shorter useful life. General, Administrative and Other Expenses . General, administrative and other expenses increased, primarily driven by the following: • $51.2 million increase in Transaction Expenses, primarily due to the KAM Acquisition, Atalaya Acquisition and Prima Acquisition. • $34.2 million increase in distribution costs, primarily related to our Credit and Real Estate products. • $28.0 million increase in reimbursed expenses, primarily related to dealer manager expenses, due to growth in our products and business overall. • The remaining net change was across various categories, primarily in office-related and other expenses driven by our continued growth. Other Loss Interest and Dividend Income. The increase in interest and dividend income was driven by dividend income from the preferred equity investment made in April 2024 in Kuvare UK Holdings. Interest Expense . The increase in interest expense was driven by higher average debt outstanding, reflecting the issuance of the 2034 Notes during the second quarter of 2024. Change in Warrant Liability. The change in the warrant liability for the current and prior period was driven by the increase in the price of our Class A Shares. Change in Earnout Liability. The change in the earnout liability for the current year period was driven by the change in the fair value of the KAM Earnouts (as described in Note 3 to our Financial Statements). Income Tax Expense The increase in income tax expense was due to higher pre-tax income in the current period as a result of the drivers discussed above. Please see Note 11 to our Financial Statements for a discussion of the significant tax differences that impacted our effective tax rate. Net Income Attributable To Noncontrolling Interests Net income attributable to noncontrolling interests primarily represents the allocation to Common Units (as defined in Note 1 to our Financial Statements) of their pro rata share of the Blue Owl Operating Group’s net income or loss due to the drivers discussed above. The Common Units represented an approximately 64% and 68% weighted average economic interest in the Blue Owl Operating Group for the nine months ended September 30, 2024 and September 30, 2023, respectively. The decrease in the Common Units’ interest in the Blue Owl Operating Group was primarily due to exchanges of Common Units for Class A Shares, as well as Class A Shares issued in connection with the Prima and KAM Acquisitions. 18 Table of Contents Non-GAAP Analysis In addition to presenting our results in accordance with GAAP, we present certain other financial measures that are not presented in accordance with GAAP. Management uses these measures in budgeting and to assess the operating results of our business, and we believe that this information enhances the ability of stockholders to analyze our performance from period to period. These non-GAAP financial measures supplement and should be considered in addition to and not in lieu of our GAAP results, and such measures should not be considered as indicative of our liquidity. Our non-GAAP measures may not be comparable to other similarly titled measures used by other companies. Please see “—Non-GAAP Reconciliations” for reconciliations of these measures to the most comparable measures prepared in accordance with GAAP. Fee-Related Earnings and Related Components Fee-Related Earnings is a supplemental non-GAAP measure of our core operating performance used to make operating decisions and assess our core operating results, focusing on whether our core revenue streams, primarily consisting of management fees, are sufficient to cover our core operating expenses. FRE performance revenues refers to the GAAP performance revenues that are measured and eligible to be received on a recurring basis and not dependent on realization events from the underlying investments. Management also reviews the components that comprise Fee-Related Earnings (i.e., FRE revenues and FRE expenses) on the same basis used to calculate Fee-Related Earnings, and such components are also non-GAAP measures and have been identified with the prefix “FRE” in the tables and discussion below. Fee-Related Earnings exclude various items that are required for the presentation of our results under GAAP, including the following: noncontrolling interests in the Blue Owl Operating Partnerships; equity-based compensation expense; compensation expenses related to capital contributions in certain subsidiary holding companies that are in-turn paid as compensation to certain employees, as such contributions are not included in Fee-Related Earnings or Distributable Earnings; amortization of acquisition-related earnouts; amortization of intangible assets; “Transaction Expenses” as defined below; expense support payments and subsequent reimbursements; net gains (losses) on investments; net losses on retirement of debt; interest and dividend income; interest expense; changes in TRA, warrant and earnout liabilities; and taxes. Transaction Expenses are expenses incurred in connection with the Business Combination and other acquisitions and strategic transactions, including subsequent adjustments related to such transactions, that were not eligible to be netted against consideration or recognized as acquired assets and assumed liabilities in the relevant transactions. FRE revenues and FRE expenses also exclude DE performance revenues and related compensation expense, as well as revenues and expenses related to amounts reimbursed by our products, including administrative fees and dealer manager reallowed commissions, that have no impact to our bottom line operating results, and therefore FRE revenues and FRE expenses do not represent our total revenues or total expenses in any given period. DE performance revenues refers to GAAP performance revenues that are not FRE performance revenues. Distributable Earnings Distributable Earnings is a supplemental non-GAAP measure of operating performance that equals Fee-Related Earnings plus or minus, as relevant, DE performance revenues and related compensation, interest and dividend income, interest expense, as well as amounts payable for taxes and payments made pursuant to the TRA. Amounts payable for taxes presents the current income taxes payable, excluding the impact of tax contingency-related accrued expenses or benefits, as such amounts are included when paid or received, related to the respective period’s earnings, assuming that all Distributable Earnings were allocated to the Registrant, which would occur following the exchange of all Blue Owl Operating Group Units for Class A Shares. Current income taxes payable and payments made pursuant to the TRA reflect the benefit of tax deductions that are excluded when calculating Distributable Earnings (e.g., equity-based compensation expenses, Transaction Expenses, tax goodwill, etc.). If these tax deductions were to be excluded from amounts payable for taxes, Distributable Earnings would be lower and our effective tax rate would appear to be higher, even though a lower amount of income taxes would have been paid or payable for a period’s earnings. We make these adjustments when calculating Distributable Earnings to more accurately reflect the net realized earnings that are expected to be or become available for distribution or reinvestment into our business. Management believes that Distributable Earnings can be useful as a supplemental performance measure to our GAAP results assessing the amount of earnings available for distribution. Margins GAAP Margin is calculated as income before income taxes, divided by total revenues. FRE Margin is a supplemental non-GAAP measure that equals Fee-Related Earnings before net (income) loss allocated to noncontrolling interests, divided by FRE revenues. Management believes that FRE Margin can be useful as a supplemental performance measure used to make operating decisions and assess our core operating results. 19 Table of Contents Fee-Related Earnings and Distributable Earnings Summary Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2024 2023 2024 2023 FRE revenues $ 568,327 $ 412,771 $ 1,574,881 $ 1,191,650 FRE expenses 231,104 161,840 636,016 468,202 Net income allocated to noncontrolling interests included in Fee-Related Earnings (10,361) (3,102) (25,830) (5,123) Fee-Related Earnings $ 326,862 $ 247,829 $ 913,035 $ 718,325 Distributable Earnings $ 301,007 $ 229,523 $ 814,071 $ 665,553 Fee-Related Earnings and Distributable Earnings for the three months ended September 30, 2024 increased as a result of higher FRE revenues in Credit, GP Strategic Capital and Real Estate, partially offset by higher FRE expenses, as further discussed below. Fee-Related Earnings and Distributable Earnings for the nine months ended September 30, 2024 increased as a result of higher FRE revenues in Credit, GP Strategic Capital and Real Estate, partially offset by higher FRE expenses, as further discussed below. FRE Revenues Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2024 2023 2024 2023 Credit Platform Direct lending $ 296,974 $ 219,297 $ 830,296 $ 630,373 Alternative credit 671 — 671 — Investment grade credit 13,260 — 13,260 — Liquid credit 7,750 6,590 21,285 20,244 Other 6,555 — 18,809 — Management Fees, Net 325,210 225,887 884,321 650,617 Administrative, transaction and other fees 31,192 14,722 97,170 40,755 FRE performance revenues 280 — 643 — FRE Revenues - Credit Platform 356,682 240,609 982,134 691,372 GP Strategic Capital Platform GP minority stakes 152,633 132,498 431,908 393,218 GP debt financing 6,120 4,613 17,199 11,990 Professional sports minority stakes 757 683 2,721 1,650 Management Fees, Net 159,510 137,794 451,828 406,858 Administrative, transaction and other fees 1,974 1,321 5,224 3,830 FRE Revenues - GP Strategic Capital Platform 161,484 139,115 457,052 410,688 Real Estate Platform Net lease 41,246 32,987 123,433 89,386 Real estate credit 8,459 — 9,815 — Management Fees, Net 49,705 32,987 133,248 89,386 FRE performance revenues — — 1,870 — Administrative, transaction and other fees 456 60 577 204 FRE Revenues - Real Estate Platform 50,161 33,047 135,695 89,590 Total FRE Revenues $ 568,327 $ 412,771 $ 1,574,881 $ 1,191,650 20 Table of Contents FRE Management Fees . For the three months ended September 30, 2024, the increase in FRE management fees was primarily driven by the following: • Credit FRE management fees increased $99.3 million, including an increase in Part I Fees of $42.5 million, due to continued fundraising and deployment of capital primarily within new and existing direct lending products, as well as management fees from products relating to the KAM Acquisition of $13.3 million. • GP Strategic Capital FRE management fees increased $21.7 million, primarily driven by fundraising in our sixth flagship minority equity stakes product. • Real Estate FRE management fees increased $16.7 million, attributable to continued fundraising and deployment of capital within new and existing Real Estate products, primarily ORENT and OREF VI, as well as management fees from products relating to the Prima Acquisition of $4.9 million and the KAM Acquisition of $3.5 million. FRE Management Fees . For the nine months ended September 30, 2024, the increase in FRE management fees was primarily driven by the following: • Credit FRE management fees increased $233.7 million, including an increase in Part I Fees of $112.0 million, due to continued fundraising and deployment of capital primarily within new and existing Credit products. • GP Strategic Capital FRE management fees increased $45.0 million, primarily driven by fundraising in our sixth flagship minority equity stakes product. • Real Estate FRE management fees increased $43.9 million, attributable to continued fundraising and deployment of capital within new and existing Real Estate products, primarily OREF VI and ORENT, as well as management fees from products relating to the Prima Acquisition of $6.3 million and KAM Acquisition of $3.5 million. FRE Administrative, Transaction and Other Fees . For the three and nine months ended September 30, 2024, the increase in FRE administrative, transaction and other fees was driven primarily by an increase of $15.5 million and $54.4 million, respectively, in fee income earned for services provided to portfolio companies, reflecting an increase in volume of transactions on which we earn such fees. Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2024 2023 2024 2023 FRE compensation and benefits $ 171,916 $ 116,197 $ 458,784 $ 335,418 FRE general, administrative and other expenses 59,188 45,643 177,232 132,784 Total FRE Expenses $ 231,104 $ 161,840 $ 636,016 $ 468,202 FRE Compensation and Benefits. For the three and nine months ended September 30, 2024, FRE compensation and benefits expenses increased, driven by higher compensation to existing employees, as well as increased headcount due to our continued growth. FRE General, Administrative and Other Expenses . For the three months ended September 30, 2024, FRE general, administrative and other expenses increased, driven by the following: • $10.4 million increase primarily in office-related and other expenses due to increased headcount and our continued growth. • The remaining net change was across various categories, driven by our continued growth. FRE General, Administrative and Other Expenses . For the nine months ended September 30, 2024, FRE general, administrative and other expenses increased, driven by the following: • $28.3 million increase primarily in office-related and other expenses due to increased headcount and our continued growth. • $7.1 million increase in occupancy costs, driven by additional leased space to accommodate our continued growth. • $6.7 million increase in distribution costs, primarily related to our Real Estate products. • The remaining net change was across various categories, driven by our continued growth. 21 Table of Contents Non-GAAP Reconciliations The table below presents the reconciliation of the non-GAAP measures presented throughout this MD&A. Please see “—Non-GAAP Analysis” for important information regarding these measures. Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2024 2023 2024 2023 GAAP Net Income Attributable to Class A Shares $ 29,805 $ 15,109 $ 88,841 $ 36,285 Net income attributable to noncontrolling interests 69,519 48,402 260,550 103,299 Income tax expense 12,796 10,652 45,764 22,494 GAAP Income Before Income Taxes 112,120 74,163 395,155 162,078 Strategic Revenue-Share Purchase consideration amortization 11,116 10,659 32,436 30,198 DE performance revenues — — — (506) DE performance revenues compensation — — — 177 Equity-based compensation - other 58,898 36,185 145,203 104,017 Equity-based compensation - acquisition related 2,077 21,192 6,343 62,768 Equity-based compensation - Business Combination grants 16,632 17,597 51,741 52,290 Acquisition-related cash earnout amortization — 6,567 — 19,163 Capital-related compensation 732 1,894 2,326 5,452 Amortization of intangible assets 68,674 56,724 181,603 243,532 Transaction Expenses 43,186 8,000 63,021 11,817 Expense support (3,860) (1,352) (11,735) (6,525) Net gains (losses) on investments (3,748) 1,227 (9,545) (2,415) Change in TRA liability (6,849) (35) (4,890) (8,187) Change in warrant liability 6,300 2,050 17,950 3,550 Change in earnout liability 10,056 2,074 10,711 4,912 Interest and dividend income (12,213) (5,686) (30,755) (16,081) Interest expense 34,102 19,672 89,301 57,208 Fee-Related Earnings Before Noncontrolling Interests 337,223 250,931 938,865 723,448 Net income allocated to noncontrolling interests included in Fee-Related Earnings (10,361) (3,102) (25,830) (5,123) Fee-Related Earnings 326,862 247,829 913,035 718,325 DE performance revenues — — — 506 DE performance revenues compensation — — — (177) Interest and dividend income 12,213 5,686 30,755 16,081 Interest expense (34,102) (19,672) (89,301) (57,208) Taxes and TRA payments (3,966) (4,320) (40,418) (11,974) Distributable Earnings $ 301,007 $ 229,523 $ 814,071 $ 665,553 Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2024 2023 2024 2023 GAAP Revenues $ 600,878 $ 429,650 $ 1,664,066 $ 1,237,573 Strategic Revenue-Share Purchase consideration amortization 11,116 10,659 32,436 30,198 DE performance revenues — — — (506) Reimbursed expenses (43,667) (27,538) (121,621) (75,615) FRE Revenues $ 568,327 $ 412,771 $ 1,574,881 $ 1,191,650 22 Table of Contents Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2024 2023 2024 2023 GAAP Compensation and Benefits $ 271,107 $ 213,976 $ 723,001 $ 619,875 DE performance revenues compensation — — — (177) Equity-based compensation - other (58,898) (36,185) (145,203) (104,017) Equity-based compensation - acquisition related (2,077) (21,192) (6,343) (62,768) Equity-based compensation - Business Combination grants (16,632) (17,597) (51,741) (52,290) Acquisition-related cash earnout amortization — (6,567) — (19,163) Capital-related compensation (732) (1,894) (2,326) (5,452) Reimbursed expenses (20,852) (14,344) (58,604) (40,590) FRE Compensation and Benefits $ 171,916 $ 116,197 $ 458,784 $ 335,418 Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2024 2023 2024 2023 GAAP General, Administrative and Other Expenses $ 121,329 $ 65,485 $ 291,535 $ 173,101 Transaction Expenses (43,186) (8,000) (63,021) (11,817) Expense support 3,860 1,352 11,735 6,525 Reimbursed expenses (22,815) (13,194) (63,017) (35,025) FRE General, Administrative and Other Expenses $ 59,188 $ 45,643 $ 177,232 $ 132,784 Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2024 2023 2024 2023 Income Before Income Taxes $ 112,120 $ 74,163 $ 395,155 $ 162,078 GAAP Revenues 600,878 429,650 1,664,066 1,237,573 GAAP Margin 19 % 17 % 24 % 13 % Fee-Related Earnings Before Noncontrolling Interests 337,223 250,931 938,865 723,448 FRE Revenues 568,327 412,771 1,574,881 1,191,650 FRE Margin 59 % 61 % 60 % 61 % Liquidity and Capital Resources Overview We rely on management fees as the primary source of our operating liquidity. From time to time we may rely on the use of our Revolving Credit Facility between management fee collection dates, which generally occur on a quarterly basis. We may also rely on our Revolving Credit Facility for liquidity needed to fund acquisitions, which we may replace with longer-term financing, subject to market conditions. We ended the third quarter of 2024 with $115.9 million of cash and cash equivalents and approximately $1.6 billion available under our Revolving Credit Facility. Based on management’s experience and our current level of liquidity and assets under management, we believe that our current liquidity position and cash generated from management fees will continue to be sufficient to meet our anticipated working capital needs for at least the next 12 months. Over the short and long term, we may use cash and cash equivalents, issue additional debt or equity securities, or may seek other sources of liquidity to: • Grow our existing investment management business. • Expand into, or acquire, businesses that are complementary to our existing investment management business or other strategic growth initiatives. • Pay operating expenses, including cash compensation to our employees. • Repay debt obligations and interest thereon. 23 Table of Contents • Opportunistically repurchase Class A Shares on the open market, as well as pay withholding taxes on net settled, vested RSUs. • Pay income taxes and amounts due under the TRA. • Pay dividends to holders of our Class A Shares, as well as make corresponding distributions to holders of Common Units at the Blue Owl Operating Group level. • Fund debt and equity investment commitments to existing or future products. Debt Obligations As of September 30, 2024, our long-term debt obligations consisted of $59.8 million aggregate principal amount of 7.397% Senior Notes due 2028 (the “2028 Notes”), $700.0 million aggregate principal amount of 3.125% Senior Notes due 2031 (the “2031 Notes”), $400.0 million aggregate principal amount of 4.375% Senior Notes due 2032 (the “2032 Notes”), $1.0 billion aggregate principal amount of the 2034 Notes and $350.0 million aggregate principal amount of 4.125% Senior Notes due 2051 (the “2051 Notes” and, collectively with the 2028 Notes, the 2031 Notes, the 2032 Notes and the 2034 Notes, the “Notes”). We also had $90.0 million outstanding under our Revolving Credit Facility as of September 30, 2024. Subsequent to the quarter ended September 30, 2024, the full amount outstanding under our Revolving Credit Facility was repaid. We expect to use cash on hand to pay interest and principal due on our financing arrangements over time, which would reduce amounts available for dividends and distributions to our stockholders. We may choose to refinance all or a portion of any amounts outstanding on or prior to their respective maturity dates by issuing new debt, which could result in higher borrowing costs. We may also choose to repay borrowing by using proceeds from the issuance of equity or other securities, which would dilute stockholders. See Note 7 to our Financial Statements and Note 4 to the financial statements in our Annual Report for additional information regarding our debt obligations. In September 2024, the Issuer (as defined in Note 7 to our Financial Statements) commenced an offer to exchange the Notes for newly issued registered notes with substantially similar terms of the respective series of Notes sought to be exchanged (the “Exchange Notes”). The Exchange Notes settled on October 28, 2024 and approximately 99.8% of the Notes had been validly tendered, which consisted of $59.8 million aggregate principal amount of 2028 Notes, $697.2 million aggregate principal amount of 2031 Notes, $397.3 million aggregate principal amount of 2032 Notes, $999.4 million aggregate principal amount of 2034 Notes and $350.0 million aggregate principal amount of 2051 Notes. Tax Receivable Agreement As discussed in Note 8 to our Financial Statements, we made a payment under the TRA and may in the future be required to make additional payments. As of September 30, 2024, assuming no material changes in the relevant tax law and that we generate sufficient taxable income to realize the full tax benefit of the increased amortization resulting from the increase in tax basis of certain Blue Owl Operating Group assets, we expect to pay approximately $1.3 billion under the TRA (such amount excludes the adjustment to fair value for the portion classified as contingent consideration). Future cash savings and related payments under the TRA in respect of subsequent exchanges of Blue Owl Operating Group Units for Class A or B Shares would be in addition to these amounts. Payments under the TRA are anticipated to increase the tax basis adjustment and, consequently, result in increasing annual amortization deductions in the taxable years of and after such increases to the original basis adjustments, and potentially will give rise to increasing tax savings with respect to such years and correspondingly increasing payments under the TRA. The obligation to make payments under the TRA is an obligation of Blue Owl GP, and any other corporate taxpaying entities that in the future may hold GP Units (as defined in Note 1 to our Financial Statements) and not of the Blue Owl Operating Group. We may need to incur debt to finance payments under the TRA to the extent the Blue Owl Operating Group does not distribute cash to the Registrant or Blue Owl GP in an amount sufficient to meet our obligations under the TRA. The actual increase in tax basis of the Blue Owl Operating Group assets resulting from an exchange or from payments under the TRA, as well as the amortization thereof and the timing and amount of payments under the TRA, will vary based upon a number of factors, including the following: • The amount and timing of our taxable income will impact the payments to be made under the TRA. To the extent that we do not have sufficient taxable income to utilize the amortization deductions available as a result of the increased tax basis in the Blue Owl Operating Partnerships’ assets, payments required under the TRA would be reduced. 24 Table of Contents • The price of our Class A Shares at the time of any exchange will determine the actual increase in tax basis of the Blue Owl Operating Partnerships’ assets resulting from such exchange; payments under the TRA resulting from future exchanges, if any, will be dependent in part upon such actual increase in tax basis. • The composition of the Blue Owl Operating Group assets at the time of any exchange will determine the extent to which we may benefit from amortizing the increased tax basis in such assets and thus will impact the amount of future payments under the TRA resulting from any future exchanges. • The extent to which future exchanges are taxable will impact the extent to which we will receive an increase in tax basis of the Blue Owl Operating Group assets as a result of such exchanges, and thus will impact the benefit derived by us and the resulting payments, if any, to be made under the TRA. • The tax rates in effect at the time any potential tax savings are realized, which would affect the amount of any future payments under the TRA. Depending upon the outcome of these and other factors, payments that we may be obligated to make under the TRA in respect of exchanges could be substantial. In light of the numerous factors affecting our obligation to make payments under the TRA, the timing and amounts of any such actual payments are not reasonably ascertainable. Share Repurchases and RSUs Withheld for Tax Withholding On May 4, 2022, our Board authorized the repurchase of up to $150.0 million of Class A Shares (the “Program”). Under the Program, repurchases may be made from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual numbers repurchased will depend on a variety of factors, including legal requirements, price and economic and market conditions. The Program may be changed, suspended or discontinued at any time and will terminate upon the earlier of (i) the purchase of all shares available under the Program or (ii) December 31, 2024. There were no repurchases made under the Program during the three and nine months ended September 30, 2024 and 2023. Additionally, pursuant to the terms of our RSU agreements, upon the vesting of RSUs to employees, we may net settle awards to satisfy employee tax withholding obligations. In such instances, we cancel a number of RSUs equivalent in value to the amount of tax withholding payments that we make on behalf of employees out of available cash. During the three and nine months ended September 30, 2024, 950,196 RSUs with a fair value of $16.8 million and 1,951,014 RSUs with a fair value of $34.9 million, respectively, were withheld to satisfy tax withholding obligations. During the three and nine months ended September 30, 2023, 542,167 RSUs with a fair value of $6.4 million and 901,113 RSUs with a fair value of $11.2 million, respectively, were withheld to satisfy tax withholding obligations. Earnout Liability The Oak Street Cash Earnouts and the Wellfleet Earnouts (each as defined in Note 3 in our Annual Report), and the KAM Earnouts (as defined in Note 3 to the Financial Statements) are classified as liabilities in our consolidated statements of financial position and represent the fair value of the obligation to make future cash payments if the respective triggering events occur. As we approach each triggering event, we generally would expect the respective liabilities to increase due to the passage of time and meeting certain revenue thresholds, which would result in mark-to-market losses being recognized in our consolidated statements of operations. To the extent we have insufficient cash on hand or that we opt to, we may rely on debt or equity financing to facilitate these transactions in the future. For additional information on these earnout liabilities, see Note 1 and Note 3 to the Financial Statements, as well as Note 3 to the financial statements in our Annual Report. The Prima Earnouts and Atalaya Earnouts (each defined in Note 3 to the Financial Statements) are payable in Class A Shares or Common Units. As we approach each Triggering Event, we generally would expect the respective liabilities to increase due to the passage of time and the achievement of certain revenue thresholds, which would result in mark-to-market losses being recognized in our consolidated statements of operations. Dividends and Distributions Starting in 2023, we moved to a fixed quarterly dividend based on our expected annual Distributable Earnings for the current fiscal year, which will be reassessed on an annual basis. For the third quarter of 2024, we declared a dividend of $0.18 to holders of record as of the close of business on November 11, 2024, which will be paid on November 22, 2024. We set the target annual dividend for fiscal year 2024 at $0.72 per Class A Share (representing a fixed quarterly dividend of $0.18 per Class A Share), subject to the approval of the Board each quarter on or prior to each quarterly distribution date and in compliance with Delaware law, and such dividends are paid following the end of each quarter. 25 Table of Contents We intend to increase our fixed dividend each year, in line with our expected growth in Distributable Earnings. When setting our dividend, our Board considers Blue Owl’s share of Distributable Earnings, and makes adjustments as necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and products, including funding of GP commitments and potential strategic transactions; to provide for future cash requirements such as tax-related payments, operating reserves, fixed asset purchases, purchases under the Company’s share repurchase program and dividends to stockholders for any ensuing quarter; or to comply with applicable law and the Company’s contractual obligations. All of the foregoing is subject to the qualification that the declaration and payment of any dividends are at the sole discretion of our Board, and our Board may change our dividend policy at any time, including, without limitation, to reduce or eliminate dividends entirely. The Blue Owl Operating Partnerships will make cash distributions (“Tax Distributions”) to the partners of such partnerships, including to Blue Owl GP, if we determine that the taxable income of the relevant partnership will give rise to taxable income for its partners. Generally, Tax Distributions will be computed based on our estimate of the taxable income of the relevant partnership allocable to a partner multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, New York State and New York City income tax rates prescribed for an individual or corporate resident in New York City (taking into account certain assumptions set forth in the relevant partnership agreements). Tax Distributions will be made only to the extent distributions from the Blue Owl Operating Partnerships for the relevant year were otherwise insufficient to cover the estimated assumed tax liabilities. Holders of our Class A and B Shares may not always receive distributions or may receive lower distributions on a per share basis at a time when we, indirectly through Blue Owl GP, and holders of our Common Units are receiving distributions on their interests, as distributions to the Registrant and Blue Owl GP may be used to settle tax and TRA liabilities, if any, and other obligations. Dividends are expected to be treated as qualified dividends under current law to the extent of the Company’s current and accumulated earnings and profits, with any excess dividends treated as a return of capital to the extent of a stockholder’s basis, and any remaining excess generally treated as gain realized on the sale or other disposition of stock. Risks to our Liquidity Our ability to obtain financing provides us with additional sources of liquidity. Any new financing arrangement that we may enter into may have covenants that impose additional limitations on us, including with respect to making distributions, entering into business transactions or other matters, and may result in increased interest expense. If we are unable to secure financing on terms that are favorable to us, our business may be adversely impacted. No assurance can be given that we will be able to issue new debt, enter into new credit facilities or issue equity or other securities in the future on attractive terms or at all. Adverse market conditions, including from unexpectedly high and persistent inflation, an increasing interest rate environment, geopolitical events, and the current instability experienced by some financial institutions, may negatively impact our liquidity. Cash flows from management fees may be impacted by a slowdown or a decline in fundraising and deployment, as well as declines in the value of investments held in certain of our products. We hold the majority of our cash balances with a single highly rated financial institution and such balances are in excess of Federal Deposit Insurance Corporation insured limits. See “Item 1A. Risk Factors — Risks Related to Macroeconomic Factors” in our Annual Report. Cash Flows Analysis Nine Months Ended September 30, (dollars in thousands) 2024 2023 $ Change Net cash provided by (used in): Operating activities $ 675,536 $ 640,796 $ 34,740 Investing activities (591,865) (94,110) (497,755) Financing activities (71,929) (538,070) 466,141 Net Change in Cash and Cash Equivalents $ 11,742 $ 8,616 $ 3,126 Operating Activities. Our net cash flows from operating activities are generally comprised of management fees, less cash used for operating expenses, including interest paid on our debt obligations. One of our largest operating cash outflows generally relates to bonus expense, which are generally paid out during the first quarter of the year following the expense. 26 Table of Contents Net cash flows from operating activities increased from the prior year period due to higher management fees, partially offset by higher operating expenses, in particular higher bonus payments made during the first quarter related to the prior year. Included in the nine months ended September 30, 2024 were the cash outflows of the portion of the Second Oak Street Earnout classified as contingent consideration in excess of the acquisition-date fair value that settled in January 2024; the amount paid up to the acquisition-date fair value was included in financing activities and the remainder (i.e., accretion since the acquisition date) was included in operating activities. Included in the nine months ended September 30, 2023 were the cash outflows of the portion of the First Oak Street Earnout classified as contingent consideration that settled in January 2023; the amount paid up to the acquisition-date fair value was included in financing activities and the remainder (i.e., accretion since the acquisition date) was included in operating activities. Investing Activities. Cash flows from investing activities for the nine months ended September 30, 2024 were primarily related to cash consideration paid in connection with the KAM Acquisition and Atalaya Acquisition, a preferred equity investment in Kuvare UK Holdings, investments in our products and cash outflows for office space-related leasehold improvements. In addition, investment activities included inflows from repayments on our interest-bearing revolving promissory note receivable from a product we manage that was fully repaid. Cash flows from investing activities for the nine months ended September 30, 2023, were primarily related to purchases of investments in our Real Estate products, cash outflows related to office space-related leasehold improvements, as well as cash consideration paid in connection with the Par Four Acquisition (as defined in Note 1 to our Financial Statements). In addition, investment activities included inflows from repayments on our notes receivable. Financing Activities. Cash flows from financing activities for the nine months ended September 30, 2024 were primarily related to the issuance of our 2034 Notes and borrowing and repayment activity under our Revolving Credit Facility, which borrowings were used to finance the Prima Acquisition, the KAM Acquisition and the Atalaya Acquisition. In addition, we had distributions on our Common Units (noncontrolling interests) and dividends on our Class A Shares. Included in the nine months ended September 30, 2024 was a portion of the cash outflows related to the Second Oak Street Earnout classified as contingent consideration that settled in January 2024, as discussed above, as well as amounts paid under the TRA. Cash flows from financing activities for the nine months ended September 30, 2023 were primarily driven by dividends on our Class A Shares and related distributions on our Common Units (noncontrolling interests). In addition, we had borrowings and repayments under our Revolving Credit Facility, as well as the issuance of our 2028 Notes, which borrowings were used to finance working capital needs and general capital purposes. Included in the nine months ended September 30, 2023, were a portion of the cash outflows related to the First Oak Street Earnout classified as contingent consideration that settled in January 2023. Critical Accounting Estimates We prepare our Financial Statements in accordance with U.S. GAAP. In applying many of these accounting principles, we make estimates that affect the reported amounts of assets, liabilities, revenues and expenses in the Financial Statements. We base our estimates on historical experience and other factors that we believe are reasonable under the circumstances. These estimates, however, are subjective and subject to change, and actual results may differ materially from our current estimates due to the inherent nature of these estimates, including geopolitical, macro-environmental and other uncertainty. For a summary of our significant accounting policies, see Note 2 to our Financial Statements and the financial statements in our Annual Report. 27 Table of Contents Estimation of Fair Values Investments Held by our Products The fair value of the investments held by our products in our Credit and Real Estate platforms is the primary input to the calculation for the majority of our management fees. Management fees from our GP Strategic Capital and other Real Estate products are generally based on commitments or investment cost, so our management fees are generally not impacted by changes in the estimated fair values of investments held by these products. However, to the extent that management fees are calculated based on investment cost of the product’s investments, the amount of fees that we may charge will increase or decrease from the effect of changes in the cost basis of the product’s investments, including potential impairment losses. In the absence of observable market prices, we use valuation methodologies applied on a consistent basis and assumptions that we believe market participants would use to determine the fair value of the investments. For investments where little market activity exists, the determination of fair value is based on the best information available, our own assumptions, a significant degree of judgment, and the consideration of a combination of internal and external factors. Our products generally value their investments at fair value, as determined in good faith by each product’s respective board of directors or valuation committee, as applicable, based on, among other things, the input of third party valuation firms and taking into account the nature and realizable value of any collateral, an investee’s ability to make payments and its earnings, the markets in which the investee operates, comparison to publicly traded companies, discounted cash flows, current market interest rates and other relevant factors. Because such valuations are inherently uncertain, the valuations may fluctuate significantly over time due to changes in market conditions. These valuations would, in turn, have corresponding proportionate impacts on the amount of management fees that we may earn from certain products on which revenues are based on the fair value of investments. TRA Liability We carry a portion of our TRA liability at fair value, as it is contingent consideration related to the Dyal Acquisition. The valuation of this portion of the TRA liability is mostly sensitive to our expectation of future cash savings that we may ultimately realize related to our tax goodwill and other intangible assets deductions. We then apply a discount rate that we believe is appropriate given the nature of and expected timing of payments of the liability. A decrease in the discount rate assumption would result in an increase in the fair value estimate of the liability, which would have a correspondingly negative impact on our GAAP results of operations. However, payments under the TRA are ultimately only made to the extent we realize the offsetting cash savings on our income taxes due to the tax goodwill and other intangibles deduction. See Note 4 to our Financial Statements for additional details. Earnout Liability The fair value of our earnout liability was determined using various significant unobservable inputs, including a discount rate and our best estimate of expected volatility and expected holding periods. Changes in the estimated fair values of this liability may have a material impacts on our results of operations in any given period, as any increases in this liability has a corresponding negative impact on our GAAP results of operations. See Note 4 to our Financial Statements for additional details. Preferred Equity Investment We have elected the fair value option on our preferred equity investment. The valuation of the preferred equity investment considers our best estimate of future cash flow, including timing of repayment, which is discounted considering the risk free rate and credit assumptions related to the underlying issuer. A decrease in the expected cash flows or increase in the discount rate assumptions would result in a decrease in the fair value of the preferred equity investment, which would have a correspondingly negative impact on our GAAP results of operations. These assumptions require a significant amount of judgment and could have a material impact on the valuation. See Note 4 to our Financial Statements for additional details. Equity-based Compensation The grant-date fair values of our RSU and Incentive Unit (both defined in Note 1 to our Financial Statements) grants, as well as the compensation-classified earnouts are generally determined using our Class A Share price on the grant date, adjusted for the lack of dividend participation during the vesting period, and the application of a discount for lack of marketability on RSUs and Incentive Units that are subject to post-vesting transfer restrictions. The higher these discounts, the lower the compensation expense taken over time for these grants. 28 Table of Contents Deferred Tax Assets Substantially all of our deferred tax assets relate to goodwill and other intangible assets deductible for tax purposes, as well as payments expected to be made under the TRA. In accordance with relevant tax rules, we expect to take substantially all of these goodwill and other intangible deductions over a 15-year period following the applicable transaction. To the extent we generate insufficient taxable income to take the full deduction in any given year, we will generate a net operating loss (“NOL”) that is available for us to use over an indefinite carryforward period in order to fully realize the deferred tax assets. When evaluating the realizability of deferred tax assets, all evidence—both positive and negative—is considered. This evidence includes, but is not limited to, expectations regarding future earnings, future reversals of existing temporary tax differences and tax planning strategies. We did not take into account any tax planning strategies when arriving at this conclusion; however, the other assumptions underlying the taxable income estimates are based on our near-term operating model. If we experience a significant decline in AUM for any extended time during the period for which these estimates relate and we do not otherwise experience offsetting growth rates in other periods, we may not generate taxable income sufficient to realize the deferred tax assets and may need to record a valuation allowance. However, given the indefinite carryforward period available for NOLs and the conservative estimates used to prepare the taxable income projections, the sensitivity of our estimates and assumptions are not likely to have a material impact on our conclusion that a valuation allowance is not needed. Acquisitions Purchase Price Allocation We account for business combinations using the acquisition method of accounting, under which the purchase price of the acquisition is allocated to the assets acquired and liabilities assumed, with any excess consideration allocated to goodwill, using the fair values determined by management as of the acquisition date. Management’s determination of the fair value of assets acquired and liabilities assumed at the acquisition date is based on the best information available and may incorporate management’s own assumptions and involve significant judgment. We use our best estimates and assumptions to accurately assign fair value to the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date. Assumptions in valuing certain intangible assets include, but are not limited to, future expected cash inflows and outflows, future fundraising and timing of new product launches, discount rates, revenue volatility and income tax rates. Our estimates for future cash flows are based on historical data, internal estimates and external sources, and are based on assumptions that are consistent with the plans and estimates we use to manage the underlying assets acquired. We estimate the useful lives of intangible assets based on the expected period over which we anticipate generating substantially all of the economic benefit from the asset. We base our estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Unanticipated events and circumstances may occur that could affect the accuracy or validity of such assumptions, estimates or actual results. Impairment Testing of Goodwill and Other Intangible Assets Our ongoing accounting for goodwill and other intangible assets requires us to make significant estimates and assumptions when evaluating these assets for impairment. We generally undertake a qualitative review of factors that may indicate whether an impairment exists. We take into account factors such as the adverse impacts to FPAUM and management fees and general economic conditions that require judgement in deciding whether a quantitative analysis should be undertaken. Our evaluation for indicators of impairment may not capture a potential impairment, which could result in an overstatement of the carrying values of goodwill and other intangible assets. We also estimate the useful lives of our finite-lived intangible assets for purposes of amortization. The useful lives are based on our judgment of the expected future economic benefits of the assets. Changes in estimated useful lives could result in significant changes to the amount of amortization expense recognized in future periods. 29 Table of Contents Variable Interest Entities The determination of whether to consolidate a variable interest entity (“VIE”) under GAAP requires a significant amount of judgment concerning the degree of control over an entity by its holders of variable interests. To make these judgments, we conduct an analysis, on a case-by-case basis, of whether we are the primary beneficiary and are therefore required to consolidate an entity. We continually reconsider whether we should consolidate a VIE. Upon the occurrence of certain events, such as modifications to organizational documents and investment management agreements of our products, we will reconsider our conclusion regarding the status of an entity as a VIE. Our judgement when analyzing the status of an entity and whether we consolidate an entity could have a material impact on individual line items within our Financial Statements, as a change in our conclusion would have the effect of grossing up the assets, liabilities, revenues and expenses of the entity being evaluated. In light of the relevantly insignificant direct and indirect investments into our products, the likelihood of a reasonable change in our estimation and judgement would likely not result in a change in our conclusions to consolidate or not consolidate any VIEs to which we have exposure. Impact of Changes in Accounting on Recent and Future Trends We believe that none of the changes to GAAP that went into effect during the nine months ended September 30, 2024, or that have been issued but that we have not yet adopted, are expected to materially impact our future trends.