Earnings Call: DigitalBridge Reports Strong Growth in Q3 2024

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Earnings Call: DigitalBridge Reports Strong Growth in Q3 2024

DigitalBridge Group, Inc. (NYSE: DBRG) reported significant growth in its third-quarter earnings announcement on November 1, 2024. CEO Marc Ganzi and CFO Tom Mayrhofer provided insights into the company’s performance. The report highlighted a 42% year-over-year increase in fee-based earnings (FRE) and a 34% FRE margin. The company has raised $6.1 billion of its $7 billion annual fundraising target, with $1.9 billion raised in the last month alone.

DigitalBridge is making strategic investments in verticals such as data centers and tower operations, including DataBank, Vertical Bridge, Yondr, and JTOWER, and anticipates strong fundraising momentum heading into the fourth quarter.

Key Points:

  • DigitalBridge reported a 42% year-over-year increase in FRE and a 34% FRE margin.
  • The company has raised $6.1 billion against its $7 billion annual fundraising goal, a 13% improvement year-over-year.
  • Strategic investments include DataBank, Vertical Bridge, Yondr, and JTOWER.
  • Third-quarter fee revenue amounted to $77 million, with an FRE of $26 million.
  • The firm has revised its 2024 fee revenue target to between $305 million and $320 million, projecting a 14% to 20% increase compared to 2023.
  • DigitalBridge maintains a strong balance sheet with $1.4 billion invested alongside partners and $127 million in cash.
  • The company is transitioning to multiple strategy operations and plans to raise between $600 million and $1 billion for a data center secondary fund in 2024.

Company Outlook: DigitalBridge anticipates a robust fourth quarter with projections for more than $3 billion in new capital. The company is on track to meet long-term goals, including doubling its fee-earning assets under management (FEEUM) within five years and increasing margins from the 30s to the mid-40s. Significant carried interest realizations are expected in the coming year.

Negative Highlights: The company has revised its FEEUM target to between $35 billion and $37 billion due to higher levels of co-investment capital.

Positive Highlights: DigitalBridge reported robust growth in fee revenue with double-digit increases. There is optimism for the Japanese tower market through JTOWER and for data center expansion with Yondr.

Underperformance: The firm’s revised 2024 fee revenue and FRE targets fall short of initial expectations despite growth.

Q&A Highlights: Management addressed investor concerns regarding fundraising dynamics and expressed confidence in executing its business plans. Ganzi emphasized the importance of co-investments and a conservative approach to asset valuations. The company is actively evaluating potential asset sales to generate more Distributed Paid-In Capital (DPI).

DigitalBridge Group, Inc. (NYSE: DBRG) exhibited resilience and strategic foresight in its 2024 third-quarter earnings announcement. CEO Marc Ganzi and CFO Tom Mayrhofer provided detailed insights into the company’s financial growth and strategic investments. The company's focus on data center and tower verticals, along with its strong balance sheet, positions it well for future growth. With the transition to multiple strategy operations, DigitalBridge appears poised to capitalize on new opportunities and deliver value to its shareholders.

InvestingPro Insights: DigitalBridge Group's (NYSE: DBRG) strong performance in the third quarter of 2024 is reflected in several key metrics from InvestingPro. The company’s revenue growth of 294.62% over the last twelve months as of the second quarter of 2024 aligns with the significant increase in fee-based earnings reported in the earnings announcement. This impressive growth is supported by a 105.32% month-over-month revenue growth in the second quarter of 2024, indicating a consistent upward trend.

InvestingPro tips emphasize that DBRG is trading at a low earnings multiple with a P/E ratio of 5.64. This suggests that the stock may be undervalued relative to its earnings, potentially offering an attractive entry point for investors impacted by recent performance and growth expectations.

As noted in the InvestingPro tip, the company’s profitability over the last twelve months aligns with the positive financial outcomes discussed in the earnings announcement. This profitability is closely mirrored by the reported 34% FRE margin, reflecting a strong operating income margin of 36.2% for the last twelve months as of the second quarter of 2024.

Despite the positive outlook, investors should be aware that analysts forecast a decline in sales for the current year, according to an InvestingPro tip. This projection contradicts the company’s optimistic forecasts for the fourth quarter and beyond, indicating that market expectations may not fully align with DigitalBridge's internal objectives.

For those interested in a more comprehensive analysis, InvestingPro offers five additional tips on DBRG, providing deeper insights into the company's financial health and market position.