Digitalbridge Group, Inc. ((DBRG)) has held its Q1 earnings call. Read on for the main highlights of the call.
DigitalBridge Group’s recent earnings call conveyed a positive outlook, underscored by strong financial performance, successful fundraising efforts, and strategic acquisitions. Despite some concerns regarding trade policy impacts and a reversal in carried interest, the company demonstrated resilience in its digital infrastructure amidst market volatility.
Strong Financial Performance
DigitalBridge reported impressive financial results, with fee revenues reaching $90 million and fee-related earnings (FRE) of $35 million, marking an almost 80% increase year-over-year. The company’s distributable earnings stood at $55 million, bolstered by a $34 million gain from the partial realization of the DataBank investment.
Successful Fundraising
The company successfully raised $1.2 billion during the quarter, with significant commitments to its flagship DigitalBridge Partner strategy, which accounted for over 70% of total fundraising. Additionally, DigitalBridge highlighted a robust pipeline in private credit, with over 100 accounts evaluating the strategy.
Zayo Acquisition
DigitalBridge supported Zayo’s $4.5 billion acquisition of Crown Castle’s fiber business, significantly increasing Zayo’s scale by over 50% and adding 90,000 route miles to its existing network, thereby enhancing its market position.
Resilience of Digital Infrastructure
The company’s digital infrastructure demonstrated resilience amidst market volatility, with long-term contracts and inflation protection contributing to stability. DigitalBridge emphasized the low correlation of its infrastructure assets to other asset classes, highlighting their stability.
Growth in Private Credit
DigitalBridge’s private credit platform showed significant growth potential, with a pipeline of $13 billion in new loan origination opportunities and plans to deploy up to $2 billion in 2025, indicating a strong future trajectory.
Market Volatility and Fundraising Delays
While some final fundraising decisions were delayed due to LPs monitoring uncertain market conditions, DigitalBridge remains confident in achieving its 2025 goals, demonstrating resilience and strategic foresight.
Impact of Trade Policy on Data Centers
Trade tariffs and policy are expected to impact data center construction costs by 3% to 7%. However, DigitalBridge anticipates recovering most of these costs through new contracts, mitigating potential financial impacts.
Reversal of Carried Interest
A $5 million reversal of carried income was reported due to net increases in the fair value of portfolio assets being slightly below the preferred return hurdle on certain funds, indicating a minor setback in financial metrics.
Forward-Looking Guidance
DigitalBridge Group’s forward-looking guidance remains optimistic, with expectations of continued growth and resilience. The company reported a 24% increase in fee revenues over the first quarter of 2024 and a 15% rise in fee-earning equity under management (FEEUM) to $37.3 billion. Despite short-term market volatility, the company is confident in achieving its 2025 goals, supported by its diversified digital infrastructure portfolio.
In summary, DigitalBridge Group’s earnings call highlighted a robust financial performance and strategic growth initiatives, underscoring its resilience in the face of market volatility. With successful fundraising, strategic acquisitions, and a strong pipeline in private credit, the company is well-positioned for future growth, despite minor setbacks related to trade policies and carried interest reversals.