DigitalBridge Swings to Loss on Carried Interest Reversal

TL;DR

**DBRG's massive carried interest reversal is a red flag, signaling potential underperformance and a tough road ahead for profitability.**

AI Summary

DigitalBridge Group, Inc. (DBRG) reported a significant shift in its financial performance for the nine months ended September 30, 2025, compared to the same period in 2024. The company experienced a net loss of $53.343 million in 2025, a stark contrast to the net income of $147.494 million in 2024. This reversal was largely driven by a substantial negative carried interest allocation of $(290.751) million in 2025, compared to a positive $263.967 million in 2024. Total revenues plummeted to $46.058 million in 2025 from $540.854 million in 2024, despite a rise in fee revenue to $268.701 million from $228.142 million. Principal investment income also increased to $51.069 million from $28.782 million. Operating expenses saw a decrease, with compensation expense—incentive fee and carried interest allocation (reversal) turning into a benefit of $(119.676) million in 2025 from an expense of $163.242 million in 2024. The company's total assets slightly decreased to $3.490 billion as of September 30, 2025, from $3.513 billion at December 31, 2024, while total liabilities decreased to $971.387 million from $1.022 billion. Net cash generated by operating activities significantly improved to $183.770 million in 2025 from $31.418 million in 2024.

Why It Matters

This filing reveals a critical shift in DigitalBridge's profitability, primarily due to a massive reversal in carried interest allocation. For investors, this indicates a significant impact on the company's earnings quality and could signal underperformance in some of its investment vehicles, potentially affecting future distributions and investor confidence. Employees might face pressure if this trend continues, impacting compensation structures tied to performance. Customers of DigitalBridge's digital infrastructure services are less directly impacted, but the company's financial health can influence its ability to invest in and expand its offerings. In the broader market, this could reflect challenges within certain segments of the digital infrastructure investment landscape, potentially affecting valuations of competitors and the overall sentiment towards the sector.

Risk Assessment

Risk Level: high — The company reported a net loss of $53.343 million for the nine months ended September 30, 2025, a significant decline from a net income of $147.494 million in the prior year. This is primarily due to a $(290.751) million carried interest allocation reversal, indicating substantial underperformance in certain investment vehicles and directly impacting profitability.

Analyst Insight

Investors should scrutinize the underlying performance of DigitalBridge's investment funds, particularly those driving the carried interest reversal. Consider reducing exposure or holding off on new investments until there's clear evidence of a turnaround in investment performance and a more stable earnings outlook.

Financial Highlights

debt To Equity

0.16

revenue

$46.058M

operating Margin

N/A

total Assets

$3.490B

total Debt

$327.945M

net Income

$(53.343)M

eps

$0.18

gross Margin

N/A

cash Position

$358.416M

revenue Growth

-91.5%

Revenue Breakdown

Key Numbers

• $(53.343)M — Net Income (Loss) (Swung from $147.494M income in 2024 to a loss in 2025, indicating a significant profitability decline.)
• $(290.751)M — Carried Interest Allocation (Reversal) (A major reversal from $263.967M in 2024, directly impacting total revenues and net income.)
• $46.058M — Total Revenues (Decreased significantly from $540.854M in 2024, primarily due to the carried interest reversal.)
• $268.701M — Fee Revenue (Increased from $228.142M in 2024, showing growth in core management fees despite overall revenue decline.)
• $183.770M — Net Cash from Operating Activities (Improved substantially from $31.418M in 2024, indicating better operational cash generation.)
• $3.490B — Total Assets (Slight decrease from $3.513B at December 31, 2024, showing relative stability in asset base.)
• $971.387M — Total Liabilities (Decreased from $1.022B at December 31, 2024, suggesting some debt reduction or liability management.)
• $0.18 — Net income (loss) attributable to common stockholders per common share—diluted (Remained flat compared to 2024, despite the net loss, due to noncontrolling interests and preferred dividends.)

Key Players & Entities

• DigitalBridge Group, Inc. (company) — Registrant
• DigitalBridge Operating Company, LLC (company) — Operating subsidiary, 97% owned by DBRG
• $53.343 million (dollar_amount) — Net loss for nine months ended September 30, 2025
• $147.494 million (dollar_amount) — Net income for nine months ended September 30, 2024
• $(290.751) million (dollar_amount) — Carried interest allocation reversal for nine months ended September 30, 2025
• $263.967 million (dollar_amount) — Carried interest allocation for nine months ended September 30, 2024
• $46.058 million (dollar_amount) — Total revenues for nine months ended September 30, 2025
• $540.854 million (dollar_amount) — Total revenues for nine months ended September 30, 2024
• $183.770 million (dollar_amount) — Net cash generated by operating activities for nine months ended September 30, 2025
• $31.418 million (dollar_amount) — Net cash generated by operating activities for nine months ended September 30, 2024

FAQ

Risk Factors

• Volatility of Carried Interest [high — financial]: The company's financial performance is highly sensitive to fluctuations in carried interest, as evidenced by the $(290.751) million reversal in the nine months ended September 30, 2025, compared to a $263.967 million gain in the prior year. This volatility can lead to significant swings in reported revenue and net income.
• Investment Performance [high — market]: The value and performance of the company's investments directly impact its revenues, particularly principal investment income and carried interest. Adverse market conditions or underperformance of underlying assets could negatively affect financial results.
• Reliance on Investment Management Platform [medium — operational]: The company's business model relies on its ability to effectively deploy and manage capital for investors. Any disruption to its investment management platform or a decline in investor confidence could impact fee revenue and AUM.
• Regulatory Environment [medium — regulatory]: As an investment manager, the company is subject to various regulations. Changes in regulations related to financial services, investment management, or digital infrastructure could increase compliance costs or restrict business activities.
• Debt Levels [medium — financial]: The company's total debt increased to $327.945 million as of September 30, 2025, from $296.362 million at December 31, 2024. While manageable, significant increases in debt could impact financial flexibility and increase interest expense.
• Valuation of Investments [medium — financial]: The company holds $2.463 billion in investments. Fluctuations in the fair value of these investments, as detailed in Note 9, can impact reported earnings and equity.
• Competition [low — operational]: The digital infrastructure investment management space is competitive. The company faces competition from other investment managers, which could affect its ability to attract capital and generate fees.

Industry Context

DigitalBridge Group operates in the digital infrastructure investment management sector, a rapidly growing area driven by increasing demand for data centers, cell towers, and fiber networks. The industry is characterized by significant capital requirements, long-term investment horizons, and a competitive landscape featuring both specialized infrastructure funds and broader private equity firms.

Regulatory Implications

As a financial services firm, DigitalBridge is subject to regulations governing investment advisors, capital markets, and potentially specific rules related to digital infrastructure. Compliance with evolving regulations, such as those concerning ESG (Environmental, Social, and Governance) factors, is becoming increasingly important.

What Investors Should Do

1. Monitor the volatility of carried interest and its impact on earnings. The significant reversal in the current period highlights the risk associated with this revenue stream.
2. Analyze the growth in fee revenue as a sign of core business health, despite the overall revenue decline driven by carried interest.
3. Assess the company's ability to manage its debt levels, which increased slightly to $327.945 million, and its overall financial leverage.
4. Evaluate the performance of the company's principal investments, as this income stream has shown positive growth.
5. Consider the substantial accumulated deficit of $(6.810) billion, which indicates a history of net losses, although recent operating cash flow has improved.

Glossary

Carried Interest

A share of the profits from an investment fund that is paid to the fund manager. It is typically a performance fee, earned only after investors have received their capital back and a predetermined preferred return. (A significant driver of revenue and profitability for DigitalBridge, but also a source of volatility, as seen in the substantial reversal reported for the nine months ended September 30, 2025.)

Fee Revenue

Revenue generated from management fees, advisory fees, and other service charges for managing investment funds and providing related services. (Represents the more stable, recurring revenue stream for DigitalBridge, showing growth in the current period.)

Principal Investment Income

Income generated from the company's own investments in funds or assets, separate from the fees earned for managing external capital. (Contributed positively to revenue, showing an increase in the current period, but is generally smaller than fee revenue or carried interest.)

Noncontrolling Interests

The portion of equity in a subsidiary that is not attributable to the parent company. In DigitalBridge's case, this includes interests held by employees in the Operating Company and interests in investment entities. (Impacts the net income attributable to common stockholders and the total equity reported on the balance sheet.)

Accumulated Deficit

The cumulative net losses of a company that have not been offset by net income since its inception. (Indicates the company's historical profitability. DigitalBridge has a significant accumulated deficit of $(6.810) billion as of September 30, 2025.)

Redeemable Noncontrolling Interests

Represents interests in subsidiaries that are redeemable by the holder, often at a future date or upon certain events, and are presented outside of permanent equity. (A liability-like component of equity that requires future cash outflow or issuance of stock.)

Year-Over-Year Comparison

Compared to the nine months ended September 30, 2024, DigitalBridge Group, Inc. experienced a dramatic decline in total revenues, falling from $540.854 million to $46.058 million. This was primarily driven by a substantial negative swing in carried interest allocation, from a gain of $263.967 million to a reversal of $(290.751) million. Consequently, the company swung from a net income of $147.494 million to a net loss of $(53.343) million. Despite the revenue and net income drop, fee revenue saw healthy growth, increasing by 17.8% to $268.701 million, and net cash from operating activities significantly improved to $183.770 million from $31.418 million, suggesting better operational cash generation.

Key Financial Figures

• $0.01 — Which Registered Class A Common Stock, $0.01 par value DBRG New York Stock Exchange

Filing Documents

• dbrg-20250930.htm (10-Q) — 2249KB
• exhibit101dbrg2025q3.htm (EX-10.1) — 10KB
• exhibit311dbrg2025q3.htm (EX-31.1) — 9KB
• exhibit312dbrg2025q3.htm (EX-31.2) — 10KB
• exhibit321dbrg2025q3.htm (EX-32.1) — 5KB
• exhibit322dbrg2025q3.htm (EX-32.2) — 5KB
• image_0.jpg (GRAPHIC) — 0KB
• 0001679688-25-000100.txt ( ) — 11321KB
• dbrg-20250930.xsd (EX-101.SCH) — 80KB
• dbrg-20250930_cal.xml (EX-101.CAL) — 93KB
• dbrg-20250930_def.xml (EX-101.DEF) — 450KB
• dbrg-20250930_lab.xml (EX-101.LAB) — 871KB
• dbrg-20250930_pre.xml (EX-101.PRE) — 637KB
• dbrg-20250930_htm.xml (XML) — 1920KB

FINANCIAL INFORMATION Page

PART I. FINANCIAL INFORMATION Page

Financial Statements

Item 1. Financial Statements 4 Consolidated Balance Sheets 4 Consolidated Statements of Operations 5 Consolidated Statements of Comprehensive Income (Loss) 6 Consolidated Statements of Equity 7 Consolidated Statements of Cash Flows 11

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements: 13 1. Business and Organization 13 2. Summary of Significant Accounting Policies 13 3. Investments 17 4. Intangible Assets 19 5. Restricted Cash, Other Assets and Other Liabilities 19 6. Debt 21 7. Stockholders' Equity 22 8. Noncontrolling Interests 23 9. Fair Value 24 10. Earnings per Share 28 11. Fee Revenue 28 12. Equity-Based Compensation 29 13. Variable Interest Entities 31 14. Transactions with Affiliates 33 15. Segment Reporting 34 16. Commitments and Contingencies 36 17. Subsequent Events 36

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 38

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 53

Controls and Procedures

Item 4. Controls and Procedures 54

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 55

Risk Factors

Item 1A. Risk Factors 55

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 55

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 55

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 55

Other Information

Item 5. Other Information 55

Exhibits

Item 6. Exhibits 57

SIGNATURES

SIGNATURES 58 Table of Contents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. DigitalBridge Group, Inc. Consolidated Balance Sheets (In thousands, except per share data) September 30, 2025 (Unaudited) December 31, 2024 Assets Cash and cash equivalents $ 358,416 $ 302,154 Restricted cash 5,534 4,144 Investments 2,463,476 2,492,268 Goodwill 465,602 465,602 Intangible assets 54,261 72,460 Other assets 47,290 52,504 Due from affiliates 95,950 124,186 Total assets $ 3,490,529 $ 3,513,318 Liabilities Debt $ 327,945 $ 296,362 Other liabilities 643,442 725,766 Total liabilities 971,387 1,022,128 Commitments and contingencies (Note 16) Redeemable noncontrolling interests 27,028 24,356 Equity Stockholders' equity: Preferred stock, $ 0.01 par value per share; $ 821,899 liquidation preference; 250,000 shares authorized; 32,876 shares issued and outstanding 794,670 794,670 Common stock, $ 0.01 par value per share Class A, 237,250 shares authorized; 182,615 and 174,202 shares issued and outstanding 1,826 1,742 Class B, 250 shares authorized; 0 and 150 shares issued and outstanding — 2 Additional paid-in capital 8,059,791 7,999,165 Accumulated deficit ( 6,810,068 ) ( 6,837,502 ) Accumulated other comprehensive income (loss) 5,868 505 Total stockholders' equity 2,052,087 1,958,582 Noncontrolling interests in investment entities 401,005 430,528 Noncontrolling interests in Operating Company 39,022 77,724 Total equity 2,492,114 2,466,834 Total liabilities, redeemable noncontrolling interests and equity $ 3,490,529 $ 3,513,318 The accompanying notes form an integral part of the consolidated financial statements. 4 Table of Contents DigitalBridge Group, Inc. Consolidated Statements of Operations (In thousands, except per share data (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenues Fee revenue $ 93,300 $ 76,582 $ 268,701 $ 228,142 Carried interest allocation (reversal) ( 120,213 ) ( 15,799 ) ( 290,751 ) 263,

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements September 30, 2025 (Unaudited) 1. Business and Organization DigitalBridge Group, Inc. ("DBRG," and together with its consolidated subsidiaries, the "Company") is a leading global investment manager in digital infrastructure. The Company deploys and manages capital on behalf of its investors and shareholders across the digital infrastructure ecosystem, including but not limited to, data centers, cell towers, fiber networks, small cells, and edge infrastructure. The Company's investment management platform is anchored by its flagship value-add digital infrastructure equity offerings, as well as offerings in core equity, credit, liquid securities, and its InfraBridge mid-market infrastructure equity. Organization The Company operates as a taxable C Corporation and conducts all of its activities and holds substantially all of its assets and liabilities through its operating subsidiary, DigitalBridge Operating Company, LLC (the "Operating Company" or the "OP") . The Company, as sole managing member, owned 97 % of the OP at September 30, 2025 , with the remaining 3 % owned by certain current and former employees of the Company as noncontrolling interest. 2. Summary of Significant Accounting Policies The significant accounting policies of the Company are described below. Basis of Presentation The accompanying unaudited interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for complete financial statements. These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. However, the results of operations for the int

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