Brookfield Oaktree's Net Income Plunges 97.5% Amid Revenue Decline

TL;DR

OAK-PB's massive 97.5% net income drop is a red flag; expect continued pressure on distributions and a tough road ahead for this alternative asset manager.

AI Summary

Brookfield Oaktree Holdings, LLC (BOH) reported a significant decline in net income attributable to Class A unitholders for the six months ended June 30, 2025, plummeting to $2.906 million from $114.760 million in the prior year, a decrease of 97.5%. Total revenues also saw a substantial drop, falling to $264.485 million for the six months ended June 30, 2025, from $410.059 million in the same period of 2024, a 35.5% reduction. This was primarily driven by a complete absence of incentive income in 2025, compared to $117.529 million in 2024, and a negative net change in unrealized appreciation on consolidated funds' investments of $(140.344) million in 2025, a stark contrast to $95.179 million in appreciation in 2024. Despite these revenue challenges, net realized gain on consolidated funds' investments increased significantly to $75.137 million in 2025 from $3.081 million in 2024. The company's total assets decreased to $6.454 billion as of June 30, 2025, from $7.073 billion at December 31, 2024, largely due to a reduction in consolidated funds' investments at fair value from $4.946 billion to $4.662 billion. Cash and cash equivalents also decreased from $449.851 million at the beginning of the six-month period to $288.185 million at June 30, 2025.

Why It Matters

This sharp decline in net income and revenue for Brookfield Oaktree Holdings, LLC signals a challenging period for investors, reflecting broader market headwinds impacting alternative asset managers. The absence of incentive income and significant unrealized depreciation on consolidated funds' investments suggest a tougher environment for generating performance fees and investment gains, potentially impacting future distributions to unitholders. In a competitive landscape, sustained underperformance could lead to capital outflows or difficulty in raising new funds, affecting Oaktree's ability to attract and retain top talent. Customers of Oaktree's funds may also see lower returns, influencing their future investment decisions and potentially shifting capital to better-performing competitors.

Risk Assessment

Risk Level: high — The risk level is high due to the dramatic 97.5% decrease in net income attributable to Class A unitholders, from $114.760 million in Q2 2024 to $2.906 million in Q2 2025. This is compounded by a 35.5% decline in total revenues and a significant negative shift in unrealized appreciation on consolidated funds' investments, moving from a gain of $95.179 million in 2024 to a loss of $(140.344) million in 2025.

Analyst Insight

Investors should consider reducing exposure to OAK-PB given the severe decline in net income and revenue, coupled with negative unrealized investment performance. Monitor future filings closely for any signs of a turnaround in incentive income generation and investment valuations before considering re-entry.

Financial Highlights

debt To Equity

N/A

revenue

$264,485,000

operating Margin

N/A

total Assets

$6,454,799,000

total Debt

$998,111,000

net Income

$2,906,000

eps

$0.02

gross Margin

N/A

cash Position

$288,185,000

revenue Growth

-35.5%

Revenue Breakdown

Key Numbers

• $2.906M — Net Income Attributable to Class A Unitholders (Decreased 97.5% from $114.760M in Q2 2024 to $2.906M in Q2 2025.)
• $264.485M — Total Revenues (Decreased 35.5% from $410.059M in Q2 2024 to $264.485M in Q2 2025.)
• $0 — Incentive Income (Zero incentive income for six months ended June 30, 2025, compared to $117.529M in Q2 2024.)
• ($140.344M) — Net Change in Unrealized Appreciation (Depreciation) (Shifted from $95.179M appreciation in Q2 2024 to $140.344M depreciation in Q2 2025.)
• $75.137M — Net Realized Gain on Consolidated Funds' Investments (Increased significantly from $3.081M in Q2 2024 to $75.137M in Q2 2025.)
• $6.454B — Total Assets (Decreased from $7.073B at Dec 31, 2024, to $6.454B at June 30, 2025.)
• $4.662B — Investments, at fair value (consolidated funds) (Decreased from $4.946B at Dec 31, 2024, to $4.662B at June 30, 2025.)
• $288.185M — Cash and Cash-Equivalents (ending balance) (Decreased from $449.851M at beginning of period to $288.185M at June 30, 2025.)
• $0.02 — Net income (loss) per Class A unit (basic and diluted) (Decreased from $1.02 in Q2 2024 to $0.02 in Q2 2025.)
• $1.58 — Distributions declared per Class A unit (Increased from $1.40 in Q2 2024 to $1.58 in Q2 2025, despite lower net income.)

Key Players & Entities

• Brookfield Oaktree Holdings, LLC (company) — registrant
• Oaktree (company) — investment manager
• New York Stock Exchange (regulator) — exchange where preferred units are registered
• $2.906 million (dollar_amount) — net income attributable to Class A unitholders for six months ended June 30, 2025
• $114.760 million (dollar_amount) — net income attributable to Class A unitholders for six months ended June 30, 2024
• $264.485 million (dollar_amount) — total revenues for six months ended June 30, 2025
• $410.059 million (dollar_amount) — total revenues for six months ended June 30, 2024
• $140.344 million (dollar_amount) — net change in unrealized depreciation on consolidated funds' investments for six months ended June 30, 2025
• $95.179 million (dollar_amount) — net change in unrealized appreciation on consolidated funds' investments for six months ended June 30, 2024
• $6.454 billion (dollar_amount) — total assets as of June 30, 2025

FAQ

Risk Factors

• Volatility in Investment Performance [high — market]: The company experienced a significant shift from unrealized appreciation of $95.179 million in the prior year to a depreciation of $140.344 million for the six months ended June 30, 2025. This volatility directly impacts investment income and overall profitability.
• Dependence on Incentive Income [high — market]: The complete absence of incentive income in the first six months of 2025, which contributed $117.529 million in the prior year, highlights a significant revenue concentration risk. Fluctuations in fund performance can lead to substantial swings in this income stream.
• Declining Asset Base and Cash Position [medium — financial]: Total assets decreased by 8.7% from $7.073 billion to $6.454 billion, with consolidated fund investments falling from $4.946 billion to $4.662 billion. Cash and cash equivalents also saw a substantial reduction from $449.851 million to $288.185 million.
• Management of Consolidated Funds [medium — operational]: The performance of consolidated funds is critical, as evidenced by the large negative unrealized appreciation. Effective management and strategy for these funds are essential to mitigate losses and generate gains.
• Reduced Net Income and EPS [high — financial]: Net income attributable to Class A unitholders plummeted by 97.5% to $2.906 million, and EPS dropped from $1.02 to $0.02. This sharp decline indicates a severe impact on shareholder value.

Industry Context

The alternative asset management industry, where Brookfield Oaktree operates, is characterized by its reliance on performance-based fees (incentive income) and the valuation of underlying investments. Market volatility and the ability to generate consistent alpha are crucial for success. Competition is intense, with firms constantly seeking to attract capital and deliver superior returns in diverse economic conditions.

Regulatory Implications

As a financial services entity, Brookfield Oaktree is subject to various regulatory frameworks governing investment management, capital markets, and investor protection. Changes in regulations related to fund accounting, disclosure requirements, or capital adequacy could impact operations and compliance costs.

What Investors Should Do

1. Monitor incentive income generation closely.
2. Analyze the drivers of unrealized depreciation.
3. Evaluate the sustainability of distributions.
4. Assess the impact of reduced asset base and cash.

Glossary

Incentive income

Income earned by asset managers based on the performance of the funds they manage, typically a percentage of profits above a certain hurdle rate. (A significant component of BOH's revenue, its absence in 2025 drastically impacted total revenues and net income.)

Unrealized appreciation

The increase in the market value of an investment that has not yet been sold. It is recognized in financial statements but does not represent actual cash received until the asset is sold. (A negative change in unrealized appreciation of $(140.344) million in 2025 significantly reduced reported investment income.)

Realized gain

The profit made from selling an asset for more than its purchase price. This represents actual cash generated. (Despite overall revenue declines, net realized gains on investments increased substantially to $75.137 million, partially offsetting other negative impacts.)

Consolidated funds

Investment funds whose assets and liabilities are included in the parent company's financial statements because the parent company has control over them. (Investments in these funds represent a large portion of BOH's assets, and their performance directly affects the company's financial results.)

Class A unitholders

Holders of a specific class of units in the limited liability company, often representing equity ownership with certain rights and claims on profits. (Net income attributable to Class A unitholders is a key profitability metric for the company's equity holders.)

Year-Over-Year Comparison

Brookfield Oaktree Holdings, LLC reported a severe downturn in financial performance for the six months ended June 30, 2025, compared to the same period in 2024. Total revenues decreased by 35.5% to $264.485 million, primarily due to a complete loss of incentive income ($117.529 million in 2024) and a significant negative swing in unrealized investment appreciation from $95.179 million to $(140.344) million. Consequently, net income attributable to Class A unitholders plummeted by 97.5% to $2.906 million, with EPS falling from $1.02 to $0.02. While total assets and cash reserves have decreased, distributions per Class A unit have surprisingly increased, signaling a potential disconnect between current earnings and shareholder payouts.

Filing Documents

• oak-20250630.htm (10-Q) — 2354KB
• oaktreecapitalilp-lpagr_.htm (EX-10.1) — 303KB
• exhibit3112q2025-conformed.htm (EX-31.1) — 11KB
• exhibit3122q2025-conformed.htm (EX-31.2) — 11KB
• exhibit3212q2025-conformed.htm (EX-32.1) — 6KB
• exhibit3222q2025-conformed.htm (EX-32.2) — 5KB
• oaktreecapitalilp-lpagr_001.jpg (GRAPHIC) — 648KB
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• oaktreecapitalilp-lpagr_020.jpg (GRAPHIC) — 1162KB
• oaktreecapitalilp-lpagr_021.jpg (GRAPHIC) — 729KB
• oaktreecapitalilp-lpagr_022.jpg (GRAPHIC) — 779KB
• oaktreecapitalilp-lpagr_023.jpg (GRAPHIC) — 1155KB
• oaktreecapitalilp-lpagr_024.jpg (GRAPHIC) — 356KB
• 0001403528-25-000039.txt ( ) — 40559KB
• oak-20250630.xsd (EX-101.SCH) — 66KB
• oak-20250630_cal.xml (EX-101.CAL) — 76KB
• oak-20250630_def.xml (EX-101.DEF) — 447KB
• oak-20250630_lab.xml (EX-101.LAB) — 707KB
• oak-20250630_pre.xml (EX-101.PRE) — 572KB
• oak-20250630_htm.xml (XML) — 2919KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) 1 Condensed Consolidated Statements of Financial Condition as of June 30, 202 5 and December 31, 202 4 1 Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 202 5 and 202 4 2 Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 202 5 and 202 4 3 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 202 5 and 202 4 4 Condensed Consolidated Statements of Changes in Unitholders' Capital for the Three and Six Months Ended June 30, 202 5 and 202 4 6 Notes to Condensed Consolidated Financial Statements 8 Item 2.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations 47 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 61 Item 4.

Controls and Procedures

Controls and Procedures 62

– OTHER INFORMATION

PART II – OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 63 Item 1A.

Risk Factors

Risk Factors 63 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 63 Item 3. Defaults Upon Senior Securities 63 Item 4. Mine Safety Disclosures 63 Item 5. Other Information 63 Item 6. Exhibits 64 Signature

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS This quarterly report contains forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"), which reflect our current views with respect to, among other things, our future results of operations and financial performance. In some cases, you can identify forward-looking statements by words such as "anticipate," "approximately," "believe," "continue," "could," "estimate," "expect," "intend," "may," "outlook," "plan," "potential," "predict," "seek," "should," "will" and "would" or the negative version of these words or other comparable or similar words. These statements identify prospective information. Important factors could cause actual results to differ, possibly materially, from those indicated in these statements. Forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Such forward-looking statements are subject to risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. In addition to factors previously disclosed in Brookfield Oaktree Holdings, LLC's ("BOH") reports filed with securities regulators in the United States and those identified elsewhere in this quarterly report, the following factors, among others, could cause actual results to differ materially from forward-looking statements and information or historical performance: the ability of BOH to retain and hire key service providers; the continued availability of capital and financing; the business, economic and political conditions in the markets in which BOH operates; changes in BOH's anticipated revenue and income, which are inherently volatile; changes in the value of BOH's investments; the pace o

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Brookfield Oaktree Holdings, LLC Condensed Consolidated Statements of Financial Condition (Unaudited) ($ in thousands) As of June 30, 2025 December 31, 2024 Assets Cash and cash-equivalents $ 15,207 $ 22,303 Corporate investments (includes $ 304,063 and $ 307,825 measured at fair value as of June 30, 2025 and December 31, 2024, respectively) 1,317,111 1,520,260 Due from affiliates 364 227 Other assets 31,356 16,728 Assets of consolidated funds: Cash and cash-equivalents 272,978 427,548 Investments, at fair value 4,662,753 4,946,862 Dividends and interest receivable 22,039 34,127 Receivable for securities sold 38,981 22,688 Derivative assets, at fair value 22,498 33,349 Other assets, net 71,512 49,340 Total assets $ 6,454,799 $ 7,073,432 Liabilities and Unitholders' Capital Liabilities: Accrued compensation expense $ 131 $ 300 Accounts payable, accrued expenses and other liabilities 323 648 Due to affiliates — 200 Liabilities of consolidated funds: Accounts payable, accrued expenses and other liabilities 12,619 12,981 Payables for securities purchased 100,674 102,607 Derivative liabilities, at fair value 63,142 13,385 Distributions payable 68 68 Debt obligations of the consolidated funds 998,111 1,472,795 Total liabilities 1,175,068 1,602,984 Commitments and contingencies (Note 13) Non-controlling redeemable interests in consolidated funds 3,104,539 3,069,084 Unitholders' capital: Series A preferred units, 7,200,000 units issued and outstanding as of June 30, 2025 and December 31, 2024 173,669 173,669 Series B preferred units, 9,400,000 units issued and outstanding as of June 30, 2025 and December 31, 2024 226,915 226,915 Class A units, no par value, unlimited units authorized, 118,832,320 and 116,373,234 units issued and outstanding as of June 30, 2025 and December 31, 2024, respectively — — Class B units, no par value, unlimited units authorized, 41,507,959 and 43,822,210 units issued an

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