DigitalBridge (DBRG) 7 Aug 252025 Q2 Earnings call transcript

Good day, and welcome to the DigitalBridge Group, Inc.

Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Severin White, Managing Director, Head of Public Investor Relations. Please go ahead.

Good morning, everyone, and welcome to DigitalBridge's Second Quarter 2025 Earnings Conference Call.

Speaking on the call today from the company is Marc Ganzi, our CEO; and Tom Mayrhofer, our CFO. I'll quickly cover the safe harbor.

Some of the statements that we make today regarding our business operations and financial performance may be considered forward-looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. All information discussed is as of today, August 7, 2025, and DigitalBridge does not intend and undertakes no duty to update it for future events or circumstances.

For more information, please refer to the risk factors discussed in our most recent Form 10-K filed with the SEC for the year ending December 31, 2024, and for the Form 10-Q to be filed with the SEC for the quarter ending June 30, 2025.

With that, let's get started. I'll turn the call over to Marc Ganzi, our CEO. Marc?

Thanks, Severin. Good morning, everyone, and welcome to our second quarter 2025 business update. We appreciate you joining us. And as always, we appreciate your interest in DigitalBridge. We had another strong quarter of execution across the board, continuing the momentum from the start of the year. The key takeaways for me are simple, and they align with the 3 pillars of our strategy you see here: Fundraise, Invest and Scale. This makes 3 quarters back to back where we've essentially gone out and done exactly what we said we would do. We took care of business.

First, let's start with the financial front. We delivered solid revenue and earnings growth, keeping us firmly on track to meet our full year objectives. Fee revenue growth of 8% year-over-year drove strong fee-related earnings growth of 23% as margins continue to expand. This is the core of the DigitalBridge investment case, scalable growth with expanding margins, and we are delivering on that fundamental premise.

Second, on fundraising.

We continue to see exceptional demand from LPs to partner with us and invest in the digital economy. We raised another $1.3 billion in the quarter, bringing our year-to-date total of $2.5 billion and making great progress towards our $40 billion FEEUM target for the year. And third, on the investment front, this was an important quarter. With a built and under construction pipeline of over 5.4 gigawatts, up 50% over the prior year, we're putting $50-plus billion to work over the next few years on contracted data center projects, tethered to our power bank, which we'll talk a little bit about later.

We weren't just deploying capital. We were making decisive strategic moves to solve the biggest bottlenecks for our customers in the AI revolution. We established 2 new critical platforms in the quarter, Yondr in hyperscale data centers and Takanock in the digital power strategy, while continuing to fuel the growth of our existing market leaders like Switch and Vantage and the rest of the constellation of the DigitalBridge portfolio companies.

We are building the AI factories that will power the next decade of innovation.

Let's dig into capital formation momentum.

As you can see, at the midyear point, we are tracking right where we need to be to achieve our full year objectives.

Importantly, the fundraising mix is aligned with our budget. And as we get back into the second half of the year, new strategies will start to contribute alongside the final close of our third flagship fund. We're building a multi-strat fundraising platform, and you'll see that on display as the year progresses.

Our flagship DBP III strategy continues to attract capital, and we've raised $6.9 billion year-to-date with a final close in the third quarter that will take the total to over $7 billion plus, which was our new target. This is the bedrock of our platform, providing diversified global exposure to the entire digital infrastructure ecosystem.

But what's really exciting and a key indicator of the value that we're creating is the maturation of our co-investment program. We talked about this last year, and we told you exactly where we were going this year.

Our market-leading platforms like Vantage and Switch become more critical to the AI ecosystem.

Our partners want more direct exposure.

You can see that in the fee rate in our co-investments, which are 30% higher year-to-date, averaging just about 60 basis points compared to our 45 basis point historical average. Again, this was a key component to our strategy and something we talked about last year that we thought we could do a better job at. This is high-quality, high conviction capital from LPs who know our assets, they know our leadership teams, and they see the performance firsthand. It's a powerful testament to the value we're creating at the portfolio company level. This is incredibly unique to the DigitalBridge story.

This all flows ultimately straight into FEEUM, the key metric that drives our earnings. The activation of new capital from the DigitalBridge Partners Series and high-quality co-investments puts us in a great position to exceed our $40 billion FEEUM target for 2025.

We are building predictable reoccurring revenue for our shareholders.

Next slide, please.

So the next question is, we're raising all this capital, where is it going? Where are we putting it to work? Look, it's going directly to work in critical infrastructure that our customers need. This slide is a great snapshot of our investment thesis in action, identifying key new secular trends and establishing platforms to capture them, while simultaneously fueling the growth of our established winners.

Let's start with new platforms. The 2 biggest constraints in the AI build-out today are power and data center capacity. I'm not the only one talking about this. I've been talking about, in fact, for the last 2 years, and now everyone is talking about it.

This quarter, we made moves to extend and establish our leadership position in both verticals, digital power and continuing to light up data center capacity.

Let's start with power. We committed up to $500 million alongside of our partners, ArcLight to launch Takanock. This isn't just an investment, it's a new strategy. We've been talking about it for the last few quarters, where are we going to put our capital to work and where we're going to put our best ideas to work in powering the AI economy. Takanock fits that prototype. It develops powered land, solving the #1 headache for hyperscalers and accelerating their ability to deploy AI capacity. We'll talk more about this in a minute.

Second, capacity. We're thrilled to close the multibillion-dollar acquisition of Yondr, a premier global hyperscale developer that is super focused on powered shell. With over 400 megawatts of leased capacity and a clear path over 1 gigawatt, Yondr immediately becomes our eighth global data center platform and significantly expands our ability to serve the largest cloud and AI players. At the same time, we're not taking our eye off the ball with our existing portfolio.

You see significant financings at both Switch and Vantage. This isn't maintenance capital. This is growth capital, and that's a critical thing to acknowledge. It's funding massive expansions, including a new $3 billion AI campus in Nevada for Switch and continued build-outs across North America and Europe for Vantage to meet record customer bookings.

Next slide, please.

So now I want to spend a few minutes on the underlying demand drivers that give us so much conviction in our strategy and our investment thesis at DigitalBridge today.

If you recall, the first quarter was characterized by some macro questions, including what's the ROI of AI. But in the second quarter, the signal broke through the noise. The narrative shifted decisively and AI's return on invested capital came in a sharp focus. And you don't have to take my word for it.

Listen to the leaders of the world's largest technology and hyperscale companies. Mark Zuckerberg describing the pace of AI innovation highlighted last week that the more aggressive assumptions were the fastest assumptions have been the ones that have most accurately predicted what would happen. Microsoft's CFO, Amy Hood, was confirming the same. The return on invested capital is real, stating that their AI spend is correlated to basically contracted on the books business. Direct free cash flow conversion directly correlated to AI workloads. And most powerfully, Google's CFO, Anat Ashkenazi confirmed that they're increasing their 2025 CapEx forecast by $10 billion to $85 billion, and they expect a further increase in 2026 demand, and that's not going to stop anytime soon.

So we've seen a step function in CapEx. We talked about it in the fourth quarter last year. We then reforecasted again in the first quarter of this year. And now we're again back at the table reforecasting CapEx for this year, which we're anticipating going to over $380 billion. When the world's largest cloud providers are telling you in no uncertain terms that demand is exceeding the most aggressive assumptions and they're increasing spending by tens of billions of dollars to keep up, you listen. The debate is over. The race is on.

Next slide, please.

So what's driving this historic capital deployment? It comes down to a fundamental unit of AI work, the token.

As tokens explode, so does the need for compute power. Look at the data from Google. A year ago, they were processing about 10 trillion tokens a month. At their I/O conference in May of this year, Sundar announced that the number had grown 50-fold to 480 trillion tokens. That is not a typo. That is a 50x increase in workloads. The number is staggering but what's really the key subtext here is the acceleration.

On their earnings call just 2 weeks ago, they updated that number again, saying they would now doubled since May and are processing over 980 trillion tokens in a month.

So this is really the conundrum for us.

As an investor, as an owner and an operator, we're at a key inflection point in compute demand, and it's on us to keep up.

So let that sink in, a 50x increase year-over-year and then a 2x increase in just the last 90 days. Every single one of these, nearly 1 quadrillion tokens processed each month requires a chip, a server, a rack in a data center that requires an immense amount of power and cooling that is the atomic level driver of the demand that we're seeing across our portfolio, and it's growing at a rate our industry has never witnessed before. This is a seminal moment in digital infrastructure.

Next page, please.

This explosion in token volume is what's fueling the leasing demand you see on this slide. That record 5-gigawatt U.S. hyperscale leasing pipeline is a direct result of the token engine that we just discussed. It's being driven by the hyperscalers and AI leaders who are in an arms race for capacity to process these workloads. And as we've said, this is still largely about training. The next wave of inference workloads is just beginning to ramp, which will compound this growth exponentially.

But taking a step back, all of this training and inference runs into one ultimate constraint, power. We've been talking about it for the last 4 quarters. The chart on the left shows the global data center, electricity consumption is set to more than double by 2030. This isn't a distant problem. It's the single biggest challenge facing our customers and our industry today. This is the entire thesis in one slide. The token explosion is driving a leasing boom, which is creating a power crunch. In our strategy, investing in hyperscale capacity with Vantage, Switch, DataBank and Yondr, building scale at the edge with DataBank and creating new power solutions with Takanock is the direct integrated response to solving our customers' biggest problems.

I'll talk more about this opportunity in the third section. But for now, I want to turn it over to Tom right now to talk through our financial performance for the quarter. Tom?

Thanks, Marc, and good morning, everyone.

As a quick reminder, the full earnings presentation is available within the shareholders section of our website.

As usual, I'll start with our financial highlights, which Marc touched on briefly.

In the second quarter, we recorded $85 million of fee revenue, representing an increase of 8% over the second quarter of 2024.

Our fee revenue this quarter benefited from the cumulative effect of organic growth in our flagship fund series over the last 12 months with a relatively modest $3 million contribution from catch-up fees this quarter. This growth in fee revenue resulted in $32 million of FRE in the quarter, an increase of 23% over Q2 of last year. Distributable earnings was negative $19 million for the quarter, principally driven by a $40 million realized loss from an InfraBridge fund investment. This was previously reported as an unrealized loss and recognized this quarter as a realized loss. The flip from unrealized to realized resulted in this markdown running through DE this quarter, but had no impact on FRE or cash flow in the quarter.

As of quarter end, our available corporate cash was $158 million, providing material liquidity and flexibility for us as we continue to evaluate both our capital structure and opportunities to invest in and grow the business.

During the quarter, we strategically deployed $33 million into seed assets to support fund launches for a couple of our new products, including our initiative around energy that Marc touched on.

Moving to the next page. Fee-earning equity under management increased to $39.7 billion as of June 30, representing a 21% increase from last year. This growth is primarily driven by capital formation in the DBP Series and co-investments as well as fee activation on certain previously raised capital that earns management fees once deployed.

While we expect to continue to raise new capital over the second half of the year, the increase in FEEUM is likely to moderate over the next quarter or 2 as distributions from the portfolio partially offset new capital raised. We closed $1.3 billion in new fee earning commitments during the quarter, a 17% increase over the second quarter of 2024, led by strong co-investment activity and new commitments to our latest DBP flagship fund.

Turning to the next page, which summarizes our non-GAAP financial results.

As mentioned earlier, we reported $85 million of fee revenue in the quarter, representing growth of 8% over the same quarter in the prior year.

Our LTM FRE margin was 36% in the second quarter.

We expect margins to remain elevated through the final close of our flagship fund in the second half of 2025, supported by the continued contribution from catch-up fees.

Moving to the next page, which summarizes our carried interest and principal investment income. We reported a $12 million net reversal of carried interest during the quarter.

As a reminder, the company accrues carried interest based on quarterly changes in the fair value of our fund investments.

As discussed previously, many of our vehicles are in the early to middle stages of their life cycle and have not fully worked their way through the [ J ] curve to be clear of the preferred return.

So at this point in their life cycle, small changes in the fair value of the fund's assets can have an outsized impact on the quarterly accrued carried interest that we record, including causing reversals as we've seen this quarter, in periods when the appreciation in the portfolio does not exceed the preferred return hurdle for the quarter.

As we've discussed in prior quarters, carried interest compensation expense tracks these changes, and therefore, there was a commensurate reversal of a portion of the unrealized carried interest compensation this quarter. Principal investment income, which represents the mark-to-market on the company's GP investments in our various funds was $21 million.

Turning to the next page. This chart continues to highlight the stability and consistency in growth, both in revenues and margin that we've experienced over the last 2 years. LTM FRE margin has grown to 36% as of June 30, which is consistent with our target of increasing our FRE margin this year and includes the impact of catch-up fees as previously discussed.

Excluding catch-up fees, we were at an FRE margin of approximately 32% over the last 12 months.

This quarter, we saw $3.4 billion of FEEUM inflows, a significant portion of which was related to the activation of fees on co-investment capital that had been raised in prior periods. These inflows were partially offset by $900 million in outflows, driven principally by various return of capital events across our liquid and credit strategies.

Finally, the company continues to maintain a strong balance sheet with approximately $1.6 billion of corporate assets, largely reflecting our material investments alongside our limited partners and available corporate cash.

Additionally, during the quarter, based on our strong liquidity position, we elected to downsize our revolver from $300 million to $100 million to avoid unnecessary unused fees, and that revolver remains fully undrawn. We're pleased with our results for the first half of the year, and we're very excited about the opportunity set that we see ahead of us, both in our core business and some of the new initiatives that we're working on.

With that, I'll turn the call back over to Marc.

Thanks, Tom.

So how do we attack the massive opportunities I talked about in the first section in a disciplined way? So many investment managers are running around and talking about power and data centers and their investment thesis and strategies. I would rather say the most important thing is you got to execute. This is a framework that we've refined over 30 years of building and scaling digital infrastructure businesses. It's not a new trick for us, it's a 3-phase process. We establish platforms, we transform them, we scale them, and ultimately, you've heard me say this over the last 5 years, we follow the logos, we serve our customers. It's our blueprint for repeatable value creation.

This quarter's activities are a perfect example of the playbook in action. Phase 1, Takanock. We established the platform, we've identified the most critical bottleneck in the entire ecosystem, power. And we've backed a world-class team led by an ex-Google and Microsoft energy veteran to build definitive platforms to solve the problem for hyperscalers. With Yondr, we're also at the beginning of our journey. We acquired a fantastic global platform that will now move into Phase 2, transform and scale. We're bringing in our capital, our operating expertise and a sharpened business plan to accelerate the growth and align it with the most pressing AI cloud demand workloads. We've already proven this out with Vantage and with Switch.

You've seen this playbook on display before.

Well, back to Switch. We're deep in Phase 3 at Switch, following the logos. Switch is a technology-centric market-leading Tier 5 platform.

Our role now is to provide the capital, the strategic support they need to serve customers and funding their growth in new AI-driven opportunities and optimizing the capital structure as you've seen in the recent financings. This is not opportunistic. This is a disciplined, repeatable process for creating value for LPs and our shareholders at every stage of the company's life cycle.

Next slide, please.

So I want to double-click on the power opportunity because this is so fundamental to our entire strategy. It's the single biggest factor shaping the next decade of digital infrastructure. The convergence of the digital economy and energy sectors is here, and with Takanock, we're not just participating, we're leading. To tackle a problem of the scale, you really need to bring together experts with deep domain expertise and that's exactly what we've done. This is a great example of our backing great teams playbook, but on an entirely different level and scale. On one side, you have DigitalBridge. We live and breathe this every day. We see the urgent demand from our customers across our portfolio and now this is nearly a 21-gigawatt power bank that we've created. We know what hyperscalers need, where they need it and the specifications that they require for high-power compute.

On the other side, you have ArcLight, a leader in building and operating power and electrification of infrastructure with a track record of managing over 65-gigawatts of power assets. I have to say working with their team to stand up Takanock has been a phenomenal experience. We bring together the data center development capabilities, they bring together the power expertise. Together, we've created a platform in Takanock that is purpose-built to solve the #1 constraint for our customers, bridging 2 worlds to create one solution that neither of us could have built effectively alone. It's been a real pleasure working alongside of an industry veteran. And we spent the last 2 years diligencing who we could go run this race with. And at the end of the day, the 3-decade track record of Dan, Angelo and Jake and the entire team at ArcLight was super compelling. We found in ArcLight a partner just like DigitalBridge, first and foremost, an industrialist and somebody that knows how to build infrastructure at the street level. This is entirely critical to the success in our digital power strategy.

Next slide, please.

So what does Takanock actually do? It's simple, but it's revolutionary. Takanock develops powered land. They acquire and entitle large sites in the most power-constrained markets like Northern Virginia and Phoenix, and they develop on-site dispatchable power solutions. That's really critical. This solves the time to power problem, instead of waiting years for utility interconnection or a will serve letter, our customers can get shovel-ready sites with power, dramatically accelerating their AI deployments. Takanock provides prime power now and can transition to grid support role later, offering tremendous flexibility and ESG-aligned design.

The team is led by Kenneth Davies, who built the energy strategies for Google and Microsoft and has successfully developed data center-focused energy platforms throughout his career. Backing great teams is straight out of the DigitalBridge playbook. It's what we know, it's what we do. Ken and the team know exactly what these customers need, and they've already got a significant pipeline with over 1,600 acres under control. They potentially have nearly 3 gigawatts of IT capacity and over 5 gigawatts of generation capacity. This is massive, it's a scalable opportunity, and we're in on the ground floor of the emerging category of digital infrastructure in partnership with the amazing team in ArcLight. I could not be more excited about this initiative.

Next slide, please.

So turning to the second phase of major investments in the quarter. We're thrilled to welcome the Yondr team to the DigitalBridge family.

As AI models grow, the demand for massive purpose-built hyperscale campuses is exploding, and Yondr is a pure-play leader in this space. With a global footprint in key markets from Northern Virginia to Frankfurt to Tokyo and a development pipeline of over 1 gigawatt, Yondr is a perfect strategic fit. This acquisition in partnership with our long-term investors at La Caisse, [ TDPQ ] immediately strengthens our global hyperscale portfolio. Alongside Vantage and Switch, Yondr gives us another world-class platform to serve the giga scale training requirements of the largest cloud and AI players. This isn't just about adding assets. It's about adding capabilities, customer relationships and a team that knows how to deliver for the most demanding clients in the world.

As you see on the next slide, we're not wasting any time putting our playbook to work to transform and scale this incredible platform.

Next page.

So despite just closing the deal, we're already deep into executing Phase 2 of our [indiscernible] Yondr, transform and scale. This is where our deep operating and financial expertise comes in to drive a sharpened business plan focused on scalable growth.

First, we appointed a new world-class senior leadership team. We brought in Aaron Wangenheim, formerly of T5 as CEO; and Sandip Mahajan, a leveraged Finance Veteran and CFO. This is a team built to execute at hyperscale speed. Finding and empowering the right leadership has always been a key differentiator for us at DigitalBridge. When you look across our portfolio, it's really comprised of industry pioneers and leaders with long and proven track records. This is what works for us and our investors over time. We're thrilled to add Aaron and Sandip to the team, and we look forward to working with them.

Second, we immediately began optimizing the footprint to focus the highest return opportunities.

So just last week, we announced the divestiture of EverYondr, our joint venture in India. This move streamlines Yondr's presence and allows us to redeploy capital to accelerate development in our priority AI cloud campuses in North America and Europe, where demand is, to be very direct, is most acute. And third, we're partnering with the leading investors in the world like La Caisse and Allianz to provide the significant primary capital required to build out Yondr's 1 gigawatt plus pipeline. This is the DigitalBridge playbook in action, speed, discipline and a relentless focus on creating value from day 1.

Next slide, please.

So finally, let's look at Switch. We've talked a lot about Switch. It's been one of the great acquisitions that we did out of our second flagship fund, taking it private for just under $11 billion. This is a perfect example of Phase 3 of our playbook, follow the logos. Since that transaction in 2022, we partnered with the team to transform its capital structure and position it to win in the age of AI.

This quarter, Switch expanded its credit facilities to an incredible $10 billion. This series of landmark financings achieved several key objectives. One, it significantly reduces their cost of capital. Two, it retires 100% of the original take private bank debt ahead of schedule. And most importantly, it provides a massive war chest to fund the next phase of their growth. This is really an exciting and transformative moment for Switch.

And look at the evolution here. We went from a fixed premium M&A deal structure to a sophisticated multi-instrument platform, including revolvers, term loans and ABS. This includes the first ever ABS rated under S&P's new and more stringent data center methodology, a testament to the quality of the assets and the strength of the customer contracts. Also a testament to the uniqueness of the Switch platform, Tier 5, highly secure, very reliable, fully redundant and has never gone down 1 day or 1 minute in the history of the company. This is something that S&P understood and it's something that investors now understand. Switch is differentiated. The bottom line is in partnership with DigitalBridge and Rob and Thomas, [ Madon ] and Jason, the entire Switch team, it now has the financial strength and the access to low cost of capital to meet the incredible demand they're seeing for their innovative AI-ready campuses. This is what follow logos looks like in practice, enabling our market leaders to scale with their customers.

Next slide, please.

So before we wrap it up, I want to put all of this into a broader context. It's the one thing to talk about individual deals and platforms. But look, it's another thing to take a step back and appreciate the sheer scale of DigitalBridge and what we're building. I don't think investors have an appreciation for what we have done and where we're going. At the global hyperscale level, for massive model training, you have Vantage, Scala and now Yondr. These are giga scale campuses serving the public cloud giants and AI leaders.

For private cloud and enterprise inside of the AI ecosystem, you have Switch, which also has a growing hyperscale customer base, along with data sovereignty and government customers. Their Tier 5 campuses are the gold standard for enterprise and sovereigns who need secure, high-performance compute with their own proprietary AI applications. And critically, for the coming wave of inference and Agentic AI, you have DataBank with 73 data center campuses, 73 data centers in 26 markets, data center provides low-latency compute at the edge that will be essential for real-time action-oriented AI applications.

We are the only platform that owns and operates best-in-class assets across the entire spectrum from the core to the edge. We can meet our customers wherever they are in their AI journey with the right solution for most importantly, the right workload. This is a very differentiated approach to investing and building in data centers. We understand [ ADs ], we understand workloads, and we understand where our customers want to be.

We have the platforms that pair up with those customer expectations. This is like no other platform in the investment management world in terms of how we tailor our solution set.

And what you see here are the AI factories of the future, 5.4 gigawatts of data center compute capacity in flight with roughly half of that currently built and the other half under construction.

If you look across the sector, even at some of our largest peers that are publicly traded, I think you'll find that pace and scale is at a very different level. And this is just what's funded and in construction today. The raw material for these factories is power. We're right back to where we started, power again, and our total secured power bank across the portfolio now stands at nearly 21 gigawatts.

This is our strategic land bank for the AI revolution, and it is industry-leading. Building these AI factories requires an immense amount of capital. Between now and the end of 2026, we anticipate deploying over $43 billion of CapEx across our portfolio with DigitalBridge's share at just under $30 billion to bring this capacity online and on time. We're not just participating in the AI build-out.

We are leading it at a scale that few can match.

We are building the critical infrastructure that will find the next decade of technological innovation.

Next slide, please.

So at the end of the day, why does this matter? What does it mean to you, our shareholders? It matters because this pipeline of AI factories represents a massive embedded value creation engine for DigitalBridge. This is how the math works.

As you can see on this slide, to build 1 gigawatt of data center capacity, it requires roughly $10 billion in total capital, about half of which is equity if you're levering those assets at the correct loan-to-value ratio. When we successfully execute our playbook, build that gigawatt, lease it up and ultimately harvest value for LPs, it generates carried interest for DigitalBridge shareholders.

So now take that math to the 5.4 gigawatts that we have either lit today or under construction. That represents over $50 billion of total investment and more than $25 billion of equity being put to work with DigitalBridge controlling approximately 2/3 of the ownership of those platforms. That represents roughly $1 billion of potential future carried interest being built, cultivated and embedded in our portfolio right now.

Look, simply put, in distilling this for you as an investor, this is long-term value creation, and this is the core of our strategy and the proposition for why to own DigitalBridge shares.

While we focus on delivering consistent fee-related earnings growth quarter-over-quarter, we're simultaneously building an enormous pipeline of future portfolio income and high-margin carry. This development pipeline is the clearest illustration of the immense embedded value that is accumulating for our shareholders at DigitalBridge.

Next slide, please.

So let's wrap it up.

Let's bring it together and look at the scorecard for 2025.

The first half is in the books. We've delivered on our key priorities.

Let's start with the most important one. We delivered strong double-digit FRE growth.

We are on track to beat our financial metrics. We successfully formed capital and are making great progress towards our $40 billion FEEUM goal for this year.

Second, we developed and launched our new investment strategies with Takanock being the first major step in our digital energy platform. And we hit a major milestone with our portfolio of AUM now exceeding $100 billion, this is up over 25% from last year. We did what we said we would do, and our focus for the second half now is very clear.

We are reaffirming our guidance for the year.

Priority one, deliver on our 2025 financial metrics with fee-related earnings up 10% to 20% over last year, and we will continue to improve our margins. Priority 2, successfully form the capital to take our FEEUM over the $40 billion mark.

We have extreme high conviction around our ability to hit and exceed our fundraising targets for 2025. Priority 3, successfully launch our new strategies with initial commitments to digital energy, our stabilized data center strategy and our next private wealth offering. All 3 of those strategies are in flight. And priorities 4 and 5, maintain a strong balance sheet and continue to evaluate strategic, but most importantly, accretive M&A opportunities.

Look, we have a really clear path.

We have momentum. And most importantly, we are executing for you. We're in the very early stages of a historic multi-decade investment cycle driven by AI. DigitalBridge has the team, the platforms, the power bank and the vision to lead the way.

I want to thank you for your time. I look forward to your questions.

So operator, please open the line to Q&A. Thank you very much.

[Operator Instructions] The first question today comes from Michael Elias with TD Cowen.

Two, if I may.

One of the themes this earnings season seems to be that inference is scaling. Marc, just curious if you're seeing any evidence of the hyperscalers scaling up their focus on inference compute? Or is it still early days?

And then my second question is, as you think of your portfolio and the position to capture the inference demand, how do you expect the inference demand to drive financial results for DigitalBridge? And how does that compare to what you saw during the training phase? I think specifically, what I'm getting at is, I'd imagine inference is more interconnection dense at the edge, which should have a higher return profile.

Just curious how you think of this.

So let's start with the first one. And first off, Michael, thank you. Look forward to seeing you next week. I would say we are very much at the early innings of inference.

If you look across our footprint and you look at where some of our customers like Rock are installing, we're seeing those workloads now manifest in data centers. They're manifesting -- as you would expect, they're manifesting in places that aren't exactly where all of the hyperscalers are going. But early workloads favor highly interconnected portfolio companies like DataBank and like Switch, where we have a ton of interconnection, but we also have something that's quite unique, which is we have high-power compute capacity.

So I was listening to another publicly traded data center conference call recently, and they really weren't talking a ton about inferencing because you not only have to have interconnection, but you have to have the ability to deliver a Tier 3, Tier 4 solution that's got somewhere in the order of magnitude of at least 25 to 100 megawatts.

So these aren't your typical edge workloads where in public cloud over the last 5 to 7 years, we've seen those deployments in the 250 kW all the way up to 10 megawatts. That's been kind of the Tier 2, Tier 3 market workloads for public cloud. AI is different.

You and I have been talking about this, Michael, for a year. Yes, it will follow some of the architecture of public cloud, but in many respects, it won't.

And so I think looking to -- for folks looking to see that, that playbook is going to re-manifest itself in the same way, it's not. Interconnection helps.

As you know, Switch and DataBank have massive interconnection capabilities. But it's back to where we finished our presentation today, Michael. It's about power. Having power on demand, having leading platforms that have that power ready today, not tomorrow, not some sort of solution in a press release, but actually going out and being able to deliver that inferencing workload in a very specific location with a ton of connectivity is what's going to win.

So it will be a little bit different from how we saw edge public cloud playing out in the last 5 years. By the way, edge cloud workloads are still playing out. We're probably -- if we were playing a 9-inning baseball game in cloud edge, we're probably in the fourth or fifth inning. Inferencing is in probably bottom of the first inning. It's very early days for inferencing.

So I hope that answers both of your questions. If I didn't, you can refocus the second question.

Yes.

Just the second question was more, look, if I think of a training -- hyperscale training data center, I would think of like, call it, 10% returns. When I think of your traditional interconnection data center, I would think of at least mid-teens type returns and the thought there is that to the extent the returns are higher when you land that demand, as we think of the accretion to DigitalBridge and the analysis that you laid out, I would think that it's more value accretive for the DigitalBridge shareholders.

So just trying to tease out how that -- essentially that math you provided at the end changes in an inference world.

Well, I think the returns for public cloud, edge and private cloud are a little bit different.

I think we've made that case pretty clearly between Vantage and DataBank and Switch and now, of course, Yondr joining that fray as well. But let's focus on inferencing and edge workloads and those returns for a second. We see that those returns are very differentiated. When we took ownership of DataBank over 8 years ago, we bought that business for circa $235 million. It's been recapped a couple of times. We've created this really unique continuation vehicle structure, and that business is well, well north of $11 billion to $12 billion with a glide path that's going quite fast. The EBITDA growth at DataBank is low 20s, but the EBITDA growth at Switch and Vantage are also in that same ballpark as well.

What you're trying to get to is the imputed returns or the cap rate on new builds. And what's interesting about when you talk about inferencing workloads, you're not just going to go build a data center for one inferencing provider in a market like, say, Bluffdale, Utah, say, Houston, Texas, say, Cleveland, Ohio.

You're going to build that edge inferencing workload to accommodate multiple customers. And I think that's the difference. When you're looking at a Vantage new build and it's a campus environment, you usually have one core anchor customer. We're in inferencing and edge, I don't have one customer, Michael. I have multiple customers.

So for example, we had an Investor Day with a series of really sophisticated pension funds a couple of weeks ago in Utah, and we were sitting in that data center, and that wasn't -- that 6 data centers in one campus, it's an edge facility that really supports one hyperscale customer. But what we find out is when you get to the edge, Michael, you got to support the ecosystem of that hyperscaler.

So it's not just the hyperscaler and edge. It's the folks that are involved in multiple facets of delivering that hyperscale experience.

So it wouldn't surprise you that there were more than 20 customers in that campus and that there were interconnection capabilities to over 30 fiber carriers. And we have over 482 pairs of dark fiber running between that and the map of the network access point of Salt Lake City, which is in Downtown Salt Lake. Edge is very different, Michael. It's a very different architecture. This concept of tethering in Tier 2 and Tier 3 markets is something we created at DataBank.

And so that's why DataBank's returns, and that's why their growth is so high.

So we don't see those types of returns in inferencing and edge below hyperscale. We actually see it the other way, Michael. We see returns are actually much, much higher. And the other thing is the places where we're building inferencing workloads, again, we already have the power. The power is there.

So our customers are not waiting.

So for example, that one hyperscaler in Bluffdale, Utah, they brought with them 6 other customers. We call that the lighthouse approach.

So you get one hyperscaler, but then you get the ecosystem of different developers that are around them and the infrastructure that sits behind that hyperscaler. Again, I'm sorry if I'm being opaque, but I can't tell you the exact customer in that location that was the lighthouse customer that brought everybody in that location. And now we've added a second hyperscaler to that campus, and that hyperscaler is bringing their ecosystem. And with that comes inferencing.

So we actually see returns in that situation. And if we look at the returns just on that specific campus, the returns were well north of 30% on a levered basis because now we've securitized those 6 data centers in Bluffdale, Utah. And then public cloud, private cloud and edge, the last one is Switch on public cloud. One thing that Switch has done a great job of, as you know, is they've created a really unique virtualized interconnection system where you can cross-connect to any telco provider in the world when you're in a Switch facility.

So it's like having over 400 virtualized cross-connects in any Switch facility, very unique, that fabric infrastructure is something that nobody else really has.

And at the end of the day, it creates an environment, a very safe and Tier 5 environment where the most important Fortune 100 customers and government agencies and now hyperscalers, they want to be A switch facility because they know what they're getting, highly connected, highly secure. And again, back to that word, power. We're going to keep talking about power until the end of this year. And hopefully, today's presentation, Michael, sort of shed some light on that. And certainly, when we get to Boulder next week to sit down with you, we can talk more about power.

But this concept of having over 20 gigawatts of power ready today for our customers available is an asset and a weapon that DigitalBridge has that nobody else has, not the publicly traded data center REITs, any other GPs in the world, we have it, they don't. They have it obviously at scale, and they have a lot of power. But what we've assembled is very unique and very different, and we've got to get investors clued into that.

The next question comes from Richard Choe with JPMorgan.

I just wanted to follow up on the strength in co-invest. It had another good quarter. How should we think about it going forward? And are there any portfolio companies you'd like to highlight from the second quarter or something we should look forward to for the rest of the year?

Look, what I would say is a couple of things. We see co-invest as actually being really important right now.

If you look at the size and the scale of some of the projects that Switch and Vantage and Yondr are taking on, these are projects, Michael (sic) [ Richard ], I've never seen in my career. I've been doing this for 30 years. The CapEx is no longer measured in, oh, I'm going to go build a $1 billion data center. It's now can I go build a $10 billion, $20 billion, $30 billion data center.

So when we line up the co-investment capital for Yondr, it was a really good outcome for Fund III, and it was a really good outcome for DigitalBridge investors. Why? We attracted over $2 billion of co-invest. We've done a really good job of changing the narrative on co-invest. We made a commitment to you and the investment community and our shareholders that we were going to do a better job of getting higher-margin co-investment capital so that this fleet would be taken seriously. Two years ago, we were making no money on co-investment. Last year, we made 45 basis points on average, and this year, now we're up to 60 basis points. The Yondr transaction was really successful for us.

We absolutely believe that we are going to not only beat our capital formation number for this year. But if you look at the back half of what some of our big portfolio companies are doing like Vantage and Switch, there will be more significant co-investment coming in Q3 and Q4. We're looking to hold the line at that 60 bps, Kevin and Leslie and the team have done a great job working with our co-investors. And the simple mantra today is, look, we're not in the free ideas business. Maybe other GPs are, we're not.

Our ideas are unique, they're differentiated. What we're doing at Yondr, what we're doing at Switch, what we're doing at Vantage and DataBank are things that other portfolio companies owned by other folks are just not doing.

So we will raise a lot more co-invest between now and the end of the year. I'll just give you the early headline on that. We've got some major giga size projects coming across our data center footprint. We highlighted the power so you can understand how we can handle some of these bigger opportunities that are coming.

Our leasing pipeline today across our 8 platforms is up over 50% versus last year. It's absolutely tremendous what's happening down at the portfolio company level.

So I would say that we're going to do 2 things really well between now and the end of the year.

One, we're going to sign a lot of leases. Two, we're going to raise a lot of co-invest. That co-invest will come at a higher margin. There's no expense associated with it, and it's going to flow directly to FEEUM and FRE, and that's going to be really good news for DigitalBridge investors in the back half of this year. It's not that we're here to tell you we're not going to continue to raise on our flagship product and our new strategies. We're absolutely fundraising on those strategies as well, and you'll see the results of that manifested in Q3 and Q4. Like I said, hopefully, you're hearing from us a level of conviction and confidence in terms of what we're doing between now and the back half of this year. A lot like last year, Richard, the fundraising will come strong. It will accelerate a bit in Q3. It will really accelerate in Q4. That seems to be the pattern of how we're fundraising. That's what happened in 2023 and 2024, and 2025 is playing out just like that.

And I just wanted to follow up quickly on Takanock. Power usually takes time, and it seems like the opportunity there's very big, but how should we think about the pacing and the ramping of the opportunity there?

Well, look, I think we see that product as being a really interesting product in the sense that having projects where a hyperscaler can step in immediately and start construction and be live within 9 to 18 months is really unique.

So what we've done is we've created kind of a fast path lane for our customers to do build-to-suit. And we're not -- at that platform, what's really interesting, Richard, we don't need to build the data center.

So we can make high teens, low 20s returns by turning over the land and the power to a customer who wants to go self-perform. And again, it's all about finding demand in swim lanes where others are not finding that demand. With Yondr, we're doing powered shell.

I think you understand pretty clearly what Vantage and Switch and DataBank does.

This platform, in particular, doesn't need to own the data hall and doesn't need to build the data hall to create great returns. I accept today that our customers are self-performing somewhere between 35% and 40% of the time.

And so I wanted to have a platform, Richard, that would respond to that opportunity. Nobody else was doing that.

If you look across our competitors that are publicly traded or if you look at our GPs that we compete against that are now in the data center space.

So this is, again, us trying to move in a direction of travel, creating a new swim lane of investable opportunity that others really haven't paid attention to. We got a great management team.

We have some amazing first few sites that we're talking to our customers, particularly in Arizona. That's a really hot location for self-performance, and we can make data center-like returns in the powered land space with this solution. And I think it's pretty unique and pretty differentiated.

I think in terms of the conversion of that into a data center, it's probably in the order of magnitude of 12 to 36 months is the conversion. But once we sell the project to a customer, we get full return of capital. That's what I like about it. I would have to sit around 5, 7, 8 years like I had to wait on DataBank Advantage to get DPI and create the returns. And Takanock, we can create the returns immediately.

So we have a huge land bank.

We have a huge power bank.

I think we're up to almost 500 megawatts of power now at Takanock.

We have over 1,600 acres. We're looking to double that footprint in the first year, and it's a really great first investment in our partnership with ArcLight. We're really excited about that as well.

The next question comes from Randy Binner with B. Riley.

Just on the $40 million realized loss, I think by stating that there is no cash flow impact, I think that was related to an older issue that's been written down before. But just wanted to get a little bit of color on the kind of the vintage of that and where that loss is, if that's the final loss for that item?

It is. Yes, that's correct. It was an investment in one of the InfraBridge funds that we also had a little on our balance sheet directly, had been made a couple of years ago. We had it valued at 0 for the last couple of quarters, but it was a final realization this quarter.

So that causes it to flip and run through DE.

So I don't want to say it's noncash, but it's not -- it doesn't impact our kind of cash flow or anything like that this year.

Right. Got it. Understood. And then I guess speaking of cash, you have a good cash balance.

I think the revolver was reduced to save cost.

For Marc, how does the Board -- how would you think about potential share buyback? I mean the stock is, I think, significantly undervalued relative to everything you've laid out on the presentation here. Is that a use of cash that could compete with all these other projects?

It's certainly something we think about and look at.

In terms of capital allocation, I would say that probably where we find the highest return on capital is seeding new investment fund opportunities. The return on that can be really extraordinary. If feeding an asset helps us raise capital. But share buybacks, and I would say both the common and the preferred is something we look at. The common from a return perspective, preferred more so just because of the magnitude of the preferred's that we have, but it is certainly something that we and the Board talk about.

The next question comes from Jade Rahmani with KBW.

What do you expect for fund outflows in 2026? And do you think it's reasonable to project FEEUM in 2026 to grow in the mid- to high single digits?

Well, look, I think it's sort of a two-pronged question, and I'll answer the first part, and Tom can backfill me if he wishes. We talked today in the presentation about deploying $43 billion of CapEx into AI infrastructure. That is up from $28 billion last year.

So we've added another circa $15 billion of new opportunity. My sense is, hopefully, you are paying attention to the doubling of the leasing backlog across our portfolio companies. And then, of course, looking at the power bank moving from 16 gigawatts to 20 gigawatts.

So I think you can -- it's hard for us to sit here today and say, gee, that $43 billion is going to $20 billion or going to $60 billion. I don't think Tom and I have a ton of control over that because there's a lot of activity, Jade happening down at the portfolio company level that's real, and it's big, and it's bigger than I've ever seen.

And so we've been spending the last 90 days fundraising, equity and debt.

And so some of the case studies that we put in front of you like Yondr and Switch were not accidental. We're showing you how much co-invest we raised at Yondr. We're showing how much debt capital we raised at Switch. Why? Because it's hard. It's not easy. These are the difficult things.

And so raising billions and billions of dollars to go build out this infrastructure is what we're focused on.

I think the other thing that we sort of put a couple of crumbs on the trail for you guys to extrapolate is we're really excited about what's happening in power.

Power, Jade, is a $1.3 trillion opportunity just in AI. In AI alone, we've got to build $1.3 trillion of new power solutions if we're going to keep up with this projection of 200 gigawatts to 300 gigawatts of power to make AI work. We identified that opportunity 2 years ago. We spent years picking the right partner, we were very careful, we were very selective. We found the right partner in our claim.

So we think that's a big new opportunity for us.

We have the right industrial partner.

We have the right capital formation team, and we have a deep pipeline of projects in power now.

So we're -- you're going to see a lot more from us on the digital power side in Q3 and Q4. And then also, we've continued to advance our strategy on private wealth, and we've continued to advance our strategy on a data center real estate fund as well, strategy, not fund.

So we've got a lot going on.

And I think that we haven't decided to give guidance, Tom, for next year yet. We're going to be in our planning in September and October in terms of where we see 2026 playing out. And then that will give us, Jade, a couple of months to see what our portfolio companies are doing.

As I said previously with Richard, we are really focused on co-investment. There's a lot of co-investment capital coming. And Tom and I and Kevin, Kevin who runs capital formation, we need to plan for that, and we need probably the next 30 to 60 days to get a good handle on that. Tom, I don't know if you want to add any more color. But sorry, Jade, we're being slightly opaque, but the numbers are getting bigger, and we feel pretty confident that our deployment schedule is going to continue to accelerate, not decelerate.

Yes. I mean, I would say, similarly, we haven't provided forecast specifically for '26 at this point. And we're a growing business. We absolutely will raise more capital over time than we sort of liquidate.

As our portfolio matures, could there be a quarter here or there where we sell more than we raise? Of course. But over time, we expect to continue growing FEEUM and raising more new capital than we distribute liquidity.

A follow-up just on carried interest, which for GAAP showed a reversal this quarter. I mean it seems like there's a lot of value being built.

So could you comment on what drove the reversal beyond the footnote, which I read. And when you expect potential realized carried interest to take place?

I'll address the GAAP reversal first. Look, we spend a lot of time on the quarterly marks. I personally chair the valuation committee. We spend a lot of time with the deal teams. We include third-party specialists. But all that said, I wouldn't read too much into the quarter-to-quarter marks. The reality is with private assets like we have, they'll often stay flat for a period of time until there's sort of an objective event or indicator of value, either at the company or a capital event or transaction.

And so as much time as we put into the quarterly marks, they can tend to move in step functions from time to time as opposed to kind of smoothly quarter-to-quarter.

So I guess I just wouldn't put too much stock into kind of either the quarterly valuation marks each quarter or kind of the movement in accrued carry on a quarter-to-quarter basis. And then the realization of carry is obviously dependent upon exit activity.

So that's a little more difficult to forecast, although certainly, as our funds mature and move into sort of the harvest stages of their life cycle, you'd expect us to be exiting more assets over time. I don't know, Marc, if you had anything.

Yes. Look, I'd just say one thing, and this is really important, Jade. And I think you've seen some articles pop up in other publications about it in the last couple of months, which is investors are growing weary of marks. Private equity in general has been defending marks at very, very high valuations. And when Tom took the job, one of the things that he said he wanted to do was make sure that our marks had a lot of integrity. Tom has been doing this for 3 decades, was at Carlyle for 2 decades and takes that part of his job very seriously.

So we have a lot of authenticity in our marks, not to suggest that previously we didn't, but we're not afraid to mark our portfolio to the reality of what today is. We've faced that, we made a decision as partners that's what we're going to do. We're not going to sort of make up marks to keep marks high so we can stay in top quartile or mid-quartile or whatever. We've been really clear about that internally is that's something that we're going to do.

And so when we do sell assets, what I would tell you is, historically, when you look at full exits like a Wildstone or Vantage, we have historically sold at a premium to NAV. And I think Tom is doing a great job of running that side of our business. And I've agreed that he would run that side of the business without me being involved in it. I'll continue to do what I do, which is raise capital and go buy and build new platforms. And it's a really good partnership, and I'm really appreciative of what we're doing there.

I think it's the right thing. And if others don't want to do that, that's not on us. We're going to run our business. We're going to run it with authenticity, and we're going to be transparent. And when we go to sell things, people will be pleased with how we do that. That's how we're building value in DigitalBridge long term.

The next question comes from Ric Prentiss with Raymond James.

A couple of questions to be 3 places at once on this busy earnings day. Marc, I hear what you're saying about power and data centers. Obviously, that's why we've got it as one of our topics. Tuesday at our Park City Summer Summit with our energy team actually will be there with the infrastructure team.

So yes, we're going to hit that pretty hard next week. Well, I'd like to take question...

I look forward to digging in with you on that, Ric. I'm looking forward to seeing you.

It's a key topic. I want to follow up on Jade's question, though, on carried interest.

As we think about carried interest events, obviously, it's hard to peg, but it does feel like, one, the macro market uncertainty might have created some pauses there. But also maybe have you comment on leverage levels, public markets versus private markets, there's definitely different leverages that are acceptable. Is that causing any consternation out there, too? But just maybe some more high-level view of carried interest, kind of what can drive timing of those events.

Yes. Look, the carry obviously is a function of the portfolio activity.

We have to balance the opportunities that we see to continue growing the companies with sort of an obligation to ultimately return capital to our investors.

And so it's something we balance, and we are always thinking about is it best to continue investing and continue letting an asset grow? Or is now the time to look for liquidity, look for an exit and return capital to our share -- limited partners.

And so we try to balance those 2. And it's a little bit unpredictable.

So yes, I don't know, Mark, if you'd add anything, but it's a balancing act.

I think what we've done, Tom and Ric has really been very disciplined. We've had some processes that have created the right outcomes for LPs. And then we have processes that honestly have not created the right outcome, Tom, for LPs. We run 11- to 13-year infrastructure funds. Everyone needs to remember that our first fund was back in 2019.

Our second fund was back in 2022.

As infrastructure goes, these are relatively younger vintage funds, and we've had exits.

So I'm not terribly fussed about the velocity at which we've returned capital. We've returned over $9 billion of DPI in the last 2.5 years. We do have, Ric, some DPI coming in the back half of this year.

We have some situations that are going to create those outcomes that we talk about in terms of returning capital.

I think as it relates to returning carry for our investors, it has been a bit episodic, but I do take some comfort, Ric, in one thing, which is 6 years ago, we were at like $20 billion in digital assets. Today, we're at $106 billion of AUM that's up 25% year-over-year. And as you continue to grow assets under management, if those businesses are growing organically, you do create carry.

And so we are creating the right outcomes in terms of creating profits interest, and I feel really good about that.

In fact, all 3 swim lanes, Ric, this quarter worked really well. We had fantastic growth in towers. That was really shocking how much towers have come back in the last 90 days. And I think you saw that a little bit with some of the public tower companies.

Data centers, we talk about, we talked about it. Leasing pipeline is up almost well over 50%. We booked some huge wins in the quarter. And then the sleeper is fiber. Businesses like Zayo and Beanfield and Netomnia in the U.K., all have had record bookings.

And some of that, of course, Ric, as you know, tethered to high strand count, low latency dark fiber routes that are really critical for AI.

So we're in really a golden moment in digital infrastructure. This is a really interesting point in time.

And so we are compounding and creating carry.

I would say from a macro perspective, interest rates have not been helpful.

I think that, generally speaking, private equity and infrastructure investors, when they're buying assets, the difference between getting a financing package at 6% and 4% is night and day.

And so as we think about what the interest rate environment looks like, not that Tom and I are economists and neither of us are on the Fed board. But I would tell you, I do see over the next 6 quarters, I do see rate cuts coming.

I think inflation has kind of found a safe home between 2% and 2.5%. And on that basis, I believe interest rates will moderate. And I think we'll see a more dovish policy coming out of the Fed. That will create some momentum in M&A., and certainly, for some of the platforms we have that we think are valuable, it's going to create good outcomes.

So while the beginning of this year hasn't produced a ton of DPI and we've been pretty busy deploying capital, it wouldn't surprise me, Ric, over the next 18 months if we end up divesting of 2, 3 or 4 different companies in the next 18 months. And that will create, obviously, DPI and it should create carry for our shareholders.

Makes sense. Makes sense. On M&A, I think you mentioned that you're still considering looking at adding platforms. How is that going? What's the competition look like out there? And I figure I know the answer here, but obviously, press reports that there might be M&A involving you. Any comments on what the Board and you are focused on?

So there's 3 questions wrapped into one there. It's a classic [indiscernible] 3-for-1 special.

So let me unpack that.

So the first one involves just M&A in terms of what we're doing at the fund level. Right now, we're investing, Ric, out of our third fund. We just closed Yondr. We've got a deep pipeline well in excess of the size of the fund. We're tracking over 20 different new ideas and M&A opportunities.

Our team meets every week to track those different opportunities in Asia, Europe and the U.S.

The deal environment is coming back to your point, Ric.

So our pipeline is up about 20% versus where it was the previous quarter.

We are seeing a lot of opportunity in fiber. We're seeing a lot of opportunity in data centers, and we're being a lot more discerning. The cadence at which we're investing Fund III is very different from the cadence at which we invested Fund I and II. But again, with a pipeline well in excess of $9 billion in opportunity, and a ton of co-invest down at our portfolio companies, we've never been busier. The amount of opportunity and discussion happening at our IC level is double what it was last year. We're very active.

Second point, Tom and myself and Parker and Severin and the team are working on a lot of interesting ideas in the GP space that involves deploying our balance sheet. We've seen some really interesting ideas on strategies, Ric, that we can add to our platform that are -- I would use the term and I've been -- you and I coined this like 25 years ago, small tuck-ins like in the tower space, we see small tuck-ins in the GP space.

So whether it's enhancing our private credit business, whether it's thinking about an entry point into private equity or power. We've been talking a lot about power. We see some really interesting ideas on backing great teams that can join DigitalBridge and we can grow and widen the aperture of this platform.

And so on that basis, we're incredibly active.

We have a number of discussions happening. We'd love to find stuff that's accretive day 1 that has to be the litmus test. And then, of course, we want to see something that has a 20% IRR on a 5- and 10-year basis.

So those are the parameters of how we're thinking about deploying our balance sheet and it's been a lot of fun working with the team. We've got a good team that's working on M&A, and Severin has been helping out on the corp debt side. Parker Anderson has been great. And of course, Tom has been amazing as well.

So we've got a team that's working on that, along with our investment management team tracking all the other platforms that we're working on.

The last question is, look, we don't really respond to market rumor stuff. My famous response to this question, Ric, is DigitalBridge is for sale every day.

You can go buy our stock. That's the best way to own DigitalBridge is by buying our shares.

The second best way is to put something in writing and provide sources and uses and pay all cash and great, you can own our business. We've attracted a lot of interest, Ric, over the last 2 years.

As you can imagine, as the largest owner and operator of digital infrastructure, other GPs are trying to get into that space.

Some will try to build it organically like Blackstone has done and like Brookfield has done and others will try to go buy it like TPG and Blue Owl have done.

Our phone rings constantly.

We have a lot of conversations.

Some of them are more real than others. But for the time being, our focus is building the best alternative asset manager tethered to the digital AI economy.

And so that's what I'm doing. My day-to-day job right now remains super focused on building the best alternative asset manager in the world that's tethered to AI, digital power and all things correlated to that ecosystem. We think that's a deep, deep swim lane. We can go long, we can go fast. We're going to run at it as hard as we can. And we've continued to demonstrate that we're growing.

So we can keep growing organically. We're comfortably -- we're getting very comfortable in our own skin in terms of the last 3 quarters. The guidance that Tom and I put out, we think, is very conservative. We've gone out and we've hit those numbers 3 quarters in a row. We're building credibility with our investor base. And more importantly, we're growing, and we're growing organically.

I think that's what you saw on display this quarter, is a very steady cadence in terms of how we're building this platform.

Great. Well, look forward to seeing you next week. Have a good one.

The next question comes from Anthony Hau with Truist.

With respect to the 3.2 gigawatts under development, can you offer any insight into when the expected delivery time line? And at what point should we expect meaningful carry from these assets?

Well, look, I think the best answer I can give you is when we did the original DataBank transaction and we did the original Vantage transaction, those transactions were 7 and 8 years ago, respectively.

Now those were not -- to be clear, Anthony, those were not in our Fund I. Those were the legacy 6 investments that predated our funds. But to be direct with you, we had a really material exit, as you know, last year in DataBank. We had a really material exit in Vantage North America last year. And then the investors that were in those vehicles that joined us 7, 8 years ago, made a lot of money, and there was a ton of carried interest that was generated. And unfortunately, at that point in time, we were not public.

So as you know, DigitalBridge was private many years ago. We did a merger with another public GP. And now our public investors get to enjoy the fruits of that labor.

Again, 2019 vintage Fund I, 2022 vintage Fund II.

If you take the trajectory of the exits in DataBank and Vantage, which were 8 years and 7 years, where we generated hundreds of millions of dollars of carried interest and profits for our LPs that were not in our -- not in the public story yet, that's really the proxy.

So as you think about that vintage of a 2019 fund and an exit time line somewhere between 7 and 8 years, we think it's logical that in 2026 and 2027, you're going to start to see realizations and you're going to start to see carry that's not episodic.

Look, my career is 32 years of owning and building these businesses. My average hold throughout my career has been just about 7 years.

So if you go back to Apex and SpectraSite, you go back to GTP, you look at DigitalBridge, you look at some of the other businesses we've built, our average hold has generally been about 7 years. That's been the sort of normal cadence for us.

So on a 2019 vintage fund, 2026 seems to be the really magical year plus 2027. And on a 2022 vintage fund, you're looking at 2029 and 2030.

So that's when we really think we can deliver meaningful carried interest in DPI for our shareholders.

And also, as the vintage of these funds has gotten older, the percentage of which the public shareholders participate has gotten bigger.

So as we raise more funds, we're getting our shareholders, you, the public shareholders, more aligned to the carry story. It's going to take a little more time. We're not sort of promising a ton of carried interest between now and the end of the year, but we do think '26 and '27, it should manifest itself.

Got you. And just one more follow-up. Could you share any updates on the build-out or traction of the private wealth channel?

Yes, I can.

So Andrew and his team coming off of the introduction of our first private wealth product last year, which raised about $1.1 billion, did a great job. We've launched our second private wealth product. By the way, similar exact time line as what we did with the first product, designed the product in Q1, going through compliance, getting registered in Europe in Q2, which was this quarter. And then Q3, Andrew and I, which is now we're already in Q3, he and I have had an aggressive set of meetings and time schedule with our team, meeting with a lot of different investment channels and meeting with different banks that want to put this product on their platform.

As I said, instead of going with one bank this time around, we'll use multiple banks for distribution in Asia, Europe and North America, and again, the ambition is very similar to the first product. We had a $600 million strategy last year. We ended up raising $1.1 billion that kind of surprised us, and that was very data center-centric. This product is very much AI-centric and really focused on the AI ecosystem. It's a product that private wealth investors haven't seen yet. It's very new, it's very differentiated. And by the way, when we launched the data center sidecar vehicle last year, nobody had that product on their platform.

So as you can imagine, when you introduce something that's proprietary and new and you put it on somebody's platform like Goldman, it flies really fast.

So we're looking to get this new strategy launched inside this quarter, and we look forward to taking subscriptions in the fourth quarter. And again, that's why Tom and I have a lot of optimism between co-investment, private wealth, our flagship product wrapping up, like we said in the earnings presentation and the initiation of Digital Power and our real estate fund, we're pretty busy in terms of fundraising right now.

This concludes our question-and-answer session. I would like to turn the conference back over for any closing remarks.

Well, look, I want to thank everyone for their interest in DigitalBridge. It's been a really outstanding quarter for us. The results were exactly what we told the Street we would do.

I think, in fact, sort of beat some of the estimates.

I think as we look forward to the back half of this year, we've got sort of 4 key things that we are very focused on right now.

One, margin improvement.

You saw the improvement in margins that have occurred in terms of co-investment.

You've seen some of the margin improvement in terms of our FRE margins, and you're going to continue to see improved margins as Tom is doing a great job on the backside of the business in terms of cost. Number two, fundraising.

You saw the fundraising numbers coming out of the quarter. We're right exactly on plan. We're actually slightly ahead of where we were last year, up about 8% year-over-year. FEEUM is up year-over-year, FRE is up year-over-year. We're in exactly the right place we want to be so that we can go out in the third and fourth quarter and really outperform.

The third thing I would say is just around power. Hopefully, everyone got the memo. This 20 gigawatt power bank is critical. When you're building the AI economy and you're building the backbone of the AI economy, everyone now accepts what I said 2 years ago, which is power is the bottleneck. We've been working on power for well over 2 years. We're building those grid independent solutions that allows us to go fast and show up and perform for our customers. This is differentiation. Whether you're benchmarking owning DigitalBridge shares against a GP or owning our shares against a digital data center REIT, we think this is the place to be.

As you look at the leasing backlog pickup and where we're going, our advantage is our power bank, and people need to start pricing that into ultimately how you think about owning DigitalBridge shares because as we lease out and build out new data center capacity, we are not constrained. Others may be, but we are not.

We have the power, and we don't have just one platform, we have 8 platforms. We get to go attack edge, we get to attack private cloud, we get to attack public cloud, Tier 5, Tier 4, Tier 3.

We have every solution for our customers. And now we have Powered Land and Takanock.

So really having this quiver with a series of arrows to go ultimately fight the fight in the AI war, no one is better positioned than DigitalBridge.

Last but not least, I just want to finish in saying we are more than excited about what's happening in terms of what's happening down at the portfolio company level. Everyone is talking about AI and data centers. There's actually a subtext below that, which is ecosystem. And the growth that we're seeing in towers, the reemergence of small cells and fiber, and these are really critical parts of the delivery of AI. And 80% of AI traffic will happen on a wireless device. It's not an accident that tower demand and tower leasing has picked up in the last 90 days. Mobile infrastructure is going to be critical, and investing in mobile infrastructure requires fiber, towers, small cell and edge facilities. These are all components of the ecosystem that DigitalBridge owns, operates and is building. Don't sleep on mobile infrastructure. It's a really important part of the delivery mechanism of AI, and people are not paying attention to that.

You need to pay attention to that.

So those are the 4 things that we're focused on. We appreciate your interest. We appreciate your support in DigitalBridge.

You want to spend some time with us, reach out to our investment -- our IR team with Severin, and we'll be delighted to keep talking to you about it. Thank you again, and we wish you all a great weekend. Take care.

The conference has now concluded. Thank you for attending today's presentation.

You may now disconnect.