NYSE:DBRG DigitalBridge Group Q2 2025 Earnings Report $10.28 -0.13 (-1.21%) Closing price 08/7/2025 03:59 PM EasternExtended Trading$10.46 +0.18 (+1.76%) As of 08:15 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast DigitalBridge Group EPS ResultsActual EPS$0.10Consensus EPS $0.09Beat/MissBeat by +$0.01One Year Ago EPS$0.44DigitalBridge Group Revenue ResultsActual Revenue($3.21) millionExpected Revenue$99.19 millionBeat/MissMissed by -$102.40 millionYoY Revenue GrowthN/ADigitalBridge Group Announcement DetailsQuarterQ2 2025Date8/7/2025TimeBefore Market OpensConference Call DateThursday, August 7, 2025Conference Call Time8:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by DigitalBridge Group Q2 2025 Earnings Call TranscriptProvided by QuartrAugust 7, 2025 ShareLink copied to clipboard.Key Takeaways Positive Sentiment: Digital Bridge delivered 8% year-over-year fee revenue growth to $85 million and saw fee-related earnings rise 23%, with expanding margin trends. Positive Sentiment: The firm raised $1.3 billion in Q2 and $2.5 billion year-to-date toward its $40 billion fee-earning capital goal, maintaining strong fundraising momentum. Positive Sentiment: With 5.4 gigawatts of data center capacity built or under construction—up 50% year-over-year—the company plans to deploy over $50 billion in AI-focused digital infrastructure, including new Yonder and Tachenock platforms. Negative Sentiment: Distributable earnings swung to a $19 million loss in Q2 due to a $40 million realized loss on an InfraBridge fund investment, though it did not affect cash flow. Positive Sentiment: Digital Bridge secured a 21 gigawatt power bank and launched Tachenock with ArcLight to develop shovel-ready power land solutions, addressing hyperscaler bottlenecks. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallDigitalBridge Group Q2 202500:00 / 00:00Speed:1x1.25x1.5x2xThere are 9 speakers on the call. Operator00:00:00Good day, and welcome to the Digital Bridge Group Inc. Second Quarter twenty twenty five Earnings Conference Call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Operator00:00:21To ask a question, you may press star then one on a touch tone phone. 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. Speaker 100:00:43Good morning, everyone, and welcome to Digital Bridges' second quarter twenty twenty five earnings conference call. Speaking on the call today from the company is Mark Ganzi, our CEO and Tom Marrofer, 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, 08/07/2025, and Digital Bridge does not intend and undertakes no duty to update it for future events or circumstances. Speaker 100:01:19For more information please refer to the risk factors discussed in our most recent Form 10 ks filed with the SEC for the year ending 12/31/2024, and for the Form 10 Q to be filed with the SEC for the quarter ending 06/30/2025. With that, let's get started. I'll turn the call over to Mark Ganzi, our CEO. Mark? Speaker 200:01:42Thanks, Severin. Good morning, everyone, and welcome to our second quarter twenty twenty five business update. We appreciate you joining us, and as always, we appreciate your interest in Digibridge. 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 three pillars of our strategy you see here: fundraise, invest, and scale. Speaker 200:02:08This makes three 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 continued to expand. This is the core of the Ditto Bridge investment case, scalable growth with expanding margins and we are delivering on that fundamental premise. Speaker 200:02:43Second, on fundraising. We continue to see exceptional demand from LPs to partner with us and invest in the digital economy. We raised another $1,300,000,000 in the quarter, bringing our year to date total of $2,500,000,000 and making great progress towards our $40,000,000,000 fee and 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. Speaker 200:03:26We 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 two new critical platforms in the quarter, Yonder in hyperscale data centers and TechnoC 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 Digital Bridge 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. Speaker 200:04:10Importantly, 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 DB3 strategy continues to attract capital, and we've raised $6,900,000,000 year to date, with a final close in the third quarter that will take the total to over $7,000,000,000 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. Speaker 200:05:01We 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. Speaker 200:05:35This 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 Digibridge story. This all flows ultimately straight into FEM, the key metric that drives our earnings. The activation of new capital from the Ditto Bridge partner series and high quality co investments puts us in a great position to exceed our $40,000,000,000 FEM target for 2025. Speaker 200:06:12We 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. Speaker 200:06:31This 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 two 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 two years, and now everyone's talking about it. Speaker 200:07:00This quarter we made moves to extend and establish our leadership position in both verticals, digital power and continue to light up data center capacity. Let's start with power. We committed up to $500,000,000 alongside of our partners ArcLight to launch TACNOC. 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 are we going to put our best ideas to work in powering the AI economy? Speaker 200:07:31Technoc fits that prototype. It develops powered land, solving the number one 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 Yonder, a premier global hyperscale developer that is super focused on powered shell. Speaker 200:07:56With over 400 megawatts of leased capacity and a clear path to over a gigawatt, Yonder 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 RF the ball with our existing portfolio. You see significant financings at both Switch and Vantage. This isn't maintenance capital. This is growth capital. Speaker 200:08:23And that's a critical thing to acknowledge. It's funding massive expansions, including a new $3,000,000,000 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 DigiRidge today. If you recall, the first quarter was characterized by some macro questions, including what's the ROI of AI? Speaker 200:08:57But 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. Speaker 200:09:26Microsoft 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 CFO, Ana Akenazi confirmed that they're increasing their 2025 CapEx forecast by 10,000,000,000 to 85,000,000,000. And they expect a further increase in 2026 demand, and that's not going to stop anytime soon. So we've seen this step function in CapEx. Speaker 200:10:07Talked about 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 $380,000,000,000. For 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. Speaker 200:10:37Next 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. Speaker 200:10:54A year ago, they were processing about 10,000,000,000,000 tokens a month. At their IO conference in May, Sundar announced that the number had grown 50 fold to $480,000,000,000,000 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. Speaker 200:11:22On their earnings call just two weeks ago, they updated that number again saying they would now doubled since May and are processing over $980,000,000,000,000 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 ninety 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. Speaker 200:12:13This 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 five gigawatt US 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. Speaker 200:12:41And 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 four quarters. The chart on the left shows the global data center electricity consumption is set to more than double by 02/1930. Speaker 200:13:11This 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 advantage, switch, data bank, and yonder, Building scale at the edge with DataBank and creating new power solutions with Tachenock is the direct integrated response to solving our customers' biggest problems. Speaker 200:13:44I'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. Speaker 300:13:54Thanks, Mark, and good morning, everyone. As a quick reminder, the full earnings presentation is available within the shareholder section of our website. As usual, I'll start with our financial highlights, which Mark touched on briefly. In the second quarter, we recorded $85,000,000 of fee revenue, representing an increase of 8% over the 2024. Our fee revenue this quarter benefited from the cumulative effect of organic growth in our flagship fund series over the last twelve months, with a relatively modest $3,000,000 contribution from catch up fees this quarter. Speaker 300:14:30This growth in fee revenue resulted in $32,000,000 of FRE in the quarter, an increase of 23% over Q2 of last year. Distributable earnings was negative $19,000,000 for the quarter, principally driven by a $40,000,000 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 $158,000,000 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. Speaker 300:15:20During the quarter, we strategically deployed $33,000,000 into seed assets to support fund launches for a couple of our new products, including our initiative around energy that Marcus touched on. Moving to the next page, fee earning equity under management increased to $39,700,000,000 as of June 30, representing a 21% increase from last year. This growth is primarily driven by capital formation in the DPP 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 fee and is likely to moderate over the next quarter or two as distributions from the portfolio partially offset new capital raised. We closed $1,300,000,000 in new fee earning commitments during the quarter, a 17% increase over the 2024, led by strong co investment activity and new commitments to our latest DBP flagship fund. Speaker 300:16:25Turning to the next page, which summarizes our non GAAP financial results. As mentioned earlier, we reported $85,000,000 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 funds in the 2025, supported by the continued contribution from catch up fees. Moving to the next page, which summarizes our carried interest and principal invested income. Speaker 300:17:01We reported a $12,000,000 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 funds 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 funds 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. Speaker 300:17:57Principal investment income, which represents the mark to market on the company's GP investments in our various funds was $21,000,000 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 two 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 twelve months. This quarter we saw $3,400,000,000 of Centimeters 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 900,000,000 in outflows driven principally by various return of capital events across our liquid and credit strategies. Speaker 300:19:01Finally, the company continues to maintain a strong balance sheet with approximately $1,600,000,000 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 $300,000,000 to $100,000,000 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 Mark. Speaker 200:19:42Thanks, 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 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 thirty years of building and scaling digital infrastructure businesses. Speaker 200:20:09It's not a new trick for us. It's a three phase process. We establish platforms. We transform them. We scale them. Speaker 200:20:17And ultimately, you've heard me say this over the last five years, we follow 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 one, TACNOC. Speaker 200:20:34We established the platform. We've identified the most critical bottleneck in the entire ecosystem, power. And we 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 Yonder, we're also at the beginning of our journey. We acquired a fantastic global platform that will now move into phase two, transform and scale. Speaker 200:21:00We'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 into phase three at Switch, following the logos. Speaker 200:21:22Switch is a technology centric, market leading tier five 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 their 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 lifecycle. Next slide, please. Speaker 200:21:55So 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 TACNOC, 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. Speaker 200:22:22And 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 digital bridge. 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. Speaker 200:22:43We 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 TACNOC has been a phenomenal experience. We bring together the data center development capabilities. They bring together the power expertise. Speaker 200:23:13Together, we've created a platform in TACNOC that is purpose built to solve the number one constraint for our customers, bridging two 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 two years diligencing who we could go run this race with. And at the end of the day, the three 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 Digitridge. First and foremost an industrialist and somebody that knows how to build infrastructure at the street level. Speaker 200:23:52This is entirely critical to the success in our digital power strategy. Next slide please. So what does Tachenock actually do? It's simple, but it's revolutionary. Tachenock develops power land. Speaker 200:24:06They 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. Speaker 200:24:32Tachnot 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 Davis, 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 digital rich playbook. It's what we know. It's what we do. Speaker 200:24:58Ken 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 three gigawatts of IT capacity and over five gigawatts of generation capacity. This is massive. It's a scalable opportunity and ran 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. Speaker 200:25:28Next slide, please. So turning to the second phase of major investments in the quarter, we're thrilled to welcome the Yonder team to the Ditto Bridge family. As AI models grow, the demand for massive purpose built Hyperscale campuses is exploding. And Yonder is a pure play leader in this space. With a global footprint in key markets from Northern Virginia to Frankfurt to Tokyo, and the development pipeline of over one gigawatt, Yonder is a perfect strategic fit. Speaker 200:26:00This acquisition in partnership with our long term investors at MacKay's CDPQ immediately strengthens our global hyperscale portfolio. Alongside Vantage and Switch, Yonder gives us another world class platform to serve the gigascale training requirements of the largest cloud may have 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. Speaker 200:26:36Next page. So despite just closing the deal, we're already deep into executing phase two of our 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 Wagenheim, formerly of T5 as CEO, and Sandeep Manaj, a leveraged finance veteran and CFO. Speaker 200:27:08This is a team built to execute at hyperscale speed. Finding and empowering the right leadership has always been a key differentiator for us at Digital Bridge. 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 Sandeep to the team, and we look forward to working with them. Speaker 200:27:34Second, we immediately began optimizing the footprint to focus the highest return opportunities. So just last week, we announced the divestiture of EverYonder, our joint venture in India. This move streamlines Yonder's presence and allows us to redeploy capital to accelerate development in our priority AI class 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 Le Case and Allianz to provide the significant primary capital required to build out Yonders one gigawatt plus pipeline. This is the Digeridge playbook in action, speed, discipline, and a relentless focus on creating value from day one. Speaker 200:28:21Next 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 $11,000,000,000 This is a perfect example of phase three 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. Speaker 200:28:48This quarter Switch expanded its credit facilities to an incredible 10,000,000,000. 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. Speaker 200:29:12This is really an exciting and transformative moment for Switch. And look at the evolution here. We went from a fixed premium M and A deal structure to a sophisticated multi instrument platform, including revolvers, term loans, and ABS. This includes the first ever ABS rated under S and 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. Speaker 200:29:44Tier five, highly secure, very reliable, fully redundant, and has never gone down one day or one minute in the history of the company. This is something that S and P understood, and it's something that investors now understand. Switch is differentiated. The bottom line is in partnership with Digital Bridge, and Rob and Thomas, Madonna, 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. Speaker 200:30:26Next 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 Digital Bridge 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 Yonder. Speaker 200:30:58These are gigascale 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 five 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 energetic AI, you have data bank. 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. Speaker 200:31:45We're 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 AZs. We understand workloads. Speaker 200:32:10And we understand where our customers want to be. We have the platforms that pair up with those customer expectations. This is like any 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. Speaker 200:32:36If 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. Speaker 200:33:01This 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 2026, we anticipate deploying over 43,000,000,000 of CapEx across our portfolio, with Digital Bridge's share at just under $30,000,000,000 to bring this capacity online and on time. We're not just participating in the ad 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. Speaker 200:33:36Next 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 Digital Bridge. This is how the math works. Speaker 200:33:54As you can see on this slide, to build one gigawatt of data center capacity, it requires roughly $10,000,000,000 in total capital, about half of which is equity if you're levering those assets at the correct loan 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 Digimarc shareholders. So now take that math to the 5.4 gigawatts that we have either lit today or under construction. That represents over 50,000,000,000 of total investment, and more than 25,000,000,000 of equity being put to work, with Digital Bridge controlling approximately two thirds of the ownership of those platforms. That represents roughly 1,000,000,000 of potential future carried being built, cultivated, and embedded in our portfolio right now. Speaker 200:34:46Look, simply put in distilling this for you as an investor, this is long term value creation. And this is the core of our strategy, the proposition for why to own Digimarc shares. While we focus on delivering consistent fee related earnings, growth quarter over quarter, we're simultaneously building 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 Digital Bridge. Next slide please. Speaker 200:35:19So 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. Speaker 200:35:31We 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 $40,000,000,000 fee and goal for this year. Second, we developed and launched our new investment strategies, with TACNOC being the first major step in our digital energy platform. And we hit a major milestone with our portfolio AUM now exceeding $100,000,000,000 This is up over 25% from last year. Speaker 200:36:01We 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 twenty twenty five financial metrics with fee related earnings up 10% to 20% over last year, and we will continue to improve our margins. Priority two, successfully form the capital to take our FEM over the $40,000,000,000 mark. We have extreme high conviction around our ability to hit and exceed our fundraising targets for 2025. Speaker 200:36:35Priority three, successfully launch our new strategies with initial commitments to digital energy, our stabilized data center strategy, and our next private wealth offering. All three of those strategies are in flight. And priorities four and five, maintain a strong balance sheet, and continue to evaluate strategic, but most importantly accretive M and A opportunities. Look, we have a really clear path. We have momentum, and most importantly, we are executing for you. Speaker 200:37:08We're in the very early stages of a historic multi decade investment cycle driven by AI. Digital Bridge 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 and A. Speaker 200:37:27Thank you very much. Operator00:37:30We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. Operator00:37:59The first question today comes from Michael Elias with C. D. Cowen. Please go ahead. Speaker 400:38:05Great. Thanks for taking the questions. Two, if I may. One of the themes this earnings season seems to be that inference is scaling. Mark, just curious if you're seeing any evidence of the hyperscalers scaling up their focus on inference compute or is it still early days? Speaker 400:38:20And 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 Digital Bridge? 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 it. Speaker 200:38:44So let's start with the first one. And first of morning, Michael. Thank you. Look forward to seeing you next week. You know, I would say we are very much at the early innings of inference. Speaker 200:38:57If you look across our footprint and you look at where some of our customers like Grok are installing, you know, 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, you know, all of the hyperscalers are going. But early, you know, 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, is we have high power compute capacity. So I 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 three, four solution that's got somewhere in the order of magnitude of at least, you know, 25 to 100 megawatts. Speaker 200:39:55So these aren't your typical edge workloads where in public cloud, for the last, you know, five to seven years, we've seen those deployments in the two fifty kW all the way up to 10 megawatts. That's been kind of the tier two, tier three market workloads for public cloud. AI is different. You and I've 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. Speaker 200:40:22And so I think looking to, for folks looking to see that that playbook is gonna remanifest itself in the same way, it's not. Interconnection helps. As you know, 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. Speaker 200:40:40Having 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 gonna win. So it will be a little bit different from, you know, how we saw Edge public cloud playing out in the last five years. By the way, Edge cloud workloads are still playing out. We're probably, if we were playing a, you know, a nine inning baseball game, in Cloud Edge, we're probably in the fourth or fifth inning. Inferencing is in probably bottom of the first inning. Speaker 200:41:20It's very early days for inferencing. So I hope that answers both of your questions. If I didn't, can refocus the second question. Speaker 400:41:30Yeah, just the second question was more, look, if I think of a training, a 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. The thought there is that to the extent that returns are higher when you land that demand, as we think of the accretion to Digital Bridge and the analysis that you laid out, I would think that it's more value creative for the Digital Bridge shareholders. So just trying to tease out how that essentially that math you provided at the end changes in an inference world. Speaker 200:42:05Well, 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, Yonder 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 eight years ago, you know, we bought that business for circa $235,000,000 It's been recapped a couple of times. Speaker 200:42:39We've created this really unique continuation vehicle structure. And that business is well, well north of 11 to $12,000,000,000 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. Speaker 200:43:06And what's interesting about you know, 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 an edge. Speaker 200:43:37I 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 weeks ago in Utah. And we were sitting in that data center, and that wasn't you know, that's six data centers in one campus. It's an edge facility that really supports you know, one hyperscale customer. Speaker 200:43:59But 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. Speaker 200:44:22And we have over four eighty two pairs of dark fiber running between that and the NAP of, you know, 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 two and tier three markets is something we created at DataBank. And so that's why DataBank's returns and that's why their growth is so high. Speaker 200:44:45So we don't see those types of returns and inferencing an 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. Speaker 200:45:04So our customers are not waiting. So for example, that one hyperscaler in Bluffdale, Utah, they brought with them six 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. Speaker 200:45:30And 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 six data centers in Bluffdale, Utah. So and then and then public cloud, private cloud, and edge. Speaker 200:45:58The last one is is Switch on public cloud. You know, one thing that Switch has done a great job of is, you know, they've created a really unique, you know, 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 five environment, where the most important Fortune 100 customers and government agencies, and now hyperscalers, they want to be at a Switch facility, because they know what they're getting. Speaker 200:46:36Highly connected, highly secure, and again, back to that word, power. We're gonna keep talking about power till 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 Digital Bridge has that nobody else has. Speaker 200:47:04Not 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. Speaker 400:47:20Great. Thanks for the call, Mark. See you in Boulder. Speaker 200:47:23Thanks, Michael. See you at your conference. Operator00:47:26The next question comes from Richard Cho with JPMorgan. Please go ahead. Speaker 500:47:32Hi. I just wanted to follow-up on the strength in co invest. 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? Speaker 200:47:53Look, what I would say is a couple 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 Yonder are taking on, these are projects, Michael, I've never seen in my career. I've been doing this for thirty years. The CapEx is no longer measured in, oh, I'm gonna go build a billion dollar data center. Speaker 200:48:21It's now, can I go build a $10.20, $30,000,000,000 data center? So when we line up the co investment capital for Yonder, it was a really good outcome for Fund III, and it was a really good outcome for Digitridge investors. Why? We attracted over $2,000,000,000 at Co Invest. We've done a really good job of changing the narrative on Co Invest. Speaker 200:48:41We 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 lead 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 Yonder transaction was really successful for us. Speaker 200:49:04We 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. Speaker 200:49:35Our ideas are unique, they're differentiated. What we're doing at Yonder, 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, you know, giga sized projects coming across our data center footprint. Speaker 200:50:00We 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 eight platforms is up, you know, 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 two things really well between now and the end of the year. One, we're going to sign a lot of leases. Speaker 200:50:25Two, 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 FEM and FRE, and that's going to be really good news for Digimarc 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. Speaker 200:50:52Like 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, you know, Richard, the fundraising will come strong. It'll accelerate a bit in Q3. It'll really accelerate in Q4. That seems to be the pattern of how we're fundraising. Speaker 200:51:11That's what happened in 2023 and 2024, and 2025 is playing out just like that. Speaker 500:51:19And I just wanted to follow-up quickly on techno. Know, power usually takes time, and it seems like the opportunity there is very big. But how should we think about the pacing and the ramping of the opportunity there? Speaker 200:51:37Well, look, I think we see that product as being a really interesting product in the sense that, you know, projects where a hyperscaler can step in immediately and start construction and be live within nine to eighteen 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 you know 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. Speaker 200:52:23With Yonder, 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 3540% of the time. And so I wanted to have a platform, Richard, that would respond to that opportunity. Speaker 200:52:47Nobody 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. Got a great management team. We have some amazing first few sites that we're talking to our customers, particularly in Arizona. Speaker 200:53:14That's a really hot location for self performance. And we can make data center like returns, you know, in the power of 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, you know, it's probably in the order of magnitude of twelve to thirty six months is the conversion. But once we sell the project to a customer, we get full return of capital. Speaker 200:53:40That's what I like about it. I don't have to sit around five, seven, eight years like I had to wait on DataBank Advantage to get DPI and create the returns. In TACNOC, 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 in TACNOC. Speaker 200:53:57We 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. Great. Speaker 200:54:09Can't wait to hear Speaker 500:54:09about going forward. Thank you. Operator00:54:14The next question comes from Randy Binner with B. Riley. Please go ahead. Speaker 600:54:20Hey, thanks. Just on the $40,000,000 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 vintage of that and where that loss is, if that's the final loss for that item. Speaker 300:54:44It is. Yeah, that's correct. It was an investment in one of the InfraBridge funds that we also had a little bit on our balance sheet directly had been made a couple years ago. We had it valued at zero for the last couple of quarters, but it was a final realization this quarter. So that causes it to flip and run through DE. Speaker 300:55:06So I don't want to say it's non cash, but it's not doesn't impact our kind of cash flow or anything like that this year. Speaker 600:55:15Right. Got it. Understood. And then I guess speaking of cash, you have a good cash balance. I think the revolver was reduced to save costs. Speaker 600:55:27For Mark, 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? Speaker 300:55:47It'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 preferreds that we have. Speaker 300:56:25But it is certainly something that we and the board talk about. Speaker 600:56:31Okay, great. Thank you. Operator00:56:36The next question comes from Jade Rahmani with KBW. Please go ahead. Speaker 700:56:43Thank you very much. What do you expect for fund outflows in 2026? And do you think it's reasonable to project fee in 2026 to grow in the mid to high single digits? Speaker 200:57:02Well, 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. You know, we talked today in the presentation about deploying $43,000,000,000 of CapEx into AI infrastructure. That is up from 28,000,000,000 last year. So we've added another circa 15,000,000,000 of new opportunity. My sense is, you were paying attention to the doubling of the leasing backlog across our portfolio companies. Speaker 200:57:36And then of course looking at the power bank moving from 16 gigawatts to 20 gigawatts. So I think you can you know, it's hard for us to sit here today and say, gee that 43,000,000,000 is going to 20,000,000,000 or going to 60,000,000,000. 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. Speaker 200:58:02And so we've been spending the last ninety days fundraising, equity and debt. And so you know, some of the case studies that we put in front of you like Yonder and Switch were not accidental. We're showing you how much ConeVest we raised at Yonder. We're showing how much debt capital we raised at Switch. Why? Speaker 200:58:20Because 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. Speaker 200:58:39Power J is a $1,300,000,000,000 opportunity just in AI. In AI alone, we've got to build 1,300,000,000,000.0 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 two years ago. We spent years picking the right partner. We were very careful, we were very selective. Speaker 200:59:04We 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 PowerNow. So you're gonna 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. Speaker 200:59:35Strategy, 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'll 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. Speaker 201:00:01There's a lot of co investment capital coming. And Tom and I and Kevin, Kevin who runs Capital Information, we need to plan for that, and we need probably the next thirty to sixty days to get a good handle on that. Tom, I don't know if you want any more color, but sorry, Jada, for 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 de accelerate. Speaker 301:00:25Yeah, mean, 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. Speaker 301:00:49But over time, we expect to continue growing FEUM and raising more new capital than we distribute liquidity. Speaker 801:00:59Thanks very much. Speaker 701:01:02Thank you very much. A follow-up just on carried interest, which for GAAP showed a reversal this quarter. I mean, 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? Speaker 301:01:28I'll address the gap reversal first. 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. Speaker 301:01:44But 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 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. Speaker 301:02:36So 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. Speaker 601:02:53Thanks a lot. Speaker 301:02:54Mark, if you'd add anything. Speaker 201:02:56Yeah. Look, I just say one thing. And this is really important, Jade. And I think you've seen some articles pop up in other publications about in the last couple of months, which is, you know, investors are growing weary of marks. Private equity in general has been defending, you know, marks at very, very high valuations. Speaker 201:03:17And you know, 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's been doing this for three decades, was at Carlyle for two 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. Speaker 201:03:47We're not going to sort of make up marks to keep marks high, so we can stay in top quartile or mid quartile or whoever. We've been really clear about that internally. Is that 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's doing a great job of running that side of our business. Speaker 201:04:11You know, 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. Speaker 201:04:29We'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 that's how we're building value in Digital Bridge long term. Speaker 701:04:43Thanks a lot. Operator01:04:47The next question comes from Rick Prentiss with Raymond James. Please go ahead. Speaker 801:04:53Thanks, good morning everybody. Couple questions Speaker 201:04:58Hey Rick, are from Speaker 801:04:59Trying to be three places at once on this busy earnings day. Mark, 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 yeah, we're gonna hit that pretty hard next week. I'd like to take questions Speaker 201:05:19I look forward to digging in with you on that Rick. I'm looking forward to seeing you. Speaker 801:05:24Yeah, 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. Speaker 801:05:50Is 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? Speaker 301:06:03Carry obviously is a function of the portfolio activity. We have to balance the opportunities that we see to continue growing the companies with an obligation to ultimately return capital to our investors. And so, it's something we balance and we are always thinking about the 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 limited partners. And so we try to balance those two. And it's a little bit unpredictable. Speaker 301:06:44So yeah, I don't know, Mark, if you'd add anything. But it's a balancing act. Speaker 201:06:49I think what we've done, Tom and Rick, is really been very disciplined. You know, 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 eleven to thirteen 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. Speaker 201:07:25So I'm not terribly fussed about the velocity at which we've returned capital. We've returned over $9,000,000,000 of DPI in the last two and a half years. We do have Rick 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. Speaker 201:07:52But I do take some comfort Rick in one thing, which is, you know, six years ago we were at like 20,000,000,000 in digital assets. Today we're at 106,000,000,000 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 interests, and I feel really good about that. Speaker 201:08:17In fact, all three swim lanes, Rick, this quarter worked really well. We had fantastic growth in towers. That was really shocking how much towers have come back in the last ninety days. And I think you saw that a little bit with some of the public tower companies. Data centers we talked about, we talked about it. Speaker 201:08:33Leasing 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 Net Omni in The UK, all have had record bookings. And some of that, of course, Rick, as you know, tethered to high strand count, low latency, dark fiber routes that are really critical for AI. Speaker 201:08:55So we're in a 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 64% is night and day. Speaker 201:09:22And so, you know, 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, you know, over the next six quarters, I do see rate cuts coming. I think inflation has kind of found a safe home between, you know, two and two and a half percent. 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 and A. Speaker 201:09:52And 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, we've been pretty busy deploying capital, it wouldn't surprise me, Rick, over the next eighteen months, if we end up divesting of two, three, or four different companies in the next eighteen months. And that will create, obviously, DPI, and it should create carry for our shareholders. Speaker 801:10:19Makes sense, makes sense. On M and A, I think you mentioned that you're still considering looking at adding platforms. How's that going? What's the competition look like out there? I figure I know the answer here, but obviously press reports that there might be M and A involving you. Speaker 801:10:39Any comments or what the board and you are focused on? Speaker 201:10:44So there's three questions wrapped into one there. It's a classic Rick Prentiss three for one special. Let me unpack that. So the first one involves just M and A in terms of what we're doing at the fund level. Right now we're investing Rick out of our third fund. Speaker 201:11:01We just closed Yonder. 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 and A opportunities. Our team meets every week to track those different opportunities in Asia, Europe and The US. The deal environment is coming back to your point, Rick. Speaker 201:11:21You know, 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 three is very different from the cadence at which we invested fund one and two. But again, with a pipeline well in excess of 9,000,000,000 in opportunity, and a ton of co invest down at our portfolio companies, we've never been busier. Speaker 201:11:49The 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 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, Rick, that we can add to our platform, that are, you know, I would use the term you and I've been you and I coined this like twenty five years ago. You know, small tuck ins, like in the tower space. Speaker 201:12:23We 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 Digital Bridge, 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. Speaker 201:12:52We'd love to find stuff that's accretive day one, that has to be the litmus test. And then of course, we want to see something that has a 20% IRR on a five and ten 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 and A, and Severin's been helping out on the corp dev side. Speaker 201:13:17Parker Anderson's been great, and of course Tom's been amazing as well. So we've got a team that's working on that, along with our investment management team tracking, you know, all the other platforms that we're working on. The last question is, look, we don't really respond to market rumor stuff. You know, my famous response to this question, Rick, is Digitridge is for sale every day. You can go buy our stock. Speaker 201:13:42That's the best way to own Digitridge, is by buying our shares. The second best way is to, you know, 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, Rick, over the last two 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 BlueOwl have done. Speaker 201:14:13Our 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. Speaker 201:14:29My 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 gonna run at it as hard as we can. And we've continued to demonstrate that we're growing. Speaker 201:14:52So we can keep growing organically. We're getting very comfortable in our own skin in terms of last three quarters. The guidance that Tom and I put out, we think is very conservative. We've gone out, we've hit those numbers three quarters in a row. We're building credibility with our investor base. Speaker 201:15:09And 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. Speaker 801:15:22Great. Well, look forward to seeing you next week. Have a good one. Speaker 201:15:26Thanks, Rick. We'll see you in Deer Valley. Thank you. Operator01:15:30The next question comes from Anthony Hao with Truist. Please go ahead. Speaker 201:15:36Thanks. Good morning, guys. Good morning, Anthony. How are doing? Good. Speaker 201:15:41Good. With respect to the 3.2 gigawatts under development, can you offer an insight into when the expected delivery timeline? And at what point should we expect meaningful carry from these assets? Well, look, 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 seven and eight years ago respectively. Now, those were not to be clear Anthony, those were not in our fund one. Speaker 201:16:16Those were the legacy six investments that predated our funds. But to be direct with you, we had a really material exit as you know last year in data bank. We had a really material exit in Vantage North America last year. And then the investors that were in those vehicles that joined us seven, eight 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. Speaker 201:16:40So as you know, Digital Bridge 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 one, 2022 Vintage Fund two. If you take the trajectory of the exits in DataBank Advantage, which were eight years and seven years, where we generated hundreds of millions dollars of carried interest and profits for our LPs that were not in our, you know, in the public story yet. Speaker 201:17:09That's really the proxy. So as you think about that vintage of a 2019 fund, and an exit timeline somewhere between seven and eight 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 thirty two years of owning and building these businesses. My average hold throughout my career has been just about seven years. So if you go back to Apex and Spectra site, you go back to GTP, you look at Digital Bridge, you look at some of the other businesses we built, our average hold has generally been about seven years. Speaker 201:17:44That'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 02/1930. 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. Speaker 201:18:12So 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. Gotcha. Speaker 201:18:34And just one more follow-up. Could you share any updates on the build out or traction of the private wealth channel? Yeah, I can. So Andrew and his team, know, coming off of the introduction of our first, you know, private wealth product last year, which raised about a billion 1, did a great job. We've launched our second private wealth product. Speaker 201:18:55By the way, similar exact timeline as what we did with the first product. You know, design 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. Speaker 201:19:34We had a $600,000,000 strategy last year. We ended up raising a billion 1. 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. Speaker 201:19:49It's a product that private wealth investors haven't seen yet. It's very new. It's very differentiated. 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. Speaker 201:20:07So 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. Thank you. You're welcome. Operator01:20:38This concludes our question and answer session. I would like to turn the conference back over for any closing remarks. Speaker 201:20:47Well, look, I want to thank everyone for their interest in Digital Bridge. 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 four key things that we are very focused on right now. Speaker 201:21:09One, 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 an 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. Speaker 201:21:32We're right exactly on plan. We're actually slightly ahead of where we were last year, up about 8% year over year. FEM 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. Speaker 201:21:49The 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 two years ago, which is power is the bottleneck. We've been working on power for well over two years. Speaker 201:22:09We'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 digital 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 Digital Bridge shares. Speaker 201:22:39Because 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 eight platforms. We get to go attack edge. Speaker 201:22:53We get to attack private cloud. We get to attack public cloud. Tier five, tier four, tier three. We have every solution for our customers. And now we have power land and TACNOC. Speaker 201:23:04So 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 Digital Bridge. 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. Speaker 201:23:43And 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 ninety 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 Digital Bridge owns, operates, and is building. Speaker 201:24:08Don'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 four things that we're focused on. We appreciate your interest. Speaker 201:24:23We appreciate your support in Jitteridge. If 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. Operator01:24:40The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.Read morePowered by Earnings DocumentsSlide DeckPress Release(8-K) DigitalBridge Group Earnings HeadlinesDigitalBridge Reports Second Quarter 2025 Financial ResultsAugust 7 at 8:35 AM | gurufocus.comDigitalBridge Group (DBRG) Projected to Post Quarterly Earnings on ThursdayAugust 5 at 3:43 AM | americanbankingnews.comTrump’s national nightmare is herePorter Stansberry and Jeff Brown say a new U.S. national emergency is already underway — and it could trigger the biggest forced rotation of capital since World War II. They reveal why Trump is mobilizing America’s tech giants… and name the two stocks most likely to soar as trillions shift behind the scenes.August 8 at 2:00 AM | Porter & Company (Ad)DigitalBridge Announces Second Quarter 2025 Earnings Release and Conference Call DateJuly 15, 2025 | tmcnet.comDigitalBridge Announces Second Quarter 2025 Earnings Release and Conference Call DateJuly 15, 2025 | businesswire.comJim Cramer Says He “Cannot Recommend DigitalBridge”July 12, 2025 | msn.comSee More DigitalBridge Group Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like DigitalBridge Group? Sign up for Earnings360's daily newsletter to receive timely earnings updates on DigitalBridge Group and other key companies, straight to your email. Email Address About DigitalBridge GroupDigitalBridge is an infrastructure investment firm specializing in digital infrastructure assets. They provide services to institutional investors. They primarily invest in data centers, cell towers, fiber networks, small cells, and edge infrastructure. 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There are 9 speakers on the call. Operator00:00:00Good day, and welcome to the Digital Bridge Group Inc. Second Quarter twenty twenty five Earnings Conference Call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Operator00:00:21To ask a question, you may press star then one on a touch tone phone. 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. Speaker 100:00:43Good morning, everyone, and welcome to Digital Bridges' second quarter twenty twenty five earnings conference call. Speaking on the call today from the company is Mark Ganzi, our CEO and Tom Marrofer, 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, 08/07/2025, and Digital Bridge does not intend and undertakes no duty to update it for future events or circumstances. Speaker 100:01:19For more information please refer to the risk factors discussed in our most recent Form 10 ks filed with the SEC for the year ending 12/31/2024, and for the Form 10 Q to be filed with the SEC for the quarter ending 06/30/2025. With that, let's get started. I'll turn the call over to Mark Ganzi, our CEO. Mark? Speaker 200:01:42Thanks, Severin. Good morning, everyone, and welcome to our second quarter twenty twenty five business update. We appreciate you joining us, and as always, we appreciate your interest in Digibridge. 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 three pillars of our strategy you see here: fundraise, invest, and scale. Speaker 200:02:08This makes three 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 continued to expand. This is the core of the Ditto Bridge investment case, scalable growth with expanding margins and we are delivering on that fundamental premise. Speaker 200:02:43Second, on fundraising. We continue to see exceptional demand from LPs to partner with us and invest in the digital economy. We raised another $1,300,000,000 in the quarter, bringing our year to date total of $2,500,000,000 and making great progress towards our $40,000,000,000 fee and 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. Speaker 200:03:26We 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 two new critical platforms in the quarter, Yonder in hyperscale data centers and TechnoC 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 Digital Bridge 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. Speaker 200:04:10Importantly, 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 DB3 strategy continues to attract capital, and we've raised $6,900,000,000 year to date, with a final close in the third quarter that will take the total to over $7,000,000,000 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. Speaker 200:05:01We 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. Speaker 200:05:35This 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 Digibridge story. This all flows ultimately straight into FEM, the key metric that drives our earnings. The activation of new capital from the Ditto Bridge partner series and high quality co investments puts us in a great position to exceed our $40,000,000,000 FEM target for 2025. Speaker 200:06:12We 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. Speaker 200:06:31This 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 two 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 two years, and now everyone's talking about it. Speaker 200:07:00This quarter we made moves to extend and establish our leadership position in both verticals, digital power and continue to light up data center capacity. Let's start with power. We committed up to $500,000,000 alongside of our partners ArcLight to launch TACNOC. 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 are we going to put our best ideas to work in powering the AI economy? Speaker 200:07:31Technoc fits that prototype. It develops powered land, solving the number one 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 Yonder, a premier global hyperscale developer that is super focused on powered shell. Speaker 200:07:56With over 400 megawatts of leased capacity and a clear path to over a gigawatt, Yonder 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 RF the ball with our existing portfolio. You see significant financings at both Switch and Vantage. This isn't maintenance capital. This is growth capital. Speaker 200:08:23And that's a critical thing to acknowledge. It's funding massive expansions, including a new $3,000,000,000 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 DigiRidge today. If you recall, the first quarter was characterized by some macro questions, including what's the ROI of AI? Speaker 200:08:57But 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. Speaker 200:09:26Microsoft 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 CFO, Ana Akenazi confirmed that they're increasing their 2025 CapEx forecast by 10,000,000,000 to 85,000,000,000. And they expect a further increase in 2026 demand, and that's not going to stop anytime soon. So we've seen this step function in CapEx. Speaker 200:10:07Talked about 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 $380,000,000,000. For 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. Speaker 200:10:37Next 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. Speaker 200:10:54A year ago, they were processing about 10,000,000,000,000 tokens a month. At their IO conference in May, Sundar announced that the number had grown 50 fold to $480,000,000,000,000 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. Speaker 200:11:22On their earnings call just two weeks ago, they updated that number again saying they would now doubled since May and are processing over $980,000,000,000,000 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 ninety 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. Speaker 200:12:13This 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 five gigawatt US 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. Speaker 200:12:41And 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 four quarters. The chart on the left shows the global data center electricity consumption is set to more than double by 02/1930. Speaker 200:13:11This 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 advantage, switch, data bank, and yonder, Building scale at the edge with DataBank and creating new power solutions with Tachenock is the direct integrated response to solving our customers' biggest problems. Speaker 200:13:44I'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. Speaker 300:13:54Thanks, Mark, and good morning, everyone. As a quick reminder, the full earnings presentation is available within the shareholder section of our website. As usual, I'll start with our financial highlights, which Mark touched on briefly. In the second quarter, we recorded $85,000,000 of fee revenue, representing an increase of 8% over the 2024. Our fee revenue this quarter benefited from the cumulative effect of organic growth in our flagship fund series over the last twelve months, with a relatively modest $3,000,000 contribution from catch up fees this quarter. Speaker 300:14:30This growth in fee revenue resulted in $32,000,000 of FRE in the quarter, an increase of 23% over Q2 of last year. Distributable earnings was negative $19,000,000 for the quarter, principally driven by a $40,000,000 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 $158,000,000 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. Speaker 300:15:20During the quarter, we strategically deployed $33,000,000 into seed assets to support fund launches for a couple of our new products, including our initiative around energy that Marcus touched on. Moving to the next page, fee earning equity under management increased to $39,700,000,000 as of June 30, representing a 21% increase from last year. This growth is primarily driven by capital formation in the DPP 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 fee and is likely to moderate over the next quarter or two as distributions from the portfolio partially offset new capital raised. We closed $1,300,000,000 in new fee earning commitments during the quarter, a 17% increase over the 2024, led by strong co investment activity and new commitments to our latest DBP flagship fund. Speaker 300:16:25Turning to the next page, which summarizes our non GAAP financial results. As mentioned earlier, we reported $85,000,000 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 funds in the 2025, supported by the continued contribution from catch up fees. Moving to the next page, which summarizes our carried interest and principal invested income. Speaker 300:17:01We reported a $12,000,000 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 funds 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 funds 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. Speaker 300:17:57Principal investment income, which represents the mark to market on the company's GP investments in our various funds was $21,000,000 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 two 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 twelve months. This quarter we saw $3,400,000,000 of Centimeters 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 900,000,000 in outflows driven principally by various return of capital events across our liquid and credit strategies. Speaker 300:19:01Finally, the company continues to maintain a strong balance sheet with approximately $1,600,000,000 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 $300,000,000 to $100,000,000 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 Mark. Speaker 200:19:42Thanks, 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 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 thirty years of building and scaling digital infrastructure businesses. Speaker 200:20:09It's not a new trick for us. It's a three phase process. We establish platforms. We transform them. We scale them. Speaker 200:20:17And ultimately, you've heard me say this over the last five years, we follow 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 one, TACNOC. Speaker 200:20:34We established the platform. We've identified the most critical bottleneck in the entire ecosystem, power. And we 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 Yonder, we're also at the beginning of our journey. We acquired a fantastic global platform that will now move into phase two, transform and scale. Speaker 200:21:00We'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 into phase three at Switch, following the logos. Speaker 200:21:22Switch is a technology centric, market leading tier five 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 their 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 lifecycle. Next slide, please. Speaker 200:21:55So 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 TACNOC, 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. Speaker 200:22:22And 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 digital bridge. 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. Speaker 200:22:43We 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 TACNOC has been a phenomenal experience. We bring together the data center development capabilities. They bring together the power expertise. Speaker 200:23:13Together, we've created a platform in TACNOC that is purpose built to solve the number one constraint for our customers, bridging two 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 two years diligencing who we could go run this race with. And at the end of the day, the three 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 Digitridge. First and foremost an industrialist and somebody that knows how to build infrastructure at the street level. Speaker 200:23:52This is entirely critical to the success in our digital power strategy. Next slide please. So what does Tachenock actually do? It's simple, but it's revolutionary. Tachenock develops power land. Speaker 200:24:06They 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. Speaker 200:24:32Tachnot 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 Davis, 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 digital rich playbook. It's what we know. It's what we do. Speaker 200:24:58Ken 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 three gigawatts of IT capacity and over five gigawatts of generation capacity. This is massive. It's a scalable opportunity and ran 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. Speaker 200:25:28Next slide, please. So turning to the second phase of major investments in the quarter, we're thrilled to welcome the Yonder team to the Ditto Bridge family. As AI models grow, the demand for massive purpose built Hyperscale campuses is exploding. And Yonder is a pure play leader in this space. With a global footprint in key markets from Northern Virginia to Frankfurt to Tokyo, and the development pipeline of over one gigawatt, Yonder is a perfect strategic fit. Speaker 200:26:00This acquisition in partnership with our long term investors at MacKay's CDPQ immediately strengthens our global hyperscale portfolio. Alongside Vantage and Switch, Yonder gives us another world class platform to serve the gigascale training requirements of the largest cloud may have 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. Speaker 200:26:36Next page. So despite just closing the deal, we're already deep into executing phase two of our 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 Wagenheim, formerly of T5 as CEO, and Sandeep Manaj, a leveraged finance veteran and CFO. Speaker 200:27:08This is a team built to execute at hyperscale speed. Finding and empowering the right leadership has always been a key differentiator for us at Digital Bridge. 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 Sandeep to the team, and we look forward to working with them. Speaker 200:27:34Second, we immediately began optimizing the footprint to focus the highest return opportunities. So just last week, we announced the divestiture of EverYonder, our joint venture in India. This move streamlines Yonder's presence and allows us to redeploy capital to accelerate development in our priority AI class 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 Le Case and Allianz to provide the significant primary capital required to build out Yonders one gigawatt plus pipeline. This is the Digeridge playbook in action, speed, discipline, and a relentless focus on creating value from day one. Speaker 200:28:21Next 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 $11,000,000,000 This is a perfect example of phase three 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. Speaker 200:28:48This quarter Switch expanded its credit facilities to an incredible 10,000,000,000. 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. Speaker 200:29:12This is really an exciting and transformative moment for Switch. And look at the evolution here. We went from a fixed premium M and A deal structure to a sophisticated multi instrument platform, including revolvers, term loans, and ABS. This includes the first ever ABS rated under S and 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. Speaker 200:29:44Tier five, highly secure, very reliable, fully redundant, and has never gone down one day or one minute in the history of the company. This is something that S and P understood, and it's something that investors now understand. Switch is differentiated. The bottom line is in partnership with Digital Bridge, and Rob and Thomas, Madonna, 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. Speaker 200:30:26Next 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 Digital Bridge 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 Yonder. Speaker 200:30:58These are gigascale 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 five 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 energetic AI, you have data bank. 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. Speaker 200:31:45We're 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 AZs. We understand workloads. Speaker 200:32:10And we understand where our customers want to be. We have the platforms that pair up with those customer expectations. This is like any 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. Speaker 200:32:36If 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. Speaker 200:33:01This 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 2026, we anticipate deploying over 43,000,000,000 of CapEx across our portfolio, with Digital Bridge's share at just under $30,000,000,000 to bring this capacity online and on time. We're not just participating in the ad 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. Speaker 200:33:36Next 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 Digital Bridge. This is how the math works. Speaker 200:33:54As you can see on this slide, to build one gigawatt of data center capacity, it requires roughly $10,000,000,000 in total capital, about half of which is equity if you're levering those assets at the correct loan 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 Digimarc shareholders. So now take that math to the 5.4 gigawatts that we have either lit today or under construction. That represents over 50,000,000,000 of total investment, and more than 25,000,000,000 of equity being put to work, with Digital Bridge controlling approximately two thirds of the ownership of those platforms. That represents roughly 1,000,000,000 of potential future carried being built, cultivated, and embedded in our portfolio right now. Speaker 200:34:46Look, simply put in distilling this for you as an investor, this is long term value creation. And this is the core of our strategy, the proposition for why to own Digimarc shares. While we focus on delivering consistent fee related earnings, growth quarter over quarter, we're simultaneously building 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 Digital Bridge. Next slide please. Speaker 200:35:19So 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. Speaker 200:35:31We 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 $40,000,000,000 fee and goal for this year. Second, we developed and launched our new investment strategies, with TACNOC being the first major step in our digital energy platform. And we hit a major milestone with our portfolio AUM now exceeding $100,000,000,000 This is up over 25% from last year. Speaker 200:36:01We 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 twenty twenty five financial metrics with fee related earnings up 10% to 20% over last year, and we will continue to improve our margins. Priority two, successfully form the capital to take our FEM over the $40,000,000,000 mark. We have extreme high conviction around our ability to hit and exceed our fundraising targets for 2025. Speaker 200:36:35Priority three, successfully launch our new strategies with initial commitments to digital energy, our stabilized data center strategy, and our next private wealth offering. All three of those strategies are in flight. And priorities four and five, maintain a strong balance sheet, and continue to evaluate strategic, but most importantly accretive M and A opportunities. Look, we have a really clear path. We have momentum, and most importantly, we are executing for you. Speaker 200:37:08We're in the very early stages of a historic multi decade investment cycle driven by AI. Digital Bridge 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 and A. Speaker 200:37:27Thank you very much. Operator00:37:30We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. Operator00:37:59The first question today comes from Michael Elias with C. D. Cowen. Please go ahead. Speaker 400:38:05Great. Thanks for taking the questions. Two, if I may. One of the themes this earnings season seems to be that inference is scaling. Mark, just curious if you're seeing any evidence of the hyperscalers scaling up their focus on inference compute or is it still early days? Speaker 400:38:20And 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 Digital Bridge? 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 it. Speaker 200:38:44So let's start with the first one. And first of morning, Michael. Thank you. Look forward to seeing you next week. You know, I would say we are very much at the early innings of inference. Speaker 200:38:57If you look across our footprint and you look at where some of our customers like Grok are installing, you know, 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, you know, all of the hyperscalers are going. But early, you know, 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, is we have high power compute capacity. So I 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 three, four solution that's got somewhere in the order of magnitude of at least, you know, 25 to 100 megawatts. Speaker 200:39:55So these aren't your typical edge workloads where in public cloud, for the last, you know, five to seven years, we've seen those deployments in the two fifty kW all the way up to 10 megawatts. That's been kind of the tier two, tier three market workloads for public cloud. AI is different. You and I've 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. Speaker 200:40:22And so I think looking to, for folks looking to see that that playbook is gonna remanifest itself in the same way, it's not. Interconnection helps. As you know, 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. Speaker 200:40:40Having 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 gonna win. So it will be a little bit different from, you know, how we saw Edge public cloud playing out in the last five years. By the way, Edge cloud workloads are still playing out. We're probably, if we were playing a, you know, a nine inning baseball game, in Cloud Edge, we're probably in the fourth or fifth inning. Inferencing is in probably bottom of the first inning. Speaker 200:41:20It's very early days for inferencing. So I hope that answers both of your questions. If I didn't, can refocus the second question. Speaker 400:41:30Yeah, just the second question was more, look, if I think of a training, a 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. The thought there is that to the extent that returns are higher when you land that demand, as we think of the accretion to Digital Bridge and the analysis that you laid out, I would think that it's more value creative for the Digital Bridge shareholders. So just trying to tease out how that essentially that math you provided at the end changes in an inference world. Speaker 200:42:05Well, 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, Yonder 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 eight years ago, you know, we bought that business for circa $235,000,000 It's been recapped a couple of times. Speaker 200:42:39We've created this really unique continuation vehicle structure. And that business is well, well north of 11 to $12,000,000,000 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. Speaker 200:43:06And what's interesting about you know, 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 an edge. Speaker 200:43:37I 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 weeks ago in Utah. And we were sitting in that data center, and that wasn't you know, that's six data centers in one campus. It's an edge facility that really supports you know, one hyperscale customer. Speaker 200:43:59But 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. Speaker 200:44:22And we have over four eighty two pairs of dark fiber running between that and the NAP of, you know, 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 two and tier three markets is something we created at DataBank. And so that's why DataBank's returns and that's why their growth is so high. Speaker 200:44:45So we don't see those types of returns and inferencing an 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. Speaker 200:45:04So our customers are not waiting. So for example, that one hyperscaler in Bluffdale, Utah, they brought with them six 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. Speaker 200:45:30And 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 six data centers in Bluffdale, Utah. So and then and then public cloud, private cloud, and edge. Speaker 200:45:58The last one is is Switch on public cloud. You know, one thing that Switch has done a great job of is, you know, they've created a really unique, you know, 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 five environment, where the most important Fortune 100 customers and government agencies, and now hyperscalers, they want to be at a Switch facility, because they know what they're getting. Speaker 200:46:36Highly connected, highly secure, and again, back to that word, power. We're gonna keep talking about power till 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 Digital Bridge has that nobody else has. Speaker 200:47:04Not 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. Speaker 400:47:20Great. Thanks for the call, Mark. See you in Boulder. Speaker 200:47:23Thanks, Michael. See you at your conference. Operator00:47:26The next question comes from Richard Cho with JPMorgan. Please go ahead. Speaker 500:47:32Hi. I just wanted to follow-up on the strength in co invest. 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? Speaker 200:47:53Look, what I would say is a couple 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 Yonder are taking on, these are projects, Michael, I've never seen in my career. I've been doing this for thirty years. The CapEx is no longer measured in, oh, I'm gonna go build a billion dollar data center. Speaker 200:48:21It's now, can I go build a $10.20, $30,000,000,000 data center? So when we line up the co investment capital for Yonder, it was a really good outcome for Fund III, and it was a really good outcome for Digitridge investors. Why? We attracted over $2,000,000,000 at Co Invest. We've done a really good job of changing the narrative on Co Invest. Speaker 200:48:41We 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 lead 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 Yonder transaction was really successful for us. Speaker 200:49:04We 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. Speaker 200:49:35Our ideas are unique, they're differentiated. What we're doing at Yonder, 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, you know, giga sized projects coming across our data center footprint. Speaker 200:50:00We 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 eight platforms is up, you know, 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 two things really well between now and the end of the year. One, we're going to sign a lot of leases. Speaker 200:50:25Two, 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 FEM and FRE, and that's going to be really good news for Digimarc 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. Speaker 200:50:52Like 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, you know, Richard, the fundraising will come strong. It'll accelerate a bit in Q3. It'll really accelerate in Q4. That seems to be the pattern of how we're fundraising. Speaker 200:51:11That's what happened in 2023 and 2024, and 2025 is playing out just like that. Speaker 500:51:19And I just wanted to follow-up quickly on techno. Know, power usually takes time, and it seems like the opportunity there is very big. But how should we think about the pacing and the ramping of the opportunity there? Speaker 200:51:37Well, look, I think we see that product as being a really interesting product in the sense that, you know, projects where a hyperscaler can step in immediately and start construction and be live within nine to eighteen 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 you know 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. Speaker 200:52:23With Yonder, 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 3540% of the time. And so I wanted to have a platform, Richard, that would respond to that opportunity. Speaker 200:52:47Nobody 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. Got a great management team. We have some amazing first few sites that we're talking to our customers, particularly in Arizona. Speaker 200:53:14That's a really hot location for self performance. And we can make data center like returns, you know, in the power of 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, you know, it's probably in the order of magnitude of twelve to thirty six months is the conversion. But once we sell the project to a customer, we get full return of capital. Speaker 200:53:40That's what I like about it. I don't have to sit around five, seven, eight years like I had to wait on DataBank Advantage to get DPI and create the returns. In TACNOC, 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 in TACNOC. Speaker 200:53:57We 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. Great. Speaker 200:54:09Can't wait to hear Speaker 500:54:09about going forward. Thank you. Operator00:54:14The next question comes from Randy Binner with B. Riley. Please go ahead. Speaker 600:54:20Hey, thanks. Just on the $40,000,000 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 vintage of that and where that loss is, if that's the final loss for that item. Speaker 300:54:44It is. Yeah, that's correct. It was an investment in one of the InfraBridge funds that we also had a little bit on our balance sheet directly had been made a couple years ago. We had it valued at zero for the last couple of quarters, but it was a final realization this quarter. So that causes it to flip and run through DE. Speaker 300:55:06So I don't want to say it's non cash, but it's not doesn't impact our kind of cash flow or anything like that this year. Speaker 600:55:15Right. Got it. Understood. And then I guess speaking of cash, you have a good cash balance. I think the revolver was reduced to save costs. Speaker 600:55:27For Mark, 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? Speaker 300:55:47It'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 preferreds that we have. Speaker 300:56:25But it is certainly something that we and the board talk about. Speaker 600:56:31Okay, great. Thank you. Operator00:56:36The next question comes from Jade Rahmani with KBW. Please go ahead. Speaker 700:56:43Thank you very much. What do you expect for fund outflows in 2026? And do you think it's reasonable to project fee in 2026 to grow in the mid to high single digits? Speaker 200:57:02Well, 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. You know, we talked today in the presentation about deploying $43,000,000,000 of CapEx into AI infrastructure. That is up from 28,000,000,000 last year. So we've added another circa 15,000,000,000 of new opportunity. My sense is, you were paying attention to the doubling of the leasing backlog across our portfolio companies. Speaker 200:57:36And then of course looking at the power bank moving from 16 gigawatts to 20 gigawatts. So I think you can you know, it's hard for us to sit here today and say, gee that 43,000,000,000 is going to 20,000,000,000 or going to 60,000,000,000. 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. Speaker 200:58:02And so we've been spending the last ninety days fundraising, equity and debt. And so you know, some of the case studies that we put in front of you like Yonder and Switch were not accidental. We're showing you how much ConeVest we raised at Yonder. We're showing how much debt capital we raised at Switch. Why? Speaker 200:58:20Because 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. Speaker 200:58:39Power J is a $1,300,000,000,000 opportunity just in AI. In AI alone, we've got to build 1,300,000,000,000.0 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 two years ago. We spent years picking the right partner. We were very careful, we were very selective. Speaker 200:59:04We 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 PowerNow. So you're gonna 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. Speaker 200:59:35Strategy, 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'll 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. Speaker 201:00:01There's a lot of co investment capital coming. And Tom and I and Kevin, Kevin who runs Capital Information, we need to plan for that, and we need probably the next thirty to sixty days to get a good handle on that. Tom, I don't know if you want any more color, but sorry, Jada, for 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 de accelerate. Speaker 301:00:25Yeah, mean, 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. Speaker 301:00:49But over time, we expect to continue growing FEUM and raising more new capital than we distribute liquidity. Speaker 801:00:59Thanks very much. Speaker 701:01:02Thank you very much. A follow-up just on carried interest, which for GAAP showed a reversal this quarter. I mean, 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? Speaker 301:01:28I'll address the gap reversal first. 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. Speaker 301:01:44But 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 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. Speaker 301:02:36So 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. Speaker 601:02:53Thanks a lot. Speaker 301:02:54Mark, if you'd add anything. Speaker 201:02:56Yeah. Look, I just say one thing. And this is really important, Jade. And I think you've seen some articles pop up in other publications about in the last couple of months, which is, you know, investors are growing weary of marks. Private equity in general has been defending, you know, marks at very, very high valuations. Speaker 201:03:17And you know, 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's been doing this for three decades, was at Carlyle for two 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. Speaker 201:03:47We're not going to sort of make up marks to keep marks high, so we can stay in top quartile or mid quartile or whoever. We've been really clear about that internally. Is that 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's doing a great job of running that side of our business. Speaker 201:04:11You know, 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. Speaker 201:04:29We'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 that's how we're building value in Digital Bridge long term. Speaker 701:04:43Thanks a lot. Operator01:04:47The next question comes from Rick Prentiss with Raymond James. Please go ahead. Speaker 801:04:53Thanks, good morning everybody. Couple questions Speaker 201:04:58Hey Rick, are from Speaker 801:04:59Trying to be three places at once on this busy earnings day. Mark, 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 yeah, we're gonna hit that pretty hard next week. I'd like to take questions Speaker 201:05:19I look forward to digging in with you on that Rick. I'm looking forward to seeing you. Speaker 801:05:24Yeah, 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. Speaker 801:05:50Is 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? Speaker 301:06:03Carry obviously is a function of the portfolio activity. We have to balance the opportunities that we see to continue growing the companies with an obligation to ultimately return capital to our investors. And so, it's something we balance and we are always thinking about the 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 limited partners. And so we try to balance those two. And it's a little bit unpredictable. Speaker 301:06:44So yeah, I don't know, Mark, if you'd add anything. But it's a balancing act. Speaker 201:06:49I think what we've done, Tom and Rick, is really been very disciplined. You know, 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 eleven to thirteen 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. Speaker 201:07:25So I'm not terribly fussed about the velocity at which we've returned capital. We've returned over $9,000,000,000 of DPI in the last two and a half years. We do have Rick 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. Speaker 201:07:52But I do take some comfort Rick in one thing, which is, you know, six years ago we were at like 20,000,000,000 in digital assets. Today we're at 106,000,000,000 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 interests, and I feel really good about that. Speaker 201:08:17In fact, all three swim lanes, Rick, this quarter worked really well. We had fantastic growth in towers. That was really shocking how much towers have come back in the last ninety days. And I think you saw that a little bit with some of the public tower companies. Data centers we talked about, we talked about it. Speaker 201:08:33Leasing 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 Net Omni in The UK, all have had record bookings. And some of that, of course, Rick, as you know, tethered to high strand count, low latency, dark fiber routes that are really critical for AI. Speaker 201:08:55So we're in a 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 64% is night and day. Speaker 201:09:22And so, you know, 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, you know, over the next six quarters, I do see rate cuts coming. I think inflation has kind of found a safe home between, you know, two and two and a half percent. 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 and A. Speaker 201:09:52And 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, we've been pretty busy deploying capital, it wouldn't surprise me, Rick, over the next eighteen months, if we end up divesting of two, three, or four different companies in the next eighteen months. And that will create, obviously, DPI, and it should create carry for our shareholders. Speaker 801:10:19Makes sense, makes sense. On M and A, I think you mentioned that you're still considering looking at adding platforms. How's that going? What's the competition look like out there? I figure I know the answer here, but obviously press reports that there might be M and A involving you. Speaker 801:10:39Any comments or what the board and you are focused on? Speaker 201:10:44So there's three questions wrapped into one there. It's a classic Rick Prentiss three for one special. Let me unpack that. So the first one involves just M and A in terms of what we're doing at the fund level. Right now we're investing Rick out of our third fund. Speaker 201:11:01We just closed Yonder. 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 and A opportunities. Our team meets every week to track those different opportunities in Asia, Europe and The US. The deal environment is coming back to your point, Rick. Speaker 201:11:21You know, 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 three is very different from the cadence at which we invested fund one and two. But again, with a pipeline well in excess of 9,000,000,000 in opportunity, and a ton of co invest down at our portfolio companies, we've never been busier. Speaker 201:11:49The 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 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, Rick, that we can add to our platform, that are, you know, I would use the term you and I've been you and I coined this like twenty five years ago. You know, small tuck ins, like in the tower space. Speaker 201:12:23We 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 Digital Bridge, 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. Speaker 201:12:52We'd love to find stuff that's accretive day one, that has to be the litmus test. And then of course, we want to see something that has a 20% IRR on a five and ten 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 and A, and Severin's been helping out on the corp dev side. Speaker 201:13:17Parker Anderson's been great, and of course Tom's been amazing as well. So we've got a team that's working on that, along with our investment management team tracking, you know, all the other platforms that we're working on. The last question is, look, we don't really respond to market rumor stuff. You know, my famous response to this question, Rick, is Digitridge is for sale every day. You can go buy our stock. Speaker 201:13:42That's the best way to own Digitridge, is by buying our shares. The second best way is to, you know, 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, Rick, over the last two 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 BlueOwl have done. Speaker 201:14:13Our 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. Speaker 201:14:29My 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 gonna run at it as hard as we can. And we've continued to demonstrate that we're growing. Speaker 201:14:52So we can keep growing organically. We're getting very comfortable in our own skin in terms of last three quarters. The guidance that Tom and I put out, we think is very conservative. We've gone out, we've hit those numbers three quarters in a row. We're building credibility with our investor base. Speaker 201:15:09And 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. Speaker 801:15:22Great. Well, look forward to seeing you next week. Have a good one. Speaker 201:15:26Thanks, Rick. We'll see you in Deer Valley. Thank you. Operator01:15:30The next question comes from Anthony Hao with Truist. Please go ahead. Speaker 201:15:36Thanks. Good morning, guys. Good morning, Anthony. How are doing? Good. Speaker 201:15:41Good. With respect to the 3.2 gigawatts under development, can you offer an insight into when the expected delivery timeline? And at what point should we expect meaningful carry from these assets? Well, look, 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 seven and eight years ago respectively. Now, those were not to be clear Anthony, those were not in our fund one. Speaker 201:16:16Those were the legacy six investments that predated our funds. But to be direct with you, we had a really material exit as you know last year in data bank. We had a really material exit in Vantage North America last year. And then the investors that were in those vehicles that joined us seven, eight 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. Speaker 201:16:40So as you know, Digital Bridge 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 one, 2022 Vintage Fund two. If you take the trajectory of the exits in DataBank Advantage, which were eight years and seven years, where we generated hundreds of millions dollars of carried interest and profits for our LPs that were not in our, you know, in the public story yet. Speaker 201:17:09That's really the proxy. So as you think about that vintage of a 2019 fund, and an exit timeline somewhere between seven and eight 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 thirty two years of owning and building these businesses. My average hold throughout my career has been just about seven years. So if you go back to Apex and Spectra site, you go back to GTP, you look at Digital Bridge, you look at some of the other businesses we built, our average hold has generally been about seven years. Speaker 201:17:44That'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 02/1930. 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. Speaker 201:18:12So 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. Gotcha. Speaker 201:18:34And just one more follow-up. Could you share any updates on the build out or traction of the private wealth channel? Yeah, I can. So Andrew and his team, know, coming off of the introduction of our first, you know, private wealth product last year, which raised about a billion 1, did a great job. We've launched our second private wealth product. Speaker 201:18:55By the way, similar exact timeline as what we did with the first product. You know, design 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. Speaker 201:19:34We had a $600,000,000 strategy last year. We ended up raising a billion 1. 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. Speaker 201:19:49It's a product that private wealth investors haven't seen yet. It's very new. It's very differentiated. 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. Speaker 201:20:07So 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. Thank you. You're welcome. Operator01:20:38This concludes our question and answer session. I would like to turn the conference back over for any closing remarks. Speaker 201:20:47Well, look, I want to thank everyone for their interest in Digital Bridge. 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 four key things that we are very focused on right now. Speaker 201:21:09One, 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 an 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. Speaker 201:21:32We're right exactly on plan. We're actually slightly ahead of where we were last year, up about 8% year over year. FEM 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. Speaker 201:21:49The 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 two years ago, which is power is the bottleneck. We've been working on power for well over two years. Speaker 201:22:09We'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 digital 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 Digital Bridge shares. Speaker 201:22:39Because 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 eight platforms. We get to go attack edge. Speaker 201:22:53We get to attack private cloud. We get to attack public cloud. Tier five, tier four, tier three. We have every solution for our customers. And now we have power land and TACNOC. Speaker 201:23:04So 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 Digital Bridge. 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. Speaker 201:23:43And 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 ninety 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 Digital Bridge owns, operates, and is building. Speaker 201:24:08Don'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 four things that we're focused on. We appreciate your interest. Speaker 201:24:23We appreciate your support in Jitteridge. If 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. Operator01:24:40The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.Read morePowered by