Ares Management Corporation (ARES) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Bank of America's 34th Annual Financial Services Conference. This is Craig Siegenthaler, North American Head of Diversified Financials, and I'm very pleased to introduce Michael Arougheti. Mike is a Co-Founder, CEO and a Director of Ares Management. Mike, thank you for joining us today.

Thanks for having me. Always good to be with you.

So Ares is one of the largest alt managers in the world with a world-class business, including its #1 noninvestment-grade private credit franchise. Five years ago, the firm managed around $200 billion in AUM. Now it's $600 billion, 3x.

With that, let's get started with a big picture question on the macro front. So we've entered year 4 of the bull market IPOs and M&A are expected to accelerate. The Fed is cutting rates, but spreads are tight. Also private equity realizations are expected to rebound, but they've been depressed for a while. How do you see this macro backdrop playing out in 2026 for the industry and Ares specifically?

Yes. Thanks again for having me, Craig. It's always good to be with all of you. Look, we're very constructive on the deal environment for 2026. If you go back and listen to some of the commentary around our third quarter earnings call in the fall, we said that we saw pipelines beginning to accelerate into year-end and that those pipelines were both new transaction driven, but as importantly, diversified across each of our businesses. We came through the end of the year. We continue to see the acceleration. And as we just announced on our earnings call, we had a record fourth quarter, about $46 billion of capital deployed in Q4. And we also said on our earnings call that as of the end of January, our pipeline, which we track across all of our businesses was at a record high in January, which usually is a good predictor for transaction volumes within the first 6 months of that determination date. So the markets are obviously having some AI jitters, which we could probably talk about a little bit later. But given everything that we're seeing fundamentally, as you mentioned, constructive rate backdrop, pro-business administration and a deregulatory stance, banks derisking and driving capital markets activity, real estate volume is picking up after valuations have troughed, aging of private equity portfolios and dry powder, there's just a lot there to catalyze deal flow. So barring any unforeseen macro event, which is always a possibility, we would think that the transaction volumes will be pretty healthy this year.

Great. So I know you said a little bit later, but maybe we can...

I was just hoping we could push it to the very end. We're running out of time.

So we can't get through a fireside chat without hitting on software AI disruption, which became a really big topic after Anthropic's Claude launch like a week ago, but I guess it feels longer than that. But I think it's important to note that a lot of what you do is private credit, we're talking 30% LTV business, so big cushion sort of in front of you. And even on the equity front, not all companies are created equal. But from your seat, from more of a private market lens, what is your perspective on what just unfolded? We knew a lot of this a year or 2 ago.

Yes. I don't want to consume the entire conversation on this issue, but it's interesting because as a private market practitioner, we try not to get whipsawed by the headlines of the day. It is quite odd to us that the public markets have woken up to AI disruption as a theme. If you've been investing over the last 5-plus years, and you haven't been thinking about opportunities and risks created from technology and AI implementation, you've probably been asleep at the switch. Before we talk about the software narrative specifically, I think it's also important to understand that for every company that gets disrupted, there is probably a company that's getting improved. Margins are expanding, productivities, expanding. They're able to invest in growth in new ways as the AI revolution continues to proliferate, you're going to see meaningful, meaningful opportunities to invest in digital infrastructure, renewable energy, transmission. So from the Ares Management lens, given that we are balance sheet light and not owning these exposures directly, we're feeling pretty good, if not great, about the way that we're positioned given the dry powder that we have and given the fact that we expect that this will create as much opportunity to go on offense as risks in the portfolio. So again, I think this narrative right now, at least as everybody is digesting, it feels very one-sided and everybody is anxious about risk. And I would just encourage everybody to be thinking about what does that mean for everything else in your portfolios. And then to your point on software specifically, I think software is a little bit of a misnomer and folks should be thinking not just about software, but generally about technology transformation and AI disruption. If you're a business services company or a health care services company or a technology business, you are either going to have risk or opportunity from AI implementation. This is not a software issue. So I think, again, that the market is too narrowly defining what the set of issues is in front of them. And again, we'll eventually get there. When we look at our portfolio, 6% of our exposures are to software companies, broadly speaking, across the waterfront. These tend to be enterprise software businesses where we have 2-sided networks, meaningful proprietary data moats, mission-critical systems. It's not to say that every exposure we have is immune. But obviously, as I said earlier, the first question we've asked ourselves across everything in our portfolio for the last 5-plus years has been what is the opportunity and risk from AI. And so not surprisingly, when we now go back and continue to re-underwrite the exposures we have, we feel like we're very well mitigated.

Great. So let's probably hit on a more important topic. What are your strategic priorities for this year? You've gone through an active period of M&A, really transform the business. You don't really have a lot of product gaps yet. But last year, you did talk a little bit about private equity, an area you could be bigger in. So when you take a step back, what are the strategic priorities today? And when you rank them, does private equity come out in the top 5?

Private equity actually does not come out in the top 5, but I'll cover that because I think it's an important thing to keep in mind when you think about our potential future growth and the way that the market is developing. Probably top of the list is continued expansion in our digital infrastructure business. We bought a company called GCP last year. The investment thesis there was to, one, grow larger in Japan. We think we acquired the preeminent real estate manager in the Japanese market, and we've been quite happy with the product set and the performance there. Two, it was to diversify our global industrial real estate business. We are now the third largest developer owner-operator of warehouses in the world, which many people don't know. And then third, we acquired a data center development capability of about 85 people under the brand Ada Infrastructure. And alongside that data center capability came a data center pipeline of very large build-to-suit hyperscaler projects across the globe in Tokyo, Osaka, London, Sao Paulo, Northern Virginia. And part of the thesis was that we would take the existing Ares digital infrastructure capabilities, the existing Ares renewable energy teams and then accelerate into this data center development business. And that's been a big success in the first year. We closed a $2.4 billion Japanese data center fund. The pipeline that we've articulated publicly requires another $6 billion of equity just to get done what's in front of us. And so that's something that we're working on now. So I think #1 priority is just continuing to lean into the momentum there and ride the secular tailwinds in that business. Two, as I mentioned, Japan. We already have a large business in APAC. We now have a very meaningful foothold in the Japanese market with a market-leading position in real estate. The goal will be now to continue to diversify the product set off of that real estate strength in the Japanese market into things like private credit and infrastructure. Third will be the continued development of our vertically integrated real estate approach. We are now, I think, the third largest institutional real estate manager in the market broadly diversified across geographies and product types. And we've been going through a very intentional and systematic move to become vertically integrated, meaning that we want to develop, own and manage our own real estate as opposed to many institutional real estate investors who are partnering with operating partners or buying developed product that's been stabilized by third parties. The reason we're focused on that is, I think as asset management matures, those that can create their own asset flow and own them for the entirety of their life cycle will have competitive advantage. We're very far along in that journey in industrials. We're very far along in that journey in multifamily, which represent close to 90% of the exposures that we manage. But we still have some work to do to just continue to fill in that capability. And then lastly, and maybe speaking to the AI conversation, we are very focused now on capturing margin opportunity across the entirety of our business. There's a lot of work happening strategically to consolidate our middle office functions and drive efficiencies. We've been showing really healthy margin improvement over the last number of years, but I think we're at a place now in our evolution where we can really accelerate that with some intentional investment in technology and organizational redesign. Private equity, we have said publicly and it got amplified by an article in the FT that we have an open mind to being bigger in private equity. It's interesting. If you look at the history of the firm, we started off almost equal weight private equity, private credit and liquid credit. And just given the growth that we've experienced in other parts of our business, private equity hasn't kept pace. That's neither good nor bad. It is what it is. The argument to be bigger in private equity is, one, our institutional clients are all large investors in private equity. And I think as they consolidate their wallet share with fewer and fewer managers to the extent we had a broader private equity offering, I think that we would see meaningful inflows. Two, it does give you a skill set as an owner and operator that you don't get at scale in other parts of the business. And so a larger private equity capability would be able to be leveraged across other parts of our business in terms of value creation, management and operating relationships, and that's something that we think is important. Third, in this world of growth in wealth and retirement, in order to deliver equity exposures away from secondaries to the end investor, you have to be large enough that you can have enough line items to deliver diversified exposure. So we actually think that if we can get large enough, it would actually benefit our ability to deliver unique product into wealth and retirement. The reason that we're open-minded, but don't have a sense of urgency around it is the private equity business in and of itself is not a growth business. We've been very focused, as I think many of you know, in delivering consistent predictable growth in our FRE and our RI to the tune of 20% plus. Private equity does not compound linearly the same way that the rest of the business does. And so if we were to do it, we would have to do it in a way that we were able to account for the slower growth in price and in high conviction that we can actually drive the revenue synergy that I just talked about.

Well, sticking with that target, I want to hit on some of the guidance you gave us at the 2024 Investor Day. You've actually raised some like your wealth AUM target. And other areas like fundraising, FRE margin really performed well last year. As you sit here today, how do you feel relative to these targets? I thought maybe you could highlight a few that you feel pretty good about?

Well, we just reaffirmed them on the last call. So just to remind everybody, we've said that we hope, and this is ex acquisition organically to grow our FRE 16% to 20% plus per year. We said that we expect to grow our RI 20% plus per year, and that's been reaffirmed as of last week. We did raise our wealth targets. That's just a simple math. If you were to run rate the experience that we're having now, just given the diversity of product that we have and the growth, you'll get to the [ $125 billion ] if we don't see acceleration in that growth. So I think we have high conviction in that change. And then lastly, we just announced our dividend for Q1, which was up 20%. And for those of you who have not been following the company, we try to peg the dividend to our expected FRE growth, and that's been a pretty consistent capital management distribution policy for the company. So the dividend increase 20% hopefully gives people increased confidence in the guidance.

Great. I wanted to dig a little deeper into private credit. I mean arguably, you're the #1 non-IG private credit ABF lender in the world, very large...

My mom would be so proud. I'll tell it.

But let's see. So long-term performance here has been much stronger than peers. And another barometer is you raise these huge institutional funds that many of your peers actually can't. So how are you able to do this? What's the secret sauce? How has performance been so good for so long?

Trying to think how to tackle this because there's a lot of important things to talk about. We -- look, we've been lending institutionally for over 30 years. And if you go back even to the early 2000s when we were building the business here, very few people knew what private credit or direct lending was. And so at the risk of sounding modest, I actually think that we were pioneers in the business. And one of the first realizations we had was that the way you were going to win over the long term was to out-originate people. And the reason that's so important is driving performance and credit is about being right almost 100% of the time, right? You have asymmetric downside risk because if you're wrong, you can lose all of your money. And if you're right, you can make your coupons. So you have to be right 99% of the time, if you really want to outperform. And in order to do that, it has to start with building these really, really broad origination funnels and being selective in what you choose to invest in. So for our entire history, it's been origination-led with an understanding that, that allows us to drive really, really high asset selectivity. And that has never changed. Even today, we invest in only 3% to 5% of the transactions that come across our desk. So we say no, 95% to 97% of the time. So that's number one. Number two, we also learned over time that scale was actually a driver of performance. And the reason for that was, one, as you grew, you could invest more in these deep origination networks, more offices, more countries, more people, more product. Two, it made you more relevant to a broader set of borrowers in the market. Even today, if you talk to a smaller private credit firm, they will tell you one of their greatest frustrations is they identify a good borrower, they grow and then they leave their portfolio. So we constructed the product set to grow with the borrower as they grew so that we can hold on to our highest quality borrowers longer, and that's a function of scale. It's also a function of product flexibility, right? You need to meet the client where they are, if they need a mezz loan and you're only a senior lender, you're going to lose the client. All of that drives one of the most important drivers of performance, which is incumbency. So if you were to look at our deployment in any given year, about 50% of our investments in private credit are to existing borrowers where we have a long-standing relationship. So that allows you over time to just continue to re-underwrite your best-performing companies and your exposure to them just compounds with their cash flow growth. So this is probably one of the most misunderstood parts of our performance, but also the growth in private credit. Our portfolio has generally compounded 10% EBITDA growth or more. And so if all you do is continue to grow and stay at the same attachment point with those borrowers, you're going to enjoy 10% growth in your private credit book with high quality performance because you get to re-underwrite those investors. So when you're talking about a market that's growing 15% compound and everybody is anxious about that linear growth rate, half of it, if you're doing it well, is coming from embedded cash flow growth in our portfolio and half is coming from new investors, new clients. And then the thing that I think is most important about the outperformance is when you've been doing it for 30 years, and you see the entirety of the market, you develop really deep industry expertise in terms of where you want to lean in and where you want to avoid. And all of the information that we capture is not just on that 3% to 5% that we said yes to, it's on the 97% that we said no to. And so the information advantage that we've been able to create over 30 years of aggregating this information and seeing the performance over hundreds of billions of dollars of investments has led to this competitive advantage that compounds. And to your point, if you look at our public track record, which I think is a good proxy for our entire track record, we've had a compound annual return in excess of 12% for over 20 years with close to 0% losses. So that's pretty good, but it also is why we also have so much high conviction that when we go through periods of time like the one we're now where the markets get anxious, that this is actually a time for opportunity, not a time for risk.

So last year was an interesting year in private credit, where if I look across the industry, I see a lot of funds doing 8%, 9%, 10% returns, pretty good. And credit quality on average, maybe not as good as 2 years ago, which was unusually strong, but still pretty good relative to history. Yet there's a negative narrative out there, especially around the media in the second half, and it did hurt our retail flows a little bit. So it was kind of weird because the fundamentals are still pretty good. So from your seat, what did you think of this whole dynamic?

It goes back a little bit to my earlier comment about AI. There has been, as long as we've been in business, there's been kind of a persistent hum in the market about risk in private credit. I could go back and show you articles as early as 2005, about all the risks in BDCs and private credit and lack of transparency. And I think it probably first and foremost, comes just from a place of misunderstanding, right? If you're very wired to public capital markets and you're not attuned to how the private markets are developing as a synergy in a supplement to public markets, it would be pretty scary if you see these markets growing. And two, at the risk of sounding cynical, I think that there are a lot of entrenched players, whether it's rating agencies or banks that don't want to see the private markets develop the way that they are developing because it actually hurts their core business. And so I think the media more than anybody has kind of picked up on this and is trying to promote the narrative. I can tell you when we talk to our large institutional clients, there's no anxiety about risk exposure in private credit. And even in retail, you mentioned, while we did see redemption queues, we did not see outflows. And I think that's also important. Net flows in wealth to private credit were actually positive. And for the leading managers like us, they were meaningfully positive. So even that narrative when you see 97% of your investors in wealth not wanting to redeem, that should be the story. It should be the durability of those exposures and the continued appetite, but yet the story is 3% of the investor base wanted to redeem. So I think it's important. We got to keep educating. We have to keep performing with each cycle of performance through volatility, the asset class gets more durability and legitimacy broadly. But I can't quite put my finger on it. It's frankly a frustrating narrative for folks like us who have been doing it a long time. But I don't actually think that it is going to have a meaningful impact on the business. You and I have talked about this. I think it's important too. We've tried to construct our product set and our fund families to be able to actually go on offense when the markets dislocate. And if you look at our history, it's interesting. Our 2 fastest periods of growth were through the GFC and through COVID. And one of the ways that we do that is all of those competitive advantages that I just talked about in terms of scale and capital, but it's the combination of institutional dry powder and wealth working hand in hand, right? So if you think about the position of Ares in, let's say, U.S. direct lending, we have very large institutional funds, as you referenced earlier. We have very large traded funds, very large semi-liquid funds and SMAs. That allows us to have very, very diversified portfolios, where no single exposure will impact performance in any fund. But that dry powder, which now sits over $150 billion on the platform, uniquely positions us to actually be a capital provider into a dislocated market. Whereas if you're relying on wealth or reliant on annuities, sometimes those flows will dry up and you're not going to be able to lean into the dislocation, the way that you probably want to. So we're hyper attuned to making sure that even as we grow these other parts of the business that the institutional business is still large and that we have those big dry powder stashes.

So with the pro-business agenda of this administration, one area is that seems to have a benefit is the banks where you've seen more tailwinds on the regulatory side, SLR, Basel III end game. If banks go a little bit more on the attack, how does this impact your business as one area is to the BSLmarket, but also they could be more lending more aggressively in areas where they'll hold things on their balance sheet, too. Are you seeing them compete more?

So this is another example of a one-sided narrative, right? And the narrative that people want to talk about is banks take more risk and there's a war going on between private credit and banks for market share. Fundamentally not true. The banks and private credit managers are incredibly symbiotic. It's important for us back to being hedged against the different outcomes. We've developed a private credit business that is playing across the entire spectrum of size companies in the middle market, $5 million of EBITDA up to $1 billion plus. There is a portion of our market where when the banks derisk, we can move in and be a capital provider. And when they're risk on, they're going to put some of that product into the broadly syndicated loan market. That's not the entirety of the private credit market. It's actually a very small percentage of exposures. But what winds up happening when they do that, CLO formation increases. We are one of the largest CLO managers in the market and a meaningful sales and trading partner to the banks like BofA. And so to the extent that BofA is risk on in BSL and high yield, we then are a very reliable partner to the banks on the CLO and sales and trading side. The other thing that people probably don't understand is the banks, when they're increasing the exposure are generally going to be going after IG exposure. They're not rebuilding deep origination networks in sub-investment-grade credit. So when you see the banks actually feeling like they have capital relief and want to take more risk, that probably means 2 things for us. It means that they're putting more capital to us in the wholesale lending business, which is driving the cost of our capital down and driving our returns up. And it also means that they're probably talking to us about ways to use our balance sheet to help drive velocity of capital on their balance sheet. So if you look at what's happening now, as they're continuing to drive competition into the BSL market, we're seeing more capital available to us on our own balance sheet. And we're talking to them about portfolio sales, SRTs, flow agreements, ways that we can help partner with them to monetize the client franchise because we fundamentally do different things. So again, if you were to see us interacting with our bank partners, it's usually, if not always, in the spirit of partnership and working together and not competition and a battle for a very small sliver of market share.

So over the history of the private credit industry, the BDC industry, I mean there's always been a few bad apples. So as you come forward today, do you think the industry is in better shape today? And also, are you seeing any underwriting going across the industry that sort of maybe makes you a little nervous in areas that Ares is not participating in?

I think that -- look, the BDCs are, again, a smallish portion of the aggregate private credit industry. If you're asking are BDCs, generally speaking, today, better positioned than they were 15 years ago, absolutely. I think the quality of manager, the size of the BDCs, which can drive diversification, the sophistication of management to make sure that the dividend is being protected and well structured. I think they're fundamentally better than they ever have been. But to your point, there are still some managers that are, if not bad actors, not good investors. But back to the headlines, you can see -- we're getting headlines that pop up every time a loan goes bad, and it's being extrapolated that private credit is hiding risk. And I think, again, that's problematic. The private credit market is very concentrated. That 65% of the capital is sitting in the hands of the top 10 managers, and then there's everybody else. And so you could see poor performance in the other 35%. That doesn't mean that, that is going to reveal itself in the top 65% because of all the things I talked about before in terms of the advantage of scale and incumbency and diversity. So I do think you're going to see dispersion of return. You're already seeing it in the nontraded and traded market, but that doesn't mean that, that's an industry index. I think you have to zoom out and look at the big players first and then look at the small players. And generally speaking, I think the big players are rational. To your point, we're not seeing bad underwriting. We're not seeing people buying market share like we have in the past. So it's -- I think it's stable, rational and performance for the top players continues to be quite good.

So 10, 20 years ago, there were a lot of BDCs that had significant declines in net asset values, and they got almost no attention from the media. Now it's a little more sensitive. But returns in private credit, they were outperforming in '22, '23 versus private equity and other asset classes. Now it's more narrow or even not private equity outperformed private credit last year, which it should do most years. At this moment, do you think there's an under -- there's a rotation going from private credit to other alt asset classes, especially in the wealth channel?

Yes and no. If you look at alts generally, I think most institutional investors and most individual investors are still meaningfully under allocated to alts. So the reason I say yes, no, it's hard to answer that question because it all depends on where the investor is in their own alts journey. There's a huge tailwind of people who are just coming into the market that are a retail investor buying a semi-liquid product for the first time or a mid-sized institution that's beginning to rotate more aggressively into alts. So it's hard to look at the industry-wide penetration rates and really see that. I think for those that have mature private credit portfolios, their appetite for private credit continues because they are still generating excess return. Even though it may have narrowed, it's still 150 to 200 basis points in excess of the traded alternative. In other market periods, it's been 300, 400, 500 basis points, but they're still getting excess return. The investors, particularly on the institutional side, who have been meaningful players in private credit are looking at other parts of the private credit landscape for excess return. So not surprisingly, if you've been an early adopter of corporate direct lending, you may be looking at asset-based finance or infrastructure lending or real estate lending as a way to grow and diversify private credit exposure, not to replace your direct lending exposure. So the way I'm experiencing it is the incremental allocation may go to other places, but we're not seeing an active rotation.

So I wanted to hit on wealth. I think you have 8 products now in the wealth channel. I mean you don't have that many product gaps left. You've been more selective in building out distribution, I think, trying to avoid maybe some of the redemption waves that some of your peers have seen in prior years. Maybe talk to us about your strategy and where you want to see it go in the next few years?

Yes. We -- it's interesting. This is -- I think this is consistent with the way that we've built the business over the last 25 years, is we want to make sure that when we're going into a market or an asset class or a distribution channel that we have a right to win and that we understand how it's going to affect other parts of our business. And so sometimes it looks like we're moving slowly. But behind the scenes, we're doing everything we need to do to set ourselves up for success. Wealth is a good example. If you look at the history of our private credit business, it actually started with ARCC in the traded market. And we then segue that into a large institutional franchise and wealth came last. And that was by design. I think as I mentioned earlier, we understood through the management of ARCC, the challenges of the structure. The positives are lots of flexibility, lots of diversification, permanence of the capital base, but much more procyclical. And if you look historically at the retail markets, they would be wanting liquidity when they should be investing and vice versa. And so very difficult to build a durable investment franchise if your capital is procyclical. And so when we saw the growth in wealth, we understood that, that market was growing, but we had to make sure, as I said earlier, that it was never going to overwhelm our ability to deploy and that it was not going to overwhelm that institutional franchise that is kind of the core driver of our business. But once we felt that we were set up to do it, we made appropriate investments and we're now 10%-ish market share player, top 3 distributor in the channel, and that's kind of a happy place for us. The market is evolving and has evolved quickly. If you look at our business, as an example, the amount of investment one needs to make to build a global wealth franchise is quite significant. We probably have 185 people, 30% of our flows are coming from non-U.S. markets, 8 products, significant distribution expense to spin these products up and get them scaled, significant investment to get these funds seeded and drive track record. So my own view, self-serving to say it is if you're not a meaningful player in wealth now, you're probably not going to be just because the amount of investment, both P&L dollars, balance sheet dollars, but people that it would take to catch up, it's too much given how developed the market is. So our plan is going to be to continue to diversify our distribution with our core product. These products are all scaled and scaling, and they deliver the best of Ares with very unique outcomes around durable yield, tax-advantaged real assets exposure and diversified equity exposure. And behind those 3 themes, we're going to continue to drive the product. I think you'll see at the margin some new product innovation, particularly in the non-U.S. markets where there's more appetite for geography-specific exposures. But generally speaking, if we never added another product, the guidance that we've put out is intact. And it's interesting because it's very hard back to my procyclicality to control flows in wealth because you put the product out there and then it ramps pretty aggressively. So we've been also very intentional about how we're building our distribution partnerships. So today, we have about 80 different distribution relationships within the wealth management sector. Half of those only have one of our funds. So part of what we're doing is we're building that stable of core relationships for product distribution, but we're slowly giving them more and more product as we're ramping. So it feels like our relationship network, while we can continue to build it, is very well developed. And now it's just a question of deepening penetration within the existing distribution partnerships that we have.

Great. Well, I have 1 AI question left, but I wanted to leave time for a question from the audience. So if anyone has a question, please raise your hand. All right. Let me go at the AI question. So Mike, I'm very curious how you're employing AI today. What do you think you'll be doing in 3 to 5 years? And then also, when I think about the business, is the output that this will drive the FRE margin higher and maybe better investment outcomes?

So the answer is both of those, and I'll come back to that. Folks may not remember this, but we brought a team of people into Ares probably 3 years ago through the acquisition of an AI venture firm called BootstrapLabs, small-seed and Series A investors who have been investing across the AI ecosystem for 15 years prior. And the investment thesis on bringing them in-house was to have experts who are seeing developing technologies that we can evaluate risk and opportunities, as I said earlier. And that we could then deploy some of those tools and expertise broadly across the business to drive efficiencies, productivities and hopefully, better investment outcomes. That capability sits within our corporate and operational strategy group so that we can deploy it across the platform and into our portfolio. And that team actively collaborates with our technology team under the leadership of our CTO to make sure that we can implement and get the outcomes that we want. The way that it's rolling out is probably similar to many companies. The normal ChatGPT, Copilot, Gemini, that is being rolled out systematically to people's desktops so that they can just explore and drive efficiencies in their day-to-day work. And then two, we have a process whereby we're going through use cases that are being pushed top down or promoted bottoms up within the organization. We're then piloting those use cases. And to the extent that we see high ROI and replicability across the platform, we're pushing it. Last year, we probably looked at 160 viable use cases. We landed on about 25 that we're actively deploying now in both the front office, middle and back office. And it's everything from NDA view and negotiation, which is now almost fully automated. AML/KYC processes where we're able to take out legal and compliance resources and get better outcomes. Sales force optimization, where we're actually using AI to help our wealth salespeople drive better sales through lead generation and some data review. Our investment teams are using AI tools to help write investment committee memos and build models. So it's pretty broad-based. Interestingly, 2025 was probably the slowest year of organic headcount growth that we've had in the last 10-plus years. And so I think that's an indication that some of these productivity initiatives are taking hold, where people are able to do more with the same headcount because of some of this productivity. And so we're still early days in that process, but I've been quite pleased with some of the early results that we're getting.

Great. So with that, we will wrap that up. But Mike, thank you so much for joining us. Really appreciate it.

Thank you, Craig. Thanks, everybody.