Free cash flow margin +36.0%.
That is the single oddest number in Blue Owl’s latest 10-Q: the firm turned a much larger share of revenue into cash even as GAAP net income fell to $11.4 million, down 34.6% from a year earlier and leaving net margin at 1.5%.
Management pins the profit hit on borrowing.
"The increase in interest expense was primarily driven by higher average debt outstanding, reflecting a higher average balance on our Revolving Credit Facility (as defined in Note 7 to our Financial Statements)."
— Blue Owl Capital Inc. / 10-Q 2026-07-31
That sentence is the clearest bookkeeping pivot here: Blue Owl’s reported earnings were dented by financing cost, not by a revenue collapse. Revenue did move the right way, rising to $753.1 million, but interest expense and other financing items pulled the bottom line the opposite way while diluted shares ticked up 4.9% to 688.5 million and left diluted EPS flat at $0.02.
Meanwhile the business actually grew its fee base.
"The increase in AUM for the six months ended June 30, 2026 was driven by the following: $5.8 billion of new capital raised, primarily driven by $3.1 billion in direct lending products reflecting continued private wealth fundraising in OCIC and OTIC, as well as new and existing products across the strategy, $1.0 billion in investment grade credit products and $0.8 billion in alternative credit products."
— Blue Owl Capital Inc. / 10-Q 2026-07-31
Put bluntly: Blue Owl raised fresh capital, $5.8 billion, and management fees rose, converting into higher cash balances (cash up 43.7% to $169.1 million) and stronger free cash flow even as GAAP profit was squeezed by financing. Capex eased and free‑cash‑flow economics improved, but the company chose to lean on its revolving facility more often, which brought higher interest costs.
That mix creates a tension that matters to investors who watch both cash and earnings. On one hand the firm shows durable fee growth and materially better cash conversion. On the other, reported profitability is being shaped by the company’s financing choices: heavier revolver usage boosts short‑term deployable cash but elevates interest expense and compresses net margin.
Blue Owl also runs meaningful stock‑based pay: stock compensation rose as a share of revenue, and the share count increase is one reason EPS didn’t budge despite rising revenue. The company’s balance sheet metrics sit alongside that operating picture, market cap $6.8B, enterprise value $9.9B, net debt $3.1B, so the financing stance is not a footnote.
The cleanest place to look next quarter is at the numbers Blue Owl highlighted: did average revolver balances and interest expense climb again, or does cash generation keep outpacing GAAP profit as fees scale? Compare interest expense on Blue Owl’s next 10-Q to see whether borrowing costs keep pulling reported net income down.
Source: Blue Owl Capital Inc., Form 10-Q for the quarter ended June 30, 2026.