DigitalBridge (DBRG)

Digital infrastructure investor DigitalBridge Group (NYSE:DBRG) fell short of the markets revenue expectations in Q3 CY2025, with sales falling 95% year on year to $3.82 million. Its GAAP profit of $0.09 per share was 12.9% below analysts’ consensus estimates.

Company Overview

Transforming from a traditional real estate investor to a digital-focused powerhouse in 2021, DigitalBridge Group (NYSE:DBRG) is a global digital infrastructure investment firm that manages capital and operates assets across data centers, cell towers, fiber networks, and edge infrastructure.

Specialty finance companies provide targeted lending or financial services for specific industries or needs. They benefit from expertise in particular sectors, often reduced competition in specialized niches, and tailored underwriting that can yield higher margins. Challenges include concentration risk in specific industries, difficulty achieving scale efficiencies, and potential vulnerability during sector-specific downturns affecting their specialized markets.

DigitalBridge's competitors include other digital infrastructure investors such as American Tower (NYSE:AMT), Crown Castle (NYSE:CCI), Equinix (NASDAQ:EQIX), and Digital Realty Trust (NYSE:DLR), as well as private equity firms with digital infrastructure portfolios like Blackstone and KKR.

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, DigitalBridge’s demand was weak and its revenue declined by 35.2% per year. This was below our standards and suggests it’s a lower quality business.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. DigitalBridge’s recent performance shows its demand remained suppressed as its revenue has declined by 61.8% annually over the last two years. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, DigitalBridge missed Wall Street’s estimates and reported a rather uninspiring 95% year-on-year revenue decline, generating $3.82 million of revenue.

Assets Under Management (AUM) is the cornerstone of a financial firm's investment division, representing all client capital under its stewardship. Management fees on this AUM create reliable, recurring revenue that maintains stability even when investment performance struggles, though prolonged poor returns can eventually affect asset retention and growth.

DigitalBridge’s AUM has grown at an annual rate of 37.8% over the last five years, much better than the broader financials industry and faster than its total revenue. When analyzing DigitalBridge’s AUM over the last two years, we can see that growth decelerated to 18.6% annually. Fundraising or short-term investment performance were net contributors for the company over this shorter period since assets grew faster than total revenue. Just remember that while assets are relevant to watch, we don't place too much emphasis on them because they ebb and flow with the market.

In Q3, DigitalBridge’s AUM was $40.7 billion. This print was 19.4% higher than the same quarter last year.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Specialty Finance companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

Financials companies manage interest-bearing assets and liabilities, making the interest income and expenses included in pre-tax profit essential to their profit calculation. Taxes, being external factors beyond management control, are appropriately excluded from this alternative margin measure.

Over the last four years, DigitalBridge’s pre-tax profit margin has fallen by 4.5 percentage points, going from negative 43.7% to negative 39.3%. However, the company gave back some of its expense savings as its pre-tax profit margin declined by 83.6 percentage points on a two-year basis.

DigitalBridge’s pre-tax profit margin came in at negative 339% this quarter. This result was 401.7 percentage points worse than the same quarter last year.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

DigitalBridge’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For DigitalBridge, its two-year annual EPS growth of 64.9% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, DigitalBridge reported EPS of $0.09, up from negative $0.01 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects DigitalBridge’s full-year EPS of $0.06 to grow 130%.

Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.

Over the last five years, DigitalBridge has averaged an ROE of 1.6%, uninspiring for a company operating in a sector where the average shakes out around 10%.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

DigitalBridge currently has $328 million of debt and $2.05 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0.2×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 3.5× for a financials business.

This was a noisy quarter. AUM saw healthy growth, but revenue missed meaningfully due to a carried interest drag in the quarter. The stock traded up 1.4% to $12.91 immediately after reporting.

Updated: December 4, 2025 at 11:44 PM EST

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

DigitalBridge’s business quality ultimately falls short of our standards. To begin with, its revenue has declined over the last five years. And while DigitalBridge’s AUM growth was exceptional over the last five years, its relatively low ROE suggests management has struggled to find compelling investment opportunities.

DigitalBridge’s P/E ratio based on the next 12 months is 1.2x. This multiple tells us a lot of good news is priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $17.28 on the company (compared to the current share price of $9.73).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.