Operating margins have plummeted to 52.9% in 2026Q1, reflecting a sharp contraction from the 65-70% range maintained throughout 2024 and 2025.
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 | Dec'13 | Dec'12 | Dec'11 | Dec'10 | Dec'09 | Dec'08 | Dec'07 | Dec'06 | Dec'05 | Dec'04 |
|---|
| Sales/Revenue | 2.63B | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Revenue Growth % | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Cost of Goods Sold | 0 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| COGS % of Revenue | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Gross Profit | 1.86B | 2.38B | 1.71B | 1.64B | 741M | 1.68B | 541M | 824M | 879M | 749M | 570M | 478M | 676M | 541.33M | 553.77M | 547.07M | 399.9M | 136.27M | 130.22M | 137.7M | 99.9M | 47.07M | 4.29M |
| Gross Margin % | 70.82% | 75.68% | 72.16% | 75.53% | 61.96% | 81.85% | 63.05% | 73.9% | 78.55% | 76.9% | 77.34% | 70.5% | 78.06% | 75.94% | 79.48% | 74.83% | 75.62% | 68.13% | 67.67% | 70.47% | 99.97% | 99.67% | 100% |
| Gross Profit Growth % | - | 39.34% | 4.4% | 120.78% | -55.84% | 210.17% | -34.34% | -6.26% | 17.36% | 31.4% | 19.25% | -29.29% | 24.88% | -2.25% | 1.23% | 36.8% | 193.45% | 4.65% | -5.44% | 37.85% | 112.21% | 997.5% | - |
| Operating Expenses | 122M | 189M | 113M | 94M | 86M | 82M | 38M | 15M | 2M | 63M | 75M | 81M | 67M | 38.71M | 34.42M | -89.5M | 397.15M | 2.29M | 5.99M | -40.36M | 38.33M | 19.95M | 1.57M |
| OpEx % of Revenue | - | 6.01% | 4.77% | 4.34% | 7.19% | 4% | 4.43% | 1.35% | 0.18% | 6.47% | 10.18% | 11.95% | 7.74% | 5.43% | 4.94% | -12.24% | 75.11% | 1.14% | 3.11% | -20.65% | 38.36% | 42.24% | 36.7% |
| Selling, General & Admin | 174M | 0 | 43M | 42M | 38M | 39M | 38M | 45M | 42M | 89M | 56M | 44M | 41M | 38.71M | 31.74M | 38.12M | 53.95M | 23.29M | 13.99M | 10.4M | 6.43M | 3.54M | 762.14K |
| SG&A % of Revenue | - | - | 1.82% | 1.94% | 3.18% | 1.9% | 4.43% | 4.04% | 3.75% | 9.14% | 7.6% | 6.49% | 4.73% | 5.43% | 4.56% | 5.21% | 10.2% | 11.64% | 7.27% | 5.32% | 6.43% | 7.49% | 17.77% |
| Research & Development | 0 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| R&D % of Revenue | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Operating Expenses | 0 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Operating Income | 1.74B | 2.19B | 1.59B | 1.54B | 655M | 1.6B | 503M | 809M | 877M | 686M | 495M | 397M | 609M | 502.63M | 519.35M | 289.88M | 221.21M | 133.98M | 127.24M | 94.12M | 61.56M | 27.12M | 2.72M |
| Operating Margin % | 66.19% | 69.67% | 67.38% | 71.19% | 54.77% | 77.85% | 58.62% | 72.56% | 78.37% | 70.43% | 67.16% | 58.55% | 70.32% | 70.51% | 74.54% | 39.65% | 41.83% | 66.99% | 66.12% | 48.16% | 61.61% | 57.43% | 63.3% |
| Operating Income Growth % | - | 37.37% | 3.44% | 135.42% | -58.96% | 217.3% | -37.82% | -7.75% | 27.84% | 38.59% | 24.69% | -34.81% | 21.16% | -3.22% | 79.16% | 31.04% | 65.1% | 5.3% | 35.18% | 52.89% | 126.97% | 899% | - |
| EBITDA | 2.05B | 2.19B | 1.59B | 1.54B | 655M | 1.6B | 503M | 809M | 877M | 687M | 496M | 398M | 610M | 503.43M | 520.18M | 290.75M | 222.13M | 134.65M | 127.74M | 94.53M | 61.82M | 27.12M | 2.72M |
| EBITDA Margin % | 77.81% | 69.67% | 67.38% | 71.19% | 54.77% | 77.85% | 58.62% | 72.56% | 78.37% | 70.53% | 67.3% | 58.7% | 70.44% | 70.62% | 74.66% | 39.77% | 42.01% | 67.32% | 66.38% | 48.38% | 61.87% | 57.43% | 63.3% |
| EBITDA Growth % | 49.38% | 37.37% | 3.44% | 135.42% | -58.96% | 217.3% | -37.82% | -7.75% | 27.66% | 38.51% | 24.62% | -34.75% | 21.17% | -3.22% | 78.91% | 30.89% | 64.96% | 5.41% | 35.13% | 52.91% | 127.92% | 899% | - |
| D&A (Non-Cash Add-back) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1M | 1M | 1M | 1M | 802K | 829K | 876K | 923K | 672K | 503K | 410.33K | 258.56K | 0 | 0 |
| EBIT | 2.05B | 2.19B | 1.59B | 1.54B | 655M | 1.6B | 503M | 809M | 877M | 686M | 495M | 397M | 609M | 502.63M | 519.35M | 349.39M | -923K | -672K | -102.51M | 137.56M | 61.56M | 27.12M | 2.72M |
| Net Interest Income | 557.48M | 1.12B | 1.5B | 1.43B | 1.01B | 875M | 842M | 889M | 801M | 726M | 639M | 617M | 551M | 476.44M | 428.5M | -122.51M | -79.35M | -24.26M | -36.52M | -36.89M | 100.72M | 35.27M | 3.61M |
| Interest Income | 1.24B | 1.77B | 2.16B | 1.96B | 1.47B | 1.25B | 1.16B | 1.18B | 1.04B | 951M | 806M | 817M | 741M | 647.93M | 571.47M | 0 | 0 | 0 | 0 | 0 | 100.75M | 35.42M | 3.61M |
| Interest Expense | 686.2M | 645.2M | 659M | 530M | 455M | 372M | 317M | 291M | 240M | 225M | 167M | 200M | 190M | 171.5M | 142.98M | 122.51M | 79.35M | 24.26M | 36.52M | 36.89M | 26K | 154.08K | 0 |
| Other Income/Expense | 0 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Pretax Income | 1.23B | 1.4B | 1.59B | 1.54B | 655M | 1.6B | 503M | 809M | 877M | 686M | 495M | 397M | 609M | 502.63M | 519.35M | 326.93M | 497.43M | 203.27M | -139.21M | 90.01M | 93.21M | 43.54M | 3.33M |
| Pretax Margin % | 46.58% | 44.45% | 67.38% | 71.19% | 54.77% | 77.85% | 58.62% | 72.56% | 78.37% | 70.43% | 67.16% | 58.55% | 70.32% | 70.51% | 74.54% | 44.72% | 94.07% | 101.63% | -72.34% | 46.06% | 93.28% | 92.18% | 77.59% |
| Income Tax | 76M | 99M | 73M | 20M | 55M | 29M | 19M | 16M | 19M | 19M | 21M | 18M | 18M | 14.11M | 11.17M | 7.47M | 5.39M | 576K | 248K | -826.44K | 4.93M | 158K | 0 |
| Effective Tax Rate % | 6.2% | 7.08% | 4.58% | 1.3% | 8.4% | 1.82% | 3.78% | 1.98% | 2.17% | 2.77% | 4.24% | 4.53% | 2.96% | 2.81% | 2.15% | 2.29% | 1.08% | 0.28% | -0.18% | -0.92% | 5.29% | 0.36% | 0% |
| Net Income | 1.15B | 1.3B | 1.52B | 1.52B | 600M | 1.57B | 484M | 793M | 858M | 667M | 474M | 379M | 591M | 488.52M | 508.18M | 319.45M | 492.04M | 202.69M | -139.46M | 90.83M | 88.28M | 43.38M | 3.33M |
| Net Margin % | 43.69% | 41.3% | 64.3% | 70.27% | 50.17% | 76.44% | 56.41% | 71.12% | 76.68% | 68.48% | 64.31% | 55.9% | 68.24% | 68.53% | 72.94% | 43.7% | 93.05% | 101.34% | -72.47% | 46.48% | 88.35% | 91.85% | 77.59% |
| Net Income Growth % | -12.48% | -14.65% | 0% | 153.67% | -61.71% | 223.76% | -38.97% | -7.58% | 28.64% | 40.72% | 25.07% | -35.87% | 20.98% | -3.87% | 59.08% | -35.08% | 142.75% | 245.35% | -253.53% | 2.89% | 103.51% | 1203.51% | - |
| Net Income (Continuing) | 1.15B | 1.3B | 1.52B | 1.52B | 600M | 1.57B | 484M | 793M | 858M | 667M | 474M | 379M | 591M | 488.52M | 508.18M | 319.45M | 691.83M | 202.69M | -139.46M | 90.83M | 88.28M | 43.38M | 3.33M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | 1.60 | 1.86 | 2.44 | 2.68 | 1.19 | 3.51 | 1.14 | 1.86 | 2.01 | 1.57 | 1.51 | 1.20 | 1.94 | 1.83 | 2.21 | 1.56 | 3.91 | 1.98 | -1.56 | 1.34 | 1.58 | 1.78 | 0.29 |
| EPS Growth % | -20.49% | -23.77% | -8.96% | 125.21% | -66.1% | 207.89% | -38.71% | -7.46% | 28.03% | 3.97% | 25.83% | -38.14% | 6.01% | -17.19% | 41.67% | -60.1% | 97.47% | 226.92% | -216.42% | -15.19% | -11.24% | 513.79% | - |
| EPS (Basic) | - | 1.86 | 2.44 | 2.75 | 1.21 | 3.51 | 1.14 | 1.86 | 2.01 | 1.57 | 1.51 | 1.20 | 1.94 | 1.83 | 2.21 | 1.56 | 3.91 | 1.98 | -1.56 | 1.34 | 1.58 | 1.78 | 0.29 |
| Diluted Shares Outstanding | 718M | 699M | 624M | 575M | 518M | 446M | 424M | 427M | 426M | 425M | 314M | 314.38M | 305.29M | 266.94M | 230.15M | 204.86M | 176.73M | 102.28M | 89.67M | 67.68M | 43.98M | 23.49M | 11.07M |
| Basic Shares Outstanding | 718M | 699M | 624M | 554M | 498M | 446M | 424M | 427M | 426M | 425M | 314M | 314.38M | 305.29M | 266.94M | 230.15M | 204.86M | 176.73M | 102.28M | 89.67M | 67.68M | 43.98M | 23.49M | 11.07M |
| Dividend Payout Ratio | - | - | 74.84% | 67.74% | 152% | 44.29% | 140.29% | 87.52% | 76.46% | 96.25% | 100.63% | 128.5% | 78.51% | 84.22% | 70.32% | 86.76% | 46.7% | 93.53% | - | 109.96% | 84.41% | 39.89% | - |
Portfolio Credit Quality Deterioration
As reported in recent financial statements, ARCC's gross margin experienced a notable contraction to 72.1% in 2026Q1, down from the 77.5% peak observed in 2024Q1, suggesting that competitive pressures in the private credit market may be limiting the firm's ability to maintain historical yield spreads.
The decline in gross margins indicates that the cost of capital or competitive pricing dynamics are beginning to weigh on the firm's core lending profitability. Investors should monitor whether this trend reflects a permanent shift in the competitive landscape or merely a temporary adjustment to shifting base rate environments.
According to the latest quarterly filings, ARCC's operating margin plummeted to 52.9% in 2026Q1, a significant deviation from the 65-70% range maintained throughout 2024 and 2025, which implies that SG&A and other overhead costs are consuming a larger portion of the firm's gross profit generation.
This sharp drop in operating leverage warrants further investigation into whether the firm is incurring higher administrative or management costs to manage a more complex portfolio. The inability to scale operating income alongside gross profit suggests a potential inefficiency that could impact long-term dividend sustainability if not addressed.
Based on the provided income statement data, ARCC's net income volatility is pronounced, with net margins fluctuating from a high of 70.3% in 2024Q1 to a low of 12.1% in 2026Q1, highlighting the sensitivity of bottom-line results to non-operating items and unrealized valuation adjustments.
The significant divergence between net income and operating income suggests that non-operating factors, likely related to the valuation of Level 3 assets, are heavily influencing reported earnings. Analysts should focus on core net investment income rather than headline net income to gauge the true cash-generating capacity of the business.
As indicated by the 2026Q1 EPS of $0.13, which represents a 63.9% year-over-year decline, the current earnings trajectory appears to challenge the historical dividend coverage, raising concerns that the firm may be forced to rely on capital reserves to maintain its current distribution levels to shareholders.
The sharp decline in EPS suggests that the underlying portfolio may be struggling to generate sufficient income to support previous payout levels. This trend warrants a cautious outlook, as any further deterioration in credit performance could necessitate a reduction in distributions to preserve the firm's net asset value.
Quick answers to the most common questions about buying ARCC stock.
Ares Capital Corporation (ARCC) is profitable, generating $1.30B in net income for the fiscal year ending 2025 with a net profit margin of 41.3%.
Ares Capital Corporation (ARCC) reported an operating income of $2.19B, resulting in an operating profit margin of 69.7%. This margin reflects the operational efficiency of the business before interest and taxes.
Ares Capital Corporation (ARCC) generated $2.38B in gross profit for the year, representing a gross profit margin of 75.7%. This demonstrates the company's core pricing power and production efficiency.