What to Expect in BlackRock Earnings as Assets Under Management Decline

BlackRock the world’s largest investment management company report third quarter earnings on Thursday. BLK reported weaker than expected second quarter earnings last quarter with the stock market falling out of bed. The bearishness in the markets lowered the firm’s assets under management by 15% from $10 trillion at the end of December 2021 to $8.5 trillion at the end of Q2 2022. Look for the same trend to continue in the third quarter. Performance fees from the firm’s actively managed funds fell 69% to $106 million, with the biggest decline coming from its single-strategy hedge funds in Q2.


Blackrock Earnings Preview

Q3 2022 earnings release at 6:15 a.m. ET; conference call at 8:30 a.m ET

  • Projected EPS: $7.64
  • Projected revenue: $4.3 billion

BlackRock Q2 2022 Recap

Q2 2022 earnings before the bell; conference call at 8:30 a.m. ET Tuesday

  • Net income of net income of $1.08 billion, down from $1.38 billion in the same period a year earlier.
  • Earnings amounted to $7.06 a share. That missed the $7.87 expected by analysts polled by FactSet.
  • Revenue dipped 6% to $4.53 billion, slightly below analysts’ estimates of $4.55 billion.
  • BlackRock’s base management fees, those not tied to performance that the firm receives for administering fund holdings dipped 2%, decreasing to $3.69 billion.
  • Performance fees from the firm’s actively managed funds fell 69% to $106 million, with the biggest decline coming from its single-strategy hedge funds.
  • Revenue from its suite of software tools, Aladdin, was a driver as well. Aladdin, its proprietary software that helps investors manage their portfolios, rose 5% to $332 million.
  • The firm brought in nearly $90 billion in new investor money in the quarter, up from about $81 billion in the same period a year ago.
  • The firm’s assets under management were about $8.5 trillion, down from $9.6 trillion in the first quarter. This is the second time in a row that BlackRock reported a quarter-over-quarter decline in assets under management. The firm ended 2022 with $10.01 trillion in assets, the first time any money manager surpassed that milestone.

BlackRock income from its ETF and investment management income fell back with the lower AUM.

BlackRock is a top provider of exchange-traded funds and other low-cost alternatives that track market indexes. The firm’s actively managed funds are its higher-fee products, made up nearly half of the manager’s fees last quarter, despite making up about one-quarter of BlackRock’s total assets under management.

Circle Internet Financial

Last quarter Blackrock said it was participating in a $400 million funding round for Circle Internet Financial, a cryptocurrency firm that issues digital assets pegged to the U.S. dollar.

Fidelity Investments, Marshall Wace Asset Management and Fin Capital also participated in the funding round. Prior to the investment, BlackRock already managed some of the cash, and cash equivalent reserves for its USD coin. In his annual letter to shareholders in March, BlackRock Chairman and Chief Executive Larry Fink predicted that the Ukraine war could boost usage of digital currencies.

On a conference call with analysts Larry Fink, BlackRock’s CEO,

“As you know, I always said—I don’t believe in divestiture,” Mr. Fink said, referring to his firm’s stance on energy transition for the fossil companies it invests in. “BlackRock has over $180 billion in investments in [energy], so we are working with all the companies about how to move forward.”

“Let me be clear, BlackRock is the largest investor for pension funds and retirement than anyone. We have a long-term responsibility of making sure that our beneficiaries achieve their long-term aspirations and goals. There is no question that this energy transition is real, but it’s not going to be a straight line.”

BlackRock in Q4 announced that it was pulling $2 trillion of assets that had been managed by State Street (NYSE: STT). BlackRock says it will reduce its reliance on a single outside investment manager and help to lower its costs for back-office workers. BlackRock said it plans to move the administrative and accounting tasks that State Street had performed to other lenders, such as Citigroup and Bank of New York Mellon Corp. (NYSE: BK).

Source: JPM, WFC, C, BLK,

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