What BlackRock (BLK) Said on Its Q3 Earnings Call

Key Points

• BlackRock delivered record third-quarter results: Revenue rose 19% year over year to $7.8 billion, operating income increased 27% to $3.3 billion, and adjusted EPS climbed 38% to $15.93. The firm reported $205 billion in quarterly net inflows and $15.5 trillion in assets under management.
• Inflows were diversified across ETFs, fixed income, private markets and cash management. ETF inflows totaled $135 billion, fixed-income inflows reached $78 billion, private markets attracted $15 billion, and the cash-management platform gained $31 billion.
• Management is targeting long-term growth in private markets, AI infrastructure financing and technology. BlackRock highlighted partnerships supporting data-center investment, continued expansion in private credit and retirement income, and 14% growth in technology-services and subscription revenue.

BlackRock NYSE: BLK reported record third-quarter revenue, operating income and earnings per share as broad-based client inflows and higher demand for private markets, exchange-traded funds and technology services lifted results.

Chief Financial Officer Martin S. Small said the firm generated $205 billion in net inflows during the quarter and nearly $870 billion over the past 12 months. Organic base fee growth reached 11%, marking the ninth consecutive quarter at or above the company’s long-term 5% target.

Third-quarter revenue rose 19% year over year to $7.8 billion, while operating income increased 27% to $3.3 billion. Adjusted earnings per share climbed 38% to $15.93, aided by higher operating income, non-operating investment gains and a lower diluted share count.

BlackRock’s operating margin reached 47.8%, up 320 basis points from a year earlier. Excluding performance fees and related compensation, adjusted operating margin was 48.6%, up 230 basis points.

Inflows Broadly Distributed Across Products

Small said the quarter’s inflows were diversified across client channels, regions, active and index strategies, and asset classes. ETF inflows totaled $135 billion, led by $61 billion into index bond ETFs and $41 billion into precision ETFs. Active ETFs added $22 billion, while digital-asset exchange-traded products generated $8 billion in inflows.

Institutional active strategies brought in $44 billion, supported by private markets, fixed income, systematic equities and liquid alternatives. Institutional index strategies posted $27 billion in outflows, which Small said were concentrated in low-fee index equities.

Private markets generated $15 billion of net inflows, primarily from infrastructure and private-credit deployment and the onboarding of a real estate mandate. The cash-management platform attracted $31 billion, including customized liquidity solutions, government funds and continued growth associated with Circle.

Chairman and Chief Executive Officer Laurence D. Fink said assets under management rose by more than $2 trillion over the past year to $15.5 trillion. He attributed the firm’s momentum to its integrated public-markets, private-markets and technology platform, including businesses acquired through GIP, HPS and Preqin.

Private Credit, AI Infrastructure in Focus

Management emphasized opportunities related to the financing needs of artificial intelligence infrastructure and data centers. Fink said BlackRock partnered with Meta on financing for its planned $14 billion Texas data center, combining infrastructure investment capabilities from GIP with private-financing capabilities from HPS.

He also said BlackRock’s AI Infrastructure Partnership completed its first deployment through the Aligned Data Centers transaction, which had an approximately $40 billion enterprise value. The company raised $68 billion in private markets over the last 12 months and $25 billion in private credit during its first full year with HPS.

Fink said the company sees a need for new financing structures for computing capacity and chips, arguing that a broader market will require trusted data, standardized performance metrics and risk analytics. He compared the potential development of compute financing to the evolution of the mortgage-backed securities market, while noting that building a securitized and tradable market for such assets will take time.

Small said BlackRock’s priority is to originate investments for long-term client portfolios and recurring management fees, rather than rely primarily on syndication and distribution revenue. He said the company can participate across capital structures through investment-grade public debt, private placements, insurance accounts, private credit and equity investments.

Income Demand Supports Fixed Income and Retirement Offerings

President Robert S. Kapito said higher interest rates have renewed investor interest in fixed income. He cited a 10-year Treasury yield above 5% and real rates near 3%, adding that BlackRock strategies including BINC and Strategic Income Opportunities were generating yields of around 7% in diversified, high-quality portfolios.

Fixed income generated $78 billion of net inflows in the third quarter and $205 billion year to date, according to Kapito. Active fixed-income inflows totaled $14 billion during the quarter, while clients also added money to short-duration and cash-management solutions.

Fink said demand for retirement-income products remains an important opportunity. The company recently introduced its LifePath Solutions framework, while its global LifePath platform has approximately $700 billion in assets. He also said BlackRock had been selected as the preferred candidate for an $80 billion outsourced fiduciary mandate for the Dutch construction industry pension fund.

Technology and Tax-Aware Strategies Continue to Expand

Technology services and subscription revenue increased 14% year over year. Annual contract value rose 12%, or an estimated 13% on a constant-currency basis. Small said BlackRock remains committed to long-term annual contract value growth in the low- to mid-teens.

The company’s tax-aware investment businesses also continued to grow. Aperio generated $5 billion in third-quarter net inflows, including $4 billion in long-short strategies and $1 billion in long-only strategies. Aperio’s assets have grown from about $40 billion at acquisition to nearly $200 billion, Small said.

Looking ahead, Small said BlackRock expects its seasonally strongest ETF-flow period in the fourth quarter and anticipates stronger private-markets fundraising than in the third quarter. He also said the company expects growth in evergreen private-market funds and a more constructive environment for private credit and retail business development companies as cash yields and base rates remain elevated.

BlackRock repurchased $550 million of shares during the third quarter and said it anticipated repurchasing at least another $550 million in the fourth quarter, subject to market and other conditions. The company expects a fourth-quarter adjusted tax rate of approximately 25%.

About BlackRock (NYSE:BLK)

BlackRock, Inc is a global investment management and financial technology company serving individual investors, institutions, governments and financial professionals. The company provides investment management, risk management and advisory services across a broad range of asset classes, including equities, fixed income, multi-asset strategies, alternatives and cash management.

BlackRock offers investment products through mutual funds, exchange-traded funds and other vehicles. Its iShares brand is one of the company's principal platforms for exchange-traded funds, providing access to domestic and international markets, industry sectors, bonds, commodities and specialized investment strategies.

The company also provides technology and analytical solutions through its Aladdin platform, which is used by asset managers, institutional investors and other financial organizations for portfolio management, risk analysis, trading and operational support.

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