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    BLK
    Earnings call· Mar 2025(Q1 FY25)

    BlackRock, Inc. BLK

    Apr 11, 2025 Source

    Executive summary

    BlackRock Q1 FY25 — Strong Organic Growth and Strategic Acquisitions Drive Record AUM

    BlackRock delivered robust Q1 FY25 results, showcasing the success of its structural growth strategy across private markets, ETFs, and technology, leading to above-target organic base fee growth and record AUM. The firm is strategically expanding its global footprint and capabilities through acquisitions like GIP and Preqin, positioning itself to capitalize on evolving client needs and macro trends despite market volatility and geopolitical uncertainties. Management emphasizes long-term client partnerships and local market engagement to drive future growth.

    Highlights

    5

    • Achieved 6% organic base fee growth, exceeding target, representing the best start to the year since 2021.

    • Reported record AUM of $11.6 trillion, driven by $140 billion of net inflows (excluding institutional index redemptions).

    • Expanded as-adjusted operating margin by 100 basis points to 43.2% year-over-year.

    • Technology services and subscription revenue grew 16% year-over-year, with organic Annual Contract Value (ACV) growth of 14%.

    • ETF net inflows reached $107 billion, annualizing at a 10% higher rate than the record year of 2024.

    Concerns

    3

    • Experienced $55 billion in low-fee institutional index redemptions, partially offset by other inflows.

    • Performance fees decreased to $60 million from a year ago, primarily due to lower revenue from private markets and liquid alternatives.

    • Base fees are expected to enter Q2 approximately 1% lower than Q1, impacted by market and foreign exchange movements and excluding catch-up fees.

    Guidance & targets

    6
    CategoryTargetConfidence
    Tax run rate
    25%
    medium materiality
    High
    Core G&A expense increase
    mid- to high single-digit percentage increase
    medium materiality
    High
    Share repurchases
    at least $375 million
    medium materiality
    High
    ACV growth
    low to mid-teens
    medium materiality
    High
    Private credit AUM
    approximately $220 billion
    high materiality
    High
    AI infrastructure partnership capital
    expected target of $30 billion
    high materiality
    High

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Firm-wide
    Driven by organic growth, higher markets on average AUM, base fees from GIP, and higher technology services and subscription revenue. Operating margin expanded by 100 basis points.
    Operating income: $2 billionOperating income growth: 14%EPS: $11.30EPS growth: 15%
    		$5.3 billion12%—43.2%
    ETFs
    Positive across all channels, led by core equity and fixed income. Innovative product launches and higher fee categories contributed to organic base fee growth. European platform crossed $1 trillion AUM with strong market share.
    Net inflows: $107 billionAnnualized organic base fee growth: 7%Core equity ETF net inflows: $46 billionFixed income ETF net inflows: $34 billionActive ETF net inflows: $9 billionDigital asset ETP net inflows: $3 billionEuropean ETF AUM: over $1 trillionEuropean ETF market share: approximately 40%
    		————
    Retail
    Led by record quarterly flows in Aperio, sustained demand for fixed income offerings, and systematic liquid alternatives funds.
    Net inflows: $13 billion
    		————
    Institutional Active
    Driven by demand for infrastructure private markets, LifePath target date franchise, and systematic active equity offerings. Partially offset by client-specific redemptions from active fixed income due to reinsurance activity.
    Net inflows: $8 billion
    		————
    Institutional Index
    Concentrated in low fee index equities, partially offset by inflows into index fixed income. Total institutional index redemptions were $55 billion.
    Net outflows: $46 billion
    		————
    Private Markets
    Led by infrastructure and private credit. Strong velocity in fundraising.
    Aggregate net inflows: $7 billion
    		————
    Liquid Alternatives
    Primarily into global equity market neutral and multi-strategy funds run by systematic teams.
    Net inflows: $2 billion
    		————
    Cash Management
    Reflected growth in the Circle Reserve Fund, partially offset by seasonal redemptions from U.S. government funds. Cash AUM reached an all-time high in April.
    Net inflows: $1 billionCash AUM (as of April): $950 billion
    		————

    Operational metrics

    38
    Organic base fee growth
    6%above target
    Q1 FY25

    Best start of the year since 2021.

    Organic base fee growth
    6%above target
    LTM

    Third consecutive quarter at or above through-the-cycle target.

    Total AUM
    $11.6 trillionrecord
    Q1 FY25

    Record units of trust.

    Net new assets
    $670 billion
    LTM

    Making more than 60% of year-over-year AUM growth organic.

    Net inflows (total)
    $84 billion
    Q1 FY25
    Net inflows (ex-institutional index redemptions)
    $140 billion
    Q1 FY25

    Excluding $55 billion of episodic large low-fee institutional index redemptions.

    Nonoperating income
    $68 million
    Q1 FY25

    Net investment gains, primarily mark-to-market noncash gains on co-investment portfolio and gain on minority investment.

    Discrete tax benefits
    $195 million
    Q1 FY25

    Portion related to stock-based compensation awards that vest in Q1.

    Base fee and securities lending revenue
    $4.4 billionup 16% year-over-year
    Q1 FY25

    Driven by market beta on average AUM, organic base fee growth, and $285 million from GIP.

    Annualized effective fee rate
    0.1 basis point highersequentially
    Q1 FY25

    On an equivalent day count basis, mainly due to $60 million higher catch-up base fees associated with private markets fundraising.

    Base fees (entering Q2)
    approximately 1% lowervs Q1 FY25
    Q2 FY25

    Excluding Q1 catch-up fees and including market and FX movements towards the second half of Q1.

    Performance fees
    $60 milliondecreased from a year ago
    Q1 FY25

    Primarily reflecting lower performance revenue from private markets and liquid alternatives.

    Technology services and subscription revenue growth
    up 16%compared to a year ago
    Q1 FY25

    Growth reflects sustained demand for Aladdin and closing of Preqin transaction.

    Preqin revenue contribution
    approximately $20 million
    Q1 FY25

    Added to first quarter revenue.

    Annual Contract Value (ACV) growth
    30%
    YoY

    Including Preqin acquisition.

    Annual Contract Value (ACV) growth (organic)
    14%
    YoY

    Organically.

    Total expense increase
    10%
    YoY

    Reflecting higher sales, asset and account, G&A and compensation expense.

    Employee compensation and benefit expense increase
    7%
    YoY

    Reflecting higher headcount from GIP and Preqin, and higher incentive compensation.

    G&A expense increase
    12%
    YoY

    Primarily driven by GIP and Preqin acquisitions and continued technology investments.

    G&A expense increase (ex-acquisitions)
    6%
    YoY

    Excluding the impact of GIP and Preqin acquisitions.

    Sales asset and account expense increase
    14%
    YoY

    Primarily driven by higher direct fund expense and distribution costs.

    Direct fund expense increase
    16%
    YoY

    Mainly due to higher average index AUM.

    Share repurchases
    $375 million
    Q1 FY25
    Euro-denominated debt issuance
    $1 billion
    March

    To refinance euro-denominated notes maturing in May 2025.

    Institutional channel organic base fee growth
    7%
    Q1 FY25

    Benefiting from client demand for private markets and systematic strategies.

    Private credit AUM for insurance industry
    $700 billion
    current

    Managed for the insurance industry, primarily in index public credit strategies.

    US capital markets share (historical)
    75%used to be around 50%, 55%
    historical

    Of the total value of the World Capital Markets.

    ETF pricing investment (historical)
    1.5% to 2.5%
    historical

    Of Global iShares revenue, targeted price investments in high-growth categories.

    ETF pricing investment (recent)
    well belowvs historical 1.5-2.5%
    recent years

    No ETF price changes in Q1.

    ETF flows (previous year)
    $390 billionrecord
    FY24

    Following a record year in 2024.

    Money market funds (total)
    $12 trillion
    current

    Total money market funds in the market.

    Cash inflows
    $20 billionelevated increase
    April

    Unusual time to see elevated increases in cash.

    BlackRock tokenized digital liquidity fund AUM
    $2 billionsurpassed $1 billion
    current

    First Wall Street issued fund to cross $1 billion in AUM, recently surpassed $2 billion.

    Preqin desktop reach
    300,000 userstriples
    current

    Triples desktop reach with Preqin acquisition.

    Preqin clients
    4,400 clients
    current

    Opportunity to expand relationships.

    BlackRock employees
    23,000
    current

    Located in 30+ countries, serving clients in 100+ countries.

    BlackRock offices
    30 countries
    current

    Expected to be 34-35 countries by year-end with 3 new offices.

    Americans owning stock
    60%
    current

    A little more than 60% of Americans own stock in one way or another.

    Industry KPIs

    5
    MetricValueDetails
    Fee rate0.1 basis point higherbps
    Organic fee growth6%%
    Fundraising inflows$7 billionUSD
    Performance revenue$60 millionUSD
    Deployment realizationslargest infrastructure investment in our history

    Product announcements

    3
    ProductTypeDetails
    Target date style offering with private marketslaunch
    Bitcoin ETFexpansion
    BlackRock tokenized digital liquidity fundmilestone

    Deals & partnerships

    9
    GIPCombination with GIP to unlock differentiated opportunities in infrastructure.

    GIP employees moved into BlackRock headquarters earlier this year. The combination has led to significant infrastructure investments.

    PreqinAcquisition of private market data capabilities to enhance technology platform.

    Preqin employees moved into BlackRock headquarters earlier this year. Enriches growth potential for BlackRock's private markets and technology franchises.

    HPSPlanned acquisition to scale private credit AUM and advance positioning in Alts to Wealth space.

    Remains subject to regulatory approvals and other customary closing conditions. HPS employees expected to join shortly after closing.

    Viridium GroupNoncontrolling, nonconsolidated minority equity investment in Germany's leading closed block life insurance consolidator.

    Investor consortium including BlackRock announced the acquisition. Subject to regulatory approvals and other customary closing conditions.

    xAI and NVIDIAExpanded AI infrastructure partnership.

    Partners alongside Microsoft and MGX. Attracted significant capital interest and advanced key discussions on AI infrastructure projects.

    Mediterranean Shipping Company and Terminal Investment LimitedConsortium to acquire a significant portfolio of 43 ports in over 20 countries.

    Largest infrastructure investment in BlackRock's history. Strong existing relationship with the seller (CK Hutchison).

    Jio BlackRockJoint venture in India to transform access to investing.

    Subject to regulatory approvals.

    Public Investment Fund (Saudi Arabia)Launched an investment management platform to drive capital into local markets.

    Managed by a dedicated BlackRock team in Riyadh.

    CircleRelationship to manage cash-based reserves for the Circle Reserve Fund.

    Digital assets drove cash management net inflows.

    Risks & headwinds

    5
    Market uncertainty and volatilityQ1 FY25

    S&P 500 ended 9% off its February peak.

    Mitigation: BlackRock's diversified platform, structural growth strategy, and strong client connectivity. Focus on long-term trends and client partnerships.

    Geopolitical and economic activity (tariffs)recent weeks

    Sweeping U.S. tariffs announcements went beyond anything I could have imagined in my 49 years in finance.

    Mitigation: BlackRock's global expertise and local presence to help clients navigate. Potential for capital flows into private markets as investors seek to insulate portfolios.

    Lower performance feesQ1 FY25

    $60 million, decreased from a year ago.

    Mitigation: Primarily reflecting lower performance revenue from private markets and liquid alternatives, but overall organic base fee growth remains strong.

    Base fees entering Q2 lowerentering Q2 FY25

    approximately 1% lower than Q1.

    Mitigation: Due to market and foreign exchange movements towards the second half of Q1 and excluding catch-up fees. Offset by strong organic growth and expected fee-accretive HPS acquisition.

    Litigation/advice reform needed for broad private markets access in DC plans

    null

    Mitigation: BlackRock is advocating for improved retirement solutions and modernizing retirement, hosting policymakers to discuss this topic.

    What to watch in Q2 FY25

    5

    Private markets in target date funds launch

    mid-year
    CurrentPlans to launch in the middle of the year
    TargetSuccessful launch with trust company

    Why it matters

    This initiative could significantly expand access to private markets for retail investors, a key strategic growth area for BlackRock.

    We are launching and have plans to launch in the middle of the year, a target date style offering with private markets, on a retirement platform, one of the larger trust companies in the United States.

    Q&A highlights

    6

    How are retail and institutional clients shifting allocations given global events, and how are they approaching decision-making?

    No capitulation in client allocations; elevated cash inflows ($20B in April) but large money market reserves. Conversations around extending duration in fixed income and private credit (8%+ yields). No wholesale changes in equities, some interest in buying dips. Potential for reallocation to Europe if growth focus continues. Strong demand for infrastructure strategies (mid-teen returns, inflation protection) and systematic equities.

    “We have not seen one true capitulation with one client in equities. Actually, in most cases, more and more of our clients are saying, hey, should we be -- when do we come in and buy more equities?”

    asked by Michael Cyprys · answered by Laurence Fink

    2 min read6 chapters

    Detailed Narrative

    01

    Structural Growth Strategy Success

    BlackRock's strategy, anchored in structural growth engines like private markets, ETFs, digital assets, and technology, delivered above-target 6% organic base fee growth in Q1 FY25. This performance, alongside double-digit growth in revenue, operating income, and EPS, and 100 basis points of margin expansion, demonstrates the platform's resilience and ability to deliver consistent organic growth through market cycles, even amidst market uncertainty🌐.

    02

    Global Footprint and Localized Approach

    The firm emphasizes its global presence, operating as a 'European firm,' 'Canadian firm,' etc., with nearly 23,000 employees in over 30 countries serving clients in more than 100. This localized approach, combined with global insights, allows BlackRock to partner with governments and clients to understand markets, navigate complex questions, and contribute to the development of local capital markets and retirement systems, as seen in initiatives in India and Saudi Arabia.

    03

    Private Markets Expansion and Strategic Acquisitions

    BlackRock is significantly expanding its private markets capabilities through strategic acquisitions and partnerships. The combination with GIP has already unlocked differentiated opportunities, including the largest infrastructure investment in its history (acquisition of 43 ports) and the AI infrastructure partnership targeting $30 billion in capital. The planned acquisition of HPS is expected to scale private credit AUM to approximately $220 billion and advance its positioning in the Alts to Wealth space.

    04

    Technology and Data Leadership

    The acquisition of Preqin triples BlackRock's desktop reach to over 300,000 users, enriching growth potential for its private markets and technology franchises. The Aladdin platform continues to see sustained demand, with 14% organic ACV growth, and is expanding globally, recently going live with its first client in Korea. This integrated workflow provides clients with a unified view of their portfolios.

    05

    Digital Assets and Onchain Finance

    BlackRock is actively pursuing opportunities in digital assets and blockchain technology. Its digital asset ETPs generated $3 billion in net inflows in Q1, and the BlackRock tokenized digital liquidity fund surpassed $2 billion in AUM. The firm continues to push Onchain finance forward, seeing large growth opportunities in this space.

    06

    Client Engagement and Macro Trends

    Despite geopolitical and economic uncertainty, BlackRock maintains strong client connectivity, providing real-time information and long-term perspectives. Management notes that while short-term fears exist, mega-trends like artificial intelligence, surging demand for global infrastructure, and the evolution of debt financing present transformative investment opportunities, which BlackRock is positioned to capture through its strategic investments and client partnerships.

    AI-generated summary of the company’s earnings call. Not investment advice.