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BlackRock, Inc. (BLK)·Q1 2025 Earnings Summary
Executive Summary
- Q1 2025 delivered as-adjusted EPS of $11.30 (+15% YoY) on revenue of $5.28B (+12% YoY); GAAP EPS was $9.64 (-8% YoY) as acquisition-related costs depressed GAAP results while non-GAAP adjustments and discrete tax benefits supported as-adjusted performance .
- Net inflows were $84B (6% organic base fee growth), led by a record quarter in iShares ETFs ($107B) and $7B into private markets; AUM ended at $11.58T .
- Versus consensus, BLK posted a significant EPS beat (as-adjusted $11.30 vs $10.13*) and a slight revenue miss ($5.28B vs $5.31B*); EBITDA missed ($2.03B vs $2.21B*) as performance fees declined sharply YoY .
- Management reiterated 2025 capital return cadence (≥$375M buybacks per quarter), projected a 25% tax run-rate for the rest of 2025, and flagged base fees entering Q2 at ~1% below Q1 excluding catch-ups; near-term catalysts include continued ETF momentum and scaling of private markets (GIP contribution, pending HPS) .
What Went Well and What Went Wrong
What Went Well
- Strong organic growth engines: 6% organic base fee growth; record iShares ETF inflows of $107B with broad-based demand (core equity $46B, fixed income $34B) supporting revenue and margin expansion (as-adjusted operating margin +100 bps YoY to 43.2%) .
- Technology franchise acceleration: Technology services & subscription revenue rose 16% YoY to $436M, boosted by Preqin’s ~$20M partial quarter contribution; ACV grew 30% YoY (14% ex-Preqin) .
- CEO tone confident on secular growth themes (ETFs, infrastructure, systematic, digital assets) and global client connectivity: “We delivered 6% organic base fee growth… our best start to a year since 2021” and “clients put an even greater premium on the differentiated value proposition that BlackRock offers” .
What Went Wrong
- Performance fees fell 71% YoY to $60M due to lower private markets and liquid alternatives performance; sequentially -87% given Q4’s seasonal concentration .
- Institutional index equity experienced sizable outflows (-$46B) tied to client rebalancing; management emphasized underlying strength excluding episodic low-fee moves .
- GAAP profitability pressure: GAAP operating margin fell to 32.2% (-360 bps YoY) and GAAP EPS declined 8% YoY, reflecting acquisition-related costs and amortization of intangibles (GIP, Preqin), partly offset in as-adjusted results .
Financial Results
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- “We delivered 6% organic base fee growth in the first quarter, representing our best start to a year since 2021… Our consistent growth is a reflection of the role BlackRock plays as a convener, providing both stability and optimism for clients.” — Laurence D. Fink, Chairman & CEO .
- “Operating income of $2B was up 14% and EPS of $11.30 was 15% higher versus a year ago… ACV increased 30% YoY including Preqin, and 14% excluding.” — Martin S. Small, CFO .
- “We expect to scale our private credit AUM to ~$220B following our planned acquisition of HPS… AI infrastructure partnerships… can unlock over $100B in investment potential over time.” — Laurence D. Fink .
Q&A Highlights
- Allocations and flows: No “capitulation” in equities; elevated April cash inflows (~$20B) and rising interest in extending duration as yield curve steepens; ongoing strong demand for infrastructure and systematic equities .
- DC plans and private markets: Target-date style solutions blending public/private will launch on a large trust platform mid-year; mid/small plans and advisor-sold platforms likely first movers; broader scale may require litigation/DoL disclosure reforms .
- Fee rate outlook and ETF pricing: Two successive quarters of sequential fee rate increases;
0.1 bp higher effective fee sequentially due to private markets catch-ups ($84M); entered Q2 with base fees ~1% lower excluding catch-ups; no ETF price changes in Q1; pricing investment remains targeted . - International positioning and geopolitics: Emphasis on “hyper-local” presence to mitigate U.S.-centric frictions; potential reallocation toward Europe if growth-oriented reforms persist; footprint expanding to 30+ countries .
Estimates Context
- Q1 2025: EPS (as-adjusted) beat ($11.30 vs $10.13*), revenue slight miss ($5.276B vs $5.312B*), EBITDA miss ($2.03B vs $2.21B*). Performance fee weakness and acquisition-related costs weighed on EBITDA/GAAP metrics, while base fee growth, technology revenues, and lower as-adjusted tax rate supported the EPS beat .
- Prior quarter (Q4 2024): EPS (as-adjusted) beat ($11.93 vs $11.22*), revenue beat ($5.677B vs $5.580B*) .
*Values retrieved from S&P Global.
Key Takeaways for Investors
- Organic growth engines remain intact and diversified; ETFs, private markets, systematic strategies, and technology together underpin resilience across cycles — supports medium-term multiple expansion case .
- Near-term trading: Favorable EPS surprise and iShares flows are positives; performance fee reset and base fees entering Q2 ~1% lower (ex catch-ups) temper sequential momentum .
- Strategic optionality: GIP already accretive to base fees (~$285M this quarter); pending HPS adds fee-rate accretive assets and expands wealth/private credit distribution .
- Technology moat widening: Preqin integration lifts ACV and desktop reach; AI infrastructure partnership could catalyze substantial capital deployment and advisory opportunities .
- Capital return: Dividend increased to $5.21 and buybacks ≥$375M per quarter provide downside support amid macro volatility .
- Watch items: Institutional index equity outflows tied to rebalancing, performance fee variability, and acquisition-related costs impacting GAAP results; monitor tariff/macro developments and DoL framework for DC private markets .
- Regional upside: Europe ETFs and localized partnerships (India, Saudi) broaden growth runway beyond U.S. markets .