Sign in

    BlackRock Inc (BLK)

    Q2 2024 Earnings Summary

    Reported on Jan 10, 2025 (Before Market Open)
    Pre-Earnings Price$829.98Open (Jul 15, 2024)
    Post-Earnings Price$829.98Open (Jul 15, 2024)
    Price Change
    $0.00(0.00%)

    What went well

    • BlackRock is experiencing strong business momentum with growth in key areas such as ETFs, models, Aladdin, and private markets, positioning the firm to achieve or exceed its 5% organic base fee growth target over the long term.
    • The company is poised to capitalize on significant opportunities in technology services, particularly with the integration of Aladdin, eFront, and Preqin, which is expected to accelerate growth and create a differentiated platform in private markets data and analytics.
    • The planned acquisition of Global Infrastructure Partners (GIP) is generating strong enthusiasm and is expected to unlock significant growth opportunities in infrastructure investments, further enhancing BlackRock's alternative investments business.

    What went wrong

    • Technology services revenue grew by 10%, which is at the low end of BlackRock's long-term target range of 10-15%, indicating potential growth headwinds in this segment.
    • Some clients are derisking due to meeting their liability levels, leading to decreased demand for higher-margin equity products.
    • BlackRock's anticipated growth heavily depends on the successful completion and integration of planned acquisitions like GIP and Preqin, introducing uncertainty and potential risks if these deals face delays or issues.

    Q&A Summary

    1. Organic Base Fee Growth
      Q: Outlook for organic base fee growth?
      A: Management is optimistic about achieving 5% organic base fee growth in the back half of '24. They see excellent momentum, with Q2 organic base fee growth at 3%. They expect rate cuts to normalize bond markets and drive flows, with growth coming from structural growers like ETFs, models, Aladdin, and an expanding private markets business. They have strong conviction about reaching or exceeding the 5% target in the longer term.

    2. Technology Services Growth
      Q: Expectations for tech services revenue growth?
      A: Technology services revenue grew 10% year-on-year and 5% sequentially. Management targets low to mid-teens growth in tech services ACV over the long term. The Preqin acquisition is expected to increase current ACV dollars by about 15% and accelerate growth within the target range. They see strong pipelines and believe integrating Preqin with Aladdin and eFront will unlock new opportunities.

    3. Alternatives and GIP Acquisition
      Q: Outlook for infrastructure flows post-GIP acquisition?
      A: Management is excited about the acquisition of GIP, expecting it to close in Q3. They highlight robust conversations with sophisticated investors worldwide about partnerships and developing new opportunities. They see significant growth potential in infrastructure investments, especially in power and AI-related projects requiring trillions of dollars. Post-closing, they anticipate amazing opportunities and announcements.

    4. Preqin Deal and Private Markets
      Q: How will Preqin impact private markets evolution?
      A: The Preqin acquisition allows BlackRock to provide a unified platform integrating public and private data analytics. They see an opportunity to index private markets, creating new revenue lines. Management believes they are uniquely positioned to offer differentiated technology and analytics in private markets, transforming capital markets similar to their impact on public markets with Aladdin and ETFs.

    5. Fixed Income Growth Outlook
      Q: Is fixed income a big area for growth?
      A: Management believes fixed income remains a significant growth area. They note that bond ETFs have seen $100 billion of organic growth over the last year. Clients are increasingly using ETFs for fixed income exposure. As clients rerisk, they expect investments in fixed income bond funds, private credit, and infrastructure debt to continue.

    6. Cash Management and Rerisking Trends
      Q: What are the trends in cash management and rerisking?
      A: Cash management saw $30 billion in flows, with the cash platform now at about $780 billion, growing over 50% in the last five years. Post-SVB, clients are managing cash more tactically. Management expects clients will rerisk, moving from cash into fixed income ETFs and other instruments. They observe a mix of clients derisking from equities into fixed income and others rerisking from cash, with a trend towards more bond allocations and alternative income strategies.

    Related Publications