BlackRock Reports Full Year 2023 Diluted EPS of $36.51, or $37.77 as Adjusted
BlackRock, Inc. (NYSE: BLK) announces acquisition of Global Infrastructure Partners, creating a world-leading infrastructure investment platform with over $150 billion in combined infrastructure platform and $10 trillion in AUM. The company reported $289 billion of net inflows in 2023, with $96 billion in the fourth quarter, while delivering flat full-year revenue and a 2% decrease in full-year operating income. BlackRock also returned $4.5 billion to shareholders in 2023, including $1.5 billion of share repurchases, and approved a 2% increase in quarterly cash dividend to $5.10 per share.
The acquisition of Global Infrastructure Partners (GIP) by BlackRock represents a strategic move to capitalize on the burgeoning demand for infrastructure investments. From a financial perspective, this expansion of BlackRock's infrastructure platform to over $150 billion in assets under management (AUM) is poised to enhance the company's product offerings and potentially increase its market share in the private markets sector.
BlackRock's reported full year net inflows of $289 billion, including $96 billion in the fourth quarter, signify robust organic growth despite market volatility. However, the flat full year revenue and a 2% decrease in operating income indicate the challenges faced due to market conditions. The increase in technology services revenue suggests a successful diversification of revenue streams, which is crucial for resilience in the face of fluctuating markets.
The $4.5 billion returned to shareholders, coupled with a 2% increase in the quarterly cash dividend, reflects BlackRock's commitment to shareholder value. This, along with the 7% increase in full year diluted EPS, may reassure investors of the company's financial health and its ability to navigate through market turbulence.
BlackRock's strategic reorganization and the acquisition of GIP underscore a larger trend within asset management towards consolidation and diversification of services. The infrastructure asset class has gained traction among investors seeking inflation-protected and long-duration investments, especially in the context of retirement planning. BlackRock's positioning as the second largest private markets infrastructure manager after this acquisition could attract significant investor interest.
Furthermore, the integration of GIP's assets and expertise with BlackRock's existing infrastructure portfolio is expected to create synergies that may offer competitive advantages over other market players. By leveraging BlackRock’s global reach and GIP’s sector-specific knowledge, the combined entity could offer more comprehensive solutions to clients, potentially driving further inflows.
The focus on enhancing ETFs and index offerings by embedding them across the firm may indicate a strategic shift towards passive investment strategies, which have been increasingly popular among investors. This move could also contribute to the growth trajectory of BlackRock's iShares brand.
The acquisition of GIP by BlackRock can be seen as a response to changing economic conditions, such as inflation and the search for yield. Infrastructure investments are typically long-term and can provide stable cash flows that are often linked to inflation, making them attractive in an inflationary environment. BlackRock’s increased focus on this asset class could be interpreted as a move to align its portfolio offerings with macroeconomic trends.
Additionally, the restructuring charge of $61 million for reorganizing specific platforms, primarily Aladdin and illiquid alternative investments, suggests a strategic pivot towards optimizing operations for efficiency and client responsiveness. This initiative may result in cost savings and improved service delivery in the long run, despite the short-term financial impact.
The emphasis on technology services revenue growth indicates an industry-wide shift towards tech-enabled asset management solutions. BlackRock's investment in technology, particularly in its Aladdin platform, may not only streamline internal processes but also enhance client engagement and satisfaction, which is critical for retaining and growing AUM in a competitive market.
01/12/2024 - 05:59 AM
BlackRock Announces Agreement to Acquire Global Infrastructure Partners (“GIP”) – Creating a World Leading Infrastructure Investment Platform
NEW YORK --(BUSINESS WIRE)--
BlackRock, Inc. (NYSE: BLK) today reported financial results for the three months and year ended December 31, 2023.
BlackRock’s acquisition of GIP will create a combined infrastructure platform of over $150 billion *, well positioned to meet fast-growing investor demand
$10 trillion in AUM following $289 billion of full year net inflows, including $96 billion in the fourth quarter
Flat full year revenue primarily driven by the negative impact of markets on average AUM, partially offset by higher technology services revenue
Restructuring charge of $61 million from initiative to reorganize specific platforms, primarily Aladdin and illiquid alternative investments, to stay ahead of client needs, excluded from as adjusted results
2% decrease in full year operating income
7% increase in full year diluted EPS also reflects significantly higher nonoperating income, partially offset by a higher effective tax rate in the current year
$4.5 billion returned to shareholders in 2023 , including $1.5 billion of share repurchases
2% increase in quarterly cash dividend to $5.10 per share approved by Board of Directors
Laurence D. Fink, Chairman and CEO:
“BlackRock delivered differentiated organic growth and operating margin through historically challenging market and industry conditions in 2022 and 2023. As we’ve seen before, when investors were ready to put money back to work, they did it with BlackRock. Clients entrusted us with $289 billion of net inflows in 2023, including $96 billion in the fourth quarter. We enter 2024 with strong momentum – $10 trillion in AUM, accelerating flows, and an organization positioned for the future.
“Today, we are announcing two transformational changes in anticipation of the evolution we see ahead for asset management and the capital markets. The strategic re-architecture of our organization will simplify and improve how we work and deliver for clients. And our acquisition of GIP will propel our leadership in the fast-growing market for hard-asset infrastructure.
“Our clients’ needs have been our compass. Listening to them and applying that to our vision for the future of our industry drove our innovation in Aladdin, and how we led a revolution that made iShares ETFs ubiquitous.
“We always viewed ETFs as a technology, a technology that facilitated investing. And just as our Aladdin technology has become core to asset management, so too have ETFs. That’s why we believe embedding our ETF and Index business across the entire firm will accelerate the growth of iShares and every investment strategy at BlackRock.
“The combination of BlackRock infrastructure with GIP will make us the second largest private markets infrastructure manager with over $150 billion in total AUM, providing clients – especially those saving for retirement – with the high-coupon, inflation-protected, long-duration investments they need.
“We are incredibly excited about this next chapter in BlackRock’s history. This ambitious transformation of our firm positions us better than ever. Our clients, shareholders and employees will be its biggest beneficiaries.”
FINANCIAL RESULTS
NET FLOW HIGHLIGHTS(1)
(in millions,
Q4
Q4
Full Year
Q4
Full Year
except per share data)
2023
2022
2023
2022
(in billions)
2023
2023
AUM
$
10,008,995
$
8,594,485
$
10,008,995
$
8,594,485
Long-term net flows:
$
63
$
209
% change
16
%
16
%
Average AUM
$
9,384,929
$
8,417,215
$
9,220,700
$
8,948,570
By region:
% change
11
%
3
%
Americas
$
54
$
138
Total net flows
$
95,647
$
113,725
$
288,695
$
306,570
EMEA
8
27
APAC
1
44
GAAP basis:
Revenue
$
4,631
$
4,337
$
17,859
$
17,873
By client type:
% change
7
%
-
%
Operating income
$
1,585
$
1,427
$
6,275
$
6,385
Retail:
$
(9
)
$
(8
% change
11
%
(2
)%
US
(6
)
(5
Operating margin
34.2
%
32.9
%
35.1
%
35.7
%
International
(3
)
(4
Net income(1)
$
1,375
$
1,259
$
5,502
$
5,178
% change
9
%
6
%
ETFs:
$
88
$
186
Diluted EPS
$
9.15
$
8.29
$
36.51
$
33.97
Core equity
32
83
% change
10
%
7
%
Strategic
28
104
Weighted-average
diluted shares
150.2
151.8
150.7
152.4
Precision
28
(1
% change
(1
)%
(1
)%
Institutional:
$
(16
)
$
32
As Adjusted(2) :
Active
8
87
Operating income
$
1,716
$
1,577
$
6,593
$
6,711
Index
(24
)
(55
% change
9
%
(2
)%
Operating margin
41.6
%
41.2
%
41.7
%
42.8
%
Net income(1)
$
1,451
$
1,356
$
5,692
$
5,391
Cash management net flows
$
33
$
79
% change
7
%
6
%
Diluted EPS
$
9.66
$
8.93
$
37.77
$
35.36
% change
8
%
7
%
Total net flows
$
96
$
289
_________________________
_________________________
(1) Net income represents net income attributable to BlackRock, Inc.
(2) See pages 10 through 12 for the reconciliation to GAAP and notes (1) through (3) to the condensed consolidated statements of income and supplemental information for more information on as adjusted items.
(1) Totals may not add due to rounding.
* Combined infrastructure platform represents client assets (AUM and non-fee paying committed capital) of BlackRock and GIP as of December 31, 2023 and September 30, 2023, respectively.
BUSINESS RESULTS
Q4 2023
Q4 2023
Base fees(1)
Base fees(1)
December 31, 2023
and securities
Q4 2023
December 31, 2023
and securities
AUM
lending revenue
(in millions), (unaudited)
Net flows
AUM
lending revenue
% of Total
% of Total
RESULTS BY CLIENT TYPE
Retail
$
(8,959
)
$
929,697
$
993
9
%
28
%
ETFs
87,721
3,499,299
1,458
35
%
40
%
Institutional:
Active
7,511
1,912,673
691
19
%
19
%
Index
(23,576
)
2,902,489
223
29
%
6
%
Total institutional
(16,065
)
4,815,162
914
48
%
25
%
Long-term
62,697
9,244,158
3,365
92
%
93
%
Cash management
32,950
764,837
240
8
%
7
%
Total
$
95,647
$
10,008,995
$
3,605
100
%
100
%
RESULTS BY INVESTMENT STYLE
Active
$
(5,762
)
$
2,621,178
$
1,631
26
%
45
%
Index and ETFs
68,459
6,622,980
1,734
66
%
48
%
Long-term
62,697
9,244,158
3,365
92
%
93
%
Cash management
32,950
764,837
240
8
%
7
%
Total
$
95,647
$
10,008,995
$
3,605
100
%
100
%
RESULTS BY PRODUCT TYPE
Equity
$
34,086
$
5,293,344
$
1,769
52
%
49
%
Fixed income
32,180
2,804,026
864
28
%
24
%
Multi-asset
(1,051
)
870,804
299
9
%
8
%
Alternatives:
Illiquid alternatives
3,561
136,909
251
1
%
7
%
Liquid alternatives
(3,289
)
74,233
138
1
%
4
%
Currency and commodities
(2,790
)
64,842
44
1
%
1
%
Total Alternatives
(2,518
)
275,984
433
3
%
12
%
Long-term
62,697
9,244,158
3,365
92
%
93
%
Cash management
32,950
764,837
240
8
%
7
%
Total
$
95,647
$
10,008,995
$
3,605
100
%
100
%
Base fees include investment advisory and administration fees.
INVESTMENT PERFORMANCE AT DECEMBER 31, 2023(1)
One-year period
Three-year period
Five-year period
Fixed income:
Actively managed AUM above benchmark or peer median
Taxable
84
%
78
%
92
%
Tax-exempt
75
%
61
%
45
%
Index AUM within or above applicable tolerance
98
%
97
%
97
%
Equity:
Actively managed AUM above benchmark or peer median
Fundamental
69
%
47
%
87
%
Systematic
87
%
83
%
89
%
Index AUM within or above applicable tolerance
96
%
99
%
100
%
Past performance is not indicative of future results. The performance information shown is based on preliminary available data. Please refer to page 14 for performance disclosure detail.
CAPITAL MANAGEMENT
BlackRock's Board of Directors approved a 2% increase in the quarterly cash dividend to $5.10 per share, payable March 22, 2024, to shareholders of record at the close of business on March 7, 2024.
TELECONFERENCE, WEBCAST AND PRESENTATION INFORMATION
Chairman and Chief Executive Officer, Laurence D. Fink, President, Robert S. Kapito, and Chief Financial Officer, Martin S. Small, will host a teleconference call for investors and analysts on Friday, January 12, 2024 at 7:30 a.m. (Eastern Time). Members of the public who are interested in participating in the teleconference should dial, from the United States , (313) 209-4913, or from outside the United States , (866) 400-0049, shortly before 7:30 a.m. and reference the BlackRock Conference Call (ID Number 3392098). A live, listen-only webcast will also be available via the investor relations section of www.blackrock.com .
The webcast will be available for replay by 10:30 a.m. (Eastern Time) on Friday, January 12, 2024. To access the replay of the webcast, please visit the investor relations section of www.blackrock.com .
ABOUT BLACKROCK
BlackRock’s purpose is to help more and more people experience financial well-being. As a fiduciary to investors and a leading provider of financial technology, we help millions of people build savings that serve them throughout their lives by making investing easier and more affordable. For additional information on BlackRock, please visit www.blackrock.com/corporate .
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION
(in millions, except per share data), (unaudited)
Three Months
Three Months Ended
Ended
December 31,
September 30,
2023
2022
Change
2023
Change
Revenue
Investment advisory, administration fees and
securities lending revenue:
Investment advisory and administration fees
$
3,448
$
3,260
$
188
$
3,514
$
(66
)
Securities lending revenue
157
139
18
167
(10
)
Total investment advisory, administration fees
and securities lending revenue
3,605
3,399
206
3,681
(76
)
Investment advisory performance fees
311
228
83
70
241
Technology services revenue
379
353
26
407
(28
)
Distribution fees
303
314
(11
)
321
(18
)
Advisory and other revenue
33
43
(10
)
43
(10
)
Total revenue
4,631
4,337
294
4,522
109
Expense
Employee compensation and benefits
1,503
1,430
73
1,420
83
Distribution and servicing costs
502
497
5
526
(24
)
Direct fund expense
318
275
43
354
(36
)
General and administration expense
624
580
44
546
78
Restructuring charge
61
91
(30
)
-
61
Amortization of intangible assets
38
37
1
39
(1
)
Total expense
3,046
2,910
136
2,885
161
Operating income
1,585
1,427
158
1,637
(52
)
Nonoperating income (expense)
Net gain (loss) on investments
265
207
58
114
151
Interest and dividend income
159
72
87
139
20
Interest expense
(82
)
(54
)
(28
)
(82
)
-
Total nonoperating income (expense)
342
225
117
171
171
Income before income taxes
1,927
1,652
275
1,808
119
Income tax expense
438
345
93
213
225
Net income
1,489
1,307
182
1,595
(106
)
Less:
Net income (loss) attributable to noncontrolling
interests
114
48
66
(9
)
123
Net income attributable to BlackRock, Inc.
$
1,375
$
1,259
$
116
$
1,604
$
(229
)
Weighted-average common shares outstanding
Basic
148.7
150.0
(1.4
)
149.2
(0.5
)
Diluted
150.2
151.8
(1.6
)
150.5
(0.3
)
Earnings per share attributable to BlackRock,
Inc. common stockholders
Basic
$
9.25
$
8.39
$
0.86
$
10.75
$
(1.50
)
Diluted
$
9.15
$
8.29
$
0.86
$
10.66
$
(1.51
)
Cash dividends declared and paid per share
$
5.00
$
4.88
$
0.12
$
5.00
$
-
Supplemental information:
AUM (end of period)
$
10,008,995
$
8,594,485
$
1,414,510
$
9,100,825
$
908,170
Shares outstanding (end of period)
148.5
149.8
(1.3
)
148.9
(0.4
)
GAAP:
Operating margin
34.2
%
32.9
%
130
bps
36.2
%
(200
)
bps
Effective tax rate
24.2
%
21.5
%
270
bps
11.7
%
1,250
bps
As adjusted:
Operating income (1)
$
1,716
$
1,577
$
139
$
1,691
$
25
Operating margin (1)
41.6
%
41.2
%
40
bps
42.3
%
(70
)
bps
Nonoperating income (expense), less net income
(loss) attributable to noncontrolling
interests (2)
$
199
$
177
$
22
$
184
$
15
Net income attributable to BlackRock, Inc. (3)
$
1,451
$
1,356
$
95
$
1,642
$
(191
)
Diluted earnings attributable to BlackRock, Inc.
common stockholders per share (3)
$
9.66
$
8.93
$
0.73
$
10.91
$
(1.25
)
Effective tax rate
24.2
%
22.7
%
150
bps
12.4
%
1,180
bps
See pages 10 through 12 for the reconciliation to accounting principles generally accepted in the United States ('GAAP") and notes (1) through (3) to the condensed consolidated statements of income and supplemental information for more information on as adjusted items.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION
(in millions, except per share data), (unaudited)
Year Ended
December 31,
2023
2022
Change
Revenue
Investment advisory, administration fees and
securities lending revenue:
Investment advisory and administration fees
$
13,724
$
13,852
$
(128
)
Securities lending revenue
675
599
76
Total investment advisory, administration fees
and securities lending revenue
14,399
14,451
(52
)
Investment advisory performance fees
554
514
40
Technology services revenue
1,485
1,364
121
Distribution fees
1,262
1,381
(119
)
Advisory and other revenue
159
163
(4
)
Total revenue
17,859
17,873
(14
)
Expense
Employee compensation and benefits
5,779
5,681
98
Distribution and servicing costs
2,051
2,179
(128
)
Direct fund expense
1,331
1,226
105
General and administration expense
2,211
2,160
51
Restructuring charge
61
91
(30
)
Amortization of intangible assets
151
151
-
Total expense
11,584
11,488
96
Operating income
6,275
6,385
(110
)
Nonoperating income (expense)
Net gain (loss) on investments
699
(35
)
734
Interest and dividend income
473
152
321
Interest expense
(292
)
(212
)
(80
)
Total nonoperating income (expense)
880
(95
)
975
Income before income taxes
7,155
6,290
865
Income tax expense
1,479
1,296
183
Net income
5,676
4,994
682
Less:
Net income (loss) attributable to noncontrolling
interests
174
(184
)
358
Net income attributable to BlackRock, Inc.
$
5,502
$
5,178
$
324
Weighted-average common shares outstanding
Basic
149.3
150.9
(1.6
)
Diluted
150.7
152.4
(1.7
)
Earnings per share attributable to BlackRock, Inc.
common stockholders
Basic
$
36.85
$
34.31
$
2.54
Diluted
$
36.51
$
33.97
$
2.54
Cash dividends declared and paid per share
$
20.00
$
19.52
$
0.48
Supplemental information:
AUM (end of period)
$
10,008,995
$
8,594,485
$
1,414,510
Shares outstanding (end of period)
148.5
149.8
(1.3
)
GAAP:
Operating margin
35.1
%
35.7
%
(60
)
bps
Effective tax rate
21.2
%
20.0
%
120
bps
As adjusted:
Operating income (1)
$
6,593
$
6,711
$
(118
)
Operating margin (1)
41.7
%
42.8
%
(110
)
bps
Nonoperating income (expense), less net income
(loss) attributable to noncontrolling
interests (2)
$
648
$
89
$
559
Net income attributable to BlackRock, Inc. (3)
$
5,692
$
5,391
$
301
Diluted earnings attributable to BlackRock, Inc.
common stockholders per share (3)
$
37.77
$
35.36
$
2.41
Effective tax rate
21.4
%
20.7
%
70
bps
See pages 10 through 12 for the reconciliation to GAAP and notes (1) through (3) to the condensed consolidated statements of income and supplemental information for more information on as adjusted items.
ASSETS UNDER MANAGEMENT
(in millions), (unaudited)
Current Quarter Component Changes by Client Type and Product Type
Net
September 30,
inflows
Market
December 31,
2023
(outflows)
change
FX impact(1)
2023
Average AUM(2)
Retail:
Equity
$
396,030
$
(370
)
$
36,080
$
3,994
$
435,734
$
407,368
Fixed income
300,232
(6,552
)
16,437
2,682
312,799
303,171
Multi-asset
129,177
(33
)
9,904
489
139,537
131,663
Alternatives
43,001
(2,004
)
303
327
41,627
42,041
Retail subtotal
868,440
(8,959
)
62,724
7,492
929,697
884,243
ETFs:
Equity
2,234,275
58,211
230,034
10,111
2,532,631
2,329,035
Fixed income
818,744
31,225
43,359
5,075
898,403
849,776
Multi-asset
7,716
746
614
64
9,140
8,251
Alternatives
57,674
(2,461
)
3,829
83
59,125
59,058
ETFs subtotal
3,118,409
87,721
277,836
15,333
3,499,299
3,246,120
Institutional:
Active:
Equity
167,917
704
14,966
3,101
186,688
174,135
Fixed income
771,581
6,012
52,739
6,491
836,823
792,981
Multi-asset
646,993
(1,244
)
62,463
8,970
717,182
667,841
Alternatives
166,771
2,039
1,239
1,931
171,980
168,608
Active subtotal
1,753,262
7,511
131,407
20,493
1,912,673
1,803,565
Index:
Equity
1,943,069
(24,459
)
190,759
28,922
2,138,291
1,998,882
Fixed income
685,648
1,495
46,049
22,809
756,001
709,186
Multi-asset
4,986
(520
)
437
42
4,945
4,747
Alternatives
3,330
(92
)
(15
)
29
3,252
3,307
Index subtotal
2,637,033
(23,576
)
237,230
51,802
2,902,489
2,716,122
Institutional subtotal
4,390,295
(16,065
)
368,637
72,295
4,815,162
4,519,687
Long-term
8,377,144
62,697
709,197
95,120
9,244,158
8,650,050
Cash management
723,681
32,950
2,770
5,436
764,837
734,879
Total
$
9,100,825
$
95,647
$
711,967
$
100,556
$
10,008,995
$
9,384,929
Current Quarter Component Changes by Investment Style and Product Type (Long-Term)
Net
September 30,
inflows
Market
December 31,
2023
(outflows)
change
FX impact(1)
2023
Average AUM(2)
Active:
Equity
$
393,690
$
(5,489
)
$
34,238
$
5,009
$
427,448
$
402,817
Fixed income
1,046,705
970
67,480
8,267
1,123,422
1,070,626
Multi-asset
776,158
(1,278
)
72,367
9,458
856,705
799,493
Alternatives
209,769
35
1,542
2,257
213,603
210,648
Active subtotal
2,426,322
(5,762
)
175,627
24,991
2,621,178
2,483,584
Index and ETFs:
ETFs:
Equity
2,234,275
58,211
230,034
10,111
2,532,631
2,329,035
Fixed income
818,744
31,225
43,359
5,075
898,403
849,776
Multi-asset
7,716
746
614
64
9,140
8,251
Alternatives
57,674
(2,461
)
3,829
83
59,125
59,058
ETFs subtotal
3,118,409
87,721
277,836
15,333
3,499,299
3,246,120
Non-ETF Index:
Equity
2,113,326
(18,636
)
207,567
31,008
2,333,265
2,177,568
Fixed income
710,756
(15
)
47,745
23,715
782,201
734,712
Multi-asset
4,998
(519
)
437
43
4,959
4,758
Alternatives
3,333
(92
)
(15
)
30
3,256
3,308
Non-ETF Index subtotal
2,832,413
(19,262
)
255,734
54,796
3,123,681
2,920,346
Index and ETFs subtotal
5,950,822
68,459
533,570
70,129
6,622,980
6,166,466
Long-term
$
8,377,144
$
62,697
$
709,197
$
95,120
$
9,244,158
$
8,650,050
Current Quarter Component Changes by Product Type (Long-Term)
Net
September 30,
inflows
Market
December 31,
2023
(outflows)
change
FX impact(1)
2023
Average AUM(2)
Equity
$
4,741,291
$
34,086
$
471,839
$
46,128
$
5,293,344
$
4,909,420
Fixed income
2,576,205
32,180
158,584
37,057
2,804,026
2,655,114
Multi-asset
788,872
(1,051
)
73,418
9,565
870,804
812,502
Alternatives:
Illiquid alternatives
131,937
3,561
(205
)
1,616
136,909
133,889
Liquid alternatives
75,139
(3,289
)
1,805
578
74,233
74,188
Currency and commodities(3)
63,700
(2,790
)
3,756
176
64,842
64,937
Alternatives subtotal
270,776
(2,518
)
5,356
2,370
275,984
273,014
Long-term
$
8,377,144
$
62,697
$
709,197
$
95,120
$
9,244,158
$
8,650,050
Foreign exchange reflects the impact of translating non-US dollar denominated AUM into US dollars for reporting purposes.
Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing four months.
Amounts include commodity ETFs.
ASSETS UNDER MANAGEMENT
(in millions), (unaudited)
Year-over-Year Component Changes by Client Type and Product Type
Net
December 31,
inflows
Market
December 31,
2022
(outflows)
Acquisition(1)
change
FX impact(2)
2023
Average AUM(3)
Retail:
Equity
$
370,612
$
2,810
$
-
$
58,248
$
4,064
$
435,734
$
403,530
Fixed income
299,114
(2,471
)
-
11,821
4,335
312,799
306,232
Multi-asset
125,168
(236
)
-
14,022
583
139,537
131,236
Alternatives
48,581
(8,576
)
-
1,286
336
41,627
45,319
Retail subtotal
843,475
(8,473
)
-
85,377
9,318
929,697
886,317
ETFs:
Equity
2,081,742
81,223
-
362,885
6,781
2,532,631
2,262,361
Fixed income
758,093
111,956
-
24,544
3,810
898,403
824,832
Multi-asset
8,875
(746
)
-
949
62
9,140
8,024
Alternatives
60,900
(6,491
)
-
4,626
90
59,125
61,439
ETFs subtotal
2,909,610
185,942
-
393,004
10,743
3,499,299
3,156,656
Institutional:
Active:
Equity
168,734
(13,301
)
-
29,088
2,167
186,688
174,967
Fixed income
774,955
4,714
-
53,538
3,616
836,823
798,832
Multi-asset
544,469
85,665
-
79,644
7,404
717,182
642,051
Alternatives
153,433
10,028
2,177
4,925
1,417
171,980
162,871
Active subtotal
1,641,591
87,106
2,177
167,195
14,604
1,912,673
1,778,721
Index:
Equity
1,814,266
(82,222
)
-
401,047
5,200
2,138,291
1,979,704
Fixed income
704,661
28,888
-
17,774
4,678
756,001
713,802
Multi-asset
6,392
(1,896
)
-
559
(110
)
4,945
5,882
Alternatives
3,296
105
-
(138
)
(11
)
3,252
3,263
Index subtotal
2,528,615
(55,125
)
-
419,242
9,757
2,902,489
2,702,651
Institutional subtotal
4,170,206
31,981
2,177
586,437
24,361
4,815,162
4,481,372
Long-term
7,923,291
209,450
2,177
1,064,818
44,422
9,244,158
8,524,345
Cash management
671,194
79,245
-
8,732
5,666
764,837
696,355
Total
$
8,594,485
$
288,695
$
2,177
$
1,073,550
$
50,088
$
10,008,995
$
9,220,700
Year-over-Year Component Changes by Investment Style and Product Type (Long-Term)
Net
December 31,
inflows
Market
December 31,
2022
(outflows)
Acquisition(1)
change
FX impact(2)
2023
Average AUM(3)
Active:
Equity
$
392,836
$
(26,772
)
$
-
$
57,431
$
3,953
$
427,448
$
409,687
Fixed income
1,053,083
(882
)
-
64,203
7,018
1,123,422
1,080,917
Multi-asset
669,629
85,424
-
93,665
7,987
856,705
773,278
Alternatives
202,012
1,451
2,177
6,210
1,753
213,603
208,189
Active subtotal
2,317,560
59,221
2,177
221,509
20,711
2,621,178
2,472,071
Index and ETFs:
ETFs:
Equity
2,081,742
81,223
-
362,885
6,781
2,532,631
2,262,361
Fixed income
758,093
111,956
-
24,544
3,810
898,403
824,832
Multi-asset
8,875
(746
)
-
949
62
9,140
8,024
Alternatives
60,900
(6,491
)
-
4,626
90
59,125
61,439
ETFs subtotal
2,909,610
185,942
-
393,004
10,743
3,499,299
3,156,656
Non-ETF Index:
Equity
1,960,776
(65,941
)
-
430,952
7,478
2,333,265
2,148,514
Fixed income
725,647
32,013
-
18,930
5,611
782,201
737,949
Multi-asset
6,400
(1,891
)
-
560
(110
)
4,959
5,891
Alternatives
3,298
106
-
(137
)
(11
)
3,256
3,264
Non-ETF Index subtotal
2,696,121
(35,713
)
-
450,305
12,968
3,123,681
2,895,618
Index and ETFs subtotal
5,605,731
150,229
-
843,309
23,711
6,622,980
6,052,274
Long-term
$
7,923,291
$
209,450
$
2,177
$
1,064,818
$
44,422
$
9,244,158
$
8,524,345
Year-over-Year Component Changes by Product Type (Long-Term)
Net
December 31,
inflows
Market
December 31,
2022
(outflows)
Acquisition(1)
change
FX impact(2)
2023
Average AUM(3)
Equity
$
4,435,354
$
(11,490
)
$
-
$
851,268
$
18,212
$
5,293,344
$
4,820,562
Fixed income
2,536,823
143,087
-
107,677
16,439
2,804,026
2,643,698
Multi-asset
684,904
82,787
-
95,174
7,939
870,804
787,193
Alternatives:
Illiquid alternatives
117,751
13,665
2,177
1,885
1,431
136,909
127,655
Liquid alternatives
80,654
(11,370
)
-
4,548
401
74,233
77,595
Currency and commodities(4)
67,805
(7,229
)
-
4,266
-
64,842
67,642
Alternatives subtotal
266,210
(4,934
)
2,177
10,699
1,832
275,984
272,892
Long-term
$
7,923,291
$
209,450
$
2,177
$
1,064,818
$
44,422
$
9,244,158
$
8,524,345
Amounts include AUM attributable to the acquisition of Kreos Capital in August 2023 (the "Kreos Transaction").
Foreign exchange reflects the impact of translating non-US dollar denominated AUM into US dollars for reporting purposes.
Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing thirteen months.
Amounts include commodity ETFs.
SUMMARY OF REVENUE
Three Months
Three Months
Ended
Ended
Year Ended
December 31,
September 30,
December 31,
(in millions), (unaudited)
2023
2022
Change
2023
Change
2023
2022
Change
Revenue
Investment advisory, administration fees and
securities lending revenue:
Equity:
Active
$
484
$
478
$
6
$
510
$
(26
)
$
2,000
$
2,147
$
(147
)
ETFs
1,102
1,021
81
1,136
(34
)
4,418
4,345
73
Non-ETF Index
183
159
24
186
(3
)
743
711
32
Equity subtotal
1,769
1,658
111
1,832
(63
)
7,161
7,203
(42
)
Fixed income:
Active
468
462
6
479
(11
)
1,897
1,977
(80
)
ETFs
311
283
28
315
(4
)
1,230
1,122
108
Non-ETF Index
85
85
-
93
(8
)
353
396
(43
)
Fixed income subtotal
864
830
34
887
(23
)
3,480
3,495
(15
)
Multi-asset
299
293
6
308
(9
)
1,203
1,299
(96
)
Alternatives:
Illiquid alternatives
251
194
57
231
20
889
741
148
Liquid alternatives
138
150
(12
)
143
(5
)
572
633
(61
)
Currency and commodities
44
47
(3
)
46
(2
)
185
216
(31
)
Alternatives subtotal
433
391
42
420
13
1,646
1,590
56
Long-term
3,365
3,172
193
3,447
(82
)
13,490
13,587
(97
)
Cash management
240
227
13
234
6
909
864
45
Total investment advisory, administration
fees and securities lending revenue
3,605
3,399
206
3,681
(76
)
14,399
14,451
(52
)
Investment advisory performance fees:
Equity
61
36
25
17
44
99
49
50
Fixed income
2
6
(4
)
1
1
4
25
(21
)
Multi-asset
5
11
(6
)
5
-
28
25
3
Alternatives:
Illiquid alternatives
149
115
34
24
125
273
296
(23
)
Liquid alternatives
94
60
34
23
71
150
119
31
Alternatives subtotal
243
175
68
47
196
423
415
8
Total investment advisory performance fees
311
228
83
70
241
554
514
40
Technology services revenue
379
353
26
407
(28
)
1,485
1,364
121
Distribution fees
303
314
(11
)
321
(18
)
1,262
1,381
(119
)
Advisory and other revenue:
Advisory
15
17
(2
)
21
(6
)
81
56
25
Other
18
26
(8
)
22
(4
)
78
107
(29
)
Total advisory and other revenue
33
43
(10
)
43
(10
)
159
163
(4
)
Total revenue
$
4,631
$
4,337
$
294
$
4,522
$
109
$
17,859
$
17,873
$
(14
)
Highlights
Investment advisory, administration fees and securities lending revenue increased $206 million from the fourth quarter of 2022, primarily driven by the impact of market beta on average AUM, positive organic base fee growth and higher securities lending revenue. Securities lending revenue of $157 million increased from $139 million in the fourth quarter of 2022, primarily reflecting higher spreads.
Investment advisory, administration fees and securities lending revenue decreased $76 million from the third quarter of 2023, primarily driven by the negative impact of market beta on average AUM and lower securities lending revenue. Securities lending revenue of $157 million decreased from $167 million in the third quarter of 2023, primarily reflecting lower spreads.
Performance fees increased $83 million from the fourth quarter of 2022 and $241 million from the third quarter of 2023, reflecting higher revenue from alternatives and long-only products.
Technology services revenue increased $26 million from the fourth quarter of 2022, reflecting the onboarding of several large clients. Technology services annual contract value (“ACV”)(1) increased 10% from the fourth quarter of 2022.
Technology services revenue decreased $28 million from the third quarter of 2023, reflecting third-quarter renewals of eFront on-premise licenses, for which a majority of the revenue is recognized at the time of renewal.
(1) See note (4) to the condensed consolidated statements of income and supplemental information on page 12 for more information on ACV.
SUMMARY OF OPERATING EXPENSE
Three Months
Three Months
Ended
Ended
Year Ended
December 31,
September 30,
December 31,
(in millions), (unaudited)
2023
2022
Change
2023
Change
2023
2022
Change
Operating expense
Employee compensation and benefits
$
1,503
$
1,430
$
73
$
1,420
$
83
$
5,779
$
5,681
$
98
Distribution and servicing costs
502
497
5
526
(24
)
2,051
2,179
(128
)
Direct fund expense
318
275
43
354
(36
)
1,331
1,226
105
General and administration expense:
Marketing and promotional
100
100
-
82
18
344
331
13
Occupancy and office related
105
99
6
103
2
418
403
15
Portfolio services
68
71
(3
)
65
3
270
280
(10
)
Sub-advisory
22
17
5
20
2
81
80
1
Technology
186
151
35
145
41
607
600
7
Professional services
67
51
16
51
16
195
180
15
Communications
11
12
(1
)
12
(1
)
47
44
3
Foreign exchange remeasurement
(4
)
8
(12
)
(3
)
(1
)
(6
)
10
(16
)
Contingent consideration fair value
adjustments
2
1
1
-
2
3
3
-
Product launch costs
-
6
(6
)
-
-
-
6
(6
)
Other general and administration
67
64
3
71
(4
)
252
223
29
Total general and administration expense
624
580
44
546
78
2,211
2,160
51
Restructuring charge
61
91
(30
)
-
61
61
91
(30
)
Amortization of intangible assets
38
37
1
39
(1
)
151
151
-
Total operating expense
$
3,046
$
2,910
$
136
$
2,885
$
161
$
11,584
$
11,488
$
96
Highlights
Employee compensation and benefits expense increased $73 million from the fourth quarter of 2022 and $83 million from the third quarter of 2023, reflecting higher incentive compensation, primarily as a result of higher performance fees, and higher severance.
Direct fund expense increased $43 million from the fourth quarter of 2022, primarily reflecting higher average index AUM.
Direct fund expense decreased $36 million from the third quarter of 2023, primarily reflecting lower average index AUM and certain rebates that seasonally occur in the fourth quarter.
General and administrative expense increased $44 million from the fourth quarter of 2022, primarily due to higher technology and professional services expenses, partially offset by the impact of foreign exchange remeasurement.
General and administrative expense increased $78 million from the third quarter of 2023, primarily due to higher technology, marketing and promotional and professional services expense.
A restructuring charge of $61 million , comprised of severance and compensation expense for accelerated vesting of previously granted deferred compensation awards, was recorded in the fourth quarter of 2023 in connection with initiatives to reorganize specific platforms, primarily Aladdin and alternative investments. The restructuring charge has been excluded from our “as adjusted” financial results. See pages 10 through 12 for the reconciliation to GAAP and notes (1) and (3) to the condensed consolidated statements of income and supplemental information for more information on as adjusted items.
SUMMARY OF NONOPERATING INCOME (EXPENSE), LESS NET INCOME (LOSS) ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
Three Months
Three Months
Ended
Ended
Year Ended
December 31,
September 30,
December 31,
(in millions), (unaudited)
2023
2022
Change
2023
Change
2023
2022
Change
Nonoperating income (expense), GAAP basis
$
342
$
225
$
117
$
171
$
171
$
880
$
(95
)
$
975
Less: Net income (loss) attributable to
noncontrolling interests ("NCI")
114
48
66
(9
)
123
174
(184
)
358
Nonoperating income (expense), net of NCI
228
177
51
180
48
706
89
617
Less: Hedge gain (loss) on deferred cash
compensation plans(1)
29
-
29
(4
)
33
58
-
58
Nonoperating income (expense), net of NCI, as
adjusted(2)
$
199
$
177
$
22
$
184
$
15
$
648
$
89
$
559
Three Months
Three Months
Ended
Ended
Year Ended
December 31,
September 30,
December 31,
(in millions), (unaudited)
2023
2022
Change
2023
Change
2023
2022
Change
Net gain (loss) on investments, net of NCI
Private equity
$
68
$
66
$
2
$
91
$
(23
)
$
349
$
88
$
261
Real assets
2
5
(3
)
3
(1
)
13
28
(15
)
Other alternatives(3)
17
5
12
22
(5
)
49
5
44
Other investments(4)
15
44
(29
)
46
(31
)
66
(201
)
267
Hedge gain (loss) on deferred cash
compensation plans(1)
29
-
29
(4
)
33
58
-
58
Subtotal
131
120
11
158
(27
)
535
(80
)
615
Other gains (losses)(5)
20
39
(19
)
(35
)
55
(10
)
229
(239
)
Total net gain (loss) on investments, net of NCI
151
159
(8
)
123
28
525
149
376
Interest and dividend income
159
72
87
139
20
473
152
321
Interest expense
(82
)
(54
)
(28
)
(82
)
-
(292
)
(212
)
(80
)
Net interest income (expense)
77
18
59
57
20
181
(60
)
241
Nonoperating income (expense), net of NCI
228
177
51
180
48
706
89
617
Less: Hedge gain (loss) on deferred cash
compensation plans(1)
29
-
29
(4
)
33
58
-
58
Nonoperating income (expense), net of NCI, as
adjusted(2)
$
199
$
177
$
22
$
184
$
15
$
648
$
89
$
559
Amount relates to the gain (loss) from economically hedging certain BlackRock deferred cash compensation plans.
Management believes nonoperating income (expense), net of NCI, as adjusted, is an effective measure for reviewing BlackRock’s nonoperating results, which ultimately impacts BlackRock’s book value. For more information on as adjusted items and the reconciliation to GAAP see notes to the condensed consolidated statements of income and supplemental information on pages 10 through 12.
Amounts primarily include net gains (losses) related to credit funds, direct hedge fund strategies and hedge fund solutions.
Amounts primarily include net gains (losses) related to BlackRock's seed investment portfolio, net of impact of certain hedges.
The amounts for the year ended December 31, 2022, primarily include nonoperating noncash pre-tax gains in connection with the Company's strategic minority investment in iCapital Network, Inc. of approximately $267 million . Additional amounts include noncash pre-tax gains (losses) related to the revaluation of certain other minority investments.
SUMMARY OF INCOME TAX EXPENSE
Three Months
Three Months
Ended
Ended
Year Ended
December 31,
September 30,
December 31,
(in millions), (unaudited)
2023
2022
Change
2023
Change
2023
2022
Change
Income tax expense
$
438
$
345
$
93
$
213
$
225
$
1,479
$
1,296
$
183
Effective tax rate
24.2
%
21.5
%
270 bps
11.7
%
1,250 bps
21.2
%
20.0
%
120 bps
Highlights
Fourth quarter 2022 income tax expense included a $28 million net discrete tax benefit, of which $17 million is associated with the net noncash tax benefit related to the revaluation of certain deferred income tax liabilities.
Third quarter 2023 income tax expense included approximately $223 million of discrete tax benefits related to the resolution of certain outstanding tax matters.
RECONCILIATION OF GAAP OPERATING INCOME AND OPERATING MARGIN TO OPERATING INCOME AND
OPERATING MARGIN, AS ADJUSTED
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
(in millions), (unaudited)
2023
2022
2023
2023
2022
Operating income, GAAP basis
$
1,585
$
1,427
$
1,637
$
6,275
$
6,385
Non-GAAP expense adjustments:
Compensation expense related to appreciation (depreciation)
on deferred cash compensation plans (a)
28
-
(3
)
57
-
Amortization of intangible assets (b)
38
37
39
151
151
Acquisition-related compensation costs (b)
2
6
6
17
24
Acquisition-related transaction costs (b)(1)
-
-
4
7
-
Contingent consideration fair value adjustments (b)
2
1
-
3
3
Lease costs - New York (c)
-
15
-
14
57
Restructuring charge (d)
61
91
-
61
91
Reduction of indemnification asset (e)(1)
-
-
8
8
-
Operating income, as adjusted (1)
1,716
1,577
1,691
6,593
6,711
Product launch costs and commissions
-
6
-
-
6
Operating income used for operating margin measurement
$
1,716
$
1,583
$
1,691
$
6,593
$
6,717
Revenue, GAAP basis
$
4,631
$
4,337
$
4,522
$
17,859
$
17,873
Non-GAAP adjustments:
Distribution fees
(303
)
(314
)
(321
)
(1,262
)
(1,381
)
Investment advisory fees
(199
)
(183
)
(205
)
(789
)
(798
)
Revenue used for operating margin measurement
$
4,129
$
3,840
$
3,996
$
15,808
$
15,694
Operating margin, GAAP basis
34.2
%
32.9
%
36.2
%
35.1
%
35.7
%
Operating margin, as adjusted (1)
41.6
%
41.2
%
42.3
%
41.7
%
42.8
%
Amounts included within general and administration expense.
See note (1) to the condensed consolidated statements of income and supplemental information on pages 11 and 12 for more information on as adjusted items.
RECONCILIATION OF GAAP NONOPERATING INCOME (EXPENSE) TO NONOPERATING INCOME
(EXPENSE), LESS NET INCOME (LOSS) ATTRIBUTABLE TO NCI, AS ADJUSTED
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
(in millions), (unaudited)
2023
2022
2023
2023
2022
Nonoperating income (expense), GAAP basis
$
342
$
225
$
171
$
880
$
(95
)
Less: Net income (loss) attributable to NCI
114
48
(9
)
174
(184
)
Nonoperating income (expense), net of NCI
228
177
180
706
89
Less: Hedge gain (loss) on deferred cash compensation
plans (a)
29
-
(4
)
58
-
Nonoperating income (expense), less net income (loss)
attributable to NCI, as adjusted (2)
$
199
$
177
$
184
$
648
$
89
See notes (1) and (2) to the condensed consolidated statements of income and supplemental information on pages 11 and 12 for more information on as adjusted items.
RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO BLACKROCK TO NET INCOME
ATTRIBUTABLE TO BLACKROCK, AS ADJUSTED
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
(in millions, except per share data), (unaudited)
2023
2022
2023
2023
2022
Net income attributable to BlackRock, Inc., GAAP basis
$
1,375
$
1,259
$
1,604
$
5,502
$
5,178
Non-GAAP adjustments(1) :
Net impact of hedged deferred cash compensation plans (a)
(1
)
-
1
(1
)
-
Amortization of intangible assets (b)
28
27
30
114
114
Acquisition-related compensation costs (b)
1
5
4
12
19
Acquisition-related transaction costs (b)
-
-
3
5
-
Contingent consideration fair value adjustments (b)
2
1
-
3
3
Lease costs - New York (c)
-
12
-
11
43
Restructuring charge (d)
46
69
-
46
69
Income tax matters
-
(17
)
-
-
(35
)
Net income attributable to BlackRock, Inc., as adjusted (3)
$
1,451
$
1,356
$
1,642
$
5,692
$
5,391
Diluted weighted-average common shares outstanding
150.2
151.8
150.5
150.7
152.4
Diluted earnings per common share, GAAP basis
$
9.15
$
8.29
$
10.66
$
36.51
$
33.97
Diluted earnings per common share, as adjusted (3)
$
9.66
$
8.93
$
10.91
$
37.77
$
35.36
Non-GAAP adjustments, excluding income tax matters, are net of tax.
See note (3) to the condensed consolidated statements of income and supplemental information on page 12 for more information on as adjusted items.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION
(unaudited)
BlackRock reports its financial results in accordance with GAAP; however, management believes evaluating the Company’s ongoing operating results may be enhanced if investors have additional non-GAAP financial measures. Adjustments to GAAP financial measures (“non-GAAP adjustments”) include certain items management deems nonrecurring or that occur infrequently, transactions that ultimately will not impact BlackRock’s book value or certain tax items that do not impact cash flow. Management reviews non-GAAP financial measures, in addition to GAAP financial measures, to assess ongoing operations and considers them to be helpful, for both management and investors, in evaluating BlackRock’s financial performance over time. Management also uses non-GAAP financial measures as a benchmark to compare its performance with other companies and to enhance comparability for the reporting periods presented. Non-GAAP financial measures may pose limitations because they do not include all of BlackRock’s revenue and expense. BlackRock’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.
Computations and reconciliations for all periods are derived from the condensed consolidated statements of income as follows:
(1) Operating income, as adjusted, and operating margin, as adjusted: Management believes operating income, as adjusted, and operating margin, as adjusted, are effective indicators of BlackRock’s financial performance over time, and, therefore, provide useful disclosure to investors. Management believes that operating margin, as adjusted, reflects the Company’s long-term ability to manage ongoing costs in relation to its revenues. The Company uses operating margin, as adjusted, to assess the Company’s financial performance, to determine the long-term and annual compensation of the Company’s senior-level employees and to evaluate the Company’s relative performance against industry peers. Furthermore, this metric eliminates margin variability arising from the accounting of revenues and expenses related to distributing different product structures in multiple distribution channels utilized by asset managers.
Operating income, as adjusted, includes the following non-GAAP expense adjustments:
Compensation expense related to appreciation (depreciation) on deferred cash compensation plans. Beginning in the first quarter of 2023, the Company updated its definition of operating income, as adjusted, to exclude compensation expense related to the market valuation changes on certain deferred cash compensation plans, which the Company began hedging economically in 2023. For these deferred cash compensation plans, the final value of the deferred amount to be distributed to employees in cash upon vesting is determined based on the returns on specified investment funds. The Company recognizes compensation expense for the appreciation (depreciation) of the deferred cash compensation liability in proportion to the vested amount of the award during a respective period, while the gain (loss) to economically hedge these plans is immediately recognized in nonoperating income (expense), which creates a timing difference impacting net income. This timing difference will reverse and offset to zero over the life of the award at the end of the multi-year vesting period. Management believes excluding market valuation changes related to the deferred cash compensation plans in the calculation of operating income, as adjusted, provides useful disclosure to both management and investors of the Company’s financial performance over time as these amounts are economically hedged, while also increasing comparability with other companies.
Acquisition related costs. Acquisition related costs include adjustments related to amortization of intangible assets, other acquisition-related costs, including compensation costs for nonrecurring retention-related deferred compensation, and contingent consideration fair value adjustments incurred in connection with certain acquisitions. Management believes excluding the impact of these expenses when calculating operating income, as adjusted, provides a helpful indication of the Company’s financial performance over time, thereby providing helpful information for both management and investors while also increasing comparability with other companies.
Lease costs – New York . In 2022 and 2023, the Company continued to recognize lease expense within general and administration expense for both its current headquarters located at 50 Hudson Yards in New York and prior headquarters until the Company's lease on its prior headquarters expired in April 2023. The Company began lease payments related to its current headquarters in May 2023, but began recording lease expense in August 2021 when it obtained access to the building to begin its tenant improvements. Prior to the Company’s move to its current headquarters in February 2023, the impact of lease costs related to 50 Hudson Yards was excluded from operating income, as adjusted. In February 2023, the Company completed the majority of its move to 50 Hudson Yards and no longer excluded the impact of these lease costs. Subsequently, from February 2023 through April 2023, the Company excluded the impact of lease costs related to the Company's prior headquarters. Management believes excluding the impact of these respective New York lease costs (“Lease costs – New York”) when calculating operating income, as adjusted, is useful to assess the Company’s financial performance and ongoing operations, and enhances comparability among periods presented.
Restructuring charge. In the fourth quarter of 2023, the Company recorded a restructuring charge, comprised of severance and compensation expense for accelerated vesting of previously granted deferred compensation awards, in connection with initiatives to reorganize specific platforms, primarily Aladdin and alternative investments. In the fourth quarter of 2022, the Company recorded a restructuring charge primarily comprised of severance and accelerated amortization expense of previously granted deferred compensation awards in connection with an initiative to modify the size and shape of the workforce to align more closely with strategic priorities. Management believes excluding the impact of these restructuring charges when calculating operating income, as adjusted, is useful to assess the Company’s financial performance and ongoing operations, and enhances comparability among periods presented.
Reduction of indemnification asset . In the third quarter of 2023, BlackRock recorded $8 million of general and administration expense to reflect the reduction of the indemnification asset and an offsetting $8 million tax benefit due to the resolution of certain tax matters. The $8 million general and administrative expense and $8 million tax benefit have been excluded from as adjusted results as there is no impact on BlackRock’s book value.
Operating income used for measuring operating margin, as adjusted, is equal to operating income, as adjusted, excluding the impact of product launch costs (e.g. closed-end fund launch costs) and related commissions. Management believes the exclusion of such costs and related commissions is useful because these costs can fluctuate considerably, and revenue associated with the expenditure of these costs will not fully impact BlackRock’s results until future periods.
Revenue used for calculating operating margin, as adjusted, is reduced to exclude all of the Company’s distribution fees, which are recorded as a separate line item on the condensed consolidated statements of income, as well as a portion of investment advisory fees received that is used to pay distribution and servicing costs. For certain products, based on distinct arrangements, distribution fees are collected by the Company and then passed-through to third-party client intermediaries. For other products, investment advisory fees are collected by the Company and a portion is passed-through to third-party client intermediaries. However, in both structures, the third-party client intermediary similarly owns the relationship with the retail client and is responsible for distributing the product and servicing the client. The amount of distribution and investment advisory fees fluctuates each period primarily based on a predetermined percentage of the value of AUM during the period. These fees also vary based on the type of investment product sold and the geographic location where it is sold. In addition, the Company may waive fees on certain products that could result in the reduction of payments to the third-party intermediaries.
(2) Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted: Management believes nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, is an effective measure for reviewing BlackRock’s nonoperating contribution to its results and provides comparability of this information among reporting periods. Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, excludes the gain (loss) on the economic hedge of certain deferred cash compensation plans. As the gain (loss) on investments and derivatives used to hedge these compensation plans over time substantially offsets the compensation expense related to the market valuation changes on these deferred cash compensation plans, which is included in operating income, GAAP basis, management believes excluding the gain (loss) on the economic hedge of the deferred cash compensation plans when calculating nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, provides a useful measure for both management and investors of BlackRock’s nonoperating results that impact book value.
(3) Net income attributable to BlackRock, Inc., as adjusted: Management believes net income attributable to BlackRock, Inc., as adjusted, and diluted earnings per common share, as adjusted, are useful measures of BlackRock’s profitability and financial performance. Net income attributable to BlackRock, Inc., as adjusted, equals net income attributable to BlackRock, Inc., GAAP basis, adjusted for certain items management deems nonrecurring or that occur infrequently, transactions that ultimately will not impact BlackRock’s book value or certain tax items that do not impact cash flow.
See notes (1) and (2) above regarding operating income, as adjusted, for information on the updated presentation of non-GAAP adjustments. For each period presented, the non-GAAP adjustments were tax effected at the respective blended rates applicable to the adjustments. Amounts for income tax matters represent net noncash (benefit) expense primarily associated with the revaluation of certain deferred tax liabilities related to intangible assets and goodwill as a result of tax rate changes. These amounts have been excluded from the as adjusted results as these items will not have a cash flow impact and to enhance comparability among periods presented.
Per share amounts reflect net income attributable to BlackRock, Inc., as adjusted, divided by diluted weighted-average common shares outstanding.
(4) ACV: Management believes ACV is an effective metric for reviewing BlackRock’s technology services’ ongoing contribution to its operating results and provides comparability of this information among reporting periods while also providing a useful supplemental metric for both management and investors of BlackRock’s growth in technology services revenue over time, as it is linked to the net new business in technology services. ACV represents forward-looking, annualized estimated value of the recurring subscription fees under client contracts, assuming all client contracts that come up for renewal are renewed, unless we received a notice of termination, even though such notice may not be effective until a later date. ACV also includes the annualized estimated value of new sales, for existing and new clients, when we execute client contracts, even though the recurring fees may not be effective until a later date and excludes nonrecurring fees such as implementation and consulting fees.
FORWARD-LOOKING STATEMENTS
This earnings release, and other statements that BlackRock may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to BlackRock’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” and similar expressions.
BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
BlackRock has previously disclosed risk factors in its Securities and Exchange Commission (“SEC”) reports. These risk factors and those identified elsewhere in this earnings release, among others, could cause actual results to differ materially from forward-looking statements or historical performance and include: (1) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for products or services or in the value of AUM; (3) the relative and absolute investment performance of BlackRock’s investment products; (4) BlackRock’s ability to develop new products and services that address client preferences; (5) the impact of increased competition; (6) the impact of future acquisitions or divestitures, including the acquisition of GIP (the "GIP Transaction"); (7) BlackRock’s ability to integrate acquired businesses successfully, including the GIP Transaction; (8) risks related to the GIP Transaction, including the expected closing date of the GIP Transaction, the possibility that the GIP Transaction does not close, including, but not limited to, due to the failure to satisfy the closing conditions, the possibility that expected synergies and value creation from the GIP Transaction will not be realized, or will not be realized within the expected time period, and impacts to business and operational relationships related to disruptions from the GIP Transaction; (9) the unfavorable resolution of legal proceedings; (10) the extent and timing of any share repurchases; (11) the impact, extent and timing of technological changes and the adequacy of intellectual property, data, information and cybersecurity protection; (12) the failure to effectively manage the development and use of AI; (13) attempts to circumvent BlackRock’s operational control environment or the potential for human error in connection with BlackRock’s operational systems; (14) the impact of legislative and regulatory actions and reforms, regulatory, supervisory or enforcement actions of government agencies and governmental scrutiny relating to BlackRock; (15) changes in law and policy and uncertainty pending any such changes; (16) any failure to effectively manage conflicts of interest; (17) damage to BlackRock’s reputation; (18) increasing focus from stakeholders regarding ESG matters; (19) geopolitical unrest, terrorist activities, civil or international hostilities, and other events outside BlackRock’s control, including wars, natural disasters and health crises, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (20) climate-related risks to BlackRock's business, products, operations and clients; (21) the ability to attract, train and retain highly qualified and diverse professionals; (22) fluctuations in the carrying value of BlackRock’s economic investments; (23) the impact of changes to tax legislation, including income, payroll and transaction taxes, and taxation on products, which could affect the value proposition to clients and, generally, the tax position of the Company; (24) BlackRock’s success in negotiating distribution arrangements and maintaining distribution channels for its products; (25) the failure by key third-party providers of BlackRock to fulfill their obligations to the Company; (26) operational, technological and regulatory risks associated with BlackRock’s major technology partnerships; (27) any disruption to the operations of third parties whose functions are integral to BlackRock’s ETF platform; (28) the impact of BlackRock electing to provide support to its products from time to time and any potential liabilities related to securities lending or other indemnification obligations; and (29) the impact of problems, instability or failure of other financial institutions or the failure or negative performance of products offered by other financial institutions.
BlackRock’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and BlackRock’s subsequent filings with the SEC, accessible on the SEC’s website at www.sec.gov and on BlackRock’s website at www.blackrock.com , discuss these factors in more detail and identify additional factors that can affect forward-looking statements. The information contained on the Company’s website is not a part of this earnings release.
PERFORMANCE NOTES
Past performance is not indicative of future results. Except as specified, the performance information shown is as of December 31, 2023 and is based on preliminary data available at that time. The performance data shown reflects information for all actively and passively managed equity and fixed income accounts, including US registered investment companies, European-domiciled retail funds and separate accounts for which performance data is available, including performance data for high net worth accounts available as of November 30, 2023. The performance data does not include accounts terminated prior to December 31, 2023 and accounts for which data has not yet been verified. If such accounts had been included, the performance data provided may have substantially differed from that shown.
Performance comparisons shown are gross-of-fees for institutional and high net worth separate accounts, and net-of-fees for retail funds. The performance tracking shown for index accounts is based on gross-of-fees performance and includes all institutional accounts and all iShares ® funds globally using an index strategy. AUM information is based on AUM available as of December 31, 2023 for each account or fund in the asset class shown without adjustment for overlapping management of the same account or fund. Fund performance reflects the reinvestment of dividends and distributions.
Performance shown is derived from applicable benchmarks or peer median information, as selected by BlackRock, Inc. Peer medians are based in part on data either from Lipper, Inc. or Morningstar, Inc. for each included product.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240112651860/en/
INVESTOR RELATIONS:
Caroline Rodda 212.810.3442
MEDIA RELATIONS:
Ed Sweeney 646.231.0268
Source: BlackRock
What is the ticker symbol for BlackRock, Inc.?
The ticker symbol for BlackRock, Inc. is BLK.
What is the total AUM after the acquisition of GIP?
The total AUM after the acquisition of GIP is $10 trillion.
How much did BlackRock return to shareholders in 2023?
BlackRock returned $4.5 billion to shareholders in 2023, including $1.5 billion of share repurchases.
What was the percentage change in full-year operating income for BlackRock?
BlackRock experienced a 2% decrease in full-year operating income.
What was the approved increase in quarterly cash dividend per share by the Board of Directors?
The Board of Directors approved a 2% increase in quarterly cash dividend to $5.10 per share.