BlackRock earnings: Revenue and profits miss Wall Street forecasts because of ‘market headwinds’

Larry Fink, the CEO of BlackRock, at the Bloomberg Global Business forum in New York.

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Larry Fink, the CEO of BlackRock, at the Bloomberg Global Business forum in New York.
source
Reuters

BlackRock’s revenue fell 2% year-on-year in the second quarter because of lower base fees and performance fees. Coupled with $61 million of fund launch costs, that contributed to a 7% drop in net income to about $1 billion in the period. More positively, the investment manager recorded a 9% increase in assets under management.

“BlackRock generated $151 billion of total net inflows in the second quarter, a record 9% annualized organic asset growth,” BlackRock CEO Laurence Fink said in the earnings statement. “While organic base fee growth of 3% and the year-over-year revenue decline reflected certain market headwinds, our second-quarter results validate BlackRock’s unique ability to bring together the entire firm to meet clients’ needs in any market environment.”

Read more: A BlackRock executive highlights the new kinds of skills he’s looking for in a $2 trillion business – and why old-school traders are still important

Here are the rest of the key numbers:

  • Assets: $6.8 trillion, up 9% year-on-year (2018: $6.3 trillion)
  • Revenue: $3.52 billion, versus analysts’ expectations of $3.57 billion and down 2% year-on-year (2018: $3.61 billion)
  • Net income: $1 billion, versus analysts’ predictions of $1.05 billion and down 7% year-on-year (2018: $1.073 billion)
  • Adjusted earnings per share: $6.41 against expectations of $6.51
  • Total net flows: $125.4 billion
  • iShares: $36.1 billion
  • Institutional: $87.4 billion

BlackRock continued to see strong growth in its technology business, a key long-term focus as the firm seeks to differentiate itself from other asset managers. Rising revenue from Aladdin, the investment-management platform, drove technology services revenue up 20% to $237 million, or 6.7% of the firm’s total revenue.

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