BlackRock, Inc. (NYSE: BLK) Q3 2025 Earnings Call | 10/14/2025

Overview:

• Speakers: Chris (Investor Relations), Martin Flanagan (President & COO), Larry Fink (Chairman & CEO), Operator, and analysts from Bank of America, Morgan Stanley, Goldman Sachs, J.P. Morgan, Jefferies, BMO Capital Markets, Deutsche Bank, Barclays, TD Cowen, and others.
• Focus: Record AUM and strong organic growth driven by diversified inflows across ETFs, private markets, digital assets, and technology. Highlighted recent acquisitions (GIP, HPS, Preqin) and strategic initiatives in tokenization, retirement solutions, and whole-portfolio outsourcing.

Key Points from Martin Flanagan (President & COO):

1. Financial Performance:
   • Revenue: $6.5B (+25% YoY), driven by acquisitions (GIP, Preqin, HPS), organic base fee growth, and market beta.
   • Operating income: $2.6B (+23% YoY).
   • EPS: $11.55 (+1% YoY), impacted by higher share count from GIP/HPS deals.
   • Base fees/securities lending: $5B (+25% YoY); performance fees: $516M (+33%, ~$270M from HPS).
   • Technology services/subscription revenue: +28% YoY (Preqin added $65M; organic +12%).
   • ACV: +29% YoY (+13% organic).
   • Expenses: +26% YoY (compensation +33% from performance fees/incentives; G&A +18% from M&A/tech investments).
   • Adjusted operating margin: 44.6% (-120 bps YoY due to performance fees/compensation); ex-performance fees: 46.3% (+110 bps).
   • Core G&A: Low-teens increase expected for 2025 (from onboardings).
   • Share repurchases: $375M in Q3; at least $375M planned for Q4.
2. AUM and Flows:
   • Record AUM: $13.5T; $640B net inflows over 12 months.
   • Q3 net inflows: $205B (10% annualized organic base fee growth, highest since 2021).
   • iShares ETFs: $153B inflows (record quarter); core equity $53B, index fixed income $41B, digital assets $17B (IBIT/ETH top inflow products), active ETFs $21B.
   • Institutional active: $22B (led by $30B Dutch pension outsourcing; offset by $15B quantitative-to-index transfer).
   • Institutional index: -$14B outflows (including transfer).
   • Retail: $10B (active fixed income, liquid alts, apparel).
   • Private markets: $13B (private credit, multi-alternatives, infrastructure).
   • Cash management: $34B inflows; AUM crossed $1T (+45% in 3 years).
3. Strategic Highlights:
   • Acquisitions: Closed HPS ($225M base fees, $270M performance fees) and Elm Tree; $80B SMA with Citi Wealth; onboarded $30B pension mandate.
   • Private markets: GIP5 closed >$25B; AI Infrastructure Partners (AIP) attracting capital (partners: MGX, Microsoft, KIA, Temasek; advisors: NVIDIA, xAI, etc.).
   • Tokenization/Digital Assets: Exploring tokenizing iShares; BUIDL tokenized fund ~$3B AUM; managing $60B Circle reserves; envision digital wallets with seamless access to stocks/bonds/crypto.
   • Technology: First full-portfolio mandate with Aladdin, eFront, Preqin; ACV growth from demand.

Key Points from Larry Fink (CEO):

1. Growth Momentum:
   • 8% organic base fee growth over 12 months (exceeding 5%+ target); $1.4T inflows in 3 years, $2.3T in 5 years.
   • Diversified across asset classes/clients; top contributors: systematic, private credit, digital assets, cash, outsourcing.
   • Local/global client presence strengthened post-tariff announcements.
2. Acquisitions & Integration:
   • Full integration model (one BlackRock, shared Aladdin); equity consideration aligns incentives.
   • HPS: 800+ colleagues; strong in insurance/wealth; $370B private financing platform.
   • GIP: Significant fundraising/deployment; AIP for data centers ($1.5T needed in 5 years).
   • Preqin: Enhances private markets data/analytics.
3. Innovation & Future Opportunities:
   • ETFs: >$5T AUM; active/digital assets from ~$0 in 2023 to $180B+.
   • Tokenization: Bridge public-private/digital assets; reduce intermediaries/fees (e.g., real estate); enable young investors via digital wallets.
   • Retirement: LifePath Paycheck for lifetime income; push for private markets in 401(k)s (needs regulatory clarity); Preqin/Aladdin for benchmarking.
   • India JV (Jio BlackRock): Launched systematic active equity; tapping untapped saver market.

Q&A Highlights:

• Base Fee Growth Breadth: 10% diversified (iShares major AUM driver); revenue-adjusted: digital assets, active ETFs (DYNF $30B, BINC $13B), outsourcing, Appirio direct indexing, liquid alts. Higher fees on new assets (6-7x vs. 2023).
• Tokenization: Partner with exchanges/platforms; replicate traditional finance in digital wallets (stocks/bonds/crypto/commodities). Holdbacks: regulatory clarity, infrastructure. Unlocks: efficiency, reduced fees, broader access (e.g., young investors).
• Private Credit Trends: Strong credit quality; no widespread stress (idiosyncratic issues in syndicated/CLO markets). HPS: Rigorous underwriting; opportunities in volatility (wider spreads). Insurance/wealth momentum; HLEND/BDC steady inflows.
• ETF Share Classes: Positive for investors/advisors (choice, efficiency in fee-based models). Evaluate fund-by-fund (fit for creation/redemption, turnover, transparency). Expands reach in liquid active market.
• Private Credit in Insurance/Wealth: Customized for insurers ($700B+ general accounts); 20+ conversations for private ABF/high-grade. Wealth: Accelerate semi-liquid products (credit, multi-asset, REITs); target $60B+ retail alts by 2030.
• M&A Integration: Alpha-oriented but aligned with existing teams; full integration (not boutiques) for whole-portfolio wins. GIP (1-year anniversary) highly successful; HPS/Preqin progressing.
• Tokenization & Models: Partner-driven; open architecture for tokenized products. Model portfolios in digital wallets (public-private, instant settlement); reduces operational friction.
• Private Markets Flows/Fees: HPS: $225M base, $270M performance (slightly lower Q4 expected). Flows steady in credit (drawdowns/BDCs); infrastructure more episodic. Good run rate for credit.
• Retirement/Private Markets: Momentum from executive order/safe harbors; interagency coordination (DOL/SEC). Target dates ideal for privates (glide path IP, 30+ years track record). Preqin/Aladdin unlock for data/analytics/fiduciary diligence.