On 12 April 2024, BlackRock, Inc. (NYSE: BLK), the world’s largest asset manager by AUM, reported its financial results for the three months ended March 31, 2024.
According to the company’s earnings release, in Q1 2024, BlackRock showcased impressive growth figures, further solidifying its position as a global leader in asset management. The firm reported a record $10.5 trillion in assets under management (AUM), marking a significant increase of $1.4 trillion compared to the previous year. This growth in AUM is attributed to BlackRock’s consistent organic growth and favorable market movements.
During the quarter, BlackRock achieved $76 billion in long-term net inflows, demonstrating the strength and appeal of its diverse investment platform. These inflows were consistent across various asset classes and client types, underscoring the firm’s broad-based market appeal. Despite seasonal outflows from cash management, total net inflows still reached $57 billion.
Financially, BlackRock saw an 11% year-over-year increase in revenue. This boost was primarily driven by the positive impact of market performance on average AUM, alongside organic base fee growth and higher performance fees and technology services revenue. Operating income for the quarter also rose by 18%, with adjusted figures showing a 17% increase.
Earnings per share (EPS) saw a remarkable 37% increase compared to the same period last year, with adjusted EPS growing by 24%. These gains reflect higher nonoperating income and a lower effective tax rate during the quarter.
Additionally, BlackRock issued $3 billion in debt to partially fund its planned acquisition of Global Infrastructure Partners. The firm also continued to return value to shareholders, repurchasing $375 million in shares and increasing its quarterly cash dividend by 2% to $5.10 per share, further demonstrating its financial health and commitment to shareholder returns.
Per a recent statement mentioned in BlackRock’s Q1 2024 earnings release, the firm’s Chairman and CEO, Larry Fink, highlighted the trust and reliance clients place in BlackRock to maximize the potential of their portfolios, as evidenced by the industry-leading total net inflows of $236 billion over the past twelve months. This client engagement has fueled sustained growth in both asset management and technology services, with technology services revenue seeing a double-digit increase.
The CEO pointed out that BlackRock’s growth is driven by its continual innovation, investment, and a strong focus on client needs. He mentioned that By maintaining close connections and adapting to the evolving demands of clients, BlackRock has deepened its client relationships and is having more comprehensive discussions about portfolio management than ever before.
Looking ahead, Fink sees substantial growth opportunities in sectors such as infrastructure, technology, retirement, and comprehensive portfolio solutions. He believes that with a robust pipeline featuring some of the broadest offerings in the company’s history, BlackRock is well-positioned to meet complex market challenges and opportunities. Fink reiterated the company’s commitment to staying ahead of client needs, aiming to drive long-term growth for clients, shareholders, and employees alike.
Later that day, in an appearance on CNBC’s “Squawk on the Street,” the BlackRock CEO shared insights into the company’s latest earnings results, which surpassed expectations, and emphasized the critical role of investing in AI infrastructure for future economic growth and technological advancement.
Larry Fink began the discussion by addressing the uncertain economic backdrop against which BlackRock still managed to achieve strong earnings. He noted significant inflows into fixed income, which he attributed to the current high levels of uncertainty causing investors to opt for safer investments. Interestingly, there has been a record $9 trillion moving into money market funds, indicating a cautious stance from investors globally. However, Fink pointed out that those fully invested in the equity markets would have seen a 25% return, underscoring the long-term value of American-style capitalism and market-driven returns.
Fink stressed the transformative potential of Artificial Intelligence (AI) but highlighted that such transformation cannot occur without substantial investments in infrastructure. AI technology requires enormous amounts of energy, and without a significant increase in power generation, adopting AI on a large scale would be infeasible. He predicted a critical need to develop gigawatts of electricity capacity, not just megawatts, to support this technological evolution.
Fink elaborated on the investment opportunities arising from the necessity to expand electricity and power infrastructure. He mentioned that these developments are essential not only to support the demands of AI but also to facilitate the ongoing global efforts toward decarbonization. This dual need, he believes, presents substantial economic opportunities, likely amounting to trillions of dollars in new investments.
The BlackRock CEO also shared that this push towards enhancing AI capabilities and infrastructure is not limited to the United States. He has been in discussions with political leaders from various countries who are equally eager to develop data centers and AI technology, alongside efforts to reduce carbon emissions. This global drive underscores a robust international commitment to advancing technology and sustainability, which Fink believes will continue to stimulate economic growth worldwide.
Reflecting on BlackRock’s operations, Fink highlighted the resilience and strength of the company’s business model. With a record $10.5 trillion in managed assets, of which more than half are retirement funds, BlackRock has seen positive inflows across its portfolio worldwide. He finds this notable given the broader industry trend of outflows, particularly from active investments. Fink was particularly optimistic about the company’s future, citing the strongest pipeline of incoming funds he has seen in a long time, indicating potential acceleration in business activities.
In the firm’s Q1 2024 Earnings Conference Call, the BlackRock CEO highlighted the remarkable success of the firm’s new Bitcoin fund (IBIT):
“Our Bitcoin fund, which was launched in January was the fastest growing ETF in history and already has nearly $20 billion in AUM.“
He also mentioned that BlackRock announced last month the launch of its first tokenized fund:
“To that end, last month, we announced the launch of our first tokenized fund as well as our minority investment in Securitize, a blockchain-based tokenization platform. This builds on our existing digital asset strategy and we’ll continue to innovate in new products and wrappers all with the aim of providing greater access and customization to each and every of our clients.“
Featured Image via Pixabay
