Q3 2024 BlackRock Inc Earnings Call

Speaker Change: Please stand by for about to begin.

Jennifer: Dean is Jennifer, and I will be your conference facilitator today. At this time, I'd like to welcome everyone to BlackRock Inc. 3rd Quarter 2024 Earnings Teleconference.

Jennifer: Good morning, my name is Jennifer and I will be your conference facilitator today. At this time I would like to welcome everyone to the BlackRock Incorporated 3rd quarter 2024 earnings teleconference.

Unknown Executive: Our host for today's call will be Chairman and Chief Executive Officer Laurence Fink, Chief Financial Officer Martin S. Small, President Robert S. Kapito, and General Counsel Christopher J. Meade. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer. If you'd like to ask a question during this time, simply press star, then the number one under the telephone keypad. If you'd like to withdraw your question, please press star two.

Jennifer: Our host for today's call will be Chairman and Chief Executive Officer, Laurence D. Zink, Chief Financial Officer, Martin S. Small, President Robert S. Capito, and General Counsel, Christopher Jay Meade.

Jennifer: All lines have been placed on mute to prevent any background noise.

Jennifer: After the speakers are marked there, we'll be a question and answer period. If you'd like to ask a question during this time, simply press star, then the number one, on your telephone, keep had. If you'd like to withdraw your question, please press star 2. Thank you, Mr. Meade, you may begin your conference.

Christopher Meade: Thank you, Mr. Meade; you may begin your conference. Good morning, everyone. I'm Chris Meade, the General Counsel of BlackRock. Before we begin, I'd like to remind you that during the course of this call, we may make a number of forward-looking statements. We call your attention to the fact that BlackRock's actual results may, of course, differ from these statements. As you know, BlackRock has filed reports such as ESEC, which lists some of the factors that may cause the results of BlackRock to differ materially from what we say today. BlackRock assumes no duty and does not undertake to update any forward-looking statements.

Jennifer: Good morning, everyone. I'm Chris Meade, the General Counsel of BlackRock.

Jennifer: Before we begin, I'd like to remind you that during the course of this call, we may make a number of forward-looking statements.

Jennifer: We call your attention to the fact that BlackRock's actual results may of course differ from these statements.

Jennifer: As you know, BlackRock has filed reports such as ECC, which lists some of the factors that may cause the results of BlackRock to differ materially from what we say today.

Jennifer: BlackRock assumes no duty and does not undertake to update any forward-looking statements.

Martin Small: So, with that, I'll turn it over to Marching. Thanks, Chris. Good morning, everyone.

Speaker Change: So with that, I'll turn it over to Martin

Martin Small: It's my pleasure to present results for the third quarter of 2024. Before I turn it over to Larry, I'll review our financial performance and business results. Our earnings release discloses both GAAP and as adjusted financial results. I'll be focusing primarily on our as adjusted results. On our previous earnings call, we spoke to improving client sentiment and steadily improving organic growth. We sounded optimism about our growth trajectory in the second half of the year, and in the third quarter, organic growth surged, and BlackRock delivered some of the best financial results in our history. We generated 221 billion of net inflows; our highest net flows quarter ever.

marartin: Thanks Chris. Good morning everyone. It's my pleasure to present results for the third quarter of 2024.

marartin: Before I turn it over to Larry, I'll review our financial performance and business results. Our earnings release discloses both gap and as adjusted financial results, I'll be focusing primarily on our as adjusted results.

marartin: On our previous earnings call, we spoke to improving client sentiment and steadily improving organic growth. We sounded optimism about our growth trajectory in the second half of the year, and in the third quarter organic growth surge, and BlackRock delivered some of the best financial results in our history.

marartin: We generated 221 billion of net inflows, our highest net flows quarter ever. We delivered record levels of quarterly revenue and operating income.

Martin Small: We delivered record levels of quarterly revenue and operating income. We expanded our margin by 350 basis points year over year. We generated 5% annualized organic base fee growth, our highest quarter in three years. Organic growth accelerating as we execute on a strong pipeline and clients turn to BlackRock to move in size into public and private markets. Our structural growers, eye shares, whole portfolio outsourcing in Aladdin, the structural growers all delivered strong third quarter growth and are poised to accelerate into year end. Eye shares, eye shares leads the industry in global flows with approximately 250 billion through the third quarter and historically sees upwards of 40% of its total annual flows in Q4.

marartin: We expanded our margin by 350 basis points year over year. We generated 5% annualized organic base speed growth, our highest quarter in three years.

marartin: Organic growth accelerating as we execute on a strong pipeline and clients turn to blackrock to move in size into public and private markets.

marartin: Our structural growers, I shares whole portfolio outsourcing in the Latin, the structural growers all delivered strong third quarter growth and are poised to accelerate into year-end. I shares leads to the industry in global flows with approximately 250 billion through the third quarter and historically sees upwards of 40% of its total annual flows in Q4.

Martin Small: Fixed income ETFs built chiefly on organic growth, eye shares fixed income ETF assets now stand at over one trillion, nearly 40% higher than at year end 2021. And Aladdin, Aladdin logged 15% ACV growth consistent with our long-term low-to-mid teams target, with excellent momentum and key wins with growing clients. Finance. Finally, fixed income, fixed income delivered across the platform with over 60 billion of net inflows. We believe a continued path of central bank normalization will support sustained inflows across bond funds, ETFs, and institutional accounts. Fixed income remains a compelling organic growth opportunity for BlackRock. Private markets are a strategic priority for BlackRock, delivering world-class private markets capabilities to more deeply serve clients across the whole portfolio.

marartin: Fixing Cometiafs built chiefly on Organic Growth, ice your fixing Cometiaf assets now stand at over one trillion, nearly 40% higher than at year end 2021.

marartin: and Aladdin Logs 15% ACV growth consistent with our long-term load-a-mid teams target with excellent momentum and key wins with growing clients.

marartin: Finally, fixed income, fixed income delivered across the platform with over 60 billion of net inflows.

marartin: We believe a continued path of central bank normalization will support sustained in flows across bond funds, ETFs and institutional accounts. Fixed income remains a compelling organic growth opportunity for BlackRock.

marartin: Private markets are a strategic priority for BlackRock, delivering world-class private markets capabilities to more deeply serve clients across the whole portfolio.

Martin Small: On October 1st, we closed on our acquisition of Global Infrastructure Partners. The combination triples infrastructure AUM and doubles private markets run rate management fees. We're already seeing the power of BlackRock and GIP together. Our partnership with Microsoft and MGX, it aims to realize the enormous investment potential of infrastructure to support AI innovation, and it's just the first proof point of the growth synergies we can create together. We're bringing private markets to wealth clients. BlackRock manages more than 300 billion of assets across model portfolios and separately managed accounts for wealth managers. These portfolios would benefit from increased exposure and more efficient access to the private markets.

marartin: On October 1, we closed on our acquisition of global infrastructure partners.

marartin: The combination triples infrastructure a UM and doubles private markets run rate management fees.

marartin: We're already seeing the power of BlackRock and GIP together.

marartin: Our partnership with Microsoft and MGX, it aims to realize the enormous investment potential of infrastructure to support AI innovation, and it's just the first proof point of the growth synergies we can create together.

marartin: We're bringing private markets to wealth clients. BlackRock manages more than 300 billion of assets across model portfolios and separately manage accounts for wealth managers.

marartin: These portfolios would benefit from increased exposure and more efficient access to the private markets.

Martin Small: We believe the model portfolio solution we're building with Partners Group will revolutionize access to private markets for wealth managers and improve portfolio outcomes for millions of households on an even bigger scale than what's been done with evergreen funds. And as long observed in markets, information about capital has become almost as important as capital itself.

marartin: We believe the model portfolio solution we're building with partners group will revolutionize access to private markets for wealth managers and improve portfolio outcomes from millions of households on an even bigger scale than what's been done with evergreen funds.

marartin: Have a good day.

marartin: and as long observed in markets, information about capital has become almost as important as capital itself. Our planned acquisition of frequent is accelerating the exciting private market's data and analytics journey for Blackrock and our clients.

Martin Small: Our planned acquisition of Preqin is accelerating this exciting private markets data and analytics journey for BlackRock and our clients. Our focus remains on delivering BlackRock's platform to clients through access to unique opportunities, expertise, and world-class client service. We're also moving swiftly and aggressively to position our firm to continue to achieve or exceed our 5% organic base-be-growth target over the long term. We're building our mix towards higher secular growth areas like private markets, technology, whole portfolio mandates, and model portfolios. We believe this will translate to higher and more durable organic growth, greater diversification, and resilience in revenue and earnings through market cycles.

marartin: Our focus remains on delivering BlackRock's platform to clients through access to unique opportunities, expertise, and world-class client service. We're also moving swiftly and aggressively to position our firm to continue to achieve or exceed our 5% organic base-view growth target over the long-term.

marartin: We're building our mix towards higher secular growth areas, like private markets, technology, whole portfolio mandates and model portfolios.

marartin: We believe this will translate to higher and more durable organic growth, greater diversification and resilience and revenue and earnings through market cycles.

Martin Small: Successful execution of these goals should also result in multiple expansion for our shareholders. We ended the quarter with AUM near 11.5 trillion. 11.5 trillion units of trust; clients building with BlackRock. Our business tends to be seasonally strongest in the fourth quarter, and we maintain line of sight into a broad global opportunity set of new asset management and technology mandates that should fuel organic growth. BlackRock generated total net inflows of 221 billion in the third quarter, representing 8% annualized organic asset growth. Third quarter revenue of 5.2 billion was 15% higher year over year, driven by 5% organic base-be-growth, the impact of market movements on average AUM over the last 12 months, and alpha generation in our liquid alternative strategies.

marartin: Successful execution of these goals should also result in multiple expansion for our shareholders.

marartin: We ended the quarter with AUM-11.5 trillion.

marartin: 11.5 trillion units of trust, clients building with BlackRock. Our business tends to be seasonally strongest in the fourth quarter, and we maintain line of sight into a broad, global opportunity set of new asset management and technology mandates that should fuel organic growth.

marartin: BlackRock generated total net inflows of 221 billion in the third quarter, representing 8% annualized organic asset growth.

marartin: 3rd quarter revenue of 5.2 billion was 15% higher year over year, driven by 5% organic face speed growth, the impact of market movements on average AUM over the last 12 months, and alpha generation in our liquid alternative strategies.

Martin Small: Operating income of 2.1 billion was up 26% year over year. Earnings per share of $11.46 increased 5%, reflecting a higher tax rate compared to a year ago. No. Non-operating results for the quarter included 108 million of net investment gains driven primarily by gains linked to a minority investment and unhedged seed capital investments. Our as-adjusted tax rate for the third quarter was 26%. The prior year quarter included 250 million of discrete tax benefits, while the third quarter of 2024 was impacted by 22 million of discrete expense. We continue to estimate that 25% is a reasonable projected tax run rate for the remainder of 2024.

marartin: Operating income of $2.1 billion was up 26% year over year, earnings per share of $11.46 increased 5% reflecting a higher tax rate compared to a year ago.

marartin: Non-operating results for the quarter included 108 million of net investment gains driven primarily by games linked to a minority investment and unhead seed capital investments.

marartin: Our Azadjusted Tax Rate for the third quarter was 26%.

marartin: The prior year quarter included 250 million of discrete tax benefits, while the third quarter of 2024 was impacted by 22 million of discrete expense.

marartin: We continue to estimate that 25% is a reasonable projected tax run rate for the remainder of 2024. The actual effective tax rate may differ because of non-recurring or discrete items or potential changes in tax legislation.

Martin Small: The actual effect of tax rate may differ because of non-recurring or discrete items, or potential changes in tax legislation. Third quarter base fee and securities lending revenue of 4 billion increased 9% year-over-year, reflecting the positive impact of market beta and foreign exchange movements on average AUM and organic base fee growth, partially offset by lower securities lending revenue. Sequentially, base fee and securities lending revenue was up 4%. On an equivalent day count basis, our annualized effective fee rate was approximately 410 of a basis point lower compared to the second quarter. This was due to the relative outperformance of lower fee U.S.

marartin: 3rd quarter base fee and securities lending revenue of 4 billion increased 9% year over year, reflecting the positive impact of market beta and foreign exchange movements on average AUM and organic base fee growth, partially offset by lower securities lending revenue.

marartin: Sequentially, based gain security's lending revenue was up 4%. On an equivalent day count basis, our annualized effective D rate was approximately 410 sub-ab basis point lower compared to the second quarter.

Martin Small: equity markets and client preferences for lower fee U.S. exposures and lower securities lending. The closing of GIP added 116 billion of client AUM and 70 billion of fee-paying AUM on October 1st. We expect GIP to add approximately 250 million of management fees in the fourth quarter of 2024. The GIP portfolios contribute competitive private markets fee levels that are typically over 100 basis points. They add primarily long-dated, non-redeemable assets to BlackRock's overall business, which further diversify our revenue and earnings mix. We expect these private market assets to positively impact BlackRock's overall effective fee rate by one half to one full basis point.

marartin: This was due to the relative outperformance of lower-PUS equity markets and client preferences for lower-PUS exposures and lower securities lending.

marartin: The closing of GIP added 116 Billion of Plan AUM and 70 Billion of Feetang AUM on October 1st.

marartin: We expect GIP to add approximately 250 million of management fees in the fourth quarter of 2024.

marartin: The GIP portfolios contribute competitive private-market steel levels that are typically over 100 basis points.

marartin: They add primarily long-dated, non-redeemable assets to BlackRock's overall business, which further diversify our revenue and earnings mix. We expect these private market assets to positively impact BlackRock's overall effective fee rate by one half to one full basis point.

Martin Small: Performance fees of 388 million increased significantly from a year ago, primarily reflecting strong alpha generation over the last 12 months from a hedge fund with an annual lock-in in the third quarter. Quarterly technology services revenue was down 1% compared to a year ago due to the prior year quarter revenue impact of eFront on-premises license renewals for several large clients. Excluding this impact, technology services revenue would have increased approximately 9% year over year. Sequentially, technology services revenue was up 2%, reflecting successful client go-lives. Annual contract value or ACV increased 15% year over year, driven by sustained demand for our full range of Aladdin technology offerings.

marartin: Performance fees of 388 million increased significantly from a year ago, primarily reflecting strong alpha generation over the last 12 months from a hedge fund with an annual lock in the third quarter.

marartin: Orderly Technology Services revenue was down 1% compared to a year ago, due to the prior year-quarter revenue impact of e-front on premises license renewals for several large clients.

marartin: Excluding this impact, Technology Services revenue would have increased approximately 9% year over year.

marartin: The Councially Technology Services Revenue was up 2% reflecting successful client go lives.

marartin: Annual Contract Value or ACV increased 15% year over year, driven by sustained demand for our full range of Aladdin technology offerings.

Martin Small: In the third quarter, a large US asset manager selected Aladdin to unify its investment management technology platform across public market asset classes. Our ACV results include the impact of this client announcement and a number of other new client mandates. Our results highlight the power of Aladdin as a unifying technology. Aladdin provides a highly scalable operating backbone to clients that's tailored to meter needs. It enables new capabilities to drive top line business growth for clients, while also unlocking scale and efficiency. Agency. Clients recognize a direct positive impact to the bottom line. Total expense was 8% higher year-over-year, primarily driven by higher incentive compensation, GNA, and sales asset and account expense.

marartin: In the third quarter, a large US asset manager selected Aladdin to unify its investment management technology platform across public market asset classes. Our ACV results include the impact of this client announcement and a number of other new client mandates.

marartin: Our results highlight the power of a Latin as a unifying technology.

marartin: Aladdin provides a highly scalable operating backbone to clients that's tailored to meet their needs. It enables new capabilities to drive top-line business growth for clients, while also unlocking scale and efficiency.

marartin: Clients recognize a direct positive impact to the bottom line.

marartin: Total expense was 8% higher year over year, primarily driven by higher incentive compensation, GNA, and sales asset and account expense.

Martin Small: Employee compensation and benefit expense was up 10% year-over-year, reflecting higher incentive compensation as a result of higher performance fees and operating income. GNA expense was up 8% year-over-year, primarily due to the timing of technology spend last year and higher professional services expense. Sales asset and account expense increased 6% compared to a year ago, driven by higher direct fund expense. Direct fund expense increased 7% year-over-year and 6% sequentially, primarily as a result of higher average ETF AUM. Our as adjusted operating margin of 45.8% was up 350 basis points from a year ago, reflecting the positive impact of markets on revenue, significantly higher performance fees, and organic base fee growth.

marartin: Employee compensation and benefit expense was up 10% year over year reflecting higher incentive compensation as a result of higher performance fees and operating income.

marartin: GNA expense was up 8% year over year, primarily due to the timing of technology spend last year and higher professional services expense.

marartin: Sales asset and account expense increased 6% compared to a year ago, driven by higher direct fund expense.

marartin: Direct Fund expense increased 7% year over year and 6% sequentially, primarily as a result of higher average ETF AUM.

marartin: Our as-adjusted operating margin of 45.8% was up 350 basis points from a year ago, reflecting the positive impact of markets on revenue, significantly higher performance fees, and organic base fee growth.

Martin Small: As markets improve, we've executed on our financial rubric, aligning controllable expense and organic growth, adding more resilience to our operating margin through greater variableization of expenses and driving fixed cost scale. This approach is yielding profitable growth and operating leverage. In line with our guidance in January, and excluding the impact of global infrastructure partners, frequent, and related transaction costs, at present we would expect our headcount to be broadly flat in 2024, and we would also expect a low to mid-single digit percentage increase in 2024 core GNA expense. In line with this outlook, we would also expect Q4 core GNA to reflect execution of planned technology investment spend at levels more consistent with Q3 and seasonal increases in marketing spend.

marartin: As markets improve, we've executed on our financial rubric, a lining-control will expense and organic growth, adding more resilience to our operating margins through greater variableization of expenses and driving fixed cost scale. This approach is yielding profitable growth and operating leverage.

marartin: in line with our guidance in January.

marartin: and excluding the impact of global infrastructure partners, frequent, and related transaction costs.

marartin: At present, we would expect our head count to be broadly flat in 2024, and we would also expect a low to mid-single digit percentage increase in 2024 core GNA expense.

marartin: In line with this outlook, we would also expect Q4 Core GNA to reflect execution of planned technology investment spend at levels more consistent with Q3 and seasonal increases in marketing spend.

Martin Small: We welcomed approximately 400 new colleagues to Black following the close of the GIP transaction, inclusive of the GIP acquisition. Impact at present, we'd expect full-year core GNA expense growth to be closer to the high end of the previously communicated range of a low to mid-single digit percentage increase. Our capital management strategy remains first to invest in our business to either scale strategic growth initiatives or drive operational efficiency, and then to return excess cash to shareholders through a combination of dividends and share repurchases. At times, we may make inorganic investments where we see an opportunity to accelerate growth and support our strategic initiatives.

marartin: We welcome to approximately 400 new colleagues to BlackRock following the close of the GIP Transaction.

marartin: Inclusive of the GIP acquisition impact at present, we'd expect full-year corgi and a expense growth to be closer to the high end of the previously communicated range of a low to mid-single digit percentage increase.

marartin: Our Capital Management Strategy remains first to invest in our business, to either scale strategic growth initiatives or drive operational efficiency, and then to return excess cash to shareholders through a combination of dividends and share repurchases.

marartin: At times, we may make inorganic investments where we see an opportunity to accelerate growth and support our strategic initiatives.

Martin Small: At the closing of the GIP transaction, we issued and delivered approximately 6.9 million shares of BlackRock common stock, subject to a two-year lockup period. Approximately 30% of the total consideration for the transaction, or 5 million shares, is deferred and is expected to be issued in approximately five years based on achievement of certain performance milestones. We repurchased 375 million worth of common shares in the third quarter. At present, based on our capital spending plans for the year and subject to market and other conditions, we still anticipate repurchasing at least 375 million of shares in the fourth quarter, consistent with our previous guide.

marartin: At the closing of the GIP Transaction, we issued and delivered approximately 6.9 million shares of BlackRock commonstop subject to a two-year lock-up period.

marartin: Approximately 30% of the total consideration for the transaction, or 5 million shares, is deferred and is expected to be issued in approximately five years, based on achievement of certain performance milestones.

marartin: We repurchased 375 million worth of common chairs in the third quarter. At present, based on our capital spending plans for the year, and subject to market and other conditions, we still anticipate repurchasing at least 375 million of shares in the fourth quarter, consistent with our previous guidance.

Martin Small: Williams. At present, we expect our planned acquisition of Prequem to close around year-end 2024, subject to regulatory approvals and other customary closing conditions. BlackRock's third-quarter net inflows of $221 billion were well-diversified and positive across client type, product type, active in index, and regions. Momentum in our ETS continued to build with $97 billion of net inflows in the third quarter. Fixed income and core equity led net inflows of $48 billion and $32 billion, respectively. Precision ETS had $20 billion net inflows as clients efficiently adjusted tactical portfolio allocations, would tilts towards U.S. and international development market equities.

marartin: At present, we expect our planned acquisition of prequim to close around year-end 2024, subject to regulatory approvals and other customary closing conditions.

marartin: BlackRock's third quarter net inflows of 221 billion will well-diversified and positive across client type, product type, active in index and regions.

marartin: Momentum in our ETFs continued to build with 97 billion of net inflows from the third quarter. Fixed income and core equity led net inflows of 48 billion and 32 billion respectively.

marartin: For Sision ETFs, had 20 billion net inflows as clients efficiently adjusted tactical portfolio allocations, with tilt towards U.S. and international development market equities.

Martin Small: BlackRock's cryptocurrency ETS continued to grow and added $5 billion of net inflows in the third quarter. Institutional clients continued to consolidate more of their portfolios with BlackRock, and our institutional franchise raised $56 billion of net inflows in the third quarter. Our institutional active franchise sought $27 billion net inflows, primarily in fixed income and multi-asset. Flows benefited from the funding of several large insurance and pension outsourcing mandates. We also saw positive flows into systematic equity, life-path targeted offerings, and private market strategies. Institutional index net inflows of $29 billion reflected large mandate wins and client-specific asset allocation and rebalancing decisions.

marartin: BlackRock's cryptocurrency EGT's continue to grow and add its 5 billion of net inflows in the third quarter.

marartin: Institutional clients continue to consolidate more of their portfolios with BlackRock and our institutional franchise raised 56 billion of net inflows in the third quarter.

marartin: Our institutional active franchise, so 27 billion net inflows, primarily in fixed income and multi-asset.

marartin: Flows benefited from the funding of several large insurance and pension outsourcing mandates. We also saw positive flows into systematic equity, life path target data offerings, and private market strategies.

marartin: Institutional index net inflows of $29 billion reflected large mandate wins and client-specific acid allocation and rebalancing decisions.

Martin Small: Retail net inflows of $7 billion were led by continued strength and a period and inflows into U.S. active fixed income mutual funds. Fixed income flows were positive across our municipal bond, high yield, unconstrained, and total return franchises. Demand for our liquid alternative strategies continued in the third quarter with $1.5 billion of net inflows driven by infrastructure and private credit. Net inflows also reflected the impact of successful realizations of over $3 billion, primarily from private equity and infrastructure strategies. Finally, cash management saw net inflows of $61 billion in the quarter, driven by both U.S. government and international prime funds and included multiple large new client mandates.

marartin: Retailment inflows of 7 billion were led by continued strength in a period and inflows into US active fixed income mutual funds.

marartin: The existing confluence were positive across our municipal bonds, high yields, unconstrained, and total return franchises.

marartin: Demand for our illiquid alternative strategies continued in the third quarter, with 1.5 billion of net inflows driven by infrastructure and private credit. Net inflows also reflected the impact of successful realizations of over 3 billion, primarily from private equity and infrastructure strategies.

marartin: Finally, cash management saw net inflows of 61 billion in the quarter, driven by both US government and international prime funds, and included multiple large new client mandates.

Martin Small: Clients recognized the benefits of our scaled and integrated cash offerings, and this is contributing to sizeable inflows of BlackRock.

marartin: Clients recognize the benefits of our scale and integrated cash offerings, and this is contributing to sizable inflows of BlackRock.

Martin Small: BlackRock delivered one of the strongest quarterly results in our history, and we're in an excellent position to grow with our clients moving head into the end of the year and beyond. BlackRock's historically delivered outsized organic growth and periods of investor re-risking around election cycles and changes in central bank policy. The fourth quarter has also been historically strong for inflows, so we're staying connected with our clients. We see significant opportunity to deepen relationships and to grow our share. As clients increasingly turned to BlackRock, we believe this will result in sustained market-leading organic growth, differentiated operating leverage, and earnings, and multiple expansion over time.

marartin: BlackRock delivered one of the strongest quarterly results in our history, and we're in an excellent position to grow with our clients, moving head into the end of the year and beyond.

marartin: BlackRock's historically delivered, outsides organic growth and periods of investor re-riscing around election cycles and changes in central bank policy.

marartin: The fourth quarter has also been historically strong for inflows, so we're staying connected with our clients.

marartin: We see significant opportunities to deepen relationships and to grow our share.

marartin: As clients increasingly turn to BlackRock, we believe this will result in sustained, market leading organic growth, differentiated operating leverage and earnings and multiple expansion over time.

Laurence Fink: So that will turn over to Larry. Thank you, Martin.

Laurence Fink: Good morning, everyone. Hopefully everyone is at a good summer and a really fun fall. Last week, we happened across two milestones on the same day. We celebrated the 25th anniversary of BlackRock becoming a public company. University. And we close our acquisition of Global Infrastructure Partners. We are incredibly excited to officially welcome our GIP colleagues to the BlackRock family. We've enjoyed great connectivity with Bio and Raj and all the GIP founding partners. And we look forward to Bio joining our Board of Directors this quarter. Reflecting on these milestones and those came before, I believe our relationships with clients, with corporations, and with other partners are the strongest they've ever been.

Speaker Change: So then, we'll turn it over to Larry.

Larry: Thank you Martin, good morning everyone, hopefully everyone is at a good summer and it's really fun fall.

Larry: Last week we happened across two milestones on the same day. We celebrated the 25th anniversary of BlackRock, becoming a public company.

Larry: and we close our acquisition of global infrastructure partners.

Larry: We are incredibly excited to officially welcome our GIP colleagues to the Black Rock family.

Larry: We've enjoyed great connectivity with Bio-Enrage and all the GIP founding partners. And we look forward to bio-joining our Board of Directors this quarter.

Larry: reflecting on these milestones and those came before I believe our relationships with clients with corporations and with other partners of the strongest they've ever been.

Laurence Fink: The long-term connectors and our relationships span many years as holders of company, debt, and equity. Our position as a consistent long-term investor differentiates us from opportunistic capital. We are not transactional. We are effectively a perpetual capital, particularly through our index holdings. Those long-standing relationships underpinned by long-term ownership positions are unlocking differentiated partnerships, especially as we expand into private markets. We find that BlackRock, based on our belief, is the long-term growth of the capital markets. And the importance of being invested in them. BlackHark has grown as a capital market to become a bigger and bigger part of the global economy.

Larry: The long-term connectors and our relationships spend many years as holders of company dead and equity.

Larry: Our position as a consistent long-term investor differentiates us from opportunistic capital. We are not transactional.

Larry: We are effectively...

Larry: A perpetual capital, particularly if you are indexed oldings.

Larry: Those long-standing relationships, underpin by long-term ownership positions, are unlocking differentiated partnerships, especially as we expand into private markets.

Larry: We find at Blackfock based on our belief in the long-term growth of the capital markets and the importance of being invested in them.

Larry: Blackhark has grown as a capital market to become a bigger and bigger part of this global economy.

Laurence Douglas Fink: And my conversations with clients and policymakers around the world, I hear how more and more countries recognize the power of American capital markets and would like to build their own type of capital markets. Record government deficits and tighter bank lending means people, companies, and countries will increasingly turn to markets to finance their retirements, their business, and their economies. The growth and prosperity generating power of the capital markets will remain a dominant economic trend in the coming decades. And BlackRock will be an important player in that growth. The opportunities ahead as we have never been better than we've seen now.

Larry: In my conversations with clients and policymakers around the world, I hear how more and more countries recognize the power of American capital markets.

Larry: and would like to build their own type of cattle markets.

Larry: Record government deficits and tighter bank lending means people, companies and countries will increasingly turn to markets to finance their retirement, their business and their economies.

Larry: The growth and prosperity generating power of the cattle markets will remain a dominant economic trend in the coming decades.

Larry: and Black Rock will be an important player in that growth.

Larry: The opportunity to head as we have never been better than we've seen now.

Laurence Fink: We see this through unique deals and partnerships with BlackRock at the center and are in accelerating high in activity. 2024 net inflows have already surpassed the full year net inflows of both 2022 and 2023. The asset means we manage on behalf of our clients reached a new high, ending the third quarter of 11.5 trillion. AUM has grown 2.4 trillion or 26% over the last 12 months. And that time, clients have entrusted BlackRock with 456 billion of net assets, including a record 221 billion in the third quarter. Third quarter net inflows and corresponding organic basic growth of 5% represents our highest level in the last three years.

Larry: We see this through unique deals and partnerships with BlackRock at the center and are an accelerating high-enactivity.

Larry: 2024 net inflows have already surpassed the full year net inflows of both 2022 and 2022.

Larry: Yes, it means we manage on behalf of our clients reach the new high, ending the third quarter 11 and a half trillion.

Larry: AUM has grown 2.4 trillion or 26%.

Larry: Over the last 12 months.

Larry: And that time, clients have entrusted Black Cross with 456 billion of net assets, including a record 221 billion in the third quarter.

Larry: Third quarter net implos and corresponding organic base seed growth of 5% represents our highest level in the last three years. And 15% technology services ACV growth is also an afresh high.

Laurence Fink: And 15% technology services ACV growth is also at a fresh high. And our earnings calls earlier this year. We discussed with our shareholders our visibility to a strong pipeline. We shared how this would lead to accelerating more organic growth in the second half. And we're seeing that in our results today. We continue to grow our pipeline across the breadth of the Latin, investment management mandates, and we expect momentum to further build into year-end in 2025. We are effectively leveraging our technology, our scale, and our global footprint to deliver profitable growth. Quite early revenues and operating income both set new records, up 15 and 26 percent, respectively, year over year.

Larry: On our earnings calls, earlier this year, we discussed with our shareholders our visibility to a strong pipeline.

Larry: We shared how this would lead to accelerated organic growth in the second half.

Larry: For us to see that in our results today.

Larry: We continue to grow our pipeline across the breath of Aladdin, investment management mandates, and we expect momentum to further build into year end in 2025.

Larry: We are effectively leveraging our technology, our scale, and our global footprint to deliver profitable growth.

Larry: Court-only revenues and operating income both set new records, up 15 and 26% respectively year over year.

Laurence Fink: And our 45.8 percent operating margin is up 350 basis points. Importantly, organic growth has been, has great breadth and has diversified across BlackRock. For both the third quarter and the first nine months of 2024, flows were positive and active in index across all asset classes, across all client types, and across all regions. Actives have contributed 28 billion in the third quarter, including positive results and active equities. ETFs remain a secular growth driver, adding $27 billion in net inflows in the quarter and $248 billion year to date. We're seeing a broadening of ETF at adaptation globally, leading to increased levels of utilization, which we believe will only continue.

Larry: and our 45.8% operating margin is up 350 basis points.

Larry: Importantly, organic growth has been great breath and is diversified across BlackRock.

Larry: For both the third quarter and the first nine months to 2024, or flows repetitive and active in the index across all asset classes, across all client types, and across all regions.

Larry: Actives have contributed 28 billion in the third quarter, including positive results in active equities.

Larry: HF remain a secular growth driver, adding $27 billion in the quarter and $248 billion year to date.

Larry: We're seeing a broadening of ETF adaptation globally, leading to increased levels of utilization which we believe will only continue.

Laurence Fink: A number of significant whole portfolio institutional mandates funded in the quarter, and we continue to be chosen for large global solutions. Last month we were selected as a fiduciary manager for a $30 billion Dutch pension fund with more than 30,000 members. Our performance, our technology, and our in-depth knowledge of local investment nuances increasingly make us the preferred partner for institutional clients. Many investors have large cash holdings. Money market industry assets are hitting new records in the quarter, including BlackRock's own cash position, which had $61 billion in net inflows. But investors will have to re-risk to meet their long-term return needs, and we see great opportunities in investors across a number of structural trends continue to build this.

Larry: A number of significant report folio institutional mandate funded in the quarter and we considered to be chosen for large global solutions.

Larry: Last month, we were selected as a fiduciary manager for a $30 billion Dutch pension fund, with more than 30,000 members.

Larry: Our performance, our technology, our in-depth knowledge of local investment nuances increasingly make us the preferred partner for institutional bias.

Larry: Many investors have large cash holdings, money market industry assets are hitting new records in the quarter, including Black Rock's own cash position which had $61 billion in that inflows.

Larry: but investors will have to re-risk to meet their long-term return needs and we see great opportunities in investors across the number of structural trends continue to build this.

Laurence Fink: These include rapid advancements in technology and AI, and rewiring of globalization and the unprecedented need for new infrastructure. BlackRock is an exceptionally well-positioned that $9 trillion of money market funds across the industry as it makes its way to public and private markets. We are connecting our clients to opportunities and working with them in an integrated whole portfolio lens to help them deploy their capital. We know our strategies are ambitious, and our strategy is working. BlackRock has become in the premier long-term capital partner across public and private markets. Private markets are becoming increasingly important in the financing of the economy.

Larry: These include rapid advancements in technology and AI and rewiring of globalization and the unprecedented need for new infrastructure.

Larry: BlackRock is exceptionally well positioned in front of that nine trillion dollars of money market funds across the industry as it makes its way to public and private markets.

Larry: We are connecting our clients to opportunities in working with them in integrated, whole portfolio lens to help them deploy their capital.

Larry: We know our strategy is ambitious and our strategy is working.

Larry: Black Rockers become in the premier long-term capital partner at Boston Public and Private Markets.

Larry: Private Markets are becoming increasingly important in the financing of the economy. Growing public deficits are only going to expand the role of private markets and powering economic growth.

Laurence Fink: Growing public deficits are only going to expand the role of private markets and powering economic growth. These dynamics are reshaping the landscape of how our clients invest and how they allocate capital within their portfolio. Rose.

Larry: These dynamics are reshaping the landscape of how our clients invest and how they allocate capital within their portfolios.

Laurence Fink: Throughout our history, we have never shied away from making big bets to better serve our clients. As we did when we created Aladdin, unlocking new markets through ETS and pioneered whole portfolio advisory process, active and indexed, we made coordinated investments to bring private market opportunities to our clients in a better way. Flying enthusiasm for the planned integration of GIP and the closing of prequit has exceeded our own high expectations. Our clients are excited to see how GIP and prequit capabilities are amplified by being part of BlackRock. The private markets and the client's allocation to them will continue to grow.

Larry: Throughout our history, we have never shied away from making big bets to better serve our clients.

Larry: As we did when we created Aladdin, unlocking new markets through ETS, and pioneered whole portfolio advisory process active and indexed, we made coordinated investments to being private market opportunities to our clients in a better way.

Larry: by an enthusiasm for the planned integration of GIP and the closing of frequent has exceeded our own high expectations.

Larry: Our clients are excited to see how GIP and frequent capabilities are amplified by being part of BlackRock.

Larry: The private markets and the client's allocation to them will continue to grow.

Laurence Fink: Standardized, transparent private market data and analytics will be increasingly important. As with Aladdin, we believe we can add more value to Prequit as both a user and a provider of private market data and risk analytics. Aladdin expanded into new asset classes and markets as BlackRock and our own clients evolved, and we expect the same for prequit. The growth of private markets is underpinned by the continual rise of infrastructure. It presents a generational investment opportunity. Over the next 15 years, the world will need to invest $75 trillion to repair aging of this structure to invest in new projects like data centers and decarbonization technology.

Larry: Dandardise, transparent private market data and analytics will be increasingly important. As with Aladdin, we believe we can add more value to pre-quent as both a user and a provider of private market data and risk analytics.

Larry: I'll add an expect, I expected it into new asset classes and markets as BlackRock, in our own clients of all, and we expect the same for pre-quen.

Larry: The growth of private markets is underpinned by the continued rise of infrastructure.

Larry: It presents a generational investment opportunity.

Larry: Over the next 15 years, the world will need to invest $75 trillion to repair aging of his structure to invest in new projects like data centers and decarbonization technology.

Laurence Fink: The current cash flow inflation protected return profile of an event structure makes it an attractive sector for our clients. Most of them will represent investor savings for retirement. With a close at GIP, we are now offering our clients access to market-leading investment and operating expertise across infrastructure private markets. Buying will benefit from a substantial scale as the second largest private market infrastructure manager in the world with $170 billion in client assets. We have differentiated performance. GIP brings a track record, a well time and discipline entries into strategic and strategic access. Having returned over $45 billion a capital to investors.

Larry: The current cash flow inflation protected return profile of an evidence structure makes it in a tractous sector for our clients. Most of them will represent investor savings for retirement.

Larry: With a close-up GIP, we are now offering our clients' access to market-leading investment and operating expertise across infrastructure-private markets.

Larry: Bines will benefit from our substantial scale as a second largest private market infrastructure manages the world with a 170 billion in our client and client assets.

Larry: and we have differentiated performance, GIP brings a track record, a well-timed and disciplined entries into strategic and strategic exits, having returned over $45 billion capital to investors.

Laurence Fink: With higher rates distributions to pay in capital, our critical measure of success and where we are in industry leader. The combination of BlackRock and infrastructure platform with GIP is already unlocking meaningful opportunity for our clients.

Larry: with higher rates, distributions to paid in capitals are a critical measure of success and where we are in industry leader.

Larry: The combination of black rock and infrastructure platform with GIP is already unlocking meaningful opportunity for our clients.

Laurence Fink: We recently announced our partnership with Microsoft and MGX to launch the global AI infrastructure investment partnership. We will make investments in new and expanded data centers to meet growing demand for compute power. We will also invest in energy infrastructure needed to create new sources of power for these facilities. Mobilizing private capital to build AI infrastructure like data centers and power will unlock a multi-trillion dollar long-term investment opportunity. BlackRock has uniquely positioned at the center of this opportunity through our long standing relationships with corporates, including hyperscalers and energy suppliers, and governments around the world. We look forward to be working with our stakeholders in this ecosystem to navigate opportunities.

Larry: We recently announced our partnership with Microsoft and MGX to launch the global AI infrastructure investment partnership.

Larry: We will make investments in new and expanded data centers to meet growing demand for compute power.

Larry: We'll also invest in energy infrastructures that needed to create new sources of power for these facilities.

Larry: Mobilizing private capital to build AI infrastructure like data centers and power will unlock a multi trillion dollar long term investment opportunity.

Larry: BlackRock has uniquely positioned at the center of this opportunity through our long-standing relationships with Forpets, including hyper-scalers and entities, suppliers and governments around the world. We look forward to be working with our stakeholders in this ecosystem to navigate opportunities.

Laurence Fink: and Challenges, while we also are delivering investment returns for our clients. This partnership is a powerful demonstration on how our expanded capabilities will enable us to do even more with our clients investing in one of the largest growth of imperatives in the coming decades. In addition to infrastructure, private credit is an important component of our clients' portfolio. We've run our own broader private market, our private debt business organically in organically in recent years. Today we manage over $85 billion in diversified across lending, investment grade private placements, infrastructure, and real estate debt. And we've been a top 10 fundraiser over the last decade.

Larry: and Challenges while we also are delivering investment returns for our clients.

Larry: This partnership is a powerful demonstration on how our expanded capabilities will enable us to do even more with our clients investing in one of the largest growth imperatives in the coming decades.

Larry: In addition to infrastructure, private credit is an important component of our client's portfolio.

Larry: We've grown our own broader private market by private debt business organically in our Ghana-Clean recent years. Today we manage over $85 billion in diversified across lending, investment-grade private placements, infrastructure, and real estate debt, and we've been at top 10 fundraiser over the last decade.

Laurence Fink: BlackRock's nearly $4 trillion in assets across public fixed income, cash, and private credit. These we both provide integrated fixed income solutions for our clients and deliverable scale benefits. Our scale enhances our proprietary deal sourcing access to the execution of deal flow, deeper liquidity, lowering trading costs, all of which benefits each and every one of our clients. Private markets have mainly been accessible to institutional investors, while private wealth holding underweight by comparison. For many wealth investors, the addition of private markets to the portfolio may provide diversification benefits to better returns.

Larry: BlackRock's nearly $4 trillion in assets across public fixed income cash and private credit. We've both provided integrated fixed income solutions.

Larry: for our clients and deliverable scale benefits.

Larry: Our scale and enhance our proprietary deal sourcing access to the execution of deal flow, deeper liquidity, lowering trading costs, all of which benefits each and every one of our clients.

Larry: Private markets have mainly been accessible to institutional investors, while private wealth holding underweight by comparison. For many wealth investors, the addition of private markets to the portfolio may provide diversification benefits to better returns.

Laurence Fink: To help bridge this gap, we recently announced a partnership with a Partners group to develop a first of its kind private markets model portfolio solution. We believe it will transform retail access by enabling financial advisors and their clients to add broad base exposures to the private markets, including to the BlackRock Funds. We continue to innovate new investment strategies to improve private market access for our clients, backed by our own investment expertise, our proprietary sourcing of deals, and our technology.

Larry: The health bridges staff will be recently announced a partnership with the partners group to develop a first of its kind private markets model for its foliosolution.

Larry: We believe it will transform retail access by enabling financial advisors and their clients to add broad-based exposures to the private markets, including to the black rock funds.

Larry: We continue to innovate new investment strategies to improve private market access for our clients back by our own investment expertise, our proprietary sourcing of deals and our technology.

Laurence Fink: As market complexities and opportunities grow, clients need to scale inabrolers like Aladdin. Clients use Aladdin to consolidate a patchwork of legacy technologies, resulting in greater and better business agility and resilience. It combines risk management, the investment book a record, its performance, its accounting, its risk, and data, all in one platform. Clients' research shows that Aladdin's scalable capabilities allow clients to grow faster, operate more efficiently, and better risk management with their technology spend over the long term. The power of Aladdin is resonated with both asset owners and managers. The ACV growth reflected several significant client mandates, including a large public asset manager and one of our largest Aladdin assignments ever.

Larry: As Market Complexities and Opportunities grow, clients need to scale in neighborhoods like Aladdin.

Larry: Clients use a lot of to consolidate a patchwork of legacy technologies, resulting greater and better business agility and resilience. It combines risk management, the investment book a record, its performance, its accounting, its risk, and data all in one platform.

Larry: Science Research shows that a lot of scalable capabilities allow clients to grow faster, operate more efficiently, better risk management with their technology spend over the long-term.

Larry: The power of Aladdin is resonating with both acid owners and managers. The ACV growth reflected several significant client mandates, including a large public acid manager, and one of our largest Aladdin assignments ever.

Laurence Fink: Aladdin is core to the consistent performance our portfolio managers deliver for clients. We leverage our investment insights and technology to bring the performance they demand and deserve. Close into BlackRock active strategies accelerated in the third quarter with 28 billion of net inflows. Bringing our year-to-date total of $39 billion. This includes demand for active equities led by our high performing quant strategies, where more than 90% of the AUM is above the one, three, and five year period. Across asset classes, investment performance remains strong over the long run. This is resonating in our act of flows and our liquid performance fees and performance positions us well for future growth.

Larry: Aladdin is core to the consistent performance our portfolio managers of deliver for clients. We leverage our investment insights and technology to bring the performance they demand and deserve.

Larry: Blows into BlackRock Active Strategies accelerated in the third quarter with 28 billion of net inflows. Bringing our year to date total of $39 billion. This includes demand for active equities led by our high-performing Quant Strategies, where more than 90% of the AUM is above the 1-3 and 5-year period.

Laurence Fink: Index ETFs are increasingly being used with an act of management, and the ETFs structures being used to pair the off-generation of leading investors with a liquidity tax efficiency and transparency offered by ETFs. These dynamics are contributing to client demand globally for ice shares ETFs. BlackRock generated in the third quarter ETF net in close of 97 billion. ETFs were positive across all segments and major regions, including double-digit organic growth in Europe. There's more to come with a fourth quarter, which typically brings our seasonally strongest period of the year. I share a fixed ETF platform recently crossed $1 trillion in assets, and stand alone it would be a top five bond manager by itself.

Larry: Indexed ETFs are increasingly being used with an act of management, and the ETFs structures being used to pair the off-generation of leading investors with a liquidity tax efficiency and transparency offered by ETFs.

Larry: These dynamics are contributing to client-demand globally for I-Share's ETFs.

Larry: BlackRock generated in the third quarter ETF net in close of 97 billion.

Larry: ATF flows repositive across all segments and major regions, including double-digit organic growth in Europe. There's more to come with a fourth quarter, which typically brings our seasonly strongest period of the year.

Larry: I share a 60mm TF platform recently crossed $1 trillion in half this, and stand alone it would be a top five bond manager by itself.

Laurence Fink: Assets have nearly doubled over the last five years. All of that growth has been organic and mostly in a flat to down fixed income income beta environment. A more normalized, relatively high rate environment has a potential to encourage investors back even more into fixed income. We continue to innovate in our exchange traded products to provide better access to markets. This quarter we launched our Ethereum ETFs, which is garnered more than $1 billion in close in the first two months of trading. It follows the successful launch of our Bitcoin products, which has now grown to $23 billion in its first nine months and will continue to pioneer new products to be making investing easier and more affordable.

Larry: Passes have nearly doubled over the last five years. All of that growth has been organic and mostly in a flat to down-fixing of income beta environment. A more normalized, relatively high rate environment has a potential to encourage investors back even more into fixing income.

Larry: We continue to innovate in our exchange-traded products to provide better access to markets.

Larry: This quarter we launched our Ethereum ETF, which has garnered more than $1 billion in that inflows in the first two months of trading. It follows the successful launch of our Bitcoin product, which has now grown to $23 billion in its first nine months. And we'll continue to pioneer new products to be making investing easier and more affordable.

Laurence Fink: On October 1, 1999, Black Rock listed on the New York Stock Exchange for $14. Today we're trading somewhere around $9.60. When we went public, it was with a belief in the importance of growth and the depth of the global capital markets. We wanted to share our success with a broader population of people investing for the future, including our employees that all still holds through today. Our relentless focus on clients having a growth mindset and a willingness to change and evolve has generated a compounded annual total return of over 20% for shareholders since our IPO 25 years ago.

Larry: and October 1st, 1999, Black Rock Listed on the New York Stock Exchange for $14.00 this year.

Larry: Today, we're trading somewhere around 960. When we went public, it was with the police and the importance of growth and the depth of the global capital markets.

Larry: We wanted to share our success with a broader population of people investing for the future, including our employees that all still holds through today.

Larry: A relentless focus on clients.

Larry: Having a growth mindset and a willingness to change and evolve has generated a compounded annual total return of over 20% for a Sherald or since our IPO 25 years ago.

Laurence Fink: BlackRock has exceeded the total return of the S&P 500 in 19 of those 25 years, representing a business model to serve all our stakeholders. We are in a better position than ever to serve our clients and to deliver growth for our shareholders in the years. I've never felt more optimistic in our position as they do today, even after 25 years of being a public firm and 37 years of being a firm. I want to thank all of BlackRock employees for their commitment to upholding our culture and serving our clients with excellence.

Larry: BlackRock has exceeded the total return of the S&P 500, and 19 of those 25 years representing a business model to serve all our stakeholders.

Larry: We are a better position than ever to serve our clients and to deliver growth for our shareholders in the years that come.

Larry: I've never felt more optimistic in our position as I do today, even after 25 years of being a public firm and 37 years of being a firm. I want to thank all of Black Rock employees for their commitment to upholding our culture and serving our clients with excellence. And again, we welcome our new colleagues from clients from GIP.

Laurence Fink: And again we welcome our new colleagues from and clients from GIP. and I believe our position has never been better and I believe as we look forward and delivering strong performance for our clients we will create differentiated growth for you or shareholders in the coming years they had.

Larry: Operator, let's open it up for questions.

Speaker Change: Thank you. If you'd like to have a question, please sign them up, press the install one on your telephone keypad. If you are using a speaker phone, please make sure your mute function is turned off to a liar signal to reach our equipment. Again, press star 1 to ask a question. We'll pause for just a moment to allow everyone an opportunity to sign up for questions.

Speaker Change: We'll go first to Craig Seagund's dollar from Bank of America.

Speaker Change: Take Greg?

Craig Seagund: Hey, good morning, Martin. Hope everyone's doing well. So my question is on the net flow trajectory. From your broad-based client conversations and your current institutional and funded wind pipeline.

Craig Seagund: Do you expect the usceleration or re-resign activity continue into next year post-the election? And if you're a long-term net flow strength and or stay strong given, that they're already pretty strong in the third quarter, should we expect any outflows in your money market business, which I know might be somewhat protected given the institutional scale?

Speaker Change: Thanks Craig for the question so new inflows are strong as you said, very healthy on any and all of the measures we track. No question Craig were winning share with our clients.

Speaker Change: The 221 billion of Q3 flows, they showed great breadth across the business, positive flows in US active fixing commutual funds, systematic equity, life path target date, Larry talked about just our long-term active business really shows resilience.

Speaker Change: Since 2019, I think we've had positive active flows in 18 of 23 quarters, so we just continue to have a very strong flow performance, 25% higher than full year 23, and we still have this seasonally strong Q4 head, so we feel like a very healthy trajectory on asset growth. It's an affirmation for us that we're focused on the right things with clients.

Speaker Change: and I think for where we are in the cycle, BlackRock has always been a meaningful outperformer in re-risking periods. So, going back to previous election cycles or central bank action, you look at BlackRock, we had outsized upside capture if that was in 2017, 18, 21 and we saw a very strong organic asset growth as well as organic base fee growth that was over our long-term targets.

Speaker Change: So we see that the market and we think the world is lining up for that with our clients.

Speaker Change: and then with respect to money markets, our business is largely institutional. It's been very durable, the 61 billion of flows that's come there. I think it's been good. The trajectory has been very strong this year. I think Craig, when we look at it, our money market fund business is at $850 billion today. It's nearly 70% bigger than it was five years ago. Cash is a meaningful part of client portfolios, but we're seeing that sort of return to fixed income as well, which has been good for the flow trajectory. I would just add, one thing is...

Speaker Change: i

Speaker Change: We'll go next to Michael Cyprus with Morgan Stanley.

Michael Cyprus: Good morning. I'm Michael. Hey, congratulations on the first quarter here. I'm great to see the meaningful operating leverage as well in the quarter. So just curious how you're pacing and investment spent here in to 25. How is that evolving? And what are some of the levers to drive margin again if it is used for?

Michael Cyprus: and 12 to 18 months. Maybe you can update it somewhere you are along the journey of very volizing your expenses.

Martin Small: Thanks Mike. I appreciate it as Martin. So just the contextually right, our approach to share holder value creation is to generate, you know, industry-leading, differentiated organic growth.

Martin Small: to drive operating leverage and industrial-leading margins and to execute on a consistent capital management strategy.

Martin Small: We've got a strong track record of BlackRock.

Martin Small: have investing in the business for growth in scale while also expanding profitability.

Martin Small: It's not just about growth, it's about profitable growth over the long term.

Martin Small: As our growth comes from being very disciplined in making and managing continued investments in our business. We've dubbed this our financial rubric, which I mentioned. We size our operating investments in line with a prudent lens on organic growth potential. We're aiming to put more flexibility in our cost space and variableizing more expenses where we can and we've made a lot of progress there. And most importantly, we're looking to generate fixed cost scale, especially through investments in technology. We've got a consistent track record of delivering industry leading margins and improving them. And I'd say the scale indicators that they're really coming through the results. We generated 350 basis points of margin expansion year-over-year while operating income rose 26%. And since the end of 22,

Martin Small: BlackRock assets under management are up to 3 trillion while head counts probably flat. So we're delivering the benefits of scale and productivity which showing in our margin expansion. We continue to believe that technology, automation from footprinting or the major levers there for us to continue to drive that margin expansion.

Martin Small: The last thing I'd say is just market movements, you know, market movements beta, that's our highest margin item, both when markets move meaningfully up or down. And we continue to see conditions for reasonably positive growth in the markets over the near to intermediate term, so we believe we can continue to invest to accelerate organic growth and deliver margin expansion using this financial rubric that we've laid out.

Speaker Change: Go to the next two Alex Blostin with Goldman Sachs.

Speaker Change: Hey Larry, Martin Good morning. Thank you. I'm good, thanks. Question for you guys on private markets, there's a couple topics, but maybe starting with GIP, helpful to maybe just to get a market to market on some of the financial elements. I know Martin, he talked about 250 million, I think, in the 4th quarter. King, talk a little bit about how you see that evolving into 2025. What are some of the kind of fun flow dynamics on the legacy GIP side and what are some of the things that you guys are working with them together, and also if you could just remind us what the up pretty margin on that business is as well out of the gate as well. Thanks.

Speaker Change: Thanks, Alex. So just the closing of GIP, it's a great milestone in BlackRock's history. We're really excited to welcome over 400 new colleagues to welcome the leadership team, BioRage, Michael, John , everybody. Our clients are excited, the consultants that we've been working with are excited, the corporate partners are excited. So we're really eager to partner on this new platform. And the reception as Larry mentioned has been overwhelmingly positive.

Speaker Change: For us, this is a revenue growth story, this is about expanding capabilities. We're working to unlock substantial growth synergies across a origination, capital formation, and platform scale. We're seeing excellent momentum in fundraising.

Speaker Change: for across the platform at GIP, at BlackRock, and have, I'd say, really strong ambitions, especially around the AI Innovation Fund that Larry mentioned. As I mentioned on the call, in my earlier remarks, we're consolidating $116 billion of GIP AUM.

Speaker Change: Pull the next two at Dan Fannon with Jeffries.

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Dan Fannon: Episode 2

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Speaker Change: Alright, thanks so much for the question. As I said, you know, we're really excited so our clients about GIP and Prequint. This is a meaningful accelerant in our private markets, capabilities.

Speaker Change: and I think just as I mentioned in the last question, it's a major financial contributor for BlackRock. But it's going to take some work to integrate well and realize the plans, synergies of this transaction. So right now, we're very focused on integrating GIP and closing pre-quen and we're focused on delivering a great integration experience for clients and employees.

Speaker Change: We've always thought of making organic and inorganic investments in our business. And inorganic is a tool that we have in order to optimize organic growth, but we don't need M&A to meet our organic growth targets. Look at this quarter. We've hit our 5% organic-based growth target and we see excellent momentum. So we'll continue to be prudent with our capital and financial position and consistent with our long-term approach.

Speaker Change: Will evaluate in organic opportunities that have the benefit for our clients and shareholders. We're always going to be very rigorous and selective in those criteria and entertain possibilities that have clear alignment with our culture, strategy, and long-term organic growth.

Speaker Change: We have great capabilities here Dan, so across infrastructure now we've got a $170 billion platform. We have an $85 billion private credit platform. We have a huge opportunity to grow in organically and private credit with our insurance clients.

Speaker Change: with the largest core fixed income manager in the world for insurance companies, with organic, we have the largest organic opportunity to grow, organic opportunity to grow with our insurance clients, we manage $700 billion of insurance company general account assets for them. So if you think about the conversations we're having with CIOs to integrate our private credit capabilities into that GA, if we can just flip 10% of the $700 billion into private credit strategies, that's $70 billion of opportunity, sitting with existing clients, with the capabilities that we have today.

Speaker Change: We'll go next to Glenn Shore with Evercore.

Glenn Shore: England. Thank you very much.

Glenn Shore: So I think we're all pretty impressed with the broad growth that you keep putting up and huge margins to. So I want to high level question. You mentioned the word multiple expansion once or twice during the conversation and just I think earnings growth needs to be part of the equation to when you have strong growth and everything you have big margins. I'm just curious why 5% EPS growth this quarter should we expect? [inaudible]

Glenn Shore: These initiatives as they lay around and you consistently hit your base feet targets to actually bring the earnings growth along with it, too. I appreciate it. Thanks.

Speaker Change: Thanks so much for the question, Glenn. So we're focused on driving differentiated organic growth, meeting our 5%.

Speaker Change: Organic Growth Targets Through the Cycle Driving Operating Leverage. And as you said, I think you see those results very much coming through. We think if we are able to drive 5% organic growth, continue to execute on this financial rubric I laid out, we should be able to drive industry leading margins and margin expansion and double digit EPS growth. I think in the quarter, I mentioned our effective tax rate was 26% in the quarter. And that's the main driver between some of that lighter EPS here, was the 22 million of discrete expense that we had in this quarter, versus the 215 million of benefit that we had last year from discreets.

Speaker Change: Over next two Brian Badell with Deutsche Bank.

Speaker Change: Hi, guys, thanks. Hey, good morning. I congratulate the quarter.

Brian Badell: Maybe just back to the 5% organic base fee growth and maybe a different angle on this in terms of the fee rate. Obviously the rate is going up with the GIP acquisition of that half to one basis point. Do you feel better now than you have maybe in a long time on the potential for the fee rate to either be stable or even move up?

Brian Badell: You know, it's quenchily in the next several years.

Brian Badell: versus the fee pressure that you've seen and I know it's all been due to mix in the past, but now.

Brian Badell: The composition of your future organic growth.

Brian Badell: seems to be tilted more towards the private market, towards higher fee products, versus obviously some of the lower mandates that you've been bringing in and also, the core ice series, of course, series ice series, sorry. So, bottom line is do you feel better about that fee rate growth potential and maybe if you can just touch on the model portfolio's partnership as well in terms of the organic growth potential there.

Speaker Change: Absolutely, thanks so much for the question. So, we generated 5% annualized organic base figure off in the quarter. So, 5% annualized organic base figure off, we're excited about that, continue to see great momentum, just in our organic growth. We're growing revenues and operating income at double digit rates and expanding margin.

Speaker Change: Average AUM growth was 18% higher than base fee growth, and that was mainly due to relative outperformance of lower fee rate US equities, or what you all in our analyst community would call divergent beta. So spot AUM of 11.5 trillion ended the quarter, about 4% higher than average AUM, and so our annualized effective fee rate was approximately 4.10s of a base's point lower sequentially.

Speaker Change: More macro just on the fee rate, on RAUM, the fee rate, it's a backward looking output basically of the mix of the stock of assets that we manage and net new flows and net new fields on the fee rate. It's primarily affected by beta and FX and also by organic growth. And so over more recent periods US public equity markets, which are a lower fee rate segment, they've grown faster than international equities. And that's been a driver of these fee rate trends on our platform. And in those environments of strong US equities, also the new base fee growth tends to occur at relatively lower fields, international or EM equities.

Speaker Change: See rate for us, it's primarily an output, it's not the basis or driver of the strategy. We're focused on meeting client needs across the whole portfolio, we're focused on technology, we're focused on driving organic growth in the most efficient way possible.

Speaker Change: But I do think you're grabbing on the point that we see, which is as we grow our private markets business and we're going to go from a 170 billion of client AUM with GIP to call it 285 of client AUM as we grow our private markets business, we would expect to see positive leverage to base V revenue. We'd expect to see positive leverage to average V rates in organic growth over time. We would expect to see positive leverage to average V rates in organic growth over time. We would expect to see positive leverage to average V rates in organic growth over time.

Speaker Change: You know, going into Q4, XGIP, we'd expect the entry rate to be flat. And as I noted, consolidation of the GIP portfolios into our business is expected to lift the fee rate by about a half to one full basis point. So in the longer term, as we see a liquid and private markets as a bigger contributor to our business mix, we would expect that to have positive leverage on the fee rate.

Speaker Change: We'll go next to Bill Kat with TD Cowen

Bill Kat: Okay, thank you very much. Good morning, everybody. Happy anniversary. I think I was there at the beginning, said to say. You are? Indeed, I remember that meeting like I was yesterday. So, a question for you. I was very intrigued by your statement about revolutionizing the wealth management opportunity. I was wondering if you could maybe unpack that a little bit. I think you mentioned that the whole portfolio opportunity could be better than everything on the evergreen side to date. And just, one, if you could expand your thinking a little bit, just so we get a sense of the magnitude and the opportunity. And maybe any go-to-market strategy we should be thinking about as we look into the new year. Thank you.

Bill Kat: Episode 2

Speaker Change: Thank you. Thanks Bill very much, very much appreciate the question. So we have strong relationships in wealth and retail markets across the globe. You know, our aims to help wealth managers build long-term portfolios that blend public and private markets exposures. I think if you go back to the last several investor days we've had, we've talked about building the portfolio of the future for wealth managers, which is digitally enabled. It's public private. And this market I think is still very early. Retail allocation to private markets still remains in low single digits.

Speaker Change: Just on capabilities for us here, we have a great established leading franchise in retail liquid alternatives. We've got over $40 billion of assets here across merger, our systematic multi-strategy commodity exposures. We've had a lot of success in bringing retail all to retirement in the UK and Europe through the LTIF and LTAF structures. We've been building out our evergreen and credit interval funds here in the United States. We have a credit strategy center for general fund credits. We've a non-traded credit BDC B-Death, which are combined to be over $1 billion today. B-Death's well-placed for RAAs, independent broker dealers, offshore wealth. We think this can be a strong grower for us.

Speaker Change: But as you said, longer term, our aspiration is to integrate semi-liquid products into our over $300 billion of managed models and S&As. That would be the most significant unlock and we feel competitive advantage we have. It's at the heart of the models venture that we've entered into with Partners Group. But I'd say it's consistently, it's part of the partnerships we have with InvestNet, with GOL, with ICAPITAL, with CASE, with VESMARK. Our goal is to make model portfolios.

Speaker Change: Seamless in terms of public private and the same way we've been able to do that in the same way that we've been able to do that with ETF and mutual fund active model portfolio. So we have a lot more work to do on that but we're excited about the opportunity.

Speaker Change: Ancestor.

Speaker Change: As we believed, when we acquired BGI that ETS would become the instrument of so much of the activity in the capital market that it's only been that way. Even in 2012, when we said ETS are going to be expanding heavily and fixed income to the surprise of so many people and we crossed the trillion dollars of that.

Speaker Change: While we are seeing now in the private markets of blending a public and private, and that's going to continue to blend.

Speaker Change: The institutional clients are going to be looking at measurements of liquidity and they're going to be trading in between public and private.

Speaker Change: And that will become the new domain.

Speaker Change: and so we're not going to look at it.

Speaker Change: Private markets in the same way like we're not going to say they're alternatives. They're just part of the marketplace itself. And one of the reasons why we were so...

Speaker Change: Driven it to acquire pre-1.

Speaker Change: We believe that data and analytics will accelerate that movement of making public and privates.

Speaker Change: and what we're going to look at is liquidity as the driver of risk.

Speaker Change: As we're going to be blending liquidity from the public markets, the liquidity, the private markets and making risk assessments.

Speaker Change: and if through the data analytics that we could have combining frequent, allotted, and e-frot, if we could build that platform into more transparency in private.

Speaker Change: More opportunities for privates, this idea of the blending in public and privates will become a reality. Just like the reality of how ETS became the driving force is so many of the markets now. And we believe that will happen too, but it's going to happen with the acceleration of data and analytics. So when we say what you think about...

Speaker Change: These retail platforms that will be driving.

Speaker Change: More private type of exposures.

Speaker Change: We'll go next to then bootage with FarClease.

Speaker Change: Hey Ben, good morning. Good morning and I thank you for having me on the call. I wanted to ask about your ambitions and digital assets to maybe change it up a little bit. It seems like one way or another we're going to have a new president next year who's going to be more friendly to the industry. And while it could take some time to see new rules and regulations, just wondering what do you see as the key opportunities for BlackRock that this change in posture from Washington could unlock sort of beyond the ETF business and some of the other custody things you do? Thank you. Thank you very much.

Speaker Change: Well, first I'm not sure if either president or other candidate would make a difference. I do believe the utilization.

Speaker Change: Yeah, all the fun.

Speaker Change: You don't ask it, it's not going to become more and more of a reality worldwide.

Speaker Change: Conversations were haven't with institutions worldwide.

Speaker Change: Conversations about how should they think about digital assets, what type of asset allocation there should be.

Speaker Change: I mean we believe Bitcoin is an asset class in itself, it is an alternative to...

Speaker Change: The other commodities like gold.

Speaker Change: and so I think the application of this form of the dust and willing to be expanded.

Speaker Change: Hello, I'm Jill.

Speaker Change: of the role of the Furium as a blockchain can grow dramatically.

Speaker Change: If we can create more acceptability, more transparency, more...

Speaker Change: More Analytics related to these...

Speaker Change: These assets, and it will be expanded. And I truly don't believe it's a function of regulation, of more regulation, less regulation.

Speaker Change: I think it's a function of liquidity.

Speaker Change: Transparency

Speaker Change: and then through that process, no different than when you, you know, years ago when we started the mortgage market, years ago when the high yield market per started off very slow.

Speaker Change: but it built as we built a letter analytics and data and then to better analytics and data more acceptance and a broadening of the market. And I truly believe we will see if watching the market of these digital assets.

Speaker Change: and then we'll see how does each and every country look at their own digital currency.

Speaker Change: That's a very different aspect than a Bitcoin in itself. But I do believe what we're going to witness as we build out better analytics.

Speaker Change: And then the question is, as you mentioned, regulation, how do we see in this country the role of digitizing the dollar?

Speaker Change: and what world does that play? That's a very different question related to, let's say, Bitcoin and other items like that. But all of that is going to be under discussion. And what we're witnessing in other countries that we're seeing big success.

Speaker Change: in India and Brazil in the digitization of their own currency for various different reasons.

Speaker Change: But we believe the technology.

Speaker Change: We'll go next to Brennan Hawken with UBS.

Brennan Hawken: Hey, good morning, all right, thanks for taking a question. Curious whether you all have seen any changes in the RFP activity on the fixed income side. There's recently been some regulatory issues that are large institutional upon manager. So kind of curious about what you're seeing in the market there on the back of that.

Speaker Change: So if you look at our announcement this quarter we announced we want a $30 billion mandate from a pension fund.

Speaker Change: There are, it is not uncommon to see.

Speaker Change: Big, large changes in the marketplace. I don't want to talk about one client or another client or what's happening with one manager versus another manager.

Speaker Change: There's no question money is in motion, Rob Capito talks about this a lot, we are seeing this. There's a very large institutional mandate that are going to be up for, uh, that there's an RFB right now.

Speaker Change: and so I don't look at this as any different obviously there are some issues around that are in the press.

Speaker Change: At this time, this does include today's Q&A session and I'd like to turn the call back to Larry Fink for any additional or closing remarks.

Larry Fink: Thank you, operator. I want to thank all of you for joining us this morning and you're continued interest in BlackRock over these last 25 years.

Larry Fink: All right, third quarter results are possible, because of the global network of relationships we've created, our data analytics that are differentiated by all imagination. And importantly, our integrated technology that we've built over many, many years.

Larry Fink: We have a long history of good integration, whether it is the integration of BGI, Malim, Apirio, E-Front, and now we're working on a successful close and integration of GIP, and we expect the same thing of a closing and integration of Purekren around year-end.

Larry Fink: and I believe our position has never been better and I believe as we look forward and delivering strong performance for our clients, we will create differentiated growth for you, our shareholders in the coming years they had. Everybody, thank you and have a nice day.

Unknown Executive: Everybody, thank you and have a nice, positive quarter. Thank you. Bye bye.

Unknown Executive: This concludes today's telecomference. You may now disconnect.

Larry Fink: Paso, positive quarter. Thank you. Bye-bye.

Speaker Change: This concludes today's teleconference you may now disconnect.

Speaker Change: Episode 2 Episode 2