January 15, 2020
Q4 2019 Earnings
Earnings Release Supplement
A broadly diversified business
across clients, products and geographies
Assets Under Management of $7.43 trillion at December 31, 2019
Q4 2019 Total Base Fees of $3.089 billion
Client Type
Institutional
33%
Institutional
60%
Retail 28%
Retail 10%
iShares | iShares |
ETFs | |
ETFs | |
39% | |
30% | |
Style
Active
27%
Active
46%
Index
36%
Index
9%
iShares | |
iShares | ETFs |
ETFs | 39% |
30% | |
Cash 7% | Cash 6% |
Product Type
Equity Equity
52%47%
Fixed | Fixed |
Income | Income |
31% | 28% |
Multi-asset | |
Multi-asset | 10% |
8% | Alternatives 9% |
Alternatives 2% | |
Cash 7% | Cash 6% |
Region
Americas Americas
66%66%
EMEA | EMEA |
27% | 28% |
Asia-Pacific | Asia-Pacific |
7% | 6% |
AUM | Base Fees | AUM | Base Fees | AUM | Base Fees | AUM | Base Fees |
Note: Base Fees and AUM by region data is based on client domicile.
1
Long-term net flows
Total long-term
($ in billions)
Retail
7% | 6% | 4% | 3% | 2% | 2% | 4% | 5% | 6% | 6% | 7% | 7% | 6% | 3% | 0% | 0% | 0% | 3% | |||||||
7% | 7% | 4% | 3% | 2% | 1% | 2% | 3% | 5% | ||||||||||||||||
$125 | ||||||||||||||||||||||||
$99 | ||||||||||||||||||||||||
$81 | $17 | |||||||||||||||||||||||
$55 | $44 | $59 | $52 | $11 | $7 | $8 | ||||||||||||||||||
$5 | ||||||||||||||||||||||||
$14 | $11 | $2 | $2 | |||||||||||||||||||||
$(3) | $(1) | |||||||||||||||||||||||
Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |||||||
2017 | 2018 | 2018 | 2018 | 2018 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||
2017 | 2018 | 2018 | 2018 | 2018 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||
iShares ETFs | Institutional | |||||||||||||||||||||||
19% | 15% | 10% | 9% | 10% | 9% | 10% | 10% | 11% | 2% | 2% | 1% | 0% | (2)% | (1)% | 2% | 3% | 4% | |||||||
$81 | $75 | Institutional Active | Institutional Index | |||||||||||||||||||||
$14 | ||||||||||||||||||||||||
$55 | ||||||||||||||||||||||||
$35 | $34 | $31 | $36 | $42 | ||||||||||||||||||||
$73 | ||||||||||||||||||||||||
$18 | $1 | |||||||||||||||||||||||
$5 | $14 | $8 | ||||||||||||||||||||||
$12 | $10 | $(1) | $(8) | $15 | $15 | |||||||||||||||||||
$2 | $(7) | $(14) | $(24) | $(27) | $(4) | |||||||||||||||||||
Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |||||||
2017 | 2018 | 2018 | 2018 | 2018 | 2019 | 2019 | 2019 | 2019 | 2017 | 2018 | 2018 | 2018 | 2018 | 2019 | 2019 | 2019 | 2019 |
LTM organic asset growth rate (%)
LTM organic base fee growth rate (%)
Note: LTM organic asset growth rate measures rolling last twelve months net flows over beginning of period assets.
2
Profitability
($ in millions, except per share data)
Operating Income and Margin, as adjusted | Net Income and EPS, as adjusted |
$1,800 $1,700 $1,600 $1,500 $1,400 $1,300 $1,200 $1,100 $1,000
$900 $800 $700 $600 $500 $400
$8.34
44.7% 44.1% | 45.2% 44.2% | 46.0% | $1,700 | |||||||||||||||||
43.5% 41.9% | 43.1% | 43.5% $44.2%1,580 | $7.52 | $7.15 | ||||||||||||||||
$6.70 | $6.66 | |||||||||||||||||||
$1,488 | $1,502 | $1,538 | $1,460 | $6.19 | $6.08 | $6.61 | $6.41 | |||||||||||||
$1,443 | $1,400 | 34.2% | ||||||||||||||||||
$1,378 | $1,309 | |||||||||||||||||||
$1,340 | ||||||||||||||||||||
$1,310 | ||||||||||||||||||||
$1,233 | $1,278 | $1,214 | ||||||||||||||||||
$24.1,220% | ||||||||||||||||||||
$1,100 | $1,092 | $1,080 | $1,053 | $1,119 | ||||||||||||||||
$1,013 | $1,003 | |||||||||||||||||||
14.2% | $975 | |||||||||||||||||||
$980 | ||||||||||||||||||||
4.$2%860 | ||||||||||||||||||||
$740 | ||||||||||||||||||||
-5.8% | ||||||||||||||||||||
$620 | ||||||||||||||||||||
-15.8% | ||||||||||||||||||||
Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | $500 | |||||||||||
Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | ||||||||||||
2017 | 2018 | 2018 | 2018 | 2018 | 2019 | 2019 | 2019 | 2019 | 2017 | 2018 | 2018 | 2018 | 2018 | 2019 | 2019 | 2019 | 2019 |
Operating Income, as adjusted | Operating Margin, as adjusted | Net Income, as adjusted | EPS, as adjusted |
For further information and reconciliations between GAAP and as adjusted, see page 12 of this earnings release supplement, notes (1) through (3) in the current earnings release as well as previously filed Form 10-Ks,10-Qs and 8-Ks.
3
Capital management
(amounts in millions, except per share data)
Share repurchases and | |||||||||||||
weighted average diluted shares | Dividends per share | ||||||||||||
163.8 | 162.9 | 162.2 | 161.4 | 160.5 | 159.3 | 156.4 | 156.9 | $3.30 | $3.30 | $3.30 | $3.30 | ||
156.4 | $3.13 | $3.13 | |||||||||||
$1,566 (1) | $2.88 | $2.88 | |||||||||||
$2.50 |
$500 | $525 | |||||||||||||||||||||
$275 | $335 | $300 | ||||||||||||||||||||
$100 | ||||||||||||||||||||||
$0 | $0 | |||||||||||||||||||||
Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |||||
2017 | 2018 | 2018 | 2018 | 2018 | 2019 | 2019 | 2019 | 2019 | 2017 | 2018 | 2018 | 2018 | 2018 | 2019 | 2019 | 2019 | 2019 | |||||
Share repurchases | Weighted average diluted shares | Dividends | ||||||||||||||||||||
- Amount includes the impact of a $1.3 billion private transaction that closed on March 25, 2019. Amounts above exclude repurchases of employee tax withholdings related to employee stock transactions.
4
Major market indices and exchange rates
% Change | % Change | ||||||||||||
Spot | 12/31/19 vs. | Average | Q4 2019 vs. | ||||||||||
12/31/2018 | 9/30/2019 | 12/31/2019 | 9/30/2019 | 12/31/2018 | Q4 2018 | Q3 2019 | Q4 2019 | Q3 2019 | Q4 2018 | ||||
Equity Indices | |||||||||||||
Domestic | |||||||||||||
S&P 500 | 2,507 | 2,977 | 3,231 | 9% | 29% | 2,693 | 2,958 | 3,086 | 4% | 15% | |||
Global | |||||||||||||
MSCI Barra World Index | 1,884 | 2,180 | 2,358 | 8% | 25% | 2,010 | 2,169 | 2,260 | 4% | 12% | |||
MSCI Europe Index | 114 | 133 | 140 | 5% | 23% | 120 | 129 | 135 | 5% | 13% | |||
MSCI AC Asia Pacific Index | 147 | 156 | 171 | 10% | 16% | 152 | 157 | 164 | 4% | 8% | |||
MSCI Emerging Markets Index | 966 | 1,001 | 1,115 | 11% | 15% | 978 | 1,014 | 1,051 | 4% | 7% | |||
S&P Global Natural Resources | 3,311 | 3,524 | 3,855 | 9% | 16% | 3,580 | 3,558 | 3,645 | 2% | 2% | |||
BLK Equity Index(1) | 10% | 22% | 4% | 10% | |||||||||
Fixed Income Index | |||||||||||||
Barclays U.S. Aggregate Bond Index | 2,047 | 2,221 | 2,225 | -% | 9% | 2,011 | 2,201 | 2,221 | 1% | 10% | |||
Foreign Exchange Rates | |||||||||||||
GBP to USD | 1.28 | 1.23 | 1.33 | 8% | 4% | 1.29 | 1.23 | 1.29 | 5% | -% | |||
EUR to USD | 1.15 | 1.09 | 1.12 | 3% | (3)% | 1.14 | 1.11 | 1.11 | -% | (3)% |
Source: Bloomberg
- Revenue weighted composite index calculated by BlackRock to approximate the impact of market fluctuations on BlackRock's equity base fees. The index is derived from publicly available market indices that represent applicable AUM benchmarks for each equity portfolio, as selected by BlackRock. The market impact information for each equity portfolio used to calculate the index may be substantially different from that shown. Index does not include portfolios that do not have an applicable market index. Index does not reflect BlackRock's investment performance, and is not indicative of past or future results.
5
Quarterly revenue
($ in millions)
73% | Base fees ex. securities lending | Percentage Change | Year-over-Year | Sequential | |||
Base fees ex. securities lending | 10% | 3% | |||||
Securities lending | |||||||
Securities lending | 31% | 13% | |||||
Performance fees | Performance fees | 139% | 98% | ||||
3% | Technology services revenue | Technology services revenue | 35% | 6% | |||
Distribution fees | Distribution fees | 0% | 0% | ||||
7% | |||||||
Advisory and other revenue | 30% | 69% | |||||
7% | 6% | 4% | Advisory and other revenue | ||||
Total | 16% | 8% | |||||
Q4 2019 compared to Q4 2018
$543
Q4 2019 compared to Q3 2019
$285
$139 | $71 | $40 | $24 | $(1) | $3,977 | $118 | $90 | $43 | $19 | $15 | $3,977 | |
$3,692 | ||||||||||||
$270 |
$3,434
Q4 2018 | Base fees | Performance | Technology | Securities | Advisory and | Distribution | Q4 2019 | Q3 2019 | Performance | Base fees | Advisory and | Securities | Technology | Q4 2019 |
ex. sec | fees | services | lending | other revenue | fees | fees | ex. sec | other revenue | lending | services | ||||
lending | revenue | lending | revenue |
6
Quarterly investment advisory, administration fees
and securities lending revenue
($ in millions) | |||||
Q4 2019 compared to Q4 2018 | Q4 2019 compared to Q3 2019 | ||||
$310 | $109 | ||||
$18 | $17 | $9 | $3,089 | $14 | $12 | $12 | $8 | $7 | $4 | $(5) | $3,089 | |||||||
$26 | $25 | $19 | $34 | $23 | ||||||||||||||
$2,980 | ||||||||||||||||||
$53 | ||||||||||||||||||
$64
$79
$2,779
Q4 2018 iShares Alts | iShares | Cash | Active Non-ETF Active | Non-ETF | Multi- Q4 2019 | Q3 2019 iShares | Alts Non-ETF | Active | Cash Multi- | iShares | Non-ETF | Active Q4 2019 | ||
ETFs EQ | ETFs FI | FI | EQ | EQ | FI | Asset | ETFs EQ | FI | EQ | Asset | ETFs FI | EQ | FI |
7
Quarterly expense, as adjusted
($ in millions)
18% | Employee comp. & benefits | |
10% | Distribution & servicing costs | |
50% | Direct fund expense | |
General & administration | ||
21% | ||
Percentage Change | Year-over-Year | Sequential |
Employee comp. & benefits | 19% | 9% |
Distribution & servicing costs | 4% | 3% |
Direct fund expense | 9% | 3% |
General & administration | 15% | 34% |
Amortization of intangible assets | 93% | 4% |
1%
Amortization of intangible assets
Total | 15% | 11% |
Q4 2019 compared to Q4 2018
$315
Q4 2019 compared to Q3 2019
$249
$196 | $2,439 | $130 | $2,439 | |||||
$101 | ||||||||
$66 | $2,190 | $1 | $6 | $11 | ||||
$2,124 | $14 | $18 | $21 | |||||
Q4 2018 | Amortization | Distribution | Direct fund | G&A | Employee | Q4 2019 | Q3 2019 | Amortization | Direct fund | Distribution | Employee | G&A | Q4 2019 |
of intangible | & servicing | expense | comp. | of intangible | expense | & servicing | comp. | ||||||
assets | costs | & benefits | assets | costs | & benefits |
Fourth quarter of 2018 expense, as adjusted, includes non-GAAP adjustments related to a restructuring charge of $60 million and PNC LTIP funding obligation of $4 million. For further information, see the item included under Non-GAAP expense adjustments on page 12 of this earnings release supplement and note (1) in the current earnings release.
8
Full year revenue
($ in millions)
77% | Base fees ex. securities lending | Percentage Change | Year-over-Year | ||
Base fees ex. securities lending | 2% | ||||
Securities lending | |||||
Securities lending | (2)% | ||||
Performance fees | Performance fees | 9% | |||
2% | Technology services revenue | Technology services revenue | 24% | ||
Distribution fees | Distribution fees | (7)% | |||
7% | |||||
Advisory and other revenue | (8)% | ||||
7% | 3%4% | Advisory and other revenue | |||
Total | 2% | ||||
2019 compared to 2018
$341
$14,198 | $234 | $189 | $38 | $(10) | $(24) | $(86) | $14,539 |
2018 | Base fees ex. | Technology | Performance fees Securities lending Advisory and other Distribution fees | 2019 |
sec lending | services revenue | revenue |
99
Full year investment advisory, administration fees
and securities lending revenue
($ in millions)
2019 compared to 2018
$224
$138 | $78 | $18 | $11 | $(18) | $(28) | $(54) | $(100) | $11,777 |
$179 |
$11,553
2018 | Alts | iShares ETFs | Active | Non-ETF | Cash | Non-ETF | Multi-Asset iShares ETFs | Active | 2019 |
FI | FI | FI | EQ | EQ | EQ |
1010
Full year expense, as adjusted
($ in millions)
19% | Employee comp. & benefits | |||
11% | Distribution & servicing costs | |||
Direct fund expense | ||||
49% | ||||
20% | General & administration | |||
Percentage Change
Employee comp. & benefits Distribution & servicing costs Direct fund expense General & administration Amortization of intangible assets
Year-over-Year
4%
1%
(2)%
7%
94%
1%
Amortization of intangible assets
Total | 4% |
2019 compared to 2018
$321
$163$8,988
$8,667 | $(20) | $10 | $47 | $48 | $73 |
2018 | Direct fund | Distribution & | Amortization of | Product launch | G&A (1) | Employee comp | 2019 |
expense | servicing costs | intangible assets | costs and | & benefits (1) | |||
comissions |
(1) Amounts exclude product launch costs and commissions incurred in 2019 and 2018, which are presented separately above.
2018 expense, as adjusted, includes non-GAAP adjustments related to a restructuring charge of $60 million and PNC LTIP funding obligation of $14 million. For further information, see the item included under Non-GAAP expense adjustments on page 12 of this earnings release supplement and note (1) in the current earnings release.
1111
Reconciliation between GAAP and as adjusted
($ in millions)
2017 | 2018 | 2019 | ||||||||||||||||||
Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | ||||||||||||
Operating Income | ||||||||||||||||||||
GAAP | $ | 1,485 | $ | 1,375 | $ | 1,440 | $ | 1,396 | $ | 1,246 | $ | 1,233 | $ | 1,278 | $ | 1,502 | $ | 1,538 | ||
Non-GAAP expense adjustments | 3 | 3 | 3 | 4 | 64 | - | - | - | - | |||||||||||
As Adjusted | $ | 1,488 | $ | 1,378 | $ | 1,443 | $ | 1,400 | $ | 1,310 | $ | 1,233 | $ | 1,278 | $ | 1,502 | $ | 1,538 | ||
Nonoperating Income (Expense) | ||||||||||||||||||||
GAAP | $ | 1 | $ | (16) | $ | (24) | $ | 33 | $ | (72) | $ | 125 | $ | 57 | $ | (42) | $ | 96 | ||
Non-GAAP adjustments | (6) | (5) | (5) | 13 | - | (7) | (10) | - | (33) | |||||||||||
As Adjusted | $ | (5) | $ | (21) | $ | (29) | $ | 46 | $ | (72) | $ | 118 | $ | 47 | $ | (42) | $ | 63 | ||
Net Income | ||||||||||||||||||||
GAAP | $ | 2,295 | $ | 1,089 | $ | 1,073 | $ | 1,216 | $ | 927 | $ | 1,053 | $ | 1,003 | $ | 1,119 | $ | 1,301 | ||
Non-GAAP adjustments | (1,282) | 3 | 7 | (2) | 48 | - | - | - | 8 | |||||||||||
As Adjusted | $ | 1,013 | $ | 1,092 | $ | 1,080 | $ | 1,214 | $ | 975 | $ | 1,053 | $ | 1,003 | $ | 1,119 | $ | 1,309 | ||
Non-GAAP adjustments include amounts related to a restructuring charge, PNC LTIP funding obligations and noncash income tax matters, as applicable. The fourth quarter of 2017 includes a non-GAAP adjustment of $1.3 billion related to the Tax Cuts and Jobs Act. For further information and reconciliation between GAAP and as adjusted, see notes (1) through (3) in the current earnings release as well as previously filed Form 10-Ks,10-Qs and 8-Ks.
12
Important Notes
This presentation, and other statements that BlackRock may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to BlackRock's future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as "trend," "potential," "opportunity," "pipeline," "believe," "comfortable," "expect," "anticipate," "current," "intention," "estimate," "position," "assume," "outlook," "continue," "remain," "maintain," "sustain," "seek," "achieve," and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may" and similar expressions.
BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
BlackRock has previously disclosed risk factors in its Securities and Exchange Commission ("SEC") reports. These risk factors and those identified elsewhere in this earnings release, among others, could cause actual results to differ materially from forward-looking statements or historical performance and include: (1) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management; (3) the relative and absolute investment performance of BlackRock's investment products; (4) the impact of increased competition; (5) the impact of future acquisitions or divestitures; (6) the unfavorable resolution of legal proceedings; (7) the extent and timing of any share repurchases; (8) the impact, extent and timing of technological changes and the adequacy of intellectual property, information and cyber security protection; (9) the potential for human error in connection with BlackRock's operational systems; (10) the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to BlackRock or PNC; (11) changes in law and policy and uncertainty pending any such changes; (12) terrorist activities, international hostilities and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (13) the ability to attract and retain highly talented professionals; (14) fluctuations in the carrying value of BlackRock's economic investments; (15) the impact of changes to tax legislation, including income, payroll and transaction taxes, and taxation on products or transactions, which could affect the value proposition to clients and, generally, the tax position of the Company; (16) BlackRock's success in negotiating distribution arrangements and maintaining distribution channels for its products; (17) the failure by a key vendor of BlackRock to fulfill its obligations to the Company; (18) any disruption to the operations of third parties whose functions are integral to BlackRock's exchange-traded funds platform; (19) the impact of BlackRock electing to provide support to its products from time to time and any potential liabilities related to securities lending or other indemnification obligations; and (20) the impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions.
This presentation also includes non-GAAP financial measures. You can find our presentations on the most directly comparable GAAP financial measures calculated in accordance with GAAP and our reconciliations on page 12 of this earnings release supplement, our current earnings release dated January 15, 2020, and BlackRock's other periodic reports, which are available on BlackRock's website at www.blackrock.com.
13
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BlackRock Inc. published this content on 15 January 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 January 2020 11:32:09 UTC