BlackRock’s Profit Beats, but Revenue Misses Despite Massive Inflows

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October 18, 2016 7:39am NYSE:BLK

BlackRock logoThe world’s largest asset manager BlackRock, Inc. (NYSE:BLK) posted mixed Q3 results this morning, with profit beating forecasts but revenue falling short of expectations.


The New York City-based company reported adjusted Q3 EPS of $5.14, easily surpassing the analyst consensus of $4.99. Revenue fell 2.5% from last year to $2.84 billion, however, and missed Wall Street’s view of $2.89 billion.

During the third quarter, BLK saw $70 billion in total net inflows. Those figures included $55 billion in long-term net inflows, and reflected positive flows across all product types, investment styles and regions, BlackRock said.

BLK also noted a 4% increase in base fees from last year, helped by organic growth and market performance, but hurt by a changing product mix and investors favoring fixed income and cash over risk-on assets.

During Q3, the company also bought back $275 million of its own stock.

Finally, BlackRock noted that impending fiduciary rule changes will continue to transform the financial services world, and that the company is well prepared for them. From the press release:

Regulatory change continues to have a material impact on our industry. In retail, the DoL fiduciary rule will increasingly influence the choices that financial intermediaries make for their clients. Anticipating that change, BlackRock is using our scale to provide distribution partners with the highest quality investment strategies at the best value, as well as portfolio construction and risk tools, to help them build better portfolios. In cash management, where more than $1 trillion dollars has shifted from prime to government funds as a result of money market reform, the breadth of our platform and our ability to both embrace and adapt ahead of change have enabled us to meet our clients’ evolving needs and increase market share, and we saw $15 billion of net inflows into cash management in the third quarter.

BLK-2016-10-18

BlackRock shares in premarket trading Tuesday. Prior to today’s report, BLK had gained 4.13%, matching the return of the benchmark S&P 500 during the same period.


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