BlackRock Inc. (NYSE:BLK) stock rose in Wednesday’s premarket trading after the world’s largest asset manager reported third-quarter results that beat Wall Street expectations, driven by stronger asset growth, strong inflows and higher fee revenue.
Earnings Beat Estimates
Revenue increased 19% year over year (Y/Y) to $7.75 billion, topping the analyst consensus estimate of $7.52 billion.
Adjusted operating income climbed 27% Y/Y to $3.33 billion, while the adjusted operating margin expanded to 47.8% from 44.6% a year earlier.
Adjusted earnings came in at $15.93 per share, ahead of the consensus estimate of $14.13.
Fee Revenue and Technology Growth
Investment advisory, administration fees and securities lending revenue rose to $6.04 billion from $5.05 billion a year earlier. The increase reflected 11% annualized organic base fee growth and the impact of market beta on average assets under management (AUM).
Securities lending revenue increased to $253 million from $203 million, led by higher spreads and increased average balances of securities on loan.
Investment advisory performance fees jumped to $630 million from $516 million, driven by stronger liquid alternatives revenue tied largely to one hedge fund whose annual performance period ends in the third quarter.
Technology services and subscription revenue rose to $588 million from $515 million, supported by continued demand for Aladdin products and multi-product solutions. Annual contract value for the segment increased 12% from a year earlier.
Strong Inflows Lift Assets Under Management
BlackRock reported $205 billion in quarterly net inflows and $869 billion over the past 12 months.
The active business generated $66 billion in net inflows, led by fixed income and systematic investment strategies. iShares attracted $135 billion.
Assets under management rose 15% year over year to $15.49 trillion, while average AUM increased 19% to $15.46 trillion.
The company repurchased $550 million of shares during the quarter.
Private Markets and AI Drive Growth Outlook
Chief Executive Officer Laurence Fink said the firm raised $68 billion in private markets over the past 12 months, and its AI Infrastructure Partnership made its first investment during the quarter.
He added that BlackRock’s role as both a trusted adviser and a destination for global capital is driving organic growth and shareholder value.
As the firm enters its seasonally strongest fourth quarter, Fink said it has increasing momentum and a broad pipeline of opportunities across whole-portfolio solutions, private markets, retirement and international platforms.
Fink said global demand for capital continues to rise and expressed confidence in the opportunities for clients and the long-term value BlackRock can deliver to shareholders.
BLK Price Action: BlackRock shares were up 3.18% at $1100.00 during premarket trading on Wednesday, according to Benzinga Pro data.
Photo via Shutterstock