The paragraph introduces a BlackRock, Inc. earnings teleconference for the first quarter of 2025. The operator, Katie, welcomes participants and states the call will be hosted by top executives Laurence D. Fink, Martin S. Small, Robert S. Kapito, and Christopher J. Meade. Christopher Meade, the General Counsel, begins by noting that forward-looking statements may be made, which might differ from actual results, as detailed in BlackRock's SEC filings. Martin Small then takes over to discuss the financial performance, emphasizing the as-adjusted results, ahead of Laurence Fink's remarks.

The paragraph discusses BlackRock's strategic approach to navigating market changes and uncertainties in fiscal and monetary policy. By focusing on private markets, ETFs, digital assets, and other growth engines, BlackRock achieved 6% organic base fee growth, alongside double-digit increases in revenue, operating income, and earnings per share, with improved margins in the first quarter of 2025. The investments in their platform have made it more resilient and capable of delivering consistent growth. Emphasizing a global perspective, BlackRock positions itself not just as a U.S. firm but as a global partner, committed to helping clients and governments understand market complexities. The firm capitalizes on periods of uncertainty by gaining market share, leveraging its experience and connectivity with clients, policymakers, and employees worldwide.

In the record quarter, BlackRock achieved record assets under management (AUM) of $11.6 trillion, with $670 billion in new assets over the past 12 months, 60% of which was organic growth. Despite $55 billion in institutional index redemptions, the company saw $140 billion in net inflows, driven by demand for private markets, ETFs, and systematic strategies. Financial results included a 12% increase in first-quarter revenue to $5.3 billion, a 14% rise in operating income to $2 billion, and a 15% increase in earnings per share to $11.30. These figures were supported by organic growth, higher markets, and transaction-related share issuance. Non-operating results showed $68 million in net investment gains, largely from mark-to-market non-cash gains and a minority investment gain.

In the first quarter, the company reported an as-adjusted tax rate of approximately 16%, benefiting from $195 million in discrete tax benefits, partly due to stock-based compensation. They anticipate a 25% tax rate for the rest of 2025, subject to change due to non-recurring items or tax law amendments. Base fee and securities lending revenue increased by 16% year-over-year to $4.4 billion, fueled by market beta, organic growth, and $285 million from GIP, though base fees entering the second quarter were slightly lower. Performance fees decreased to $60 million due to weaker returns from private markets and alternatives. Technology services and subscription revenue grew by 16%, bolstered by demand for Aladdin and the Preqin acquisition, which added $20 million to revenue. Annual contract value rose 30% year-over-year, with a 14% organic growth. The firm aims for sustained ACV growth in the low to mid-teens, while total expenses increased by 10%, reflecting higher sales, G&A, and compensation costs.

The paragraph discusses the company's financial performance and strategic plans. Employee compensation and benefit expenses increased by 7% due to higher headcount and increased incentive compensation. General and administrative (G&A) expenses rose by 12%, mainly due to recent acquisitions and technology investments, but would have only increased by 6% without the acquisitions. Sales asset and account expenses grew by 14%, driven by direct fund and distribution costs. The company's operating margin improved, attributed to market impacts and organic growth. Following January guidance, the company expects core G&A expenses to rise in the mid to high-single digits by 2025. Their capital management strategy prioritizes reinvestment for growth and efficiency, alongside shareholder returns through dividends and share repurchases, having bought back $375 million in shares in the first quarter and planning to continue this trend.

The paragraph details several key updates for BlackRock. The company aims to complete the HPS transaction by mid-2025, pending regulatory approvals. It highlights BlackRock's minority investment in Viridium Group, acquired by an investor consortium, which will enhance Viridium's private market investment opportunities. A $1 billion euro-denominated debt issuance was made to refinance upcoming maturing notes and align capital structure. BlackRock also refined its AUM presentation to highlight growth in private markets and ETFs, with significant net inflows of $84 billion in the first quarter, driven primarily by ETFs. Core equity and fixed income ETFs performed well, and new product launches continue gaining traction.

In the first quarter, BlackRock's ETFs and digital asset ETPs saw substantial net inflows, contributing significantly to annualized organic base fee growth. Retail net inflows reached $13 billion, driven by Aperio, fixed income offerings, and systematic liquid alternatives funds. Institutional active net inflows were influenced by demand for infrastructure, private markets, and systematic active equity. However, institutional index net outflows of $46 billion occurred, primarily from low-fee index equities, offset partially by index fixed income inflows. BlackRock's private markets experienced $7 billion in net inflows, particularly in infrastructure and private credit, while liquid alternatives added $2 billion. The cash management platform also saw $1 billion in net inflows, despite some seasonal redemptions. BlackRock's business strategy focuses on investments that benefit from changing client practices and less market sensitivity, ensuring growth even in weaker markets.

In the first quarter, BlackRock exceeded its 5% organic base fee growth target despite challenging market conditions. CEO Laurence Fink emphasized the company's enhanced structural strength, which enabled a 6% organic base fee growth, the best start since 2021, even as the S&P 500 declined. Revenues grew at double digits, and operating margins expanded. The company saw net inflows of around $140 billion, excluding specific institutional activities. The growth was well-distributed across BlackRock's platform, demonstrating the company's strategic positioning and connectivity with clients. BlackRock remains focused on investing in secular growth opportunities aligned with their clients' needs.

The paragraph discusses BlackRock's strategy and performance, highlighting the strength in their foundational businesses and recent developments in digital assets, ETFs, and systematic equities. It notes the record start of the year for iShares and ETF growth amid uncertain market conditions and U.S. tariffs. The author emphasizes the importance of capital markets in wealth generation and mentions the widespread impact of market downturns on ordinary people's investments and retirement savings. Despite geopolitical and economic challenges, BlackRock aims to stay proactive and assist clients in navigating these turbulent times, emphasizing resilience and adaptation in the face of change.

The paragraph highlights BlackRock's global presence and commitment to providing tailored services to clients worldwide. With a workforce predominantly based outside the U.S. in more than 100 countries, BlackRock leverages its global expertise to deliver localized insights and investment strategies. The firm emphasizes its ability to adapt to local contexts while maintaining global strength and efficiency. It aims to meet diverse client needs by offering a comprehensive range of services, including active strategies, ETFs, private markets, and technology solutions, underscoring a commitment to support clients' ambitions globally.

The paragraph discusses BlackRock's strategies and successes in catering to clients' diverse investment needs, including capital preservation, equities, and uncorrelated private markets. They emphasize their focus on long-term client relationships, asset allocation, and liquidity management, evidenced by their record-high cash AUM of $950 billion as of April. BlackRock's integration with GIP and Preqin and the anticipated joining of HPS reflect their unified approach. They highlight the sensitivity of public markets to policy changes, driving capital towards private markets. BlackRock has invested in enhancing its private market data platforms and infrastructure, exemplified by their largest infrastructure investment recently.

The paragraph discusses an agreement to acquire a portfolio of 43 ports in over 20 countries, leveraged through a strong relationship with the seller and partners like Mediterranean Shipping Company and Terminal Investment Limited. The acquisition will expand the consortium's portfolio to around 100 ports globally. Additionally, the organization has enhanced its AI infrastructure partnership, welcoming xAI and NVIDIA alongside Microsoft and MGX, targeting $30 billion in capital for AI projects and potential investments over $100 billion, including debt financing. This move highlights the efficacy of the partnership between GIP and BlackRock, which could not have achieved such transactions individually. The firm also plans to increase its private credit assets under management to approximately $220 billion following the acquisition of HPS.

The paragraph discusses BlackRock's expanding role in private credit markets, driven by increasing demand for flexible financing from various borrowers and growing investment from insurance companies in private debt. BlackRock manages significant funds for the insurance industry and uses its Aladdin Technology to support over 100 insurance companies. The company is deepening its involvement with Viridium to manage private market investments and anticipates further opportunities with the acquisition of HPS, which will bolster its position in private credit and wealth markets. Additionally, the acquisition of Preqin enhances BlackRock's capabilities in private market data, expanding its user base and growth potential across the private market industry.

The paragraph discusses BlackRock's expansion of its Aladdin franchise by leveraging its integrated public and private market capabilities to provide clients with a unified portfolio view. The company recently added its first client in Korea and sees potential to expand its relationships with Preqin's clients. Globally, BlackRock operates with a hyper-local strategy, facilitating investments in local and global capital markets. In India, BlackRock plans to launch a joint venture with Jio subject to regulatory approval, aiming to enhance investment access and strengthen the retirement system. In Saudi Arabia, BlackRock has launched an investment management platform with the public investment fund to stimulate local market growth, managed by a team in Riyadh.

The paragraph outlines BlackRock's initiatives to expand its financial services, including developing a mortgage-backed securities market in the Kingdom and boosting home mortgage accessibility. In Europe, BlackRock is enhancing access to investing through ETFs, with its European ETF platform surpassing $1 trillion in assets under management. The firm is also capitalizing on growth in digital assets, having launched Bitcoin ETFs in Europe, the U.S., and Canada, with significant net inflows. BlackRock is advancing on-chain finance with tokenization and blockchain technologies, notably with its tokenized digital liquidity fund reaching over $2 billion in assets. The company's global presence, technology, and partnerships position it as a leader in financial innovation.

The paragraph emphasizes BlackRock's commitment to long-term investment strategies and its role as a trusted advisor in the global financial landscape. BlackRock focuses on developing long-term relationships with corporations and governments, offering guidance on economic frameworks and capital liquidity, particularly through its Financial Markets Advisory (FMA) practice. The firm has historically provided counsel during financial crises, assisting institutions like the Federal Reserve and the Bank of Canada. Despite current market volatility, BlackRock sees no systemic risks and believes the financial system remains resilient. The paragraph concludes by highlighting the unchanged nature of major macroeconomic trends despite recent market fluctuations.

The paragraph highlights the transformative investment opportunities presented by mega forces such as artificial intelligence, global infrastructure demand, and evolving debt financing. It emphasizes BlackRock's readiness and optimism in serving client needs, particularly by leveraging strong client relationships and strategic investments in areas like infrastructure and ETFs. The company's focus on growth and value creation is underscored by its recent 6% organic base fee growth, despite market complexities, and its commitment to maintaining high-quality conversations and partnerships with clients globally. The paragraph concludes with appreciation for BlackRock employees and a dedication to staying resilient and optimistic for long-term success.

In the article, Laurence Fink discusses the current financial landscape and client behavior, noting that despite global uncertainties, there has been no client capitulation, and retail investors have shown increased activity, especially in cash inflows, with $20 billion noted for the month. Fink highlights the significant capital available in money market funds and anticipates that as the yield curve steepens, there will be more opportunities for investors, particularly in fixed income and private credit markets, where attractive returns are possible.

The paragraph addresses market uncertainty and discusses potential investment strategies. Despite the turbulence, clients are still interested in investing in equities and are pondering when to increase their exposure. Historically, the U.S. capital markets have held a dominant position, but there's speculation about potential reallocations to Europe as it focuses on growth. Infrastructure investments remain in high demand for their potential to deliver mid-teens returns and protect against inflation. The paragraph concludes by noting the strong performance of the systematic equity team compared to other asset managers.

The paragraph discusses BlackRock's strategy and progress in incorporating private markets into retirement investment products, such as target date funds. During a discussion with Craig Siegenthaler from Bank of America, Laurence Fink highlights the acquisition of Preqin as a strategic move to enhance data analytics, transparency, and price discovery in private investments. This development is seen as essential for adapting retirement products to include more private investments. Martin Small is expected to elaborate on BlackRock's specific actions in this area.

The paragraph discusses BlackRock's position and strategy in the investment and retirement sector, highlighting its status as a leading DC investment-only and DCIO firm. BlackRock aims to enhance retirement outcomes by integrating public and private markets, using glide path technology to create target date-style products that adjust allocations across these markets. The company plans to launch a target date offering with private market exposure on a major U.S. retirement platform. This approach targets efficient delivery of private markets to retirement accounts, particularly defined contribution plans, through vehicles like target funds, balanced funds, or managed accounts that serve as defaults for QDIA. Additionally, to fully realize this strategy's potential, BlackRock notes the need for litigation or advice reform in the U.S. retirement sector.

The paragraph discusses BlackRock's focus on making private markets more accessible in retirement plans and highlights their proactive efforts, including hosting a retirement summit with policymakers and Congress members. The discussion also shifts to BlackRock's strategic approach during major market disruptions. CEO Laurence Fink responds to a question about whether BlackRock plans to expand or acquire outside the U.S., stating they do not have acquisition plans currently but are exploring opportunities, particularly in India and Latin America, through partnerships with local organizations.

The paragraph discusses the company's strategic partnerships and global presence, highlighting its substantial market share in ETFs in Europe and its involvement in transitioning retirement systems from defined benefit to defined contribution plans in countries like the Netherlands. It mentions the acquisition of a stake in Viridium as a significant opportunity in the insurance sector in Germany and elsewhere in Europe. The company's global expansion includes operations in 30 countries, with plans to increase that to 34 or 35 by the year's end. They manage assets for clients in 100 countries and assist them in navigating changes in retirement systems and developing financial systems, such as a mortgage-backed security system in Saudi Arabia. The company's extensive global footprint and deep local engagement are portrayed as valuable yet underappreciated features, emphasizing that their relationships are long-term rather than merely transactional.

In the paragraph, Laurence Fink discusses BlackRock's strategy of maintaining strong relationships with international clients and its local presence in various countries, which helps mitigate risks associated with geopolitical tensions. Fink emphasizes BlackRock's long-term commitment to being locally integrated in the markets it serves, highlighting the company's history of adapting to different economic environments and fostering broad global connections. Michael Brown from Wells Fargo Securities inquires about potential risks of asset movement away from the U.S. due to international frictions, but Fink reassures that BlackRock's international approach is well-established and has been a fundamental aspect of the company's operations since its inception.

The paragraph discusses plans to open more local offices to strengthen client relationships and highlights the current dynamics in global capital markets. It notes the shift in focus towards European growth potential and the need for clients to consider reallocating investments there. Despite recent U.S. market dominance discussions, the paragraph emphasizes the ongoing strength of macro trends like AI and infrastructure. It suggests that deregulation and growth initiatives, particularly under the Trump administration, could unlock significant private capital for investments in infrastructure and private credit, both in the U.S. and potentially in Europe.

The paragraph discusses ongoing macroeconomic trends and growth opportunities in different global regions, highlighting that despite short-term economic risks like inflation, the long-term outlook remains positive. Christopher Meade mentions that BlackRock benefits from international stock market growth, which enhances their business model. The conversation shifts to Patrick Davitt from Autonomous Research, who asks about demand for alternative investments and 401(k) products. Laurence Fink and Martin Small acknowledge the question, with Martin Small indicating the market can be segmented into three main categories in terms of product demand, pending legal clarifications.

The paragraph discusses the varying levels of interest and speed of adoption among different types of plan sponsors when it comes to building certain portfolios. Large plan sponsors move slowly due to consultants and fiduciary scrutiny, while mid-tier and smaller plan sponsors show more interest. Platforms like trust companies and retirement platforms are also keen on offering these products. Adviser-sold plans are expected to adopt these changes fastest. The speaker notes that assessing pricing and operations will take time but believes it can be done faster than previous projects like LifePath Paycheck, due to existing target date funds. Following this, a new question from Dan Fannon of Jefferies is introduced, asking Martin about client demand trends, growth, and the impact of Vanguard's recent fee reductions.

In the paragraph, Martin Small discusses the competitive landscape in the ETF market and how BlackRock is responding to changes. He highlights that BlackRock has achieved 6% annualized base fee growth for three consecutive quarters, indicating solid revenue and income growth. The annualized effective fee rate increased by a tenth of a basis point due to growth in private markets fundraising, with significant catch-up fees recorded in Q1. Despite market and FX challenges, BlackRock's fee rate is 5% higher than six months ago. The company anticipates further growth with the addition of HPS assets, similar to the post-GIP transaction impact. Although the fee rate is influenced by market, FX, and organic growth, Small expects continued positive leverage to base fee revenue over time, driven by private markets business expansion and strong fundraising activity.

The paragraph discusses iShares' pricing strategy, which remains unchanged and involves targeted price investments in high-growth categories to boost volume, despite recent lower levels of investment. There were no ETF price changes in the first quarter, and the segment experienced significant ETF flows, suggesting a strong performance and positioning. Laurence Fink thanks participants for their interest in BlackRock and highlights the company's strategic investments and partnerships, such as with Preqin and HPS, as drivers of growth and shareholder value. The first quarter results reflect the success of these strategies, and Fink expresses optimism for the future, closing the teleconference.

This summary was generated with AI and may contain some inaccuracies.