BlackRock Inc. (BLK) is by some measures the biggest investment management company across the globe, with more than $10.0 trillion in assets under management (AUM) as of Dec. 31, 2023. As a major publicly traded company with a market capitalization of about $112.85 billion (as of April 18, 2024), BlackRock provides investment and technology services to both institutional and retail clients around the world.
The firm offers a variety of funds and portfolios investing in vehicles such as equities, money market instruments, and fixed income. Clients look to BlackRock for access to mutual funds, investments focused on objectives related to retirement income and college savings, and exchange-traded funds (ETFs).
BlackRock is the parent company for the iShares group of ETFs, a leader in the global ETF market. BlackRock derives the majority of its revenue from investment advisory and administrative fees charged to its clients. Among BlackRock's major competitors are The Vanguard Group, State Street Corp. (STT), and T. Rowe Price Group Inc. (TROW).
Key Takeaways
- BlackRock is one of the world's largest investment management companies by AUM.
- The company operates as a single business segment.
- The firm derives most of its revenue from investment advisory and administration fees.
- BlackRock said that it has halted purchases of Russian securities amid Russia's invasion of Ukraine.
BlackRock's Financials
BlackRock's filed it's latest 10-K in Feb. 2024 for the 2023 fiscal year (FY), ended Dec. 31, 2023. The company reported a net income of $5.5 billion, up 6.26% compared to the previous fiscal year. Revenue shrank by less than 1% year over year (YOY) to $17.86 billion. The company's AUM is back up to $10.0 trillion, after a dip the previous year.
BlackRock generated $1.9 trillion of net inflows during the fiscal year. The Americas region led all other regions with long-term net flows of $177.2 billion. The company's ETF offerings generated $185.9 billion in long-term net inflows, more than the long-term net inflows of retail and institutional investors combined.
BlackRock's Business Segments
BlackRock operates as a single business segment and does not report on income for individual parts of its business. However, it does divide its revenue according to categories for "Investment advisory, administration fees, and securities lending revenue," for "Investment advisory performance fees," for "Technology services revenue," for "Distribution fees," and for "Advisory and other revenue."
Investment Advisory, Administration Fees, and Securities Lending Revenue
BlackRock derives the majority of its revenue from investment advisory and administration fees levied over time and is typically based upon predetermined percentages of AUM. This category of BlackRock's business includes fees related to the firm's equity, fixed income, multi-asset alternative, and cash management services. In FY 2023, this category accounted for $14.4 billion in revenue, or about 81% of total revenue. This was a small decrease of less than 1% compared to the year-ago quarter.
Investment Advisory Performance Fees
In contrast with administrative fees, performance fees are assessed to certain types of BlackRock accounts when performance exceeds a predetermined threshold. Performance fees accounted for $554 million in revenue, or about 3% of total revenue in FY 2023. This was up 7.78% compared to the previous fiscal year.
Technology Services Revenue
BlackRock offers a range of investment management technology systems, risk management services, wealth management, and digital distribution tools to various insurance company, bank, pension fund, and asset manager clients. Technology services accounted for $1.49 billion in revenue for FY 2023, or about 8% of the total. This figure was up about 9%.
Distribution Fees
BlackRock levies fees associated with the distribution and service of its various products, as well as for support services related to investment portfolios. In FY 2023, this category accounted for $1.26 billion in revenue, or about 7% of total revenue for the year. This was down about 9% compared to FY 2022.
Advisory and Other Revenue
BlackRock also separates out a category of revenue associated with its advisory services for global financial institutions, regulators, and governments. These fees are set at a fixed rate. In FY 2023, this category accounted for $159 million in revenue, or about 1% of total revenue. This was down about 3% compared to the previous fiscal year.
BlackRock's Recent Developments
On March 3, 2022, BlackRock said that it had halted purchases of all Russian securities in both its active and index funds amid Russia's recent invasion of Ukraine. Russian securities comprise less than 0.01% of the company's clients' assets.
How BlackRock Reports Diversity and Inclusiveness
As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of BlackRock and its commitment to diversity, inclusiveness, and social responsibility. We examined the data BlackRock releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.
Below is a table of potential diversity measurements. It shows whether BlackRock discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether BlackRock breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.
