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BlackRock, Inc.’s (BLK - Free Report) second-quarter 2022 adjusted earnings of $7.36 per share missed the Zacks Consensus Estimate of $8.33. The figure reflects a decrease of 30% from the year-ago quarter.
Shares of the company are down 1.8% in pre-market trading in response to lower-than-expected earnings. Investors are bearish on the stock over dismal quarterly performance and are concerned over the challenging geopolitical and macroeconomic environment.
Results were adversely impacted by an unfavorable operating backdrop, leading to lower revenues and assets under management (AUM) balance. A modest decline in expenses was a tailwind.
Net income attributable to BlackRock (on a GAAP basis) was $1.08 billion, down 22% from the prior-year quarter.
Revenues & Expenses Down
Revenues (on a GAAP basis) were $4.53 billion, falling 6% year over year. The decline largely stemmed from a decrease in almost all components of revenues, except for technology services revenues and total advisory and other revenues. The figure also lagged the Zacks Consensus Estimate of $4.54 billion.
Total expenses amounted to $2.86 billion, down 1%. The decline was mainly due to lower employee compensation and benefits costs and direct fund expenses.
Non-operating expenses (on a GAAP basis) were $347 million against non-operating income of $270 million in the year-ago quarter.
BlackRock’s adjusted operating income was $1.73 billion, down 14% from the prior-year period.
AUM Balance Dips
As of Jun 30, 2022, AUM totaled $8.49 trillion, reflecting a year-over-year fall of 11%. In the reported quarter, the company witnessed long-term net inflows of $68.6 billion. On the other hand, unfavorable market change and FX impact hurt AUM balance.
Average AUM of $9.02 trillion as of Jun 30, 2022, declined 3%.
Share Repurchase Update
BlackRock repurchased shares worth $500 million in the reported quarter.
Our View
Uncertain markets and extreme volatility on the back of macroeconomic concerns have led to unfavorable operating backdrop for BlackRock. These factors have been leading to lower performance fees and an overall decline in average AUM balance and thus, hurting revenue growth.
Yet, BLK’s continued efforts to strengthen the iShares and ETF operations, along with its initiatives to restructure the actively-managed equity business, are expected to remain tailwinds.
Earnings Dates & Expectations of Other Asset Managers
SEI Investments Company (SEIC - Free Report) is slated to report second-quarter 2022 results on Jul 20.
Over the past 30 days, the Zacks Consensus Estimate for SEI Investments’ quarterly earnings has moved 8.9% lower to 82 cents. This indicates an 11.8% fall from the prior-year quarter.
Invesco Ltd. (IVZ - Free Report) is scheduled to announce second-quarter 2022 numbers on Jul 27.
Over the past month, the Zacks Consensus Estimate for IVZ’s quarterly earnings has moved 3.3% south to 58 cents, implying a 25.6% decline from the prior-year reported number.
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BlackRock (BLK) Q2 Earnings Lag, Revenues & AUM Fall, Stock Down
BlackRock, Inc.’s (BLK - Free Report) second-quarter 2022 adjusted earnings of $7.36 per share missed the Zacks Consensus Estimate of $8.33. The figure reflects a decrease of 30% from the year-ago quarter.
Shares of the company are down 1.8% in pre-market trading in response to lower-than-expected earnings. Investors are bearish on the stock over dismal quarterly performance and are concerned over the challenging geopolitical and macroeconomic environment.
Results were adversely impacted by an unfavorable operating backdrop, leading to lower revenues and assets under management (AUM) balance. A modest decline in expenses was a tailwind.
Net income attributable to BlackRock (on a GAAP basis) was $1.08 billion, down 22% from the prior-year quarter.
Revenues & Expenses Down
Revenues (on a GAAP basis) were $4.53 billion, falling 6% year over year. The decline largely stemmed from a decrease in almost all components of revenues, except for technology services revenues and total advisory and other revenues. The figure also lagged the Zacks Consensus Estimate of $4.54 billion.
Total expenses amounted to $2.86 billion, down 1%. The decline was mainly due to lower employee compensation and benefits costs and direct fund expenses.
Non-operating expenses (on a GAAP basis) were $347 million against non-operating income of $270 million in the year-ago quarter.
BlackRock’s adjusted operating income was $1.73 billion, down 14% from the prior-year period.
AUM Balance Dips
As of Jun 30, 2022, AUM totaled $8.49 trillion, reflecting a year-over-year fall of 11%. In the reported quarter, the company witnessed long-term net inflows of $68.6 billion. On the other hand, unfavorable market change and FX impact hurt AUM balance.
Average AUM of $9.02 trillion as of Jun 30, 2022, declined 3%.
Share Repurchase Update
BlackRock repurchased shares worth $500 million in the reported quarter.
Our View
Uncertain markets and extreme volatility on the back of macroeconomic concerns have led to unfavorable operating backdrop for BlackRock. These factors have been leading to lower performance fees and an overall decline in average AUM balance and thus, hurting revenue growth.
Yet, BLK’s continued efforts to strengthen the iShares and ETF operations, along with its initiatives to restructure the actively-managed equity business, are expected to remain tailwinds.
BlackRock, Inc. Price, Consensus and EPS Surprise
BlackRock, Inc. price-consensus-eps-surprise-chart | BlackRock, Inc. Quote
BlackRock currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates & Expectations of Other Asset Managers
SEI Investments Company (SEIC - Free Report) is slated to report second-quarter 2022 results on Jul 20.
Over the past 30 days, the Zacks Consensus Estimate for SEI Investments’ quarterly earnings has moved 8.9% lower to 82 cents. This indicates an 11.8% fall from the prior-year quarter.
Invesco Ltd. (IVZ - Free Report) is scheduled to announce second-quarter 2022 numbers on Jul 27.
Over the past month, the Zacks Consensus Estimate for IVZ’s quarterly earnings has moved 3.3% south to 58 cents, implying a 25.6% decline from the prior-year reported number.