BlackRock (BLK) Beats On Q1 Earnings Despite Lower Revenues
Zacks Investment Research | Apr 16, 2019 08:33AM ET
BlackRock, Inc.’s (NYSE:BLK) first-quarter 2019 adjusted earnings of $6.61 per share surpassed the Zacks Consensus Estimate of $6.20. However, the figure was 1.3% lower than the year-ago quarter’s number.
Results benefited from a decline in expenses and higher assets under management (AUM). However, lower revenues acted as a headwind.
Net income (on a GAAP basis) was $1.05 billion, decreasing 3.3% from the prior-year quarter.
Revenues & Expenses Decline
Revenues for the reported quarter (on a GAAP basis) were $3.35 billion, declining 6.6% year over year. This downside stemmed mainly from decrease in investment advisory, administration fees and securities lending revenues, and investment advisory performance fees. However, the reported figure surpassed the Zacks Consensus Estimate of $3.32 billion.
Total expenses amounted to $2.11 billion, down nearly 4.3% year over year. This decline was due to fall in almost all components except for general and administration costs, and costs related to amortization of intangible assets.
Non-operating income (on a GAAP basis) was $125 million compared with non-operating expense of $16 million recorded in the year-ago quarter.
BlackRock’s adjusted operating income was $1.23 billion, down 10.5% year over year.
Higher AUM & Inflows
As of Mar 31, 2019, AUM totaled nearly $6.5 trillion, reflecting rise of 3.1% year over year. Furthermore, during the reported quarter, the company witnessed long-term net inflows of $59 billion.
Our Viewpoint
BlackRock’s acquisitions and expansion efforts, along with initiatives to restructure its actively managed equity business, are expected to boost top line and AUM. While increase in operating expenses and the company's high dependence on overseas revenues remain matters of concern, its capital deployment actions reflect strong balance sheet position.
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