BlackRock profits jump in volatile quarter thanks to tech services growth

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BlackRock’s profit beat forecasts, rising 13% year-on-year, despite market volatility that reduced assets under management and led to the group’s first quarterly net long-term outflows since the early days of the Covid-19 pandemic.

The world’s largest asset manager reported adjusted net profit of $1.6 billion, helped by faster-than-expected growth in its Aladdin risk management platform and other technologies. Revenue was $4.5 billion and adjusted earnings per share were $10.91.

Large institutional clients redeemed $19 billion from their index funds, driving outflows, while flows into exchange-traded funds continued, taking long-term net outflows to $13 billion at the end of June. Cautious investors continued to hold more cash, so total funds flow was slightly positive at $2.57 billion.

“We are delivering economies of scale to our customers and shareholders, with margin expansion and adjusted earnings per share growing 14% year over year,” said Chief Executive Officer Larry Fink. “Technology services revenue grew 20% during the same period, reflecting a strong focus on Continued demand for Aladdin and several large renewals for eFront… The long-term trend of clients integrating more of their portfolios with BlackRock is only accelerating, and the underlying business momentum remains strong.”

Assets under management fell to $9.1 trillion in the quarter, despite year-over-year growth.

BlackRock shares fell 1.8% in premarket trading. They have fallen more than 15% since late July.

Analysts polled by Bloomberg had expected long-term net inflows this quarter to be $50 billion.

While BlackRock outperformed most rivals, its quarterly long-term inflows fell to their lowest levels since the pandemic began, according to calculations by Edward Jones firm Kyle Saunders.

But he remains bullish on the stock, saying investors will soon come back in droves. “With so much money in money market funds, it’s just a matter of when, not if,” said Sanders, who continued to rate the company a “buy.”

Among the broader industry, assets in national money market funds remain close to a record high of $5.7 trillion, according to data this week from the Investment Company Institute.