BlackRock, Inc.’s 2025 Earnings Call: Private Credit Contradictions and Diverging Margin Targets Highlight Inconsistent Messaging

Date of Call: Jan 15, 2026

Financials Results

• Revenue: Q4: $7B, up 23% YOY; Full Year: $24B, up 19% YOY
• EPS: Q4: $13.16, up 10% YOY; Full Year: $48.09, up 10% YOY
• Operating Margin: Q4 as-adjusted: 45%, down 50 bps YOY; Full Year as-adjusted: 44.1%, down 40 bps YOY

Guidance:

• Base fees run rate approx. 35% higher than 2024 and 50% higher than 2023.
• Targeting $400B in gross private markets fundraising through 2030.
• Expect mid-single-digit percentage increase in G&A for 2026 after annualizing HPS/Preqin impact.
• Headcount expected to be broadly flat in 2026.
• Targeting $1.8B in share repurchases for 2026.
• Expect bond returns to be driven more by income than price appreciation in 2026.
• Fee yields on new assets 6-7x higher than in 2023.
• Expect strong momentum in private markets, systematic strategies, and active ETFs.

Business Commentary:

Record Financial Performance and Growth:

• BlackRock reported revenue of $24 billion for the full year 2025, up 19% year-over-year, and operating income of $9.6 billion, up 18%.
• This growth was driven by strong net new asset inflows, organic base fee growth, and favorable market movements.

Organic Base Fee Growth:

• The company achieved 9% organic base fee growth for the full year 2025, with a notable 12% growth in the fourth quarter.
• This growth was broad-based across various franchises, including systematic, private markets, ETFs, and digital assets, reflecting strong client retention and performance.

Technology and Data Services Expansion:

• Technology services and subscription revenue increased by 24% year-over-year, with annual contract value (ACV) rising by 31%, of which 16% was organic.
• This was due to successful onboarding of new clients and the integration of Preqin, enhancing BlackRock's data and analytics offerings.

Shareholder Returns and Dividend Growth:

• BlackRock returned a record $5 billion to shareholders in 2025 through dividends and share repurchases, and announced a 10% increase in the 2026 dividend per share.
• The increase in dividends and share repurchases was supported by accelerating growth trajectory and strong platform performance.

Strong Earnings and Margin Performance:

• The company reported earnings per share (EPS) of $48.09, a 10% increase from the previous year, with a fourth-quarter EPS of $13.16, up 10% year-over-year.
• Margin expansion was driven by favorable market conditions, strong recurring fee growth, and strategic acquisitions like HPS and Preqin.

Sentiment Analysis:

Overall Tone: Positive

• Management stated: 'We're closing out one of the strongest years in our history' and 'We entered 2026 with accelerating momentum across our entire platform.' They highlighted record net inflows, strong organic base fee growth (12% in Q4), margin expansion on recurring fees, and confidence in future growth drivers like private markets and technology.

Q&A:

• Question from Craig Siegenthaler (BofA Securities): As we look ahead to 2026, can you flush out what you're all seeing and thinking on the net flow pipeline? And... with the Fed cutting, do you see flows reversing in this business? And if it does, where do you think that liquidity goes?
  Response: Organic base fee growth is strong and accelerating; pipeline is broad-based. Money market yields may fall with rate cuts, but cash holdings are expected to remain large due to global capital market growth and tokenization, with investors moving up the yield curve.

• Question from Michael Cyprys (Morgan Stanley): How are you looking to accelerate growth and expand contribution from Asia over the next couple of years?
  Response: Asia's growing capital markets (e.g., Japan NISA, Hong Kong IPOs, India's Jio BlackRock platform) present significant opportunities; growth is tied to the expansion of global capital markets.

• Question from Michael Brown (UBS Investment Bank): Can you talk about how your differentiated offering... differentiates here and maybe unpack your comments about how the demand for the channel is shaping up here in 2026?
  Response: BlackRock's full-service platform (public fixed income, private credit, Aladdin, middle office) makes it a performance enhancer for insurers; has over 20 active conversations to migrate assets into private high-grade and expand mandates.

• Question from Alexander Blostein (Goldman Sachs Group, Inc.): How should we think about that progressing over the course of '26... And then, Martin, just a follow-up for you, the specifics around G&A...
  Response: Target 45%+ adjusted operating margin; margin on recurring fee earnings is expanding and should trend toward north of 50% over time. G&A expected mid-single-digit percentage increase in 2026 after annualizing acquisitions.

• Question from Kenneth Worthington (JPMorgan Chase & Co): How should we view the evolution of Preqin and BlackRock's initiatives around private market data? And what sort of outlook do you see...
  Response: Integration is progressing well; focus is on expanding distribution, building data/models, enriching data, and leveraging Aladdin/iShares to create investable private market indices, with a big opportunity in standardizing pricing and risk tools.

• Question from Daniel Fannon (Jefferies LLC): I was hoping you could first disclose what the HPS flows were in the quarter. And then more broadly, how you're thinking about the outlook for growth...
  Response: HPS private credit net inflows were $7B in Q4. Credit conditions are stable; defaults are rising but in historical ranges. Strong fundraising momentum continues with over 80% of investors planning to maintain/increase private credit allocations.

• Question from Benjamin Budish (Barclays Bank PLC): Just curious if you could provide a little bit more color on your expectations for the wealth channel more generally in 2026... And then I think in the prepared remarks, you talked about model portfolios using private markets...
  Response: Launching an H Series of private markets vehicles in 2026 (e.g., real assets, triple net lease) to grow AUM to at least $60B by 2030; targeting $400B in gross fundraising from 2025-2030.

Contradiction Point 1

Outlook and Tone on Private Credit Credit Trends

Contradiction in assessment of credit environment and default trends.

What were the HPS flows in the quarter, and how is the outlook for growth influenced by recent private credit developments? - Daniel Fannon (Jefferies LLC)

2025Q4: Default rates are rising but remain in historical ranges (slightly below 3% long-term average). Nonaccruals and recovery rates are also in line with history. - Martin Small(CFO)

What credit trends are the HPS team observing in their direct lending portfolios in Q3, and how do lower rates and tighter spreads impact the asset class's growth? - Alexander Blostein (Goldman Sachs Group, Inc.)

2025Q3: Reported bankruptcies in private credit are in syndicated bank loan/CLO markets, not large private credit direct lending books... Teams are being vigilant but are not seeing widespread credit stress. - Martin Small(CFO)

Contradiction Point 2

Expectations for Private Markets Flows in HPS

Contradiction in describing the nature and predictability of private credit flows.

What were the HPS flows in the quarter, and how do you view the growth outlook considering recent private credit headlines? - Daniel Fannon (Jefferies LLC)

2025Q4: HPS deployed $25B in 2025, with $7B in private credit net inflows in Q4 (primarily deployment). Credit conditions are generally stable. - Martin Small(CFO)

Are the recent increases in private markets flows, similar to those after the GIP acquisition, indicative of a sustainable run rate for the next several quarters, or were there unusual factors this quarter? - Benjamin Budish (Barclays Bank PLC)

2025Q3: Private credit flows (e.g., from HLEND, junior capital strategies) are more regular, while infrastructure flows are more episodic due to large transactions/realizations. - Martin Small(CFO)

Contradiction Point 3

Capital Return Strategy and Payout Ratio

Guidance on dividend policy and capital allocation appears inconsistent.

How will the 45% operating margin (excluding performance fees) progress in 2026 under normal market conditions, and what are the specifics around G&A? - Alexander Blostein (Goldman Sachs)

2025Q4: The dividend payout ratio is targeted between 40%-50%... Future dividend growth is expected to be at high single to low double-digit rates. - Martin Small(CFO)

Given recent transaction consolidation and a cautious M&A outlook, how do you plan to balance capital returns through dividends and buybacks? - William Raymond Katz (TD Cowen)

2025Q2: The dividend has grown at a CAGR of over 15% since 2003. The average dividend payout ratio over the last 5 years has been 50% of GAAP net income. - Martin Small(CFO)

Contradiction Point 4

Long-Term Operating Margin Trajectory

The target for recurring fee margin progression is presented differently.

How will the 45% operating margin (excluding performance fees) progress in 2026 under normal market conditions, and what are the specifics around G&A? - Alexander Blostein (Goldman Sachs)

2025Q4: Long-term margin trajectory aims north of 50% for fee-recurring earnings. - Martin Small(CFO)

How do you expect the impact of acquisitions fully integrating to affect adjusted operating margin and business scaling in the back half? - Alexander Blostein (Goldman Sachs)

2025Q2: The strategy targets 45% or greater margins over the cycle. - Martin Small(CFO)

Contradiction Point 5

Outlook for Money Market and Bond Flows

Contradiction on investor behavior and liquidity movement with changing interest rates.

Looking ahead to 2026, what are your expectations for the net flow pipeline? With the Fed cutting rates, do you anticipate flow reversals in your money market business, and if so, where might that liquidity go? - Craig Siegenthaler (BofA Securities)

2025Q4: Money market yields may fall with rate cuts, prompting investors to move up the curve to intermediate-term bonds. - Martin Small(CFO)

What shifts in retail and institutional allocations are clients anticipating, and how are they making decisions? - Michael Cyprys (Morgan Stanley)

2025Q1: Elevated cash inflows ($20 billion in April) indicate a shift towards fixed income and cash as yield curves steepen. - Laurence Fink(CEO)