BlackRock lives up to the billing with a big beat, big AUM, and a big acquisition

BlackRock Inc., the world's largest asset manager, delivered a strong earnings report for the fourth quarter of 2023, surpassing expectations and highlighting the company's ability to attract client inflows amid market volatility. The company reported adjusted earnings per share of $9.66, beating the consensus estimate of $8.87, and revenues of $4.63 billion, slightly missing estimates of $4.65 billion.

The impressive quarterly performance was driven by a surge in client inflows, particularly in its long-term funds. BlackRock's clients added a remarkable $63 billion to its ETFs and other products in the fourth quarter, demonstrating their willingness to invest as stock and bond markets surged. This influx of funds pushed BlackRock's total assets under management (AUM) over $10 trillion, exceeding the $9.8 trillion estimate of analysts and coming close to its record AUM from two years ago.

CEO Larry Fink attributed the company's success to its ability to provide differentiated organic growth and operating margins in challenging market conditions. When investors were ready to put money back to work, they did it with BlackRock, he said in a statement.

The strong earnings report came on the same day that BlackRock announced its acquisition of Global Infrastructure Partners (GIP), an independent infrastructure fund manager, for a total consideration of $3 billion in cash and approximately 12 million shares of BlackRock common stock. GIP is the world's largest independent infrastructure manager with over $100 billion in assets under management (AUM) and a strong reputation for driving operational improvements in its portfolio companies and proprietary origination. The acquisition is expected to create a market-leading, multi-asset class infrastructure investing platform with combined client AUM of over $150 billion across equity, debt, and solutions, and strengthen deal flow and co-investment opportunities.

In addition to the strong earnings and acquisition news, BlackRock also announced a 2% increase in its quarterly cash dividend to $5.10 per share, approved by its Board of Directors.

The company's shares were up 0.81% at 9:38 a.m. in New York. BlackRock's adjusted net income rose 7% year-over-year to $1.5 billion, while revenue increased 7% to $4.6 billion.

The company's separate cash-management business and money-market funds also saw significant inflows, adding $33 billion. Clients put $88 billion into the firm's ETFs and $32 billion into its fixed-income funds.

Overall, BlackRock's fourth-quarter earnings report reflects the company's ability to attract client inflows, drive operational improvements, and deliver strong results in a challenging market environment. With its acquisition of GIP and a growing AUM, BlackRock is well-positioned to continue its leadership in the asset management industry.