BlackRock Hits Revenue Expectations, Misses on Earnings
Citing a volatile economic environment, the massive asset management company BlackRock (BLK) - Get Report posted mixed results for the second quarter.
For the quarter ended June 30, BlackRock posted earnings of $4.73 per share, missing Bloomberg's consensus estimate of $4.78, and down from $4.84 the same quarter last year. Revenue of $2.8 billion was slightly higher than expectations, and down 3% from last year.
Excluding some items, the company's earnings were $4.78 per share, in line with analyst expectations.
BlackRock's iShares line of exchange-traded funds accounted for more than a third of the company's base fees for the quarter, while making up just a quarter of the assets under management. Advisory fees and securities lending make up the vast majority of BlackRock's revenue.
"Preferences are changing, so the old ways of people investing in categories of market capitalization are also going to be changing," BlackRock CEO Laurence D. Fink said on a conference call with investors, adding that "iShares is taking some share away from people buying individual stocks" or bonds.
Fink predicted the market for exchange-traded funds, or ETFs, would double in the next five years.
Earlier this year, global markets were roiled by slowing economic growth in China as well as a slide in oil prices, which began to rebound in the past three months but are still at less than half their peak 2014 price. "Political and macroeconomic uncertainty, historically low yields and elevated market volatility are leading clients to pause," Fink said in a statement.
Last month, Great Britain's decision to leave the European Union fueled further uncertainty about the economic outlook, including how Europe will handle risks in its weakest economies without U.K. funding.
The uncertainty has fueled high demand for bonds, and fixed-income products drove two-thirds of iShares' $16 billion in long-term net inflows for the quarter. Those gains were partially offset by net outflows in BlackRock's other retail and institutional investing businesses.
"Clients are facing unprecedented challenges as they attempt to navigate the current investment environment," Fink noted.
BlackRock shares were roughly flat in early trading.