BlackRock Inc. - FORM 8-K - EX-99.1 - EARNINGS RELEASE DATED JULY 17, 2020

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EX-99.2 - SECOND QUARTER 2020 EARNINGS - EARNINGS RELEASE SUPPLEMENT - BlackRock Inc.	blk-ex992_6.htm
8-K - 8-K - BlackRock Inc.	blk-8k_20200717.htm

Exhibit 99.1

INVESTOR RELATIONS:

Samantha Tortora 212.810.5397

MEDIA RELATIONS:

Brian Beades 212.810.5596

BlackRock Reports Second Quarter 2020 Diluted EPS of $7.85

New York, July 17, 2020 – BlackRock, Inc. (NYSE: BLK) today reported financial results for the three and six months ended June 30, 2020.

$100 billion of quarterly total net inflows, driven by fixed income and continued momentum in cash management

6% annualized organic asset growth in the quarter and higher organic base fee growth reflect strength of diversified investment management platform, especially in active capabilities and strategic focus areas of iShares®

4% increase in revenue year-over-year reflects higher performance fees and 17% growth in technology services revenue, driven by continued Aladdin® momentum

10% increase in operating income year-over-year also reflects lower G&A expense, including the impact of $59 million of product launch costs in the prior year quarter

22% increase in diluted EPS reflects higher year-over-year nonoperating income, a lower effective tax rate and a lower diluted share count in the current quarter

$1.1 billion of shares repurchases in the quarter as part of PNC’s successful sale of its entire 22% ownership position

Laurence D. Fink, Chairman and CEO:

“Clients are turning to BlackRock more than ever before as they face increasing uncertainty about the future, and we are bringing together the entirety of our differentiated platform to help them. Clients are relying on BlackRock for our unique insights, guidance and comprehensive investment solutions. This is leading to deeper partnerships, and we’re seeing clients entrust BlackRock with a greater share of their assets.

“BlackRock’s globally integrated asset management and technology platform generated $100 billion of total net inflows in the second quarter, representing 10% annualized organic base fee growth. iShares fixed income ETFs and BlackRock’s active equity strategies both saw record inflows, and leadership in cash solutions drove strength in flows as clients sought liquidity. Momentum also continued in sustainable strategies and illiquid alternatives, where we are investing for future growth.

“BlackRock’s strong fiduciary culture is resonating in the depth of our relationships and the strength of our results. It is one of the key drivers of growth in our Aladdin technology business, and a critical reason why our Financial Markets Advisory team is working with governments around the world as they support their economies.

“Our steadfast focus is on serving all of our stakeholders through this crisis. I am honored by the trust that clients, governments and communities have placed in us, which we approach with a deep sense of responsibility. I am also incredibly proud of our employees, who have come together, even while working remotely, to partner with clients, uphold our One BlackRock culture and live our purpose.

FINANCIAL RESULTS

	Q2			Q2
(in millions, except per share data)	2020			2019
AUM	$	7,317,949		$	6,842,482
% change		7	%
Average AUM	$	6,975,779		$	6,625,391
% change		5	%
Total net flows	$	100,217		$	150,985

GAAP basis:
Revenue	$	3,648		$	3,524
% change		4	%
Operating income	$	1,406		$	1,278
% change		10	%
Operating margin		38.5	%		36.3	%
Net income⁽¹⁾	$	1,214		$	1,003
% change		21	%
Diluted EPS	$	7.85		$	6.41
% change		22	%
Weighted average diluted shares		154.7			156.4
% change		(1	)%

As Adjusted:
Operating income⁽²⁾	$	1,406		$	1,278
% change		10	%
Operating margin⁽²⁾		43.7	%		43.1	%
Net income^{(1) (2)}	$	1,214		$	1,003
% change		21	%
Diluted EPS⁽²⁾	$	7.85		$	6.41
% change		22	%

⁽¹⁾	Net income represents net income attributable to BlackRock, Inc.

⁽²⁾	See notes (1) through (4) to the condensed consolidated statements of income and supplemental information on pages 11 and 12 for more information on as adjusted items and the reconciliation to GAAP.

NET FLOW HIGHLIGHTS

			Q2			YTD
(in billions)			2020			2020
Long-term net flows:			$	62.2		$	43.5

By region:

	Americas		$	30.9		$	17.2
	EMEA			29.0			18.4
	APAC			2.3			7.9

By client type:

	Retail:		$	16.2		$	14.7
		US		8.4			6.8
		International		7.8			7.9

	iShares:		$	51.0		$	64.8
		Core		1.3			8.3
		Non-Core		49.7			56.5

	Institutional:		$	(5.0	)	$	(36.0	)
		Active		2.5			0.7
		Index		(7.5	)		(36.7	)

Cash management net flows:			$	24.2		$	76.7

Advisory net flows:			$	13.8		$	15.0

Total net flows			$	100.2		$	135.2

BUSINESS RESULTS

								June 30, 2020			Q2 2020
	Q2 2020			June 30, 2020		Q2 2020		AUM			Base fees⁽¹⁾
(in millions), (unaudited)	Net flows			AUM		Base fees⁽¹⁾		% of Total			% of Total
RESULTS BY CLIENT TYPE
Retail	$	16,210		$	695,154	$	825		9	%		28	%
iShares ETFs		50,970			2,162,597		1,089		30	%		37	%
Institutional:
Active		2,513			1,341,610		546		18	%		18	%
Index		(7,486	)		2,482,336		295		35	%		10	%
Total institutional		(4,973	)		3,823,946		841		53	%		28	%
Long-term		62,207			6,681,697		2,755		92	%		93	%
Cash management		24,198			619,351		211		8	%		7	%
Advisory⁽²⁾		13,812			16,901		-		-			-
Total	$	100,217		$	7,317,949	$	2,966		100	%		100	%

RESULTS BY INVESTMENT STYLE
Active	$	18,563		$	1,943,828	$	1,354		27	%		46	%
Index and iShares ETFs		43,644			4,737,869		1,401		65	%		47	%
Long-term		62,207			6,681,697		2,755		92	%		93	%
Cash management		24,198			619,351		211		8	%		7	%
Advisory⁽²⁾		13,812			16,901		-		-			-
Total	$	100,217		$	7,317,949	$	2,966		100	%		100	%

RESULTS BY PRODUCT TYPE
Equity	$	(4,414	)	$	3,519,225	$	1,351		48	%		46	%
Fixed income		60,266			2,411,092		854		33	%		29	%
Multi-asset		(4,754	)		551,362		270		8	%		9	%
Alternatives		11,109			200,018		280		3	%		9	%
Long-term		62,207			6,681,697		2,755		92	%		93	%
Cash management		24,198			619,351		211		8	%		7	%
Advisory⁽²⁾		13,812			16,901		-		-			-
Total	$	100,217		$	7,317,949	$	2,966		100	%		100	%

⁽¹⁾	Base fees include investment advisory, administration fees and securities lending revenue.

⁽²⁾

Approximately $3.9 billion of iShares ETFs AUM held in advisory accounts associated with the Federal Reserve Bank of New York (“FRBNY”) assignment as of June 30, 2020 (disclosed via FRBNY reporting as of July 10, 2020) are included within iShares AUM or Fixed Income AUM above. These holdings are excluded from Advisory AUM.

INVESTMENT PERFORMANCE AT June 30, 2020⁽¹⁾

	One-year period	Three-year period	Five-year period
Fixed income:
Actively managed AUM above benchmark or peer median
Taxable	75%	82%	84%
Tax-exempt	29%	53%	62%
Index AUM within or above applicable tolerance	81%	97%	91%
Equity:
Actively managed AUM above benchmark or peer median
Fundamental	76%	82%	85%
Systematic	33%	76%	71%
Index AUM within or above applicable tolerance	95%	98%	97%

⁽¹⁾	Past performance is not indicative of future results. The performance information shown is based on preliminary available data. Please refer to page 13 for performance disclosure detail.

TELECONFERENCE, WEBCAST AND PRESENTATION INFORMATION

Chairman and Chief Executive Officer, Laurence D. Fink, President, Robert S. Kapito, and Chief Financial Officer, Gary S. Shedlin, will host a teleconference call for investors and analysts on Friday, July 17, 2020 at 8:30 a.m. (Eastern Time). Members of the public who are interested in participating in the teleconference should dial, from the United States, (800) 374-0176, or from outside the United States, (706) 679-8281, shortly before 8:30 a.m. and reference the BlackRock Conference Call (ID Number 7266989). A live, listen-only webcast will also be available via the investor relations section of www.blackrock.com.

Both the teleconference and webcast will be available for replay by 11:30 a.m. (Eastern Time) on Friday, July 17, 2020 and ending at midnight on Friday, July 31, 2020. To access the replay of the teleconference, callers from the United States should dial (855) 859-2056 and callers from outside the United States should dial (404) 537-3406 and enter the Conference ID Number 7266989. To access the webcast, please visit the investor relations section of www.blackrock.com.

ABOUT BLACKROCK

BlackRock’s purpose is to help more and more people experience financial well-being. As a fiduciary to investors and a leading provider of financial technology, our clients turn to us for the solutions they need when planning for their most important goals. As of June 30, 2020, the firm managed approximately $7.32 trillion in assets on behalf of investors worldwide. For additional information on BlackRock, please visit www.blackrock.com | Twitter: @blackrock | Blog: www.blackrockblog.com | LinkedIn: www.linkedin.com/company/blackrock.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION

(in millions, except shares and per share data), (unaudited)

										Three Months
	Three Months Ended									Ended
	June 30,									March 31,
	2020			2019			Change			2020			Change
Revenue
Investment advisory, administration fees and securities lending revenue	$	2,966		$	2,903		$	63		$	3,055		$	(89	)
Investment advisory performance fees		112			64			48			41			71
Technology services revenue		278			237			41			274			4
Distribution fees		253			267			(14	)		276			(23	)
Advisory and other revenue		39			53			(14	)		64			(25	)
Total revenue		3,648			3,524			124			3,710			(62	)

Expense
Employee compensation and benefits		1,152			1,083			69			1,137			15
Distribution and servicing costs		429			416			13			445			(16	)
Direct fund expense		246			252			(6	)		277			(31	)
General and administration		388			470			(82	)		1,142			(754	)
Amortization of intangible assets		27			25			2			25			2
Total expense		2,242			2,246			(4	)		3,026			(784	)

Operating income		1,406			1,278			128			684			722

Nonoperating income (expense)
Net gain (loss) on investments		398			89			309			(40	)		438
Interest and dividend income		10			20			(10	)		15			(5	)
Interest expense		(51	)		(52	)		1			(46	)		(5	)
Total nonoperating income (expense)		357			57			300			(71	)		428

Income before income taxes		1,763			1,335			428			613			1,150
Income tax expense (benefit)		361			322			39			(14	)		375
Net income		1,402			1,013			389			627			775
Less:
Net income (loss) attributable to noncontrolling interests		188			10			178			(179	)		367
Net income attributable to BlackRock, Inc.	$	1,214		$	1,003		$	211		$	806		$	408

Weighted-average common shares outstanding
Basic		153,732,878			155,354,552			(1,621,674	)		155,243,279			(1,510,401	)
Diluted		154,712,032			156,360,741			(1,648,709	)		156,416,726			(1,704,694	)
Earnings per share attributable to BlackRock, Inc. common stockholders (4)
Basic	$	7.90		$	6.46		$	1.44		$	5.19		$	2.71
Diluted	$	7.85		$	6.41		$	1.44		$	5.15		$	2.70
Cash dividends declared and paid per share	$	3.63		$	3.30		$	0.33		$	3.63		$	-

Supplemental information:

AUM (end of period)	$	7,317,949		$	6,842,482		$	475,467		$	6,466,668		$	851,281
Shares outstanding (end of period)		152,460,239			155,366,861			(2,906,622	)		155,085,806			(2,625,567	)
GAAP:
Operating margin		38.5	%		36.3	%		220	bps		18.4	%		2,010	bps
Effective tax rate		22.9	%		24.3	%		(140	) bps		(1.7	)%		2,460	bps
As adjusted:
Operating income (1)	$	1,406		$	1,278		$	128		$	1,273		$	133
Operating margin (1)		43.7	%		43.1	%		60	bps		41.7	%		200	bps
Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests (2)	$	169		$	47		$	122		$	(14	)	$	183
Net income attributable to BlackRock, Inc. (3)	$	1,214		$	1,003		$	211		$	1,032		$	182
Diluted earnings attributable to BlackRock, Inc. common stockholders per share (3) (4)	$	7.85		$	6.41		$	1.44		$	6.60		$	1.25
Effective tax rate		22.9	%		24.3	%		(140	) bps		18.0	%		490	bps

See pages 11-12 for the reconciliation to GAAP and notes (1) through (4) for more information on as adjusted items.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION

(in millions, except shares and per share data), (unaudited)


	Six Months Ended
	June 30,
	2020			2019			Change
Revenue
Investment advisory, administration fees and securities lending revenue	$	6,021		$	5,708		$	313
Investment advisory performance fees		153			90			63
Technology services revenue		552			441			111
Distribution fees		529			529			-
Advisory and other revenue		103			102			1
Total revenue		7,358			6,870			488

Expense
Employee compensation and benefits		2,289			2,147			142
Distribution and servicing costs		874			820			54
Direct fund expense		523			494			29
General and administration		1,530			858			672
Amortization of intangible assets		52			40			12
Total expense		5,268			4,359			909

Operating income		2,090			2,511			(421	)

Nonoperating income (expense)
Net gain (loss) on investments		358			231			127
Interest and dividend income		25			49			(24	)
Interest expense		(97	)		(98	)		1
Total nonoperating income (expense)		286			182			104

Income before income taxes		2,376			2,693			(317	)
Income tax expense (benefit)		347			620			(273	)
Net income		2,029			2,073			(44	)
Less:
Net income (loss) attributable to noncontrolling interests		9			17			(8	)
Net income attributable to BlackRock, Inc.	$	2,020		$	2,056		$	(36	)

Weighted-average common shares outstanding
Basic		154,488,079			156,803,244			(2,315,165	)
Diluted		155,556,187			157,853,711			(2,297,524	)
Earnings per share attributable to BlackRock, Inc. common stockholders (4)
Basic	$	13.08		$	13.11		$	(0.03	)
Diluted	$	12.99		$	13.02		$	(0.03	)
Cash dividends declared and paid per share	$	7.26		$	6.60		$	0.66

Supplemental information:

AUM (end of period)	$	7,317,949		$	6,842,482		$	475,467
Shares outstanding (end of period)		152,460,239			155,366,861			(2,906,622	)
GAAP:
Operating margin		28.4	%		36.6	%		(820	) bps
Effective tax rate		14.7	%		23.2	%		(850	) bps
As adjusted:
Operating income (1)	$	2,679		$	2,511		$	168
Operating margin (1)		42.7	%		42.5	%		20	bps
Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests (2)	$	155		$	165		$	(10	)
Net income attributable to BlackRock, Inc. (3)	$	2,246		$	2,056		$	190
Diluted earnings attributable to BlackRock, Inc. common stockholders per share (3) (4)	$	14.44		$	13.02		$	1.42
Effective tax rate		20.7	%		23.2	%		(250	) bps

See pages 11-12 for the reconciliation to GAAP and notes (1) through (4) for more information on as adjusted items.

ASSETS UNDER MANAGEMENT

(in millions), (unaudited)

Current Quarter Component Changes by Client Type and Product Type
			Net
	March 31,		inflows			Market						June 30,
	2020		(outflows)			change			FX impact⁽¹⁾			2020		Average AUM ⁽²⁾
Retail:
Equity	$	204,742	$	7,134		$	41,803		$	425		$	254,104	$	234,908
Fixed income		278,057		8,656			13,721			726			301,160		290,404
Multi-asset		101,032		(1,345	)		12,127			120			111,934		107,444
Alternatives		24,993		1,765			1,158			40			27,956		26,315
Retail subtotal		608,824		16,210			68,809			1,311			695,154		659,071
iShares ETFs:
Equity		1,253,690		(14,249	)		226,848			4,025			1,470,314		1,384,781
Fixed income		554,009		57,306			20,451			2,332			634,098		594,631
Multi-asset		4,499		52			503			20			5,074		4,850
Alternatives		39,992		7,861			5,205			53			53,111		46,967
iShares ETFs subtotal		1,852,190		50,970			253,007			6,430			2,162,597		2,031,229
Institutional:
Active:
Equity		112,440		(316	)		20,937			871			133,932		124,521
Fixed income		625,345		4,978			33,808			2,562			666,693		646,344
Multi-asset		381,416		(3,337	)		45,012			3,462			426,553		406,737
Alternatives		110,891		1,188			1,787			566			114,432		112,512
Active subtotal		1,230,092		2,513			101,544			7,461			1,341,610		1,290,114
Index:
Equity		1,388,790		3,017			261,528			7,540			1,660,875		1,555,131
Fixed income		778,404		(10,674	)		38,702			2,709			809,141		795,846
Multi-asset		7,230		(124	)		682			13			7,801		7,628
Alternatives		4,075		295			153			(4	)		4,519		4,229
Index subtotal		2,178,499		(7,486	)		301,065			10,258			2,482,336		2,362,834
Institutional subtotal		3,408,591		(4,973	)		402,609			17,719			3,823,946		3,652,948
Long-term		5,869,605		62,207			724,425			25,460			6,681,697		6,343,248
Cash management		594,089		24,198			143			921			619,351		621,985
Advisory ⁽³⁾		2,974		13,812			94			21			16,901		10,546
Total	$	6,466,668	$	100,217		$	724,662		$	26,402		$	7,317,949	$	6,975,779
Current Quarter Component Changes by Investment Style and Product Type (Long-Term)
			Net
	March 31,		inflows			Market						June 30,
	2020		(outflows)			change			FX impact⁽¹⁾			2020		Average AUM ⁽²⁾
Active:
Equity	$	252,758	$	7,647		$	51,204		$	1,200		$	312,809	$	287,991
Fixed income		887,458		12,645			46,761			3,279			950,143		919,877
Multi-asset		482,450		(4,682	)		57,139			3,582			538,489		514,181
Alternatives		135,882		2,953			2,946			606			142,387		138,826
Active subtotal		1,758,548		18,563			158,050			8,667			1,943,828		1,860,875
Index and iShares ETFs:
iShares ETFs:
Equity		1,253,690		(14,249	)		226,848			4,025			1,470,314		1,384,781
Fixed income		554,009		57,306			20,451			2,332			634,098		594,631
Multi-asset		4,499		52			503			20			5,074		4,850
Alternatives		39,992		7,861			5,205			53			53,111		46,967
iShares ETFs subtotal		1,852,190		50,970			253,007			6,430			2,162,597		2,031,229
Non-ETF Index:
Equity		1,453,214		2,188			273,064			7,636			1,736,102		1,626,569
Fixed income		794,348		(9,685	)		39,470			2,718			826,851		812,717
Multi-asset		7,228		(124	)		682			13			7,799		7,628
Alternatives		4,077		295			152			(4	)		4,520		4,230
Non-ETF Index subtotal		2,258,867		(7,326	)		313,368			10,363			2,575,272		2,451,144
Index and iShares ETFs subtotal		4,111,057		43,644			566,375			16,793			4,737,869		4,482,373
Long-Term	$	5,869,605	$	62,207		$	724,425		$	25,460		$	6,681,697	$	6,343,248
Current Quarter Component Changes by Product Type (Long-Term)
			Net
	March 31,		inflows			Market						June 30,
	2020		(outflows)			change			FX impact⁽¹⁾			2020		Average AUM ⁽²⁾
Equity	$	2,959,662	$	(4,414	)	$	551,116		$	12,861		$	3,519,225	$	3,299,341
Fixed income		2,235,815		60,266			106,682			8,329			2,411,092		2,327,225
Multi-asset		494,177		(4,754	)		58,324			3,615			551,362		526,659
Alternatives:
Illiquid alternatives		75,101		1,585			(365	)		286			76,607		75,954
Liquid alternatives		58,127		1,395			3,280			318			63,120		60,226
Currency and commodities⁽⁴⁾		46,723		8,129			5,388			51			60,291		53,843
Alternatives subtotal		179,951		11,109			8,303			655			200,018		190,023
Long-Term	$	5,869,605	$	62,207		$	724,425		$	25,460		$	6,681,697	$	6,343,248

⁽¹⁾	Foreign exchange reflects the impact of translating non-US dollar denominated AUM into US dollars for reporting purposes.

⁽²⁾	Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing four months.

⁽³⁾

Advisory AUM represents mandates linked to purchases and disposition of assets and portfolios on behalf of official institutions and long-term portfolio liquidation assignments. Approximately $3.9 billion of iShares ETFs AUM held in advisory accounts associated with the FRBNY assignment as of June 30, 2020 (disclosed via FRBNY reporting as of July 10, 2020) are included within Fixed Income iShares AUM above. These holdings are excluded from Advisory AUM in the first table above.

⁽⁴⁾	Amounts include commodity iShares ETFs.

ASSETS UNDER MANAGEMENT

(in millions), (unaudited)

Year-to-Date Component Changes by Client Type and Product Type
			Net
	December 31,		inflows			Market						June 30,
	2019		(outflows)			change			FX impact⁽¹⁾			2020		Average AUM ⁽²⁾
Retail:
Equity	$	252,413	$	16,236		$	(11,177	)	$	(3,368	)	$	254,104	$	240,942
Fixed income		305,265		243			(977	)		(3,371	)		301,160		298,574
Multi-asset		120,439		(4,903	)		(3,048	)		(554	)		111,934		112,349
Alternatives		25,180		3,108			(207	)		(125	)		27,956		26,277
Retail subtotal		703,297		14,684			(15,409	)		(7,418	)		695,154		678,142
iShares ETFs:
Equity		1,632,972		(3,801	)		(153,420	)		(5,437	)		1,470,314		1,467,523
Fixed income		565,790		55,670			14,040			(1,402	)		634,098		587,842
Multi-asset		5,210		76			(191	)		(21	)		5,074		4,990
Alternatives		36,093		12,857			4,174			(13	)		53,111		43,199
iShares ETFs subtotal		2,240,065		64,802			(135,397	)		(6,873	)		2,162,597		2,103,554
Institutional:
Active:
Equity		141,118		708			(6,342	)		(1,552	)		133,932		129,527
Fixed income		651,368		(8,930	)		27,735			(3,480	)		666,693		652,186
Multi-asset		434,233		4,857			(8,281	)		(4,256	)		426,553		418,451
Alternatives		111,951		4,016			(492	)		(1,043	)		114,432		112,359
Active subtotal		1,338,670		651			12,620			(10,331	)		1,341,610		1,312,523
Index:
Equity		1,793,826		(14,395	)		(104,885	)		(13,671	)		1,660,875		1,629,613
Fixed income		792,969		(22,089	)		61,750			(23,489	)		809,141		802,752
Multi-asset		8,239		(393	)		(49	)		4			7,801		7,981
Alternatives		4,848		288			(541	)		(76	)		4,519		4,406
Index subtotal		2,599,882		(36,589	)		(43,725	)		(37,232	)		2,482,336		2,444,752
Institutional subtotal		3,938,552		(35,938	)		(31,105	)		(47,563	)		3,823,946		3,757,275
Long-term		6,881,914		43,548			(181,911	)		(61,854	)		6,681,697		6,538,971
Cash management		545,949		76,639			(117	)		(3,120	)		619,351		587,844
Advisory ⁽³⁾		1,770		15,019			142			(30	)		16,901		6,798
Total	$	7,429,633	$	135,206		$	(181,886	)	$	(65,004	)	$	7,317,949	$	7,133,613
Year-to-Date Component Changes by Investment Style and Product Type (Long-Term)
			Net
	December 31,		inflows			Market						June 30,
	2019		(outflows)			change			FX impact⁽¹⁾			2020		Average AUM ⁽²⁾
Active:
Equity	$	316,145	$	11,554		$	(12,073	)	$	(2,817	)	$	312,809	$	296,949
Fixed income		939,275		(9,016	)		25,926			(6,042	)		950,143		933,514
Multi-asset		554,672		(44	)		(11,329	)		(4,810	)		538,489		530,799
Alternatives		137,130		7,124			(699	)		(1,168	)		142,387		138,635
Active subtotal		1,947,222		9,618			1,825			(14,837	)		1,943,828		1,899,897
Index and iShares ETFs:
iShares ETFs:
Equity		1,632,972		(3,801	)		(153,420	)		(5,437	)		1,470,314		1,467,523
Fixed income		565,790		55,670			14,040			(1,402	)		634,098		587,842
Multi-asset		5,210		76			(191	)		(21	)		5,074		4,990
Alternatives		36,093		12,857			4,174			(13	)		53,111		43,199
iShares ETFs subtotal		2,240,065		64,802			(135,397	)		(6,873	)		2,162,597		2,103,554
Non-ETF Index:
Equity		1,871,212		(9,005	)		(110,331	)		(15,774	)		1,736,102		1,703,133
Fixed income		810,327		(21,760	)		62,582			(24,298	)		826,851		819,998
Multi-asset		8,239		(395	)		(49	)		4			7,799		7,982
Alternatives		4,849		288			(541	)		(76	)		4,520		4,407
Non-ETF Index subtotal		2,694,627		(30,872	)		(48,339	)		(40,144	)		2,575,272		2,535,520
Index and iShares ETFs subtotal		4,934,692		33,930			(183,736	)		(47,017	)		4,737,869		4,639,074
Long-Term	$	6,881,914	$	43,548		$	(181,911	)	$	(61,854	)	$	6,681,697	$	6,538,971
Year-to-Date Component Changes by Product Type (Long-Term)
			Net
	December 31,		inflows			Market						June 30,
	2019		(outflows)			change			FX impact⁽¹⁾			2020		Average AUM ⁽²⁾
Equity	$	3,820,329	$	(1,252	)	$	(275,824	)	$	(24,028	)	$	3,519,225	$	3,467,605
Fixed income		2,315,392		24,894			102,548			(31,742	)		2,411,092		2,341,354
Multi-asset		568,121		(363	)		(11,569	)		(4,827	)		551,362		543,771
Alternatives:
Illiquid alternatives		75,349		4,152			(2,129	)		(765	)		76,607		75,705
Liquid alternatives		59,048		2,956			1,535			(419	)		63,120		60,261
Currency and commodities⁽⁴⁾		43,675		13,161			3,528			(73	)		60,291		50,275
Alternatives subtotal		178,072		20,269			2,934			(1,257	)		200,018		186,241
Long-Term	$	6,881,914	$	43,548		$	(181,911	)	$	(61,854	)	$	6,681,697	$	6,538,971

⁽¹⁾	Foreign exchange reflects the impact of translating non-US dollar denominated AUM into US dollars for reporting purposes.

⁽²⁾	Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing seven months.

⁽³⁾

⁽⁴⁾	Amounts include commodity iShares ETFs.

ASSETS UNDER MANAGEMENT

(in millions), (unaudited)

Year-over-Year Component Changes by Client Type and Product Type
			Net
	June 30,		inflows			Market						June 30,
	2019		(outflows)			change			FX impact⁽¹⁾			2020		Average AUM ⁽²⁾
Retail:
Equity	$	232,429	$	21,011		$	2,307		$	(1,643	)	$	254,104	$	238,057
Fixed income		291,772		10,186			2,182			(2,980	)		301,160		297,562
Multi-asset		118,135		(7,463	)		1,660			(398	)		111,934		114,692
Alternatives		22,570		5,659			(177	)		(96	)		27,956		24,917
Retail subtotal		664,906		29,393			5,972			(5,117	)		695,154		675,228
iShares ETFs:
Equity		1,462,623		58,351			(45,191	)		(5,469	)		1,470,314		1,476,916
Fixed income		513,843		104,309			17,688			(1,742	)		634,098		563,566
Multi-asset		4,442		666			(17	)		(17	)		5,074		4,833
Alternatives		27,959		18,183			6,981			(12	)		53,111		38,367
iShares ETFs subtotal		2,008,867		181,509			(20,539	)		(7,240	)		2,162,597		2,083,682
Institutional:
Active:
Equity		125,884		5,176			3,793			(921	)		133,932		129,091
Fixed income		649,924		(26,222	)		45,319			(2,328	)		666,693		652,323
Multi-asset		393,101		21,311			16,119			(3,978	)		426,553		410,295
Alternatives		103,623		11,302			179			(672	)		114,432		109,375
Active subtotal		1,272,532		11,567			65,410			(7,899	)		1,341,610		1,301,084
Index:
Equity		1,664,933		(37,274	)		41,472			(8,256	)		1,660,875		1,651,852
Fixed income		735,591		9,885			73,443			(9,778	)		809,141		786,774
Multi-asset		8,050		(526	)		293			(16	)		7,801		8,011
Alternatives		4,617		289			(353	)		(34	)		4,519		4,490
Index subtotal		2,413,191		(27,626	)		114,855			(18,084	)		2,482,336		2,451,127
Institutional subtotal		3,685,723		(16,059	)		180,265			(25,983	)		3,823,946		3,752,211
Long-term		6,359,496		194,843			165,698			(38,340	)		6,681,697		6,511,121
Cash management		481,208		138,426			1,516			(1,799	)		619,351		552,549
Advisory ⁽³⁾		1,778		15,021			136			(34	)		16,901		4,472
Total	$	6,842,482	$	348,290		$	167,350		$	(40,173	)	$	7,317,949	$	7,068,142
Year-over-Year Component Changes by Investment Style and Product Type (Long-Term)
			Net
	June 30,		inflows			Market						June 30,
	2019		(outflows)			change			FX impact⁽¹⁾			2020		Average AUM ⁽²⁾
Active:
Equity	$	289,870	$	17,570		$	7,084		$	(1,715	)	$	312,809	$	295,079
Fixed income		926,097		(17,456	)		46,473			(4,971	)		950,143		933,192
Multi-asset		511,236		13,849			17,780			(4,376	)		538,489		524,986
Alternatives		126,190		16,961			4			(768	)		142,387		134,291
Active subtotal		1,853,393		30,924			71,341			(11,830	)		1,943,828		1,887,548
Index and iShares ETFs:
iShares ETFs
Equity		1,462,623		58,351			(45,191	)		(5,469	)		1,470,314		1,476,916
Fixed income		513,843		104,309			17,688			(1,742	)		634,098		563,566
Multi-asset		4,442		666			(17	)		(17	)		5,074		4,833
Alternatives		27,959		18,183			6,981			(12	)		53,111		38,367
iShares ETFs subtotal		2,008,867		181,509			(20,539	)		(7,240	)		2,162,597		2,083,682
Non-ETF Index
Equity		1,733,376		(28,657	)		40,488			(9,105	)		1,736,102		1,723,921
Fixed income		751,190		11,305			74,471			(10,115	)		826,851		803,467
Multi-asset		8,050		(527	)		292			(16	)		7,799		8,012
Alternatives		4,620		289			(355	)		(34	)		4,520		4,491
Non-ETF Index subtotal		2,497,236		(17,590	)		114,896			(19,270	)		2,575,272		2,539,891
Index and iShares ETFs subtotal		4,506,103		163,919			94,357			(26,510	)		4,737,869		4,623,573
Long-Term	$	6,359,496	$	194,843		$	165,698		$	(38,340	)	$	6,681,697	$	6,511,121
Year-over-Year Component Changes by Product Type (Long-Term)
			Net
	June 30,		inflows			Market						June 30,
	2019		(outflows)			change			FX impact⁽¹⁾			2020		Average AUM ⁽²⁾
Equity	$	3,485,869	$	47,264		$	2,381		$	(16,289	)	$	3,519,225	$	3,495,916
Fixed income		2,191,130		98,158			138,632			(16,828	)		2,411,092		2,300,225
Multi-asset		523,728		13,988			18,055			(4,409	)		551,362		537,831
Alternatives:
Illiquid alternatives		67,910		11,335			(2,147	)		(491	)		76,607		73,083
Liquid alternatives		55,514		5,634			2,246			(274	)		63,120		58,510
Currency and commodities⁽⁴⁾		35,345		18,464			6,531			(49	)		60,291		45,556
Alternatives subtotal		158,769		35,433			6,630			(814	)		200,018		177,149
Long-Term	$	6,359,496	$	194,843		$	165,698		$	(38,340	)	$	6,681,697	$	6,511,121

⁽¹⁾	Foreign exchange reflects the impact of translating non-US dollar denominated AUM into US dollars for reporting purposes.

⁽²⁾	Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing thirteen months.

⁽³⁾

⁽⁴⁾	Amounts include commodity iShares ETFs.

SUMMARY OF REVENUE

	Three Months							Three Months					Six Months
	Ended							Ended					Ended
	June 30,							March 31,					June 30,
(in millions), (unaudited)	2020		2019		Change			2020		Change			2020		2019		Change
Investment advisory, administration fees and securities lending revenue:
Equity:
Active	$	381	$	385	$	(4	)	$	398	$	(17	)	$	779	$	760	$	19
iShares ETFs		792		870		(78	)		879		(87	)		1,671		1,717		(46	)
Non-ETF Index		178		163		15			163		15			341		327		14
Equity subtotal		1,351		1,418		(67	)		1,440		(89	)		2,791		2,804		(13	)
Fixed income:
Active		464		474		(10	)		481		(17	)		945		931		14
iShares ETFs		261		234		27			259		2			520		454		66
Non-ETF Index		129		98		31			112		17			241		195		46
Fixed income subtotal		854		806		48			852		2			1,706		1,580		126
Multi-asset		270		288		(18	)		293		(23	)		563		564		(1	)
Alternatives:
Illiquid alternatives		128		118		10			148		(20	)		276		228		48
Liquid alternatives		117		102		15			112		5			229		196		33
Currency and commodities		35		24		11			32		3			67		48		19
Alternatives subtotal		280		244		36			292		(12	)		572		472		100
Long-term		2,755		2,756		(1	)		2,877		(122	)		5,632		5,420		212
Cash management		211		147		64			178		33			389		288		101
Total base fees		2,966		2,903		63			3,055		(89	)		6,021		5,708		313
Investment advisory performance fees:
Equity		23		4		19			2		21			25		4		21
Fixed income		2		-		2			2		-			4		2		2
Multi-asset		2		6		(4	)		1		1			3		6		(3	)
Alternatives:
Illiquid alternatives		32		15		17			17		15			49		35		14
Liquid alternatives		53		39		14			19		34			72		43		29
Alternatives subtotal		85		54		31			36		49			121		78		43
Total performance fees		112		64		48			41		71			153		90		63
Technology services revenue		278		237		41			274		4			552		441		111
Distribution fees:
Retrocessions		162		164		(2	)		169		(7	)		331		325		6
12b-1 fees (US mutual fund distribution fees)		78		88		(10	)		91		(13	)		169		177		(8	)
Other		13		15		(2	)		16		(3	)		29		27		2
Total distribution fees		253		267		(14	)		276		(23	)		529		529		-
Advisory and other revenue:
Advisory		17		22		(5	)		17		-			34		41		(7	)
Other		22		31		(9	)		47		(25	)		69		61		8
Total advisory and other revenue		39		53		(14	)		64		(25	)		103		102		1
Total revenue	$	3,648	$	3,524	$	124		$	3,710	$	(62	)	$	7,358	$	6,870	$	488

Highlights

•

Investment advisory, administration fees and securities lending revenue increased $63 million from the second quarter of 2019, primarily driven by organic growth and higher securities lending revenue, partially offset by the negative impact of equity beta and foreign exchange movements on average AUM, and strategic pricing changes to certain products.

Investment advisory, administration fees and securities lending revenue decreased $89 million from the first quarter of 2020, primarily driven by the impact of first quarter global market declines and foreign exchange movements on average AUM, partially offset by higher securities lending revenue and organic growth.

Securities lending revenue of $210 million increased $60 million from the second quarter of 2019 and $52 million from the first quarter of 2020, primarily reflecting higher asset spreads and average balances of securities on loan.

•	Performance fees increased $48 million from the second quarter of 2019 and $71 million from the first quarter of 2020, primarily reflecting higher revenue from alternative and long-only equity products.

•	Technology services revenue increased $41 million from the second quarter of 2019, primarily reflecting higher revenue from Aladdin.

•

Advisory and other revenue decreased $25 million from the first quarter of 2020, primarily reflecting the impact of the previously announced charitable contribution of BlackRock’s remaining 20% stake in PennyMac Financial Services, Inc. (the “Charitable Contribution”) in the first quarter of 2020 and lower transition management assignments.

SUMMARY OF OPERATING EXPENSE

	Three Months								Three Months					Six Months
	Ended								Ended					Ended
	June 30,								March 31,					June 30,
(in millions), (unaudited)	2020			2019		Change			2020		Change			2020		2019		Change
Operating expense
Employee compensation and benefits	$	1,152		$	1,083	$	69		$	1,137	$	15		$	2,289	$	2,147	$	142
Distribution and servicing costs:
Retrocessions		162			164		(2	)		169		(7	)		331		325		6
12b-1 costs		75			88		(13	)		89		(14	)		164		176		(12	)
Other		192			164		28			187		5			379		319		60
Total distribution and servicing costs		429			416		13			445		(16	)		874		820		54
Direct fund expense		246			252		(6	)		277		(31	)		523		494		29
General and administration:
Marketing and promotional		39			81		(42	)		69		(30	)		108		162		(54	)
Occupancy and office related		80			75		5			78		2			158		149		9
Portfolio services		65			65		-			65		-			130		127		3
Technology		92			67		25			88		4			180		136		44
Professional services		41			44		(3	)		44		(3	)		85		77		8
Communications		14			10		4			12		2			26		19		7
Foreign exchange remeasurement		1			12		(11	)		5		(4	)		6		20		(14	)
Contingent consideration fair value adjustments		(2	)		13		(15	)		25		(27	)		23		19		4
Product launch costs		-			59		(59	)		84		(84	)		84		59		25
Charitable Contribution		-			-		-			589		(589	)		589		-		589
Other general and administration		58			44		14			83		(25	)		141		90		51
Total general and administration expense		388			470		(82	)		1,142		(754	)		1,530		858		672
Amortization of intangible assets		27			25		2			25		2			52		40		12
Total operating expense	$	2,242		$	2,246	$	(4	)	$	3,026	$	(784	)	$	5,268	$	4,359	$	909

Highlights

•	Employee compensation and benefits expense increased $69 million from the second quarter of 2019, reflecting higher base and incentive compensation, driven in part by higher performance fees.

Employee compensation and benefits expense increased $15 million from the first quarter of 2020, primarily reflecting higher incentive compensation, driven in part by higher performance fees, partially offset by lower seasonal payroll taxes in the current quarter.

•	Direct fund expense decreased $31 million from the first quarter of 2020, including the impact of lower average AUM.

•

General and administration expense decreased $82 million from the second quarter of 2019, reflecting lower marketing and promotional expense, lower contingent consideration fair value adjustments related to prior acquisitions and lower foreign exchange remeasurement expense, partially offset by higher technology expense, including certain costs related to COVID-19 and a $12 million impairment of a fixed asset incurred in the current quarter. The decrease also reflected the impact of $59 million of product launch costs incurred in the second quarter of 2019.

General and administration expense decreased $754 million from the first quarter of 2020, primarily reflecting the impact of significant expense incurred in the first quarter of 2020, including $589 million of expense related to the Charitable Contribution, $84 million of product launch costs, costs related to certain legal matters, including Aviron Capital, LLC, and lower contingent consideration fair value adjustments related to prior acquisitions. The decrease also reflected lower marketing and promotional expense, partially offset by a $12 million impairment of a fixed asset incurred in the current quarter.

INCOME TAX EXPENSE (Benefit)

	Three Months									Three Months							Six Months
	Ended									Ended							Ended
	June 30,									March 31,							June 30,
(in millions), (unaudited)	2020			2019			Change			2020				Change			2020			2019			Change
Income tax expense (benefit)	$	361		$	322		$	39			$	(14	)	$	375		$	347		$	620		$	(273	)
Effective tax rate		22.9	%		24.3	%		(140	) bps			(1.7	)%		2,460	bps		14.7	%		23.2	%		(850	) bps

Highlights

•	First quarter 2020 income tax benefit included a discrete tax benefit of $241 million recognized in connection with the Charitable Contribution and $64 million of other discrete tax benefits, including benefits related to stock-based compensation awards that vested in the first quarter of 2020.

SUMMARY OF NONOPERATING INCOME (expense), less net income (loss) attributable TO noncontrolling interests

	Three Months									Three Months						Six Months
	Ended									Ended						Ended
	June 30,									March 31,						June 30,
(in millions), (unaudited)	2020			2019			Change			2020			Change			2020			2019			Change
Nonoperating income (expense), GAAP basis	$	357		$	57		$	300		$	(71	)	$	428		$	286		$	182		$	104
Less: Net income (loss) attributable to noncontrolling interests ("NCI")		188			10			178			(179	)		367			9			17			(8	)
Nonoperating income (expense)⁽¹⁾	$	169		$	47		$	122		$	108		$	61		$	277		$	165		$	112

	Three Months									Three Months						Six Months
	Ended									Ended						Ended
	June 30,									March 31,						June 30,
(in millions), (unaudited)	2020			2019			Change			2020			Change			2020			2019			Change
Net gain (loss) on investments⁽¹⁾
Private equity	$	8		$	32		$	(24	)	$	(18	)	$	26		$	(10	)	$	32		$	(42	)
Real assets		-			4			(4	)		5			(5	)		5			10			(5	)
Other alternatives⁽²⁾		21			7			14			(25	)		46			(4	)		15			(19	)
Other investments⁽³⁾		130			31			99			(150	)		280			(20	)		104			(124	)
Subtotal		159			74			85			(188	)		347			(29	)		161			(190	)
Gain related to the Charitable Contribution		-			-			-			122			(122	)		122			-			122
Other gains (losses)⁽⁴⁾		51			5			46			205			(154	)		256			53			203
Total net gain (loss) on investments⁽¹⁾		210			79			131			139			71			349			214			135
Interest and dividend income		10			20			(10	)		15			(5	)		25			49			(24	)
Interest expense		(51	)		(52	)		1			(46	)		(5	)		(97	)		(98	)		1
Net interest expense		(41	)		(32	)		(9	)		(31	)		(10	)		(72	)		(49	)		(23	)
Nonoperating income (expense)⁽¹⁾	$	169		$	47		$	122		$	108		$	61		$	277		$	165		$	112

⁽¹⁾

Net of net income (loss) attributable to NCI. Management believes nonoperating income (expense), as adjusted, is an effective measure for reviewing BlackRock’s nonoperating results, which ultimately impacts BlackRock’s book value. For more information on as adjusted items and the reconciliation to GAAP see note (2) to the condensed consolidated statements of income and supplemental information on pages 11 and 12.

⁽²⁾	Amounts primarily include net gains (losses) related to direct hedge fund strategies and hedge fund solutions.

⁽³⁾	Amounts primarily include net gains (losses) related to unhedged equity, fixed income and multi-asset investments.

⁽⁴⁾

The amounts for the three months ended March 31, 2020 and six months ended June 30, 2020 include a nonoperating pre-tax gain of approximately $240 million in connection with a recapitalization of iCapital Network, Inc. Additional amounts primarily include noncash pre-tax gains (losses) related to the revaluation of a corporate minority investment.

RECONCILIATION OF US GAAP OPERATING INCOME AND OPERATING MARGIN TO OPERATING INCOME AND OPERATING MARGIN, AS ADJUSTED
	Three Months Ended									Six Months Ended
	June 30,						March 31,			June 30,
(in millions), (unaudited)	2020			2019			2020			2020			2019
Operating income, GAAP basis	$	1,406		$	1,278		$	684		$	2,090		$	2,511
Non-GAAP expense adjustment:
Charitable Contribution		-			-			589			589			-
Operating income, as adjusted (1)		1,406			1,278			1,273			2,679			2,511
Product launch costs and commissions		-			61			87			87			61
Operating income used for operating margin measurement	$	1,406		$	1,339		$	1,360		$	2,766		$	2,572
Revenue, GAAP basis	$	3,648		$	3,524		$	3,710		$	7,358		$	6,870
Non-GAAP adjustments:
Distribution fees		(253	)		(267	)		(276	)		(529	)		(529	)
Investment advisory fees		(176	)		(149	)		(169	)		(345	)		(291	)
Revenue used for operating margin measurement	$	3,219		$	3,108		$	3,265		$	6,484		$	6,050
Operating margin, GAAP basis		38.5	%		36.3	%		18.4	%		28.4	%		36.6	%
Operating margin, as adjusted (1)		43.7	%		43.1	%		41.7	%		42.7	%		42.5	%

See note (1) to the condensed consolidated statements of income and supplemental information on page 12 for more information on as adjusted items and the reconciliation to GAAP.

RECONCILIATION OF US GAAP NONOPERATING INCOME (EXPENSE) TO NONOPERATING INCOME (EXPENSE), LESS NET INCOME (LOSS) ATTRIBUTABLE TO NCI, AS ADJUSTED
	Three Months Ended							Six Months Ended
	June 30,				March 31,			June 30,
(in millions), (unaudited)	2020		2019		2020			2020		2019
Nonoperating income (expense), GAAP basis	$	357	$	57	$	(71	)	$	286	$	182
Less: Net income (loss) attributable to NCI		188		10		(179	)		9		17
Nonoperating income (expense), net of NCI		169		47		108			277		165
Less: Gain related to the Charitable Contribution		-		-		122			122		-
Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted (2)	$	169	$	47	$	(14	)	$	155	$	165

See note (2) to the condensed consolidated statements of income and supplemental information on page 12 for more information on as adjusted items and the reconciliation to GAAP.

RECONCILIATION OF US GAAP NET INCOME ATTRIBUTABLE TO BLACKROCK TO NET INCOME ATTRIBUTABLE TO BLACKROCK, AS ADJUSTED
	Three Months Ended						Six Months Ended
	June 30,				March 31,		June 30,
(in millions, except per share data), (unaudited)	2020		2019		2020		2020		2019
Net income attributable to BlackRock, Inc., GAAP basis	$	1,214	$	1,003	$	806	$	2,020	$	2,056
Non-GAAP adjustments:
Charitable Contribution, net of tax		-		-		226		226		-
Net income attributable to BlackRock, Inc., as adjusted (3)	$	1,214	$	1,003	$	1,032	$	2,246	$	2,056
Diluted weighted-average common shares outstanding (4)		154.7		156.4		156.4		155.6		157.9
Diluted earnings per common share, GAAP basis (4)	$	7.85	$	6.41	$	5.15	$	12.99	$	13.02
Diluted earnings per common share, as adjusted (3) (4)	$	7.85	$	6.41	$	6.60	$	14.44	$	13.02

See notes (3) and (4) to the condensed consolidated statements of income and supplemental information on page 12 for more information on as adjusted items and the reconciliation to GAAP.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION (unaudited)

BlackRock reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”); however, management believes evaluating the Company’s ongoing operating results may be enhanced if investors have additional non-GAAP financial measures. Management reviews non-GAAP financial measures to assess ongoing operations and considers them to be helpful, for both management and investors, in evaluating BlackRock’s financial performance over time. Management also uses non-GAAP financial measures as a benchmark to compare its performance with other companies and to enhance the comparability of this information for the reporting periods presented. Non-GAAP measures may pose limitations because they do not include all of BlackRock’s revenue and expense. BlackRock’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Non-GAAP measures may not be comparable to other similarly titled measures of other companies.

Management uses both GAAP and non-GAAP financial measures in evaluating BlackRock’s financial performance. Adjustments to GAAP financial measures (“non-GAAP adjustments”) include certain items management deems nonrecurring or that occur infrequently, transactions that ultimately will not impact BlackRock’s book value or certain tax items that do not impact cash flow.

Computations for all periods are derived from the condensed consolidated statements of income as follows:

(1) Operating income, as adjusted, and operating margin, as adjusted: Management believes operating income, as adjusted, and operating margin, as adjusted, are effective indicators of BlackRock’s financial performance over time, and, therefore, provide useful disclosure to investors. Management believes that operating margin, as adjusted, reflects the Company’s long-term ability to manage ongoing costs in relation to its revenues. The Company uses operating margin, as adjusted, to assess the Company’s financial performance and to determine the long-term and annual compensation of the Company’s senior-level employees. Furthermore, this metric is used to evaluate the Company’s relative performance against industry peers, as it eliminates margin variability arising from the accounting of revenues and expenses related to distributing different product structures in multiple distribution channels utilized by asset managers.

•	Operating income, as adjusted, included a non-GAAP expense adjustment in the first quarter of 2020. The Charitable Contribution expense of $589 million has been excluded from operating income, as adjusted, due to its nonrecurring nature.

•

Operating income used for measuring operating margin, as adjusted, is equal to operating income, as adjusted, excluding the impact of product launch costs (e.g. closed-end fund launch costs) and related commissions. Management believes the exclusion of such costs and related commissions is useful because these costs can fluctuate considerably and revenue associated with the expenditure of these costs will not fully impact BlackRock’s results until future periods.

•

Revenue used for calculating operating margin, as adjusted, is reduced to exclude all of the Company’s distribution fees, which are recorded as a separate line item on the condensed consolidated statements of income, as well as a portion of investment advisory fees received that is used to pay distribution and servicing costs. For certain products, based on distinct arrangements, distribution fees are collected by the Company and then passed-through to third-party client intermediaries. For other products, investment advisory fees are collected by the Company and a portion is passed-through to third-party client intermediaries. However, in both structures, the third-party client intermediary similarly owns the relationship with the retail client and is responsible for distributing the product and servicing the client. The amount of distribution and investment advisory fees fluctuates each period primarily based on a predetermined percentage of the value of AUM during the period. These fees also vary based on the type of investment product sold and the geographic location where it is sold. In addition, the Company may waive fees on certain products that could result in the reduction of payments to the third-party intermediaries.

(2) Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted: Management believes nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, is an effective measure for reviewing BlackRock’s nonoperating contribution to its results and provides comparability of this information among reporting periods. Management believes nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, provides a useful measure, for both management and investors, of BlackRock’s nonoperating results, which ultimately impact BlackRock’s book value. In the first quarter of 2020, the noncash, nonoperating pre-tax gain of $122 million related to the Charitable Contribution has been excluded from nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, due to its nonrecurring nature.

(3) Net income attributable to BlackRock, Inc., as adjusted: Management believes net income attributable to BlackRock, Inc., as adjusted, and diluted earnings per common share, as adjusted, are useful measures of BlackRock’s profitability and financial performance. Net income attributable to BlackRock, Inc., as adjusted, equals net income attributable to BlackRock, Inc., GAAP basis, adjusted for significant nonrecurring items, charges that ultimately will not impact BlackRock’s book value or certain tax items that do not impact cash flow.

See aforementioned discussion regarding operating income, as adjusted, operating margin, as adjusted, and nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, for information on the Charitable Contribution.

The first quarter of 2020 included a discrete tax benefit of $241 million recognized in connection with the Charitable Contribution. The discrete tax benefit has been excluded from as adjusted results due to the non-recurring nature of the Charitable Contribution.

Per share amounts reflect net income attributable to BlackRock, Inc., as adjusted divided by diluted weighted average common shares outstanding.

(4) Nonvoting participating preferred stock is considered to be a common stock equivalent for purposes of determining basic and diluted earnings per share calculations.

FORWARD-LOOKING STATEMENTS

This earnings release, and other statements that BlackRock may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to BlackRock’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” and similar expressions.

BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

BlackRock has previously disclosed risk factors in its Securities and Exchange Commission (“SEC”) reports. These risk factors and those identified elsewhere in this earnings release, among others, could cause actual results to differ materially from forward-looking statements or historical performance and include: (1) a pandemic or health crisis, including the COVID-19 pandemic, and its impact on financial institutions, the global economy or capital markets, as well as BlackRock’s products, clients, vendors and employees, and BlackRock’s results of operations, the full extent of which may be unknown; (2) the introduction, withdrawal, success and timing of business initiatives and strategies; (3) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management (“AUM”); (4) the relative and absolute investment performance of BlackRock’s investment products; (5) BlackRock’s ability to develop new products and services that address client preferences; (6) the impact of increased competition; (7) the impact of future acquisitions or divestitures; (8) BlackRock’s ability to integrate acquired businesses successfully; (9) the unfavorable resolution of legal proceedings; (10) the extent and timing of any share repurchases; (11) the impact, extent and timing of technological changes and the adequacy of intellectual property, information and cyber security protection; (12) attempts to circumvent BlackRock’s operational control environment or the potential for human error in connection with BlackRock’s operational systems; (13) the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to BlackRock; (14) changes in law and policy and uncertainty pending any such changes; (15) terrorist activities, international hostilities and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (16) the ability to attract and retain highly talented professionals; (17) fluctuations in the carrying value of BlackRock’s economic investments; (18) the impact of changes to tax legislation, including income, payroll and transaction taxes, and taxation on products or transactions, which could affect the value proposition to clients and, generally, the tax position of the Company; (19) BlackRock’s success in negotiating distribution arrangements and maintaining distribution channels for its products; (20) the failure by a key vendor of BlackRock to fulfill its obligations to the Company; (21) any disruption to the operations of third parties whose functions are integral to BlackRock’s exchange-traded funds (“ETF”) platform; (22) the impact of BlackRock electing to provide support to its products from time to time and any potential liabilities related to securities lending or other indemnification obligations; and (23) the impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions.

BlackRock’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and BlackRock’s subsequent filings with the SEC, accessible on the SEC’s website at www.sec.gov and on BlackRock’s website at www.blackrock.com, discuss these factors in more detail and identify additional factors that can affect forward-looking statements. The information contained on the Company’s website is not a part of this earnings release.

PERFORMANCE NOTES

Past performance is not indicative of future results. Except as specified, the performance information shown is as of June 30, 2020 and is based on preliminary data available at that time. The performance data shown reflects information for all actively and passively managed equity and fixed income accounts, including US registered investment companies, European-domiciled retail funds and separate accounts for which performance data is available, including performance data for high net worth accounts available as of May 31, 2020. The performance data does not include accounts terminated prior to June 30, 2020 and accounts for which data has not yet been verified. If such accounts had been included, the performance data provided may have substantially differed from that shown.

Performance comparisons shown are gross-of-fees for institutional and high net worth separate accounts, and net-of-fees for retail funds. The performance tracking shown for index accounts is based on gross-of-fees performance and includes all institutional accounts and all iShares funds globally using an index strategy. AUM information is based on AUM available as of June 30, 2020 for each account or fund in the asset class shown without adjustment for overlapping management of the same account or fund. Fund performance reflects the reinvestment of dividends and distributions.

Performance shown is derived from applicable benchmarks or peer median information, as selected by BlackRock, Inc. Peer medians are based in part on data either from Lipper, Inc. or Morningstar, Inc. for each included product.

BlackRock Inc. - FORM 8-K - EX-99.1 - EARNINGS RELEASE DATED JULY 17, 2020 - July 17, 2020

Attached files

BlackRock Inc. Reports