BlackRock Q2 EPS $10.89, Revenue Up 11%, AUM $11.7T

BlackRock reported second quarter earnings. Per share came in at $10.89, up from $10.36 a year ago. Revenue rose 11% to $4.99 billion, driven by growth in management fees and technology services. Assets under management hit a record $11.7 trillion, the company said Tuesday.

Net inflows totaled $102 billion during the quarter, including $73 billion in long-term products and $29 billion in cash management. Organic base fee growth was 6%. Operating income climbed 13% to $1.74 billion. The operating margin slipped 30 basis points to 34.9% as the firm invested in technology and distribution.

Chief Financial Officer Martin Small said on the earnings call that the full-year operating margin target remains 44%, consistent with BlackRock's long-term plan. Technology services revenue increased 8% to $432 million. Advisory revenue rose 18% to $128 million. Small said expense growth will moderate in the second half as the firm laps recent investments.

Chief Executive Laurence Fink said the flow base is broad across client channels and product types. iShares ETF flows were solid, with demand concentrated in fixed income and multi-asset strategies, he said. Fink said private markets are a growth driver, citing strong interest from institutional clients. Expansion in Asia and the Middle East is contributing to new client mandates, he added.

The $100 billion in market gains contributed to the AUM record. Small said organic growth helps the firm manage market volatility.

Margin compression from technology spending is a deliberate trade-off, Fink said. He expects those investments to yield higher client retention and faster product development.

Analysts on the call focused on pricing. BofA's Craig Siegenthaler asked about fee pressure in iShares products. Small responded that BlackRock has maintained pricing discipline and that fee waivers are limited.

The company's Alpha Score stands at 61 out of 100, labeled Moderate. More detail is on the BLK stock page.