With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

America's Most Innovative Companies

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

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Industries included in the sector are banks, insurance, and real estate companies.

Fortune Sector Leaders: Financials

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

WMA-2024-BlackRock

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

WMAC 2023-BlackRock

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

WMAC-2022-20-Blackrock

This year’s Fortune 500 marks the 68th running of the list.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

WMAC 2021-18-BlackRock

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-192-BlackRock

The world's largest asset manager helps handle the investments of its clients, with over $8 trillion in assets under management.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-219-BlackRock

Money management firm BlackRock provides investment and risk management services to clients including endowments, pension funds, and insurance companies. In a January 2020 letter to investors, CEO Larry Fink outlined the ways in which the company would <a href="https://fortune.com/longform/wall-street-fossil-fuels-divest-climate-change/">prioritize environmental sustainability</a> in its investment strategy in order to curb climate change.

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05.CTW20.Blackrock

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Change the World

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 65th running of the list.

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This year's Fortune 500 marks the 63rd running of the list.

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This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

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Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Change The World

Impact Segment

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Use of Corporate Assets

Social Responsibility

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Quality of Products/Services

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BlackRock held $11.6 trillion in assets under management at the end of 2024, making it far and away the world’s largest asset manager. BlackRock serves institutional and individual investors across more than 100 countries. Its largest business divisions include investment advisory services, technology services, stock lending distribution, and a variety of shareholder services. Founded in 1988, BlackRock is today known for its popular iShares ETF platform, Aladdin risk management technology, and expanding presence in private markets, infrastructure, and private credit. One of BlackRock’s newest businesses is cryptocurrency, including a Bitcoin ETF that quickly became the world’s biggest.

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BlackRock (BLK): Company Profile, Stock Price, News, Rankings

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BlackRock

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Good morning. My name is Katie, and I will be your conference facilitator today. At this time, I'd like to welcome everyone to the BlackRock Incorporated Second Quarter twenty twenty five Earnings Teleconference. Our host for today's call will be Chairman and Chief Executive, Laurence D. Fink Chief Financial Officer, Martin S.

Small President, Robert S. Capito and General Counsel, Christopher J. Meade. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. You. Mr. Meade, you may begin your conference.

Good morning, everyone. I'm Chris Meade, the General Counsel of BlackRock. Before we begin, I'd like to remind you that during the course of this call, we may make a number of forward looking statements. We call your attention to the fact that BlackRock's actual results may, of course, differ from these statements. As you know, BlackRock has filed reports with the SEC, which was some of the factors that may cause the results of BlackRock to differ materially from what we say today.

BlackRock assumes no duty and does not undertake to update any forward looking statements. So with that, I'll turn it over to Mike.

Thanks, Chris. Good morning, everyone. It's my pleasure to present results for the second quarter of twenty twenty five. Before I turn it over to Larry, I'll review our financial performance and business results. Our earnings release discloses both GAAP and as adjusted financial results.

I'll be focusing primarily on our as adjusted results. At our Investor Day last month, we communicated our ambitions for BlackRock in 02/1930. Our leadership team and our employees have seen and contributed to that vision over the last two years. We anticipated where our clients and markets were going. We've established strength at the foundation of our platform in ETFs, Aladdin, whole portfolio, fixed income, cash management.

They're the strong foundations to serve clients and deliver on our organic growth objectives. We executed on organic business builds in structural growth categories, including digital assets, active ETFs, model portfolios and systematic equities, and we've executed on three major acquisitions. We've built a premier investment and technology platform across public and private markets, one that's only at the beginning of a durable long term runway for growth. Building on our record results in 2024, we continue to see the proof points of the success of our strategy into 2025. We generated 7% organic base fee growth and over $650,000,000,000 of net inflows over the last twelve months.

This success has been built on multiyear sustained growth in iShares, fixed income, systematic tax managed strategies in Aladdin and now expansions in private markets. We believe these engines will enable us to more consistently rise above 5% organic base fee growth. We posted 6% organic base fee growth in the second quarter for our fourth consecutive quarter of 5% or higher organic base fee growth. We finished the second quarter with record AUM, record units of trust of $12,500,000,000,000 We once again delivered double digit year over year growth in revenue, operating income and earnings per share. GIP V closed above its $25,000,000,000 target, making it the largest private markets fundraise in the histories of both BlackRock and GIP.

We took early commercial steps to bring a first of its kind public private target date solution to retirees with GreatGray, a leading collective investment trust platform. And earlier this month, we closed our acquisition of HPS Investment Partners, a major milestone as we evolve towards our ambitions of 30% revenue contribution from private markets and technology by 02/1930. Second quarter net inflows of 68,000,000,000 were impacted by low fee institutional index redemptions, which saw $48,000,000,000 of net outflows. Excluding that activity, BlackRock delivered approximately $116,000,000,000 of net inflows in the quarter. Turning to financial results.

Second quarter revenue of $5,400,000,000 was 13% higher year over year, driven by the impact of organic growth in higher markets on average AUM, base fees consolidated in the GIP transaction and higher technology services and subscription revenue, which includes the onboarding of Prequip. Operating income of $2,100,000,000 was up 12% and earnings per share of $12.5 was 16% higher versus a year ago. EPS also reflected higher non operating income, a higher tax rate and a higher share count in the current quarter. Non operating results for the quarter included $433,000,000 of net investment gains, driven by mark to market non cash gains on minority investments, including Circle and in our co invest portfolio. We own approximately 2,300,000.0 shares of Circle common stock, which will continue to be marked through investment income going forward.

Our as adjusted tax rate for the second quarter was approximately 25%, and we continue to estimate that 25 is a reasonable projected tax run rate for the remainder of 2025. The actual effective tax rate may differ because of nonrecurring or discrete items or potential changes in tax legislation. Second quarter base fee and securities lending revenue of $4,500,000,000 was up 15% year over year, driven by the positive impact of market beta on average AUM, organic base fee growth and approximately $240,000,000 in base fees from GIP. On an equivalent day count basis, our annualized effective fee rate was down four tenths of a basis point compared to the first quarter. This was partially due to the impact of catch up based fees associated with private markets fundraising, which were $36,000,000 lower relative to the first quarter.

Significant intra month equity market declines in April were also a contributing factor. As a result of market and FX movements into the end of the quarter, we entered the third quarter with an estimated base fee run rate approximately 5% higher than our total base fees for the second quarter. That's excluding the impact of HPS. The closing of HPS added 165,000,000,000 of client AUM and $118,000,000,000 of fee paying AUM on July 1. We expect HPS to add approximately $450,000,000 of revenue, including $225,000,000 in management fees in the third quarter of twenty twenty five.

We expect HPS to positively impact BlackRock's overall effective fee rate by approximately zero of a basis point. Performance fees of $94,000,000 decreased from a year ago, reflecting lower performance revenue from private markets, liquid alternatives and long only products. Quarterly technology services revenue and subscription revenue was up 26% compared to a year ago. Growth reflects sustained demand for our full range of Aladdin technology offerings and the impact of the Prequen transaction, which closed on March 3. Prequen added approximately $60,000,000 to second quarter revenue.

Annual contract value, or ACV, increased 32% year over year, including the Prequen acquisition. ACV growth increased 16% organically, also including the impact of currency exchange tailwinds. Total expense increased 14% year over year, reflecting higher compensation, sales asset and account expense and higher G and A. Employee compensation and benefit expense was up 12%, reflecting higher headcount associated with the onboarding of GIP and frequent employees and higher incentive compensation linked to higher operating income. G and A expense increased 16%, primarily driven by the GIP and Prequen acquisitions and higher technology spend.

Sales asset and account expense increased 14% compared to a year ago, primarily driven by higher direct fund expense and distribution costs. Direct fund expense was up 23% year over year, mainly due to higher average ETF AUM and net inflows. Our second quarter as adjusted operating margin of 43.3 was down 80 basis points from a year ago, partially due to the impact of lower performance fees. We'll continue to execute on our financial framework of aligning organic growth with controllable expenses. This approach has yielded profitable growth and operating leverage in good markets, and we believe it adds more resilience to our operating margin when markets contract.

We welcomed approximately 800 new colleagues to BlackRock following the close of the HPS transaction. Inclusive of the HPS acquisition impact at present, we would expect a low teens percentage increase in 2025 core G and A expense with the onboarding of GIP, Prequen and HPS as the main driver of the year over year core G and A increase. In addition, we'd expect our adjusted compensation to net revenue ratio to be modestly higher due to compensation associated with performance related revenues from HPS. Our capital management strategy remains first to invest in our business to either scale strategic growth initiatives or drive operational efficiency and then to return excess cash to shareholders through a combination of dividends and share repurchases. At times, we may make inorganic investments where we see an opportunity to accelerate growth and support our strategic initiatives.

At the closing of the HPS transaction, we issued and delivered approximately 8,500,000 BlackRock Subco units subject to two to three year lockup periods. Subco units are exchangeable on a one for one basis with BlackRock common stock. We also issued approximately 1,000,000 BlackRock restricted stock units primarily for retention of HPS employees. Additional subco units may be issued in approximately five years subject to achievement of certain post closing conditions and financial performance milestones. If all contingent consideration is achieved, all sub co units are exchanged for shares of common stock, and all RSUs vest and are settled as common stock, we do not expect to issue more than approximately 13,800,000.0 additional shares of common stock in aggregate.

Subco units issued will be included in our as adjusted diluted shares outstanding and will be captured in our as adjusted results going forward. We repurchased $375,000,000 worth of common shares in the second quarter. At present, based on our capital spending plans for the year and subject to market and other conditions, we still anticipate repurchasing at least $375,000,000 of share per quarter for the balance of the year, consistent with our January guidance. In May, we made a minority investment and established a strategic alliance with Generation Life with the goal of developing investment solutions for Australian retirees. Last week, we announced our agreement to acquire Elmtree Funds, a real estate investment firm with $7,300,000,000 in client AUM, of which $3,100,000,000 is fee paying.

The transaction is expected to close in the third quarter of twenty twenty five, subject to regulatory approvals and customary closing conditions. In the second quarter, BlackRock generated total net inflows of $68,000,000,000 Excluding low fee institutional index outflows, BlackRock's net inflows were $116,000,000,000 ETF net inflows of $85,000,000,000 were diversified by channel and over a third were driven by our clients in Europe using local ranges. Fixed income ETFs led inflows with $44,000,000,000 and active ETFs and digital asset ETPs added $11,000,000,000 and $14,000,000,000 respectively. Retail net inflows of $2,000,000,000 reflected continued strength in Imperial and our systematic liquid alternatives funds. Institutional active net inflows of $7,000,000,000 were driven by insurance client fixed income mandates and strength in infrastructure, private credit and liquid alternatives.

Institutional index net outflows of $48,000,000,000 were impacted by a single client redemption of $52,000,000,000 primarily from fixed income. Our institutional channel delivered 3% long term organic base fee growth in the quarter, benefiting from client demand for active and alternatives. Finally, our scale and our active approach with clients around liquidity management are driving sustained growth in our cash platform. Cash AUM is up 25% over the last year, and we generated $22,000,000,000 of net inflows in the second quarter. The BlackRock platform is powered by foundational growth businesses linked to long term growth in capital markets and fast growing client product channels.

By combining BlackRock's capabilities with GIP, PreQin and HPS, we've laid the groundwork for an exciting future. We're already steadily delivering above 5% organic base fee growth, and our new colleagues from HPS are only going to help us build from here. There's a bright future ahead to grow with clients, build great careers for our employees and deliver profitable growth for our shareholders. I'll turn it over to Larry.

Thank you, Martin. Good morning, everyone, and thank you for joining the call. Over many years, BlackRock has worked to serve the ambitions of each and every client around the world, from the largest asset owners to individuals just getting with their start with investing. We design and deliver strategies and products that fit their unique long term needs and aspirations. We deliver in a way that best serves each client, whether through whole portfolio solutions, opportunistic investments, or customized models and SMAs.

Throughout BlackRock's history, we've been relentless in anticipating the future needs of our clients and taking strategic actions to evolve for them. Our sustained multiyear growth has been powered by our whole portfolio approach. We were the first provider to blend active and index at scale through our acquisition of BGI and iShares. Our integration of active and index investing propelled the next fifteen years of success for our clients and shareholders. IShares AUM was about $300,000,000,000 when we announced our acquisition, And today, it's approaching $5,000,000,000,000 And now we're building on our fundamental foundational platform to redefine the whole portfolio again by bringing together public and private markets across both asset management and technology.

That foundational platform has powered performance for clients and sustained organic base fee growth through cycles. We believe our expansions can drive even higher growth. Our trust and comprehensive relationships we have with clients across our core businesses like Aladdin, ETFs, fixed income and retirement are now driving at even a broader with an even a broader opportunity set. We're seeing secular demand for capabilities we developed in recent years like digital assets, active ETFs, systematic strategies, and customized SMAs through Aperio and Spider Rock. The strength of BlackRock's platform is also expanding the growth potential of GIP and HPS.

They're both premier firms in their own right, but they recognize how our client relationships and the completeness of our platform could help us all achieve new heights together. BlackRock's ethos have changed, the integration of firms, and the best parts of their culture. That's what allows us to be more adaptive with our clients. Our history of integrations is very different, and it sets us apart from any other public or private markets firm in the industry. BlackRock's breadth and scale has differentiated us with our clients of all sizes worldwide.

We're delivering an integrated approach to help our clients across all aspects of public and private markets investing. We enable a seamless view into investment management, into technology and data on one single platform. We remain steadfast in our one BlackRock culture, making sure clients have access to all of BlackRock in a comprehensive, consistent way in every region with every client. The long standing relationships and history of reinvention are resulting in a higher, more diversified organic base fee growth. We're now generating 6% organic base fee growth for the second quarter and the first half of twenty twenty five and seven percent over the last twelve months.

Revenues, operating income and earnings per share each grew double digit. Total inflows were $116,000,000,000 excluding the index activity Martin mentioned. Growth is being powered by both our largest core businesses and newer initiatives. IShares ETFs have had a record first half inflows. Our technology ACV growth reached a fresh high of 16%.

The strong fundamentals alongside client demand for private markets, digital assets, Aperio and systematic strategies propel another consecutive quarter above target organic growth and a record AUM of $12,500,000,000,000 Our global reach delivers diversification upside to our platform with gains in international currencies lifting AUM by over $170,000,000,000 in the quarter. We managed $4,500,000,000,000 in AUM for clients outside The United States. Many of our largest growth opportunities are outside our home market, including our work in India and The Middle East alongside our established presence in Europe and Asia. BlackRock is executing on a deepening set of opportunities across technology and data and public and private markets. Momentum is only accelerating, and many of our recent milestones have not yet reflected in our results.

Two weeks ago, we closed our acquisition of HBS Investment Partners. We're excited to welcome Scott, Scott and Mike, and the entire HBS team to BlackRock. We see immense growth ahead for our combined franchise. Together, we'll be able to serve investors and borrowers across all of the private financing needs. Client feedback has been extremely positive as we integrate GIP, HPS, and Frequent.

For many companies, periods of M and A contribute to a pause in client engagement. We're seeing the opposite. Clients are eager to put more capital to work with BlackRock. They appreciate our reputation as long term investors and partners. We're not transactional.

We're helping them invest in compelling long term growth themes like the global needs of new infrastructure investments and the fast evolving debt financing landscape. These are creating differentiated private markets opportunities for our clients. At the June, we marked the major milestone with the final close of GIP's fifth flagship infrastructure strategy. It surpassed its target, raising $25,200,000,000. That's a validation of how clients are embracing the logic of a BlackRock GIP combination.

Many would expect a change in ownership to dampen fundraising. In our case, it ultimately ended up driving an even higher fundraising ability. GIP five represents the largest ever client capital raise in a private infrastructure fund, And our AI partnership continues to attract significant capital interest, including the recent additions of Equator Investment Authority and Tomasik. The diversification benefits and potential for higher returns offered by private markets also make them an attractive investment for retirement accounts, a space where BlackRock has been a leader. We were recently selected by the Great Great Trust Company to provide a custom target date fund glide path that strategically allocates across public and private markets.

We have a wealth of expertise in the defined contribution space, and we're looking to expand across to private markets across a variety of retirement solutions. Retirement is core to BlackRock. In The United States and internationally, we are a trusted expert in advising clients, advising governments, and policymakers on how they can help their constituents achieve a more secure futures and retire with dignity. Demographic shifts and financial pressures are driving governments and corporations to rethink their retirement plans and their retirement systems, putting significant money in motion. In The Netherlands, for example, a transition from defined benefits to a hybrid form of defined contribution is well underway.

BlackRock is working with clients to manage this transition and improve investment outcomes for plan members. We had a related $30,000,000,000 outsourcing mandate with a Dutch client fund in early July. We take a blended approach of being deeply local and powered by our global platform. We deploy capital in a public and private markets in every country in which we operate and beyond, and we are consistently studying what's driving capital flows both within each country and within each region. Our ability to execute at scale at the local levels differentiates our international business.

We're bringing a global framework to India through our geo BlackRock offering in partnership with JFS and Reliance, who already serves hundreds of millions of individuals across India. There are huge advancements taking place through the digitization of currency and identification, but India remains a country of savers, not investors. Our joint venture, GeoBlackRock, recently launched its first funds raising over $2,000,000,000 with over 67,000 customers. We look forward to helping more and more people participate in the growth of local and global capital markets and global connections. Our acquisition of Prequen will be a key to enabling more transparency and clarity in private markets.

In just the first few months since our closing of the Prequen acquisition, we've seen strong early demand from both GPs and LPs as they are looking to better analyze and benchmark their private market allocations. It's through better analytics, standardized benchmarks and more widely available performance data we could close the information gap and enable even more future growth in private markets investing. In the public markets, our iShares business continues to be a powerful growth engine and a key driver of industry innovation. After nearly thirty years and approaching $5,000,000,000,000 in assets, innovation remains at the heart of our franchise. Our newest investments in product launches from just over the last few years are driving outsized growth, contributing to record flows in the first half of twenty twenty five and twelve percent organic base fee growth in ETFs this quarter.

Our active ETFs delivered $11,000,000,000 of net inflows and our digital asset products continue to set new records. IBet at quarter end crossed over $75,000,000,000 in AUM with another $12,000,000,000 in net inflows. As of this morning, it crossed over $80,000,000,000 iShares ETPs are bridging the traditional capital markets with fast growing cryptocurrency markets. They're also bringing new investors to the iShares brand. Nearly a third of the investors who first came to BlackRock for iBit have gone on to purchase other iShares product.

It's this type of capability expansion that drives durable growth and new client opportunities for our business. From category innovation in iShares to new ventures across the world, the investments we made across our platform are paying off. Many of the categories that are leading our growth barely existed two years ago. Categories like active ETFs, digital assets, and our scaled private markets franchise. Just as importantly, BlackRock's core businesses like ETFs, Aladdin, and cash management continue to be a growth engine for the firm and are cornerstones of many client relationships.

A lot of firms got out of the cash business after the financial crisis when fee waivers were in place during a sustained period of low rates, but we recognize a simple thing. Every client needs to hold cash. Cash management has been the first entry point for many of our clients who've gone on to build large mandates with BlackRock. Our cash AUM is nearly $1,000,000,000,000 and I think it's remarkable considering we're not a direct retail business or a DTC bank. At BlackRock, we think of cash as another avenue for innovation.

We see a great untapped opportunity for cash and liquidity, where people want to use the technologies of digital assets to access traditional instruments like treasuries. Our tokenized liquidity fund now has 3,000,000,000 in AUM and what started as a small corporate investment and asset management relationship with Circle in 2022 has grown meaningfully. We delivered a significant gain to shareholders this quarter in connection with the IPO and subsequent trading activity and we now manage more than $50,000,000,000 for Circle stablecoin cash reserves. We're entering our seasonally strongest back half of the year with considerable momentum and a robust pipeline. Our recent closing of HBS will help us offer even more to clients.

We believe our clients and shareholders will be beneficiaries as GIP, HBS and frequent are now all coming together in a shared BlackRock story. We are intentionally organizing to bring clients under one unified firm, not a collection of enterprises, and we have aligned our cultures and aligned each and everybody's interests. The opportunity to deliver the full reach of BlackRock's capabilities to more individuals, to more companies and governments and regions is greater today than ever before. Our comprehensive platform is deeply connected to our clients, to the capital market, and to the future trends that are driving portfolios. These are just the early days in our next phase of growth at BlackRock. Operator, let's open it up for questions.

Thank you. We'll take our first question from Michael Cyprys with Morgan Stanley.

Good morning. With a number of acquisitions closed over the last year now under your belt, was hoping you could talk about the progress that you're making here bringing HPS in particular and GIP together with BlackRock, how the conversation is progressing, particularly with insurance clients, to what extent you're seeing new mandate wins or expanded relationships there? And then can you just update us on the traction in the wealth and retirement channels as it relates to private market and multi liquid strategies and talk about some of the steps you're looking to take over the next twelve months? Thank you.

Great question. Thank you, Michael. Well, I I think as we, showed in the in in the closing of the second quarter, the client feedback has been extremely strong. I actually was in Asia this past week, and the opportunities we have with insurance companies, with wealth management, across our across Asia and every other region is is stronger than we ever imagined. As we said, GIP five closed above our target at 25.2.

Our AIP fund will have a lot of positive announcements in the coming quarters. We announced in the past quarter that we added Tomasik and Kuwait Investment Authority as a part of our investment team, and we are confident that we'll be able to raise the full $30,000,000,000 that we announced in equity. And once we then begin those projects, we'll have to raise another $100,000,000,000 in in the associated debt to finance those type of projects. And we're working with the hyperscalers as we speak right now on this, and we have some really great opportunities ahead of us in that. Those are just two examples of the opportunities we see with with GIP.

There's no question in my mind that with rising deficits with more and more governments, the conversations we're having, whether it's in Europe or The United States or Japan, that the role of public private financing and the role of infrastructure financing is gonna grow dramatically. And so we see some huge, huge opportunities. Another big opportunity that GIP just closed was purchasing all the Malaysian airports. This is just another example of the opportunity. And and we we are still progressing with the proposed announcement of of our ports transaction with with Hutchinson.

So all of that is just a good example of some of the growth opportunities we see, but the resiliency and the conversations have never been greater. Related to private credit and HBS, we're just at the beginning. But we could say we you know, we'll have a lot to discuss in the third quarter. But the flow opportunities of HBS during the period of time of announcement and closing did not abate at all. So we are seeing across the board, a very large acceptance of the the industrial logic of the combination of HBS, GIP, and BlackRock.

And I would say that was quite a big difference than when we did the BGI transaction in 02/2009. Today, clients are looking at the merits of what BlackRock can do, our history of integration, our history of bringing one culture together, bringing the best of of all the acquired organizations to be part of us, to to build a new foundational structure around BlackRock. On insurance, you know, with having $700,000,000,000 of AUM with insurance companies, and that is continuing to grow, We are continuing to see more and more opportunities where we could be driving private markets with the insurance companies that we already manage. In wealth, very, very exciting. If there is a change in the opportunity related to defined contributions, it is only gonna accelerate the opportunities we have in the private market space with retirement.

50% of our assets that we manage, is in retirement. And so the relationships we have with plans is enormous. If you look at our success in LifePath, if you look at our success in in our target date products, if you look at our success and what we're trying to do now, a LifePath paycheck where now we have over $500,000,000,000 in in in that alone, you know, our relationships with these defined contribution plans is as strong as ever. We're innovating. We're creating opportunity.

Now if you overlay the opportunity for wealth worldwide, whether it's wealth in Japan, wealth in The United States, wealth in any region, the need, especially here in The United States because you have a much higher threshold related to fiduciary responsibility, is gonna be analytics and data. And if that moves forward, if there's that opportunity, the need for analytics and data will will more than ever create huge opportunities for frequent and the future opportunity of growth with frequent eFront. And so we believe all these changes, the the integration of and blending of both public markets and private markets is gonna all be centered around having a base of great analytics and data. And I am more certain than ever, the acquisition of Frequent alongside eFront is gonna be generating much more opportunity for BlackRock. And I believe we are well positioned, whether it's well because of the product profile we have with HBS and GIP and what we but with the foundational position we're in in the retirement space, in the defined contribution space, overlaying all the analytics data that we have under Aladdin now puts us in a position that we could have broader, deeper conversations with our clients.

And I'm very much looking forward to having those deep conversations with each and every client.

Thank you. Your next question comes from Craig Siegenthaler with Bank of America.

Hey. Good morning, Larry, Martin. Hope everyone's doing well.

I think we are on a hot humid summer day.

So, I actually wanna continue with that retirement commentary to Mike's question. So our question is on the potential migration of privates into target date fund and The US foreign k channel. We did see the great, the great, gray win news in late June. That was a positive sign. But I think BlackRock may be getting ready to launch its own target date fund with private allocation.

So I was hoping you could update us on your strategy, timeline, and also what are you waiting to see from the Department of Labor, the SEC, or Congress before you launch your own target date fund with private allocations?

Thanks, Craig. How are you today? Thanks so much for the question. As Larry mentioned, Craig, more than half the $12,000,000,000,000 of assets plus that we manage at BlackRock are related to retirement. And so building better portfolios, retirees is at the heart of what we do.

I think we have real ambitions also to bring the same tried and true portfolio construction characteristics that built the DB market. So defined benefit has long been allocating to both public and private markets. If you think of the largest public plans across corporate, and across, the public sector, they've always been private markets investors. That opportunity should be there for individuals in their long term tax advantaged accounts as well. We're the number one DCIO, the d defined contribution investment only firm.

We're a top five private markets manager following our recent acquisition. So we think we have all the building blocks here. As I said on the last call, and I think Larry alluded to, for the opportunity, I think, to be most tangible in larger plans, we'll likely need to see litigation reform or at least some advice reform in The US to add private market exposure into DC plans. What I would say relative to the call last quarter is we're really encouraged by the recent dialogue with policymakers on these topics and some of the activity by trade associations that I think has been helpful in really building a fact based and consensus around this. There's still significant work to do, but we feel positive momentum, is certainly building.

We're really proud of our recent announcement, with GreatGrey to build, and power the glide path for their public private target date solution. As I mentioned on the call, I think the real advantage that BlackRock brings here is that we've been doing glide path technology across, target date funds for thirty plus years. We feel that, this is a place that we have particular strength and can add a lot of value rather than just rote allocations of x percent to public markets and y percent to private markets. That glide path is so important, as you go from the accumulation to the end of the target date and ultimately to a decumulation phase. So with Great Grey, we're gonna provide the underlying index equity as well as fixed income exposures as well as our private equity exposures through our product BlackRock Private Investment Fund BPF.

We're ultimately working on other products, and we would expect to launch a proprietary life path with private's target date fund, I believe, sometime in 2026. So we're excited about that, as a way of continuing to bring, public private whole portfolio investing to the retirement market.

Let me just add one thing. Just the industrial logic and why this is so imperative. If through broadening the investment profile of what can be included in a defined contribution plan, if you if you believe over a thirty year horizon, you could add 50 basis points, which is not an unrealistic target. It adds 18% to the corpus 30 later. That should be compelling enough.

Now the reality is though there is a lot of litigation risk. There's a lot of issues, a lot related to the defined contribution business. And this is why that analytics and data are gonna be so imperative way beyond just the inclusion. And and and so this is one thing that we are very certain on. As this moves forward, the need for analytics and data and the role of frequent eFront Aladdin is only gonna is only gonna be a a larger set of opportunities for BlackRock in this space.

Thank you. We'll go next to Alex Blostein with Goldman Sachs.

Hey, Larry. Hey, Mark. Good morning, everybody. Hello. Wanted to ask you guys around profitability.

You've made a number of acquisitions, obviously, now they're kind of coming into the run rate. As you think about the adjusted operating margin for the back half, curious to get your thoughts. But also, as you pointed out at the Investor Day, the 45% plus adjusted operating margin, obviously, is quite healthy. So maybe help us sort of think through the cadence and scaling of the business as these two acquisitions kind of come into the full run rate and you continue to grow some of your faster growing areas of the business?

Great. Thanks, Alex, for the question. I'll take that one. So we talked about strategy at Investor Day, in terms of growing the business. BlackRock continues to deliver industry leading margin.

The margin in the second quarter of 43.3% was about 80 bps lower year over year. That's really partially due to the impact of lower performance fees. Over the cycle, we see a very clear path to continue to target a 45% or greater margin profile. About 75% of that, second quarter margin decline is really due to lower performance fees as well as the lower performance related compensation in the quarter. Just as a reminder, we defer a portion of compensation that's linked to performance fees for talent retention.

So in years where we see higher performance fees, we also see higher deferrals, which impact comp expense in future years. The remainder is really just margin impact from higher expense offset by acquisitions. So what I'd say is with the HPS acquisition now closed on July 1, as I mentioned in my remarks, we expect a low teens percentage increase in our twenty twenty five core G and A. That's primarily driven by the onboarding of our three acquisitions. Ex HPS, G and A would remain in our mid to high single digit percentage increase range.

And at Investor Day, I talked a lot about how we've executed on our financial framework by keeping controllable expenses within organic growth since 2023. That's really driven profitable growth and margin expansion. And we aim to continue to align organic revenue growth and controllable expenses. That's compensation that's compensation across base salaries and benefits as well as g and a. Right?

We think of controllable expenses traveling together, comp and base salaries and benefits as well as g and a. For the second quarter, our controllable expenses, excluding acquisitions, are in line with our last twelve months of organic revenue growth of 7%. On a go forward basis, I'd say we're in a period now where expense consolidation from recent acquisitions, it's coloring obviously the comparisons. And next year will really be a full year where we get the impact of HPS and Prequen. Those acquisitions are essentially self funding.

And GIP, HPS and Prequin, they've all been double digit FRE and ACV growers. So once we're through this period of consolidation in the back half of the year, we expect you'll continue to see controllable expense in line with organic base fee growth. That's what we've delivered since we introduced this framework in '23 and over the last twelve months. And so as we start to see that really strong, FRE and ACV growth, overall organic growth, I think you can expect us to continue to be able to drive towards our 45% or greater margin profile. Last thing I'd say is just, we have a really strong entry rate, as I mentioned, into q three.

Our entry rate's 5% higher, going into q three. That's pre HPS. With HPS, it's it's more like 10%, higher in terms of the base fee jumping off point. So I think we have a really sound entry point into the back half of the year even though we get some more consolidated expenses from bringing these acquisitions together. It's really important to bring people together.

We've got a lot of energy about co locating people on real estate. We know we need to do events where we bring people together. We have to go see our clients. All of those things in the long term, are both growth and revenue accretive for BlackRock.

Thank you. We'll go next to Dan Fannon with Jefferies.

Hello. I was hoping just on HBS now closed. Larry, you mentioned the growth there has been strong. I was hoping you could put some numbers around recent flow trends there. And as we think about the second half of the year, what products are in market and how we should think about organic growth or fundraising for that part of the business, for the remainder of the year?

So thanks for the question. Definitely an exciting time at BlackRock and for our clients in private markets. I think we talked a fair amount about this at investor day, but I'll I'll give a little bit more color. We're obviously looking to scale private markets fundraising through a systematic approach to our clients. Now integrating GIP and HPS, We have a really robust and I think exciting pro road map for '25 as well as the out years, which includes the next vintage of several strategies and thematic products.

Let me just give you sort of a a list of the things that are out in the marketplace today. We have fundraising going on across mid cap and emerging markets infrastructure equity. We have investment grade high yield and credit sensitive infrastructure debt, direct lending and junior capital, private equity secondaries, real estate debt, and some more targeted strategies in Europe, and Asia on real estate equity. As Larry and I both mentioned, on the call, we successfully closed GIP five, surpassing its $25,000,000,000 fundraising target. We also closed our secondary and liquidity strategies to SLS two, the next vintage of our secondary funds at over 2 and a half billion.

At investor day, we talked about targeting 400,000,000,000 in gross private market fundraising through 2020 from 2025 through 2030. We believe that'll be led again by our infrastructure and private financing solutions platforms. We're really building on very strong absolute and relative performance. I think very strong DPI's on the platform relative to the peer group. This power of vintage, LP re ups, and track record, we really feel we're in the best position that we've ever been in there to get closer to clients.

I wouldn't expect that 400,000,000,000 to be a straight line average, for five years. So don't just take this last six months and average it. We'd expect more of a ramp up to higher fundraising levels in the later years, call that 2028 through 2030. And, again, as Scott Kapnick said, as Bayo said, as Larry said, as Raj has said, you know, consistent investment performance is the license to grow. So all of our teams are going to be blisteringly focused on delivering for clients as the key input, to our fundraising goals.

So I think between now and the end of the year, we'll continue to execute, on those targets, bringing us towards our 400,000,000,000 in gross fundraising out to 2,030.

Thank you. We'll go next to Ben Budish with Barclays.

Hi. Good morning and Good thank you for taking the morning. Thank you. Maybe just another follow-up on the private markets strategy. So you announced the acquisition of Elmtree, a smaller tuck in.

But just curious how are you thinking about inorganic opportunities? Is this sort of an acquisition that had been on your radar? Is this something that sort of that you'd been seeking or came across your desk? How does it kind of fit in? And should this be indicative of maybe future M and A?

Or do you feel pretty good about the assets that you have today as they are? Thank you.

Thanks so much for the question. So our main focus right now is fully integrating our acquisitions and realizing the planned synergies. It's about delivering great integration experiences for all of our clients that are seamless and our employees. I think as we've shown in our results, we don't need M and A to meet or exceed our organic growth targets. We were doing that before M and A, and now we're running on the trailing twelve months at 7% organic base fee growth.

So these capabilities are helping us lift through our targets. So we're going to continue, I think, to be very prudent, selective, tactical with our capital and financial position and in how we look at M and A. We've made several smaller tactical acquisitions to bolster certain areas of the business. The planned acquisition of Elmtree, which we're very excited about, which brings triple net lease, the intersection of real estate and credit, which we think is very germane to our insurance clients and our wealth clients, And also previous acquisitions like Krios in growth oriented lending and Spider Rock, which helps extend our capabilities in SMAs. We also announced a minority investment in Viridium earlier this year, which also, I think, is accretive to private credit and alternatives.

So these acquisitions, alongside with our minority investments, they bring incremental capabilities to better serve clients and generate attractive shareholder returns. And so as I said at Investor Day, I I think because of large scale m and a in the near to intermediate term, we've rounded out that agenda. We're gonna continue to look at things that we think are complementary in terms of capabilities across private markets and technology.

I would just add a few other things that that we've been building up a bit organically and the opportunities we see. If we believe fundamentally that every country in the world is is going to be attempting to build out their own capital markets. I they see the success of The United States. One of the great reasons of The US position in the world today is having a strong banking system and a strong capital market system. We talked about this at an investor day.

But the what we saw in India and what we're trying to do and bring out, you know, bring out and expand its retirement system platform there is a good example of the expansion of the global capital markets. Yesterday, we had a conversation with another very big, you know, organization in a strong position in in a growing developing country with huge opportunity to do the same thing we're doing with Reliance and Geo BlackRock. We've already announced what we are trying to do in in in The Middle East and Saudi Arabia related to expansion of the of a mortgage backed securities market. So we are not just looking at tuck in acquisitions, but the opportunity we have to expand our position as more and more countries are expanding their capital markets and playing a bigger role in that. And I think India is just the beginning where we believe we're we're gonna build out of a a very large scale asset management platform in India itself.

It's gonna be these are the seeds that we are doing that that are are probably being obscured by all the inorganic things we are doing. But I I I wanna just ask you know, give you that color that we see the expansion of the global capital markets as as a primary driver of future success for BlackRock over the next five years. And having our global footprint being in a a 100 different countries just gives us a unique opportunity to be working with more and more governments worldwide. It's helping them think about how they expand their capital market and how do they expand their own pillar free retirement system. As a leader in retirement, this is a conversation we're having with everybody.

And, you know, I mentioned in my in one of in one of the prior questions related what's going on in Netherlands, moving from DB to a to a hybrid DC. These are all big changes, but they present huge and and unique opportunities for BlackRock. And and so, you know, inorganic opportunities are still gonna be if they're compelling, we will still be doing those types of transactions, especially tuck in areas in in private markets or tuck in in in technology. But the opportunity to grow organically as the capital markets grows worldwide is is something that we are very excited about over the next five years.

You. We'll go next to Bill Katz with TD Cowen. Thank you very much

BlackRock (BLK) Q2 2025 Earnings Call Transcript

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