BlackRock (BLK) Q2 Earnings Lag, Falling Revenue & AUM, Falling Stocks

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BlackRock, Inc.BLK’s second-quarter 2022 adjusted earnings of $7.36 per share missed Zacks’ consensus estimate of $8.33. This figure reflects a 30% decline from the prior year quarter.

Shares of the company are down 1.8% in premarket trading in response to earnings below expectations. Investors are bearish on the stock due to the dismal quarterly performance and are worried about the difficult geopolitical and macroeconomic environment.

The results were penalized by an unfavorable operating environment, resulting in lower revenues and the balance of assets under management (AUM). A slight drop in spending was a tailwind.

Net income attributable to BlackRock (on a GAAP basis) was $1.08 billion, down 22% from the prior year quarter.

Lower income and expenses

Revenue (on a GAAP basis) was $4.53 billion, down 6% year-over-year. The decline was largely the result of a decline in almost all revenue components, with the exception of technology services revenue and total consulting and other revenue. The figure was also lower than Zacks’ consensus estimate of $4.54 billion.

Total expenses were $2.86 billion, down 1%. The decrease was primarily due to lower compensation and employee benefits costs and direct fund expenses.

Non-operating expenses (on a GAAP basis) were $347 million compared to non-operating income of $270 million in the prior year quarter.

BlackRock’s adjusted operating profit was $1.73 billion, down 14% from the prior year period.

AUM Balance Decline

As of June 30, 2022, assets under management were $8.49 trillion, reflecting an 11% year-over-year decline. During the reported quarter, the company recorded long-term net inflows of $68.6 billion. On the other hand, unfavorable market trends and the impact of exchange rates adversely affected the balance of assets under management.

Average assets under management of $9.02 trillion as of June 30, 2022 decreased by 3%.

Share buyback update

BlackRock repurchased shares worth $500 million during the quarter under review.

Our point of view

Uncertain markets and extreme volatility amid macro concerns have led to an unfavorable operating environment for BlackRock. These factors led to lower performance fees and an overall lower average balance of assets under management, which hurt revenue growth.

Still, BLK’s continued efforts to strengthen iShares and ETF operations, as well as its initiatives to restructure actively managed equity businesses, should remain supportive.

BlackRock, Inc. Price, Consensus, and EPS Surprise

BlackRock, Inc. price-consensus-eps-surprise-chart | Quote from BlackRock, Inc.

BlackRock currently carries a Zacks rank #4 (sell).

You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Results dates and expectations of other asset managers

SEI Investment Company SEIC is expected to release its second quarter 2022 results on July 20.

Over the past 30 days, the Zacks consensus estimate for SEI Investments’ quarterly earnings fell 8.9% to 82 cents. This indicates a decline of 11.8% from the prior year quarter.

Invesco Ltd. IVZ is expected to announce second quarter 2022 figures on July 27.

Over the past month, the Zacks consensus estimate for IVZ’s quarterly earnings has moved 3.3% south to 58 cents, implying a 25.6% decline from the figure for l ‘last year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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