LIVE : Q4 2025 BlackRock, Inc. Earnings Conference Call

Thank you, Martin. Good morning, everyone, and happy new year. Thank you for joining. We enter 2026 with accelerating momentum across our entire platform. It will be the first full year with the combined strength of BlackRock, GIP, HPS, and Prequin. We're coming off the strongest year and quarter of net inflows in our history. Clients awarded BlackRock with nearly 700 billion in new assets in 2025, including 342 billion in the fourth quarter. And the consistency of our results stands out even more over the long term with nearly two and a half trillion dollars of net inflows over the last five years. Our pipeline of business has broadened across products and regions spanning public and private markets, technology and data, and client channels. We're seeing excellent fundraising activity. We have an ambitious 2026 fundraising plan diversified across infrastructure, equity, and debt, private financing solutions, and multi-alternatives. Our client relationships have never been stronger and deeper. We're a scale operator in public and private markets, investments, and technology. That's significantly enhancing our position with clients worldwide. We're building off accelerating growth over the course of 2025. We delivered 6% or higher organic base fee growth each quarter and we ended the year with 12% organic base fee growth and 16% technology ACV growth in the fourth quarter. These growth rates are both four points higher than last year and 9% full-year organic base growth represents one and a half billion of net new base fees. That means we enter 2026 with base fees approaching 21 billion, 13% higher than 2025. And we delivered a premium 45% operating margin. Our scale and Aladdin technology fuels growth and helps push down our marginal cost. We're in an upward trajectory in our margins on fee recurring earnings as we continue to drive growth in private markets and scale businesses like ETFs and systematic equities. Our belief in our future growth, increasing profitability, and durability of cash flow led us to increase the dividend per share by 10% and step up planned share repurchases. Over the last 10 years, we delivered a 10% compounded annual growth rate in our dividend and over a 15% annual return on our repurchases. And we're more confident than ever in our model and the outsized opportunity we see across multiple growth engines. Our foundational businesses like iShares are unlocking new markets like active ETFs and digital assets. At the same time, we're a leader in emerging trends like private markets to wealth, 401(k)s, tokenization, and private market data. In private markets, our investments in infrastructure and private credit, and alts in wealth underpin our ambitions to raise 400 billion in private markets by 2030. BlackRock is already managing $3 trillion on behalf of insurance, wealth, and OCIO clients. We have a significant opportunity to deliver better outcomes and experiences for clients in private market allocations. And for our shareholders, that shift represents new private markets AUM and potentially over $1 billion in new base fees. For example, BlackRock is the largest general account manager for insurers with 700 billion in AUM. With HPS, we're now also one of the largest asset-based finance and high-grade managers. We're in about 20 latest stage conversations to help insurers build more dynamic and diversified portfolios across public and private markets. Similarly, in wealth, we're focused on expanding access to private markets. We're bringing together strong investment performance track records with BlackRock's scaled global distribution model. We have the largest wholesaling team in the industry covering every corner of the United States marketplace. We have very strong relationships in private banks in Europe. Our more than $1 trillion wealth platform spans end clients' whole portfolios from models and SMAs to ETFs and private markets. We're also a technology provider through Aladdin Wealth which brings institutional quality portfolio construction right to the desktops of our financial advisers. We continue to expand and diversify distribution of HPS's non-traded BDC to US warehouses and RIAs, and we believe model portfolios will be another unlock. We're also planning to widen our product range through an H series family of funds that would be led by the flagship HLEND alongside junior capital, real assets, triple net lease, multi-strat credit, and secondaries and co-investment strategies. We plan to bring all the building blocks to serve wealth investors through coordinated multi-portfolios. Then in retirement, we're seeing important progress towards a framework to include private assets in target date funds. We expect to launch our first life path target date fund with private markets later this year. Most Americans' only experience with capital markets is through their 401(k) plan. I've said many times that helping workers build and spend their retirement savings is one of the greatest challenges of our generation. We've long advocated for better retirement solutions and easier access to investment options. BlackRock has also championed early childhood savings accounts and the policies that make them possible. And we're encouraged by and supportive of the launch of these accounts in the United States. For retirement savers, there's a real opportunity to bring additional returns and diversification to investors through private markets. BlackRock will be at the forefront with our leading DCIO business, our 600 billion life path franchise, top five alternative platforms, and definitely Prequin. We expect plan sponsors will need standardized benchmarking and performance data to validate their plan choices, and Prequin can be the central provider. Our leadership in all of these areas distinguishes BlackRock with plan sponsors and policy makers. We've always been a leader in retirement and a first mover in developing new solutions in retirement. We started innovating life path paycheck in 2018 and it's been the fastest growing lifetime income target date strategy in the defined contribution market. We believe it will be the default retirement investment strategy. Guaranteed income and private markets are not two separate conversations. BlackRock can bring it all together. Our vision is not just for incremental addition of private markets. It's the design of an optimal target date solution. One that combines public markets, private markets, and guaranteed income like life path paycheck. BlackRock has longstanding relationships and decades of experience in working with plan sponsors and building client-first retirement solutions for their members. We're a bit over a year into closing our GIP transaction and we're already seeing synergies through our combined expertise and relationships. GIP5 closed above its $25 billion target in July and our AI partnership which was not part of the deal model continues to attract significant capital. AIP has raised over 12.5 billion from partnership founders and clients. Our initial target is to mobilize and deploy $30 billion of equity capital with a potential of reaching a hundred billion including debt. More broadly, we're seeing excellent progress across the range of infrastructure strategies including midcap and emerging markets infra equity and investment grade, high yield, and credit sensitive infra debt. The current cash flow and inflation protected return profile of infrastructure makes it an attractive sector for our clients, especially those saving for retirement. More broadly, income oriented strategies are a critical component of our clients' portfolios. BlackRock manages over four and a half trillion in assets across both public fixed income, cash, and private credit. This means we can provide an integrated fixed income solution for clients that delivers scale benefits. In 2025, we generated over 45 billion of net inflows across our high-performing active fixed income franchise led by Rick Rieder. We believe 2026 is shaping up to be another year where returns may be driven primarily by income rather than price appreciation. We're well positioned to capture flows with strong performance and differentiated strategies across municipals, high yield, total return, and unconstrained fixed income strategies. And we're leveraging active ETFs to provide access to our portfolio managers' insight along with the benefits of the ETF wrapper. Our active ETFs drove more than $50 billion in net inflows in 2025, nearly tripling their assets in the last year. Rick's flexible active income ETF, BINC, and our systematic US equity factor rotation ETF, DYNF, led our active ETF flows for the year. DYNF was the highest inflowing active ETF in the industry with 14 billion of net inflows. It is our flagship of our systematic equity platform. Overall, our systematic equity franchise raised over $50 billion in 2025. Even as the active equity industry saw another year of outflows, our systematic investments have been using data and AI for 20 years. We've invested in this business and today its IP delivers alpha to clients and helps portfolio managers across BlackRock to invest better. As more investors are looking at how to use AI for investments, we already have one of the best platforms utilizing AI and big data to drive thousands of alpha signals. We're optimistic about our systematic platform's continued double-digit organic base fee growth potential and its position as a bright spot in the active equity industry. iShares continues to be an innovation engine for BlackRock. iShares remains the market leader in ETFs in terms of organic assets and base fee growth, countries served, and product lineup. 2025 was another record year for iShares with 527 billion of net inflows. In 2000, with just 40 ETFs, BlackRock iShares set out to revolutionize investing and over those 25 years has led the way in democratization of access to the growth of capital markets. BlackRock shaped the industry and we continued to expand choice and access for investors around the world. We brought US investors access to international markets and we introduced ETFs to Europe. We launched the world's first bond ETF. We provide over 1,700 ETFs today, more than six times the next largest issuer. And we're focused on providing investors value for their money while driving growth and margin expansion for our shareholders. iShares' AUM was about 300 billion when we announced our acquisition in 2009. Today it's 5.5 trillion and iShares revenues have more than quadrupled to over 8 billion. iShares is delivering growth both through core channels and newer premium initiatives like active ETFs, digital assets, and in international markets. In Europe, ETF net inflows of 136 billion was approximately 50% higher than 2024. And we're seeing more individuals coming to iShares through digitally enabled offerings and monthly savings plans. We're seeing similar trends in India where our Jio BlackRock joint venture operates through a digital first direct to consumer model. Jio BlackRock raised two billion upon launch, six times the previous industry record, and now manages 12 funds spanning cash, index, systematic equities on behalf of nearly 400 institutions and already more than 1 million Indian retail investors. More broadly, we're seeing great momentum and connectivity with clients in international markets both in Asia and in LatAm. We saw double-digit organic base fee growth in 2025. Growth in Asia was led by our active wealth strategies and 30 billion of ETF net inflows across our locally listed and global ETF range. In Latin America, our local presence is similarly resonating through our onshore ETFs and wealth offerings. And in the Middle East, we have a strong history as a trusted adviser to countries looking to allocate capital or to build out their own local markets. It is one of our fastest growing regions. Our Aladdin technology powers and unites all of our platform and all our work. The fact that BlackRock is the largest user of Aladdin allows us to stay attuned to changes in the marketplace and adapt Aladdin for our clients. Today, we're enabling our clients to more easily manage their exposures through end-to-end integration across public and private markets. 16% technology ACV growth reflected several innovative multi-product wins which will drive future revenues. Through Prequin, we're expanding access to actionable private market data, giving investors the analytics they need to build strong and reliable portfolios. The BlackRock platform is comprehensive. It's global. We're a leader in public markets. We're a leader in private markets. And we are a leader in technology and data. We're a foundational provider in the traditional financial markets and the evolving decentralized financial ecosystem. Most importantly, we bring it all together to deliver BlackRock to our clients in a comprehensive, consistent, determined way. We're entering 2026 with elevated momentum and we're positioned ahead of big future opportunities. We ended the year with 12% organic base fee growth, record flows, and a new AUM high at $14 trillion. This already lifts our base fee entry level rate by 13%. We are confident in our organic base fee growth ambitions. We plan to raise a cumulative 400 billion in private markets by 2030. We're focused on our margins and driving profitable growth. This all should translate to shareholder value through higher earnings and then multiple expansion. I'd like to thank our employees for the work they do every day on behalf of our clients. Each and every client we stand by as a fiduciary. When we do well for our clients, we also do well for our employees and then we do well for our shareholders. I believe they'll all be beneficiaries of our future growth. Operator, let's open it up for questions.

Hi Craig, happy new year.

Well, I hope it's going to be impressive when we're a much larger manager than 14 trillion. As we look ahead to 2026, can you flush out what you're all seeing and thinking on the net flow pipeline? And a sort of follow-up would be your money market business, which is not a new business, has done really well over the last 5 years. Higher rates has been a factor there. But with the Fed cutting, do you see flows reversing in this business? And if it does, where do you think that liquidity goes?

Let me just add one more point. As global capital markets grow, cash is going to grow alongside of it. So the base holdings of cash will be elevated as long as the global capital markets continue to grow. If you overlay, if tokenization becomes more real and the opportunity to have a tokenized money market fund alongside tokenizing other assets, I actually believe you're going to see probably above trend holdings in cash. That being said, I agree with everything Martin said. We're going to see much more, you're going to see more and more investors going out the curve, especially if the yield curve becomes steeper and steeper, which probably is going to be the outcome. But I think we have to look at the overall scale of the capital markets and its growth globally, and that is one of the foundational reasons why cash holdings will look larger than ever, which they certainly are. But I think as the capital markets grow, so do holdings in capital markets cash, and I think that is an important connection. Cash is just not an outcome of people being nervous and holding and not looking to do it. As the capital markets grow and as more people's wallets are in the capital markets, the role of the money market fund just grows, and I think that is one of the foundational reasons why we continue to believe that money market holdings will continue to be quite large.

Hey, good morning. Michael, how are you?

Well, I would say first and foremost, Asian capital markets grew faster than the US capital markets. More IPOs in Asia, especially in Hong Kong. So, let's just start with that foundational base. The capital markets are going faster there. You're seeing historical changes in Japan because of NISA accounts and retirement accounts. You're just seeing more wealth entering the capital markets out of the banking system and that just represents more and more opportunities. So Japan has been an exceptional platform for growth. The insurance industry in Japan, the pension fund industry as the NISA accounts grow. So that's just one really good foundational example. As I said, the IPOs in Hong Kong and the scale of wealth management in Hong Kong and Singapore, the wealth that is being generated in Southeast Asia, all leads to bigger opportunities, not just bigger opportunities to manage the money, but bigger opportunities to invest like GIP invested in the airports of Malaysia. In India, I believe we have the best single platform to grow in India with the Jio BlackRock partnership. I talked about the growth in 2025 but we believe that the transmission of the growth of the capital markets in India is just at the very beginning. Historically, Indians kept most of their money either in gold or in cash. And I think the opportunity to develop a self-directed retirement platform in India is real and as the platform grows in terms of retirement, the opportunities for us are very large. But even in places like Saudi Arabia, there are conversations going on now to really build a pillar two retirement system there and then obviously a pillar three, and we're engaged in those conversations and opportunities. So historically we looked at a lot of these markets who were exporters of capital but now in many cases they're importers of capital but more importantly they're developing their own capital markets. This is a trend that I've been talking about for years and I think we're at the early stages of the growth of the capital markets in every place in the world. If you look at our growth rates, the double digit growth rates in base fees in LatAm, it is another example of the growth of wealth and the opportunities we have. And so the key is BlackRock is going to grow as long as the world and the global capital markets grow. But what I would clearly say what 2025 indicates and what 2026 offers is the growth of these capital markets are very beneficial for platforms like BlackRock and we are involved in these conversations. We're building our platform in each and every country and I believe this is one of the real foundational opportunities for us in the future.

Good morning, Mike.

Hi, good morning. Happy New Year.

Happy new year, Alex.

Good morning.

Let me add one other point. Because more and more insurance companies, more and more pension funds and sovereign funds are deploying more and more private market strategies, and more wealth managers are anticipating more private market strategies. The need to have a comprehensive risk management platform is even more imperative. So having a separate risk management system only for private markets is not going to be workable. And I think what Aladdin is bringing across the world of the spectrum of public and private markets, we're in a position of very large growth and you saw that in our ACV growth in 2025 and we expect that to continue over the coming years. The need to have a comprehensive risk platform, especially if the Department of Labor approves the utilization of private markets in the 401(k) and the defined contribution business, each and every firm is going to have to validate and authenticate the risk that is being implied when they add private markets. We are still going to have to live under some prudent ruling, maybe still a fiduciary ruling of some sort, we don't know, but I can say with absolute certainty the need to have comprehensive risk tools to understand the risk associated with adding private markets to a what is an all public market portfolio is imperative. And so the need for a platform like Aladdin has never been greater, especially with the addition of private markets in the defined contribution space.

Morning Dan.

Morning. So just a question on private credit. I was hoping you could first disclose what the HPS flows were in the quarter and then more broadly how you're thinking about the outlook for growth given the headlines and news flow around this asset class. Has that changed at all as we think about 2026 and beyond?

Good morning, Ben. Happy New Year.

Thank you, operator. I want to thank all of you for joining us this morning and for the continued interest in BlackRock. Our results in 2025 validate the power of our integrated platform and the strength of our positioning with clients. We enter 2026 with differentiated momentum and opportunities ahead for us. I think we're well positioned to deliver for our clients and in turn create longer term value for our shareholders. Everyone have a very good first quarter and enjoy the winter.