Executive Summary / Key Takeaways

• BlackRock is strategically transforming into a premier integrated public-private market investment and technology firm, leveraging recent acquisitions like GIP, Preqin, and the planned HPS deal to capture secular growth trends in infrastructure, private credit, and data/analytics.
• The firm's proprietary Aladdin technology platform, now enhanced with eFront and Preqin data, provides a significant competitive moat by enabling sophisticated, integrated risk management and portfolio analytics across both public and private assets, driving efficiency and attracting large, complex mandates.
• Recent financial performance, including 6% organic base fee growth in Q1 2025 and double-digit revenue and operating income growth in 2024, demonstrates the early success of this strategy, fueled by strong flows in ETFs, private markets, and technology services, even amidst volatile markets.
• Management is guiding for continued profitable growth, expecting a mid-to-high single-digit increase in 2025 core G&A (ex-HPS) and targeting at least $375 million in quarterly share repurchases, while anticipating margin expansion driven by scale and strategic investments.
• Key opportunities lie in democratizing private markets access for wealth and retirement clients, capitalizing on the massive need for AI and energy infrastructure, and expanding global partnerships, though geopolitical risks, market volatility, and integration challenges remain factors to monitor.

The Architect of Modern Asset Management: BlackRock's Strategic Evolution

BlackRock, Inc. stands as a colossus in the global investment management landscape, a firm that has consistently redefined its role and capabilities over its 37-year history. What began as a specialized fixed-income and risk management firm has evolved through strategic vision and transformative acquisitions into the world's largest asset manager, now charting a course to become the preeminent integrated public-private market investment and technology provider. This journey, marked by pivotal moments like the 1999 IPO and the game-changing 2009 acquisition of BGI and iShares, has built a foundation of scale, global reach, and technological prowess that underpins its current strategic pivot.

At its core, BlackRock's business is multifaceted, encompassing investment management across a vast spectrum of asset classes – equities, fixed income, alternatives, and cash management – delivered through diverse vehicles including mutual funds, the ubiquitous iShares ETFs, separate accounts, and pooled funds. Complementing this is a robust technology services segment, anchored by the industry-leading Aladdin platform. This integrated approach allows BlackRock to serve a broad client base, from large institutions and sovereign wealth funds to retail investors and wealth managers, across more than 100 countries.

The competitive landscape in asset management is fierce, populated by established giants like State Street (STT), Invesco (IVZ), Franklin Resources (BEN), and T. Rowe Price (TROW), as well as a growing array of specialized firms and fintech disruptors. While many competitors offer strong capabilities in specific areas – STT in custody and servicing, TROW in active equity research, IVZ and BEN in various fund offerings – BlackRock differentiates itself through its unparalleled scale, the breadth of its integrated platform, and, critically, its technological moat.

Aladdin, BlackRock's proprietary investment and risk management technology platform, is not merely a tool but an operating system that provides a significant competitive advantage. It integrates portfolio management, trading, operations, and risk analytics onto a single platform, offering clients a unified view of their portfolios. This technology enables capabilities like faster risk analysis (estimated 20-30% faster than some alternatives) and contributes to operational efficiency, potentially lowering costs. The strategic acquisitions of eFront (private markets technology) and, more recently, Preqin (private markets data) are designed to extend Aladdin's capabilities into the less transparent private markets, aiming to bridge the gap between public and private assets. The vision is to integrate Preqin's extensive private markets data with Aladdin's analytical power to create better transparency, price discovery, and risk management tools for private assets, potentially paving the way for indexing principles to be applied to private markets over the long term. This technological integration is a key differentiator, attracting large, complex mandates and providing a sticky revenue stream through technology services and subscriptions, which saw 16% year-over-year growth in Q1 2025 (including Preqin's impact) and 14% organic ACV growth.

This strategic evolution is not just about adding capabilities; it's about fundamentally reshaping the firm to capture the next wave of growth. BlackRock is making a bold pivot towards private markets and integrated solutions, anticipating that clients will increasingly seek diversified portfolios that blend public and private assets and will consolidate relationships with partners who can offer comprehensive, tech-enabled solutions.

Performance Reflecting a Strategic Shift

BlackRock's recent financial performance provides tangible evidence that this strategic transformation is gaining traction, even against a backdrop of market volatility and geopolitical uncertainty. In the first quarter of 2025, the firm reported total revenue of $5.276 billion, a notable increase from $4.728 billion in the prior-year quarter. While GAAP operating income saw only a modest increase to $1.698 billion, the operating margin decreased to 32.2%, primarily due to higher expenses associated with recent acquisitions, including amortization of intangible assets ($117 million in Q1 2025 vs. $38 million in Q1 2024) and contingent consideration adjustments ($96 million in Q1 2025 vs. $7 million in Q1 2024).

However, the as-adjusted results, which exclude these acquisition-related impacts, paint a clearer picture of the underlying business momentum. As-adjusted operating income rose significantly to $2.032 billion in Q1 2025, up from $1.775 billion in Q1 2024, resulting in a 100 basis point expansion in the as-adjusted operating margin to 43.2%. This highlights the operating leverage inherent in BlackRock's model when viewed without the near-term costs of strategic expansion.

Revenue growth in Q1 2025 was primarily driven by a 16% increase in investment advisory, administration fees, and securities lending revenue to $4.401 billion. This was fueled by the positive impact of market movements on average AUM, strong organic base fee growth (clocking in at an above-target 6% annualized rate), and approximately $285 million in base fees contributed by the Global Infrastructure Partners (GIP) acquisition, which closed in October 2024. Technology services and subscription revenue also saw a healthy 16% increase to $436 million, benefiting from sustained demand for Aladdin and the initial contribution from the Preqin acquisition, which added approximately $20 million to first-quarter revenue. Performance fees, however, saw a significant decline to $60 million from $204 million in the prior-year quarter, primarily reflecting lower revenue from private markets and liquid alternative products in the period.

Asset under management (AUM) reached a record $11.58 trillion at March 31, 2025, up from $11.55 trillion at December 31, 2024, and $10.47 trillion a year prior. Net inflows in Q1 2025 totaled $84 billion. Excluding episodic low-fee institutional index equity outflows ($55 billion), net inflows were approximately $140 billion, underscoring broad-based client activity. ETF net inflows were particularly strong at $107 billion, led by equity and fixed income ETFs, and included $9 billion in active ETFs and $3 billion in digital asset ETPs (like the Bitcoin ETF, which reached nearly $20 billion in AUM within six months of launch and surpassed $30 billion by Q1 2025, and the tokenized digital liquidity fund surpassing $2 billion). Retail net inflows were $13 billion, driven by equity products (including Aperio), multi-asset, and systematic liquid alternatives. Institutional active saw $8 billion in net inflows, led by infrastructure private markets, LifePath target-date strategies, and systematic active equity, though partially offset by client-specific redemptions in active fixed income. Institutional index experienced net outflows of $46 billion, concentrated in low-fee equity offerings. Cash management AUM increased to $931 billion with $1 billion in net inflows.

Over the last twelve months ending March 31, 2025, BlackRock attracted $668 billion in total net inflows, with long-term net inflows of $496 billion diversified across ETFs ($431 billion), institutional ($35 billion), and retail ($30 billion). This robust flow generation, combined with market appreciation and the AUM added from the GIP transaction ($116 billion client AUM, $70 billion fee-paying), drove the substantial year-over-year AUM growth.

Technological Moat and Future Growth Engines

BlackRock's technological ecosystem, centered around Aladdin, is not just a competitive advantage; it's a fundamental enabler of its strategic transformation and a key driver of future growth. Aladdin provides a unified platform for investment management, risk analysis, trading, and operations across public markets. The integration of eFront extended this capability to private markets, allowing for a "whole portfolio" view that seamlessly manages both public and private assets on a single platform. This is particularly crucial as institutional and wealth clients increasingly allocate to private strategies but struggle with fragmented data and systems.

The recent acquisition of Preqin significantly bolsters this technological moat by adding a premier source of private markets data. The strategic intent is to integrate Preqin's extensive data and research tools with Aladdin and eFront's workflows and analytics. This combination aims to create a preeminent private markets technology and data provider, bridging the transparency gap between public and private markets. The vision extends to potentially applying indexing principles to private markets through standardization of data, benchmarking, and enhanced performance tools, a transformative opportunity that could open up new revenue streams and further democratize access to private assets.

The tangible benefits of this integrated technology are reflected in the strong demand for Aladdin, which saw 14% organic ACV growth in Q1 2025 and 30% including Preqin. Management remains committed to achieving low-to-mid teens ACV growth over the long term, viewing Preqin as an accelerant to this target. The platform's ability to handle complex, multi-asset portfolios and provide sophisticated risk management is resonating with clients, leading to significant mandates and expanding relationships.

Beyond technology, BlackRock is actively investing in several key growth engines:

• Private Markets: The GIP acquisition has created a scaled infrastructure franchise ($170 billion client AUM), uniquely positioned to capitalize on the generational need for infrastructure investment ($75 trillion globally over 15 years), particularly in areas like AI data centers and energy transition. The planned HPS acquisition is set to significantly scale BlackRock's private credit AUM to approximately $220 billion, addressing the growing demand for flexible debt financing and expanding opportunities in the insurance and wealth channels.
• Wealth Management: BlackRock is focused on democratizing access to private markets for wealth clients, who are currently underweight in these strategies. Initiatives include developing first-of-its-kind public-private model portfolios with partners like GeoWealth (utilizing UMA technology) and Partners Group, and leveraging the HPS acquisition to expand wealth-focused BDC offerings. The LifePath target-date franchise ($0.5 trillion AUM) and the innovative LifePath Paycheck solution are key components of the retirement strategy, aiming to improve retirement outcomes and capture flows in the defined contribution market.
• ETFs: As the world's largest ETF provider, BlackRock continues to drive innovation and capture flows across core, strategic, precision, active, and digital asset categories. The European ETF platform crossing $1 trillion in AUM and the success of digital asset ETPs (Bitcoin, Ethereum) highlight the ongoing secular growth and BlackRock's leadership in expanding the utility of the ETF structure.
• Global Expansion: BlackRock is deepening its local presence and partnerships in key growth markets like India (Jio BlackRock JV), Saudi Arabia (investment management platform with PIF), and across Europe and the Indo-Pacific, aiming to help develop local capital markets and capture long-term AUM growth.

Outlook, Guidance, and Risks

Management's outlook for 2025 is one of continued profitable growth, driven by the momentum in its core business and the integration of recent acquisitions. They anticipate that the strategic investments in private markets and technology will contribute to higher and more resilient organic growth, leading to differentiated operating leverage and earnings expansion.

Specific guidance for 2025 includes:

• A projected as-adjusted tax run rate of 25% for the remainder of the year, though actual rates may vary due to discrete items or tax legislation changes.
• A mid-to-high single-digit percentage increase in core General and Administration (G&A) expense, excluding the impact of the HPS acquisition and related transaction costs. This increase is primarily attributed to the consolidation of GIP and Preqin expenses and ongoing investments in technology.
• A target to repurchase at least $375 million of shares per quarter for the balance of 2025, subject to market and other conditions.

The successful integration of GIP and Preqin, and the planned closing of HPS in mid-2025, are central to achieving these objectives. GIP is expected to contribute significantly to base fees and earnings, while HPS is anticipated to scale the private credit business and enhance capabilities in the wealth channel. The Viridium transaction in Germany and the Jio BlackRock JV in India are also expected to contribute to future growth upon their respective closings in 2025.

However, the path forward is not without risks. Geopolitical tensions, including the impact of tariffs and trade policies, introduce uncertainty and can affect market volatility, potentially impacting AUM and client sentiment. Regulatory risks, such as the need for litigation or advice reform to broaden private markets access in U.S. defined contribution plans, could influence the pace of growth in key target markets. Integration risks associated with large acquisitions like GIP, Preqin, and HPS could impact expected synergies and operational efficiency. Market risks, including potential downturns or shifts in interest rates, can affect AUM values, flow patterns, and investment performance. Competition remains intense across all segments, potentially pressing fees and requiring continuous investment in innovation. Finally, contingent consideration liabilities related to acquisitions, particularly the GIP deal ($4.3 billion at March 31, 2025), introduce potential volatility in general and administration expense based on fair value adjustments and performance outcomes.

Despite these challenges, BlackRock's management expresses confidence in its ability to navigate the environment, citing the firm's experience in prior periods of disruption, its deep client relationships, and the strength of its integrated platform. They believe the macro trends favoring private markets, technology, and integrated solutions provide a strong tailwind that positions BlackRock for continued market leadership.

Conclusion

BlackRock is executing a deliberate and ambitious strategy to transform itself into the leading provider of integrated public-private market investment and technology solutions. Anchored by the powerful Aladdin platform and bolstered by recent, significant acquisitions like GIP and Preqin, the firm is building a differentiated ecosystem designed to meet the evolving needs of global investors, particularly in high-growth areas like infrastructure, private credit, and digital assets.

Recent financial results demonstrate the early success of this pivot, with robust organic growth in key segments and expanding margins (on an as-adjusted basis), even as acquisition-related costs impact GAAP profitability in the near term. The firm's strong flow momentum, particularly in ETFs and private markets, underscores client validation of its strategy.

While risks such as geopolitical uncertainty, market volatility, and integration challenges persist, BlackRock's scale, technological moat, global footprint, and strategic focus on secular growth drivers position it favorably. The vision for indexing private markets and democratizing access to these strategies for wealth and retirement clients represents a significant long-term opportunity. For investors, BlackRock represents a compelling investment thesis centered on a market leader actively reshaping the future of finance, poised for potentially higher and more resilient growth as its integrated public-private and technology platform continues to mature.