BlackRock (BLK) Earnings Call Shows Record Flows, Growth

BlackRock Inc. ((BLK)) has held its Q4 earnings call. Read on for the main highlights of the call.

BlackRock Highlights Record Flows and Expanding Platform Despite Margin Pressures

BlackRock’s latest earnings call painted a broadly upbeat picture, with management emphasizing record net inflows, strong revenue and earnings growth, and powerful momentum across ETFs, technology, and private markets. While the firm acknowledged headwinds from institutional index outflows, higher expenses, and some mark-to-market investment losses, executives stressed that the underlying engine of recurring fee revenue and organic growth is accelerating. The message to investors was clear: the platform is getting larger, more diversified, and more profitable over time, even as near-term noise affects reported margins.

Record Net Inflows Underscore Franchise Strength

BlackRock reported a standout year for asset gathering, with full-year 2025 net inflows of $698 billion, including a hefty $342 billion in the fourth quarter alone. Over the last five years, the firm has attracted nearly $2.5 trillion of net new client money, reinforcing its position as a go-to partner for institutional and retail investors globally. Management framed these flows as broad-based, spanning index, active, and alternatives, and argued that they reflect both the breadth of BlackRock’s product lineup and the depth of client relationships across regions and channels.

Revenue, Earnings, and EPS Show Strong Growth

Financial performance kept pace with asset growth. Full-year revenue climbed 19% year over year to $24.0 billion, while operating income rose 18% to $9.6 billion. Earnings per share increased 10% to $48.09 for the year, with fourth-quarter EPS of $13.16 also up 10%. Management highlighted that this growth came despite market volatility and some drag from nonoperating items, underscoring the resilience of BlackRock’s diversified business model. The combination of strong top-line expansion and disciplined cost management supported solid profitability even as the firm continued to invest in future growth.

Organic Base Fee Growth Accelerates

A key focus of the call was organic base fee growth, which management views as the clearest indicator of the firm’s underlying health. For 2025, organic base fee growth reached 9%, with BlackRock delivering more than 6% organic base fee growth in every quarter of the year and finishing with a robust 12% in the fourth quarter. This reflects strong net inflows into higher-fee strategies and platforms, including ETFs, active products, and alternatives. Executives stressed that this level and consistency of organic fee growth reinforces the firm’s long-term earnings power and operating leverage.

iShares Delivers Record ETF Flows and Fee Growth

The iShares ETF business again emerged as a major growth engine. iShares generated a record $527 billion of net inflows in 2025, driving 12% organic asset growth and 13% organic base fee growth. Active ETFs were a highlight, pulling in more than $50 billion of net inflows, with the DYNF strategy leading the industry and capturing $14 billion alone. The mix shift toward higher-value ETFs, including fixed income and active strategies, supported both asset and fee growth. Management positioned iShares as central to BlackRock’s growth story, benefiting from structural adoption of ETFs by institutions, wealth platforms, and individual investors.

AUM Hits $14 Trillion as Base Fee Run Rate Surges

BlackRock’s assets under management reached a new high of $14 trillion, reflecting market appreciation and strong net inflows. More importantly for earnings visibility, the firm’s base fee run rate entering 2026 is approximately 35% higher than in 2024 and roughly 50% above 2023 levels. Base fees are now approaching $21 billion, around 13% higher than the 2025 level. Management emphasized that this step-up in recurring fee revenue provides a stronger foundation for future earnings, reducing the firm’s dependence on more volatile sources such as performance fees.

Technology, Data, and Subscription Revenue Power Structural Growth

The call underscored rapid expansion in BlackRock’s technology and data business, including Aladdin and newly acquired platforms. Both quarterly and full-year technology services and subscription revenue increased 24% year over year. Annual contract value (ACV) rose 31% year over year including the Preqin acquisition, and 16% organically, showcasing strong demand for risk, data, and workflow tools from asset managers, asset owners, and other financial institutions. Management highlighted technology ACV growth of 16% as a key strategic metric, arguing that these capital-light, high-margin revenues add resilience and diversification to the overall franchise.

Private Markets and Alternatives Gain Scale

BlackRock’s alternatives platform continued to build momentum, particularly in private credit and infrastructure. The scaled private markets franchise generated $40 billion of net inflows for the year, bringing total alternative client assets to more than $675 billion. Management reiterated a long-term aspiration to raise $400 billion of gross private markets capital through 2030, supported by strong demand from institutional and wealth clients seeking diversification and income. The firm is positioning its private credit, infrastructure, and other alternative strategies as central pillars in client portfolios, complementing its traditional public markets offerings.

Shareholder Returns and Capital Deployment Remain Aggressive

BlackRock coupled its growth story with substantial capital return. The company returned a record $5.0 billion to shareholders in 2025 through dividends and share repurchases. The board approved a 10% increase to the first-quarter 2026 dividend per share, signaling confidence in future cash flows. Planned share repurchases for 2026 have been raised to $1.8 billion, and the board authorized the repurchase of an additional 7 million shares. Management framed this capital return program as balanced with continued investment in acquisitions, technology, and new growth initiatives.

Underlying Margin Expansion Despite Reported Compression

On the surface, BlackRock’s as-adjusted operating margin dipped, with the full-year margin at 44.1% and fourth quarter at 45%, marking a modest decline of around 40 basis points for the year and 50 basis points for Q4. However, executives emphasized that margins on recurring fee-related earnings actually expanded. Excluding performance fees and related compensation, the fourth-quarter adjusted margin would have been 45.5%, up 30 basis points year over year, and the full-year margin would have been 44.9%, up 60 basis points. Management argued that this underlying margin improvement demonstrates operating leverage in the core business even as the company invests in growth and absorbs M&A-related costs.

Institutional Index Outflows Temper the Inflows Story

One notable weak spot was institutional index strategies, which saw net outflows of $119 billion during 2025. These redemptions were concentrated in low-fee equity index mandates, where large institutional clients actively rebalance or reallocate capital. While management framed this as part of the normal ebb and flow in a commoditized segment of the market, the outflows partially offset strengths elsewhere. The company stressed that it continues to see strong institutional demand in higher-value strategies, including factor, fixed income, and alternatives, which help support overall fee growth.

Expense Growth Reflects M&A and Talent Investment

Total expenses increased 19% in 2025, roughly in line with revenue growth but still a key topic on the call. Employee compensation and benefits rose 20%, driven by higher incentive compensation and the onboarding of employees from acquisitions. General and administrative expense climbed 15%, reflecting integration of deals such as HPS and Preqin and increased spending on technology, data, and infrastructure. Management portrayed these costs as deliberate investments to enhance capabilities, scale technology, and support long-term growth, while acknowledging investor focus on maintaining margin discipline.

Reported Margin Pressure and Nonoperating Losses

The combination of higher expenses and volatile performance fees led to slight compression in reported operating margins, even as underlying fee-based margins improved. In addition, nonoperating items weighed on results. BlackRock recorded $106 million of net investment losses in the fourth quarter, driven primarily by a noncash mark-to-market loss on its minority stake in Circle. The company noted that it still holds about 1.1 million Circle shares, which will continue to be marked through investment income. Management framed these swings as accounting noise rather than reflective of core operating performance.

HLEND and BDC Flows Reflect Private Credit Volatility

Within private credit, BlackRock discussed flow dynamics in HLEND and certain BDC vehicles. HLEND generated $1.1 billion in gross subscriptions in the fourth quarter but experienced higher redemptions, with a quarterly redemption rate of 4.1%. Executives attributed this to seasonal patterns, media-driven profit taking, and shifting yield expectations as interest rates evolve. While net flows showed some volatility, management argued that client interest in private credit remains strong and that long-term demand for income-oriented private strategies should continue to support growth.

Private Credit Risk Normalization and Credit Stress Watchpoints

Management also addressed risk in the private credit market. They described overall credit conditions as generally stable but acknowledged that default rates are normalizing higher versus the unusually low levels seen in the post–global financial crisis environment. The team flagged potential stress among smaller borrowers that were financed at peak valuations and may face refinancing challenges in a higher-rate world. BlackRock emphasized its focus on underwriting discipline, diversification, and conservative structures as key protections, while recognizing that some degree of credit normalization is inevitable.

Fee Yield and Securities Lending Introduce Quarter-to-Quarter Noise

The firm noted some variability in its effective fee rate due to market and securities lending dynamics. On an equivalent day-count basis, the annualized effective fee rate was roughly 0.1 basis point lower than in the third quarter, largely because the prior quarter benefited from unusually strong securities lending revenue tied to “specials.” Management reminded investors that while fee yields can fluctuate quarter to quarter based on mix and lending revenues, the broader trend is being driven by structural growth in higher-fee products such as active ETFs, alternatives, and technology solutions.

Guidance Signals Confidence in Sustainable Growth and Margins

Looking ahead, BlackRock’s guidance suggested continued confidence in both growth and profitability. The company plans a 10% increase to the first-quarter 2026 dividend and expects to repurchase roughly $1.8 billion of shares in 2026 under a new authorization covering an additional 7 million shares. Management guided to an as-adjusted tax rate of about 25% for 2026 and projected mid-single-digit growth in G&A expenses after fully annualizing recent acquisitions, with headcount expected to remain broadly flat. Operationally, BlackRock aims to maintain an adjusted operating margin of 45% or higher, sustain organic base fee growth more consistently in the 6–7%+ range, and continue expanding technology ACV from both organic growth and acquisitions. Longer term, the firm reiterated its ambition to raise $400 billion in gross private markets capital through 2030 and to build new franchises in areas like private markets for insurance and wealth clients, digital assets, and active ETFs into meaningful revenue contributors over the next five years.

BlackRock’s latest earnings call reinforced a theme of durable, diversified growth anchored in record inflows, expanding ETF and technology franchises, and a scaling alternatives platform. While institutional index outflows, expense growth, and nonoperating investment losses created some headline noise and modest reported margin compression, the underlying trajectory of recurring fee revenue and core margins remains positive. For investors, the combination of strong organic growth, disciplined capital return, and clear long-term strategic targets positions BlackRock as a central player in the evolving global asset and wealth management landscape.