BlackRock 8K Other Events

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 17, 2019 (April 16, 2019)

BLACKROCK, INC.

(Exact name of registrant as specified in its charter)

DELAWARE

001-33099

32-0174431

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)


55 East 52nd Street, New York, New York		10055
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (212)810-5300

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule14a-12 under the Exchange Act (17 CFR240.14a-12)

☐	Pre-commencement communications pursuant to Rule14d-2(b) under the Exchange Act (17 CFR240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule13e-4(c) under the Exchange Act (17 CFR240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule12b-2 of the Securities Exchange Act of 1934(§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 8.01 Other Events.

First Quarter 2019 Results

On April 16, 2019, BlackRock, Inc. (the “Company”) reported results of operations for the three months ended March 31, 2019.

FINANCIAL RESULTS


	Q1			Q1
(in millions, except per share data)	2019			2018
AUM	$	6,515,345		$	6,316,984
% change		3	%
Total net flows	$	64,666		$	56,946
GAAP basis:
Revenue	$	3,346		$	3,583
% change		(7	)%
Operating income	$	1,233		$	1,375
% change		(10	)%
Operating margin		36.8	%		38.4	%
Net income⁽¹⁾	$	1,053		$	1,089
% change		(3	)%
Diluted EPS	$	6.61		$	6.68
% change		(1	)%
Weighted average diluted shares		159.3			162.9
% change		(2	)%
As Adjusted:
Operating income⁽²⁾	$	1,233		$	1,378
% change		(11	)%
Operating margin⁽²⁾		41.9	%		44.1	%
Net income^{(1) (2)}	$	1,053		$	1,092
% change		(4	)%
Diluted EPS⁽²⁾	$	6.61		$	6.70
% change		(1	)%

⁽¹⁾	Net income represents net income attributable to BlackRock, Inc.

⁽²⁾	See notes (1) through (3) to the condensed consolidated statements of income and supplemental information on pages 10-11 for more information on as adjusted items and the reconciliation to GAAP.

NET FLOW HIGHLIGHTS


	Q1			LTM⁽¹⁾
(in billions)	2019			2019
Long-term net flows:	$	59.0		$	127.7
By region:
Americas	$	40.0		$	140.8
EMEA		21.9			3.3
APAC		(2.9	)		(16.4	)
By client type:
*Retail:*	$	(0.8	)	$	1.6
US		3.2			18.8
International		(4.0	)		(17.2	)
*iShares*^®:	$	30.7		$	163.6
Core		19.5			93.4
Non-Core		11.2			70.2
*Institutional:*	$	29.1		$	(37.5	)
Active		15.4			12.9
Index		13.7			(50.4	)
Cash management net flows:	$	5.7		$	3.0

⁽¹⁾	Amounts represent rolling last twelve months long-term net flows as of March 31, 2019.

BUSINESS RESULTS


								March 31, 2019			Q1 2019
	Q1 2019			March 31, 2019		Q1 2019		AUM			Base fees⁽¹⁾
(in millions), (unaudited)	Net flows			AUM		Base fees⁽¹⁾		% of Total			% of Total
RESULTS BY CLIENT TYPE
Retail	$	(813	)	$	646,355	$	826		10	%		29	%
iSharesETFs		30,688			1,924,710		1,091		30	%		39	%
Institutional:
Active		15,367			1,160,150		500		17	%		18	%
Index		13,757			2,327,080		247		36	%		9	%

Total institutional		29,124			3,487,230		747		53	%		27	%

Long-term		58,999			6,058,295		2,664		93	%		95	%
Cash management		5,666			455,271		141		7	%		5	%
Advisory		1			1,779		—		—			—

Total	$	64,666		$	6,515,345	$	2,805		100	%		100	%

RESULTS BY INVESTMENT STYLE
Active	$	13,603		$	1,724,875	$	1,307		26	%		47	%
Index andiSharesETFs		45,396			4,333,420		1,357		67	%		48	%

Long-term		58,999			6,058,295		2,664		93	%		95	%
Cash management		5,666			455,271		141		7	%		5	%
Advisory		1			1,779		—		—			—

Total	$	64,666		$	6,515,345	$	2,805		100	%		100	%

RESULTS BY PRODUCT TYPE
Equity	$	(26,077	)	$	3,375,885	$	1,386		52	%		49	%
Fixed income		79,923			2,029,966		774		31	%		28	%
Multi-asset		(1,655	)		499,520		276		8	%		10	%
Alternatives		6,808			152,924		228		2	%		8	%

Long-term		58,999			6,058,295		2,664		93	%		95	%
Cash management		5,666			455,271		141		7	%		5	%
Advisory		1			1,779		—		—			—

Total	$	64,666		$	6,515,345	$	2,805		100	%		100	%

⁽¹⁾	Base fees include investment advisory, administration fees and securities lending revenue.

INVESTMENT PERFORMANCE AT MARCH 31, 2019⁽¹⁾


	One-year period			Three-year period			Five-year period
Fixed income:
Actively managed AUM above benchmark or peer median
Taxable		61	%		83	%		85	%
Tax-exempt		28	%		78	%		76	%
Index AUM within or above applicable tolerance		98	%		99	%		98	%
Equity:
Actively managed AUM above benchmark or peer median
Fundamental		63	%		73	%		83	%
Systematic		27	%		87	%		87	%
Index AUM within or above applicable tolerance		97	%		99	%		98	%

⁽¹⁾	Past performance is not indicative of future results. The performance information shown is based on preliminary available data. Please refer to page 12 for performance disclosure detail.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION

(in millions, except shares and per share data), (unaudited)


										Three Months
	Three Months Ended									Ended
	March 31,									December 31,
	2019			2018			Change			2018			Change
Revenue
Investment advisory, administration fees and securities lending revenue	$	2,805		$	2,947		$	(142	)	$	2,779		$	26
Investment advisory performance fees		26			70			(44	)		100			(74	)
Technology services revenue		204			184			20			203			1
Distribution fees		262			311			(49	)		271			(9	)
Advisory and other revenue		49			71			(22	)		81			(32	)

Total revenue		3,346			3,583			(237	)		3,434			(88	)

Expense
Employee compensation and benefits		1,064			1,121			(57	)		1,020			44
Distribution and servicing costs		404			432			(28	)		420			(16	)
Direct fund expense		242			261			(19	)		224			18
General and administration		388			383			5			449			(61	)
Restructuring charge		—			—			—			60			(60	)
Amortization of intangible assets		15			11			4			15			—

Total expense		2,113			2,208			(95	)		2,188			(75	)

Operating income		1,233			1,375			(142	)		1,246			(13	)
Nonoperating income (expense)
Net gain (loss) on investments		142			15			127			(67	)		209
Interest and dividend income		29			15			14			41			(12	)
Interest expense		(46	)		(46	)		—			(46	)		—

Total nonoperating income (expense)		125			(16	)		141			(72	)		197

Income before income taxes		1,358			1,359			(1	)		1,174			184
Income tax expense		298			265			33			247			51

Net income		1,060			1,094			(34	)		927			133

Less:
Net income (loss) attributable to noncontrolling interests		7			5			2			—			7

Net income attributable to BlackRock, Inc.	$	1,053		$	1,089		$	(36	)	$	927		$	126

Weighted-average common shares outstanding
Basic		158,268,034			161,250,018			(2,981,984	)		158,859,998			(591,964	)
Diluted		159,348,431			162,918,961			(3,570,530	)		160,450,266			(1,101,835	)
Earnings per share attributable to BlackRock, Inc. common stockholders (3)
Basic	$	6.65		$	6.75		$	(0.10	)	$	5.84		$	0.81
Diluted	$	6.61		$	6.68		$	(0.07	)	$	5.78		$	0.83
Cash dividends declared and paid per share	$	3.30		$	2.88		$	0.42		$	3.13		$	0.17
Supplemental information:
AUM (end of period)	$	6,515,345		$	6,316,984		$	198,361		$	5,975,818		$	539,527
Shares outstanding (end of period)		155,323,503			161,275,008			(5,951,505	)		158,520,147			(3,196,644	)
GAAP:
Operating margin		36.8	%		38.4	%		(160	) bps		36.3	%		50	bps
Effective tax rate		22.1	%		19.6	%		250	bps		21.0	%		110	bps
As adjusted:
Operating income (1)	$	1,233		$	1,378		$	(145	)	$	1,310		$	(77	)
Operating margin (1)		41.9	%		44.1	%		(220	) bps		43.5	%		(160	) bps
Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests	$	118		$	(21	)	$	139		$	(72	)	$	190
Net income attributable to BlackRock, Inc. (2)	$	1,053		$	1,092		$	(39	)	$	975		$	78
Diluted earnings attributable to BlackRock, Inc. common stockholders per share (2) (3)	$	6.61		$	6.70		$	(0.09	)	$	6.08		$	0.53
Effective tax rate		22.1	%		19.6	%		250	bps		21.2	%		90	bps

See pages 10-11 for the reconciliation to GAAP and notes (1) through (3) for more information on as adjusted items.

ASSETS UNDER MANAGEMENT

(in millions), (unaudited)


Current Quarter Component Changes by Client Type and Product Type

			Net
	December 31,		inflows			Market					March 31,
	2018		(outflows)			change		FX impact⁽¹⁾			2019		Average AUM ⁽²⁾
Retail:
Equity	$	205,714	$	(3,613	)	$	23,370	$	521		$	225,992	$	219,245
Fixed income		271,588		5,929			4,099		(50	)		281,566		277,587
Multi-asset		113,417		(3,692	)		8,086		87			117,898		116,924
Alternatives		20,131		563			226		(21	)		20,899		20,495

Retail subtotal		610,850		(813	)		35,781		537			646,355		634,251
iSharesETFs:
Equity		1,274,262		(1,622	)		151,100		(536	)		1,423,204		1,369,626
Fixed income		427,596		32,203			12,010		(648	)		471,161		451,119
Multi-asset		4,485		(636	)		320		2			4,171		4,204
Alternatives		25,082		743			354		(5	)		26,174		26,119

iSharesETFs subtotal		1,731,425		30,688			163,784		(1,187	)		1,924,710		1,851,068
Institutional:
Active:
Equity		110,976		(5,536	)		12,941		272			118,653		117,018
Fixed income		538,961		12,992			18,942		418			571,313		551,584
Multi-asset		336,237		2,591			30,680		(462	)		369,046		355,060
Alternatives		93,805		5,320			1,905		108			101,138		98,044

Active subtotal		1,079,979		15,367			64,468		336			1,160,150		1,121,706
Index:
Equity		1,444,873		(15,306	)		177,919		550			1,608,036		1,558,876
Fixed income		646,272		28,799			25,821		5,034			705,926		676,391
Multi-asset		7,745		82			600		(22	)		8,405		8,182
Alternatives		4,340		182			157		34			4,713		4,511

Index subtotal		2,103,230		13,757			204,497		5,596			2,327,080		2,247,960

Institutional subtotal		3,183,209		29,124			268,965		5,932			3,487,230		3,369,666

Long-term		5,525,484		58,999			468,530		5,282			6,058,295		5,854,985
Cash management		448,565		5,666			676		364			455,271		450,140
Advisory⁽³⁾		1,769		1			3		6			1,779		1,778

Total	$	5,975,818	$	64,666		$	469,209	$	5,652		$	6,515,345	$	6,306,903


Current Quarter Component Changes by Investment Style and Product Type (Long-term)

			Net
	December 31,		inflows			Market					March 31,
	2018		(outflows)			change		FX impact⁽¹⁾			2019		Average AUM⁽²⁾
Active:
Equity	$	258,205	$	(9,464	)	$	29,893	$	310		$	278,944	$	273,333
Fixed income		795,985		18,285			22,525		155			836,950		813,821
Multi-asset		449,654		(1,101	)		38,766		(375	)		486,944		471,984
Alternatives		113,936		5,883			2,131		87			122,037		118,539

Active subtotal		1,617,780		13,603			93,315		177			1,724,875		1,677,677
Index andiSharesETFs:
iSharesETFs:
Equity		1,274,262		(1,622	)		151,100		(536	)		1,423,204		1,369,626
Fixed income		427,596		32,203			12,010		(648	)		471,161		451,119
Multi-asset		4,485		(636	)		320		2			4,171		4,204
Alternatives		25,082		743			354		(5	)		26,174		26,119

iSharesETFs subtotal		1,731,425		30,688			163,784		(1,187	)		1,924,710		1,851,068
Non-ETF Index:
Equity		1,503,358		(14,991	)		184,337		1,033			1,673,737		1,621,806
Fixed income		660,836		29,435			26,337		5,247			721,855		691,741
Multi-asset		7,745		82			600		(22	)		8,405		8,182
Alternatives		4,340		182			157		34			4,713		4,511

Non-ETF Index subtotal		2,176,279		14,708			211,431		6,292			2,408,710		2,326,240

Index &iShares ETFs subtotal		3,907,704		45,396			375,215		5,105			4,333,420		4,177,308

Long-term	$	5,525,484	$	58,999		$	468,530	$	5,282		$	6,058,295	$	5,854,985


Current Quarter Component Changes by Product Type (Long-term)

			Net
	December 31,		inflows			Market					March 31,
	2018		(outflows)			change		FX impact⁽¹⁾			2019		Average AUM⁽²⁾
Equity	$	3,035,825	$	(26,077	)	$	365,330	$	807		$	3,375,885	$	3,264,765
Fixed income		1,884,417		79,923			60,872		4,754			2,029,966		1,956,681
Multi-asset		461,884		(1,655	)		39,686		(395	)		499,520		484,370
Alternatives:
Illiquid alternatives		59,827		5,938			600		97			66,462		63,757
Liquid alternatives		51,718		(99	)		1,494		5			53,118		52,362
Currency and commodities⁽⁴⁾		31,813		969			548		14			33,344		33,050

Alternatives subtotal		143,358		6,808			2,642		116			152,924		149,169

Long-term	$	5,525,484	$	58,999		$	468,530	$	5,282		$	6,058,295	$	5,854,985

⁽¹⁾	Foreign exchange reflects the impact of translatingnon-US dollar denominated AUM into US dollars for reporting purposes.

⁽²⁾	Average AUM is calculated as the average of themonth-end spot AUM amounts for the trailing four months.

⁽³⁾	Advisory AUM represents long-term portfolio liquidation assignments.

⁽⁴⁾	Amounts include commodity iShares ETFs.

ASSETS UNDER MANAGEMENT

(in millions), (unaudited)


Year-over-Year Component Changes by Client Type and Product Type

			Net			Acquisitions
	March 31,		inflows			and			Market						March 31,
	2018		(outflows)			dispositions⁽¹⁾			change			FX impact⁽²⁾			2019		Average AUM ⁽³⁾
Retail:
Equity	$	232,955	$	(5,771	)	$	2,137		$	2,077		$	(5,406	)	$	225,992	$	228,018
Fixed income		266,571		7,411			14,070			(2,343	)		(4,143	)		281,566		273,072
Multi-asset		121,601		(2,813	)		2,519			(2,465	)		(944	)		117,898		119,768
Alternatives		17,236		2,753			1,628			(427	)		(291	)		20,899		19,305

Retail subtotal		638,363		1,580			20,354			(3,158	)		(10,784	)		646,355		640,163
iSharesETFs:
Equity		1,344,564		81,482			—			9,013			(11,855	)		1,423,204		1,367,394
Fixed income		394,191		79,923			—			3,410			(6,363	)		471,161		418,978
Multi-asset		3,766		366			—			43			(4	)		4,171		3,908
Alternatives		25,404		1,804			—			(933	)		(101	)		26,174		25,078

iSharesETFs subtotal		1,767,925		163,575			—			11,533			(18,323	)		1,924,710		1,815,358
Institutional:
Active:
Equity		136,470		(13,136	)		(4,296	)		3,196			(3,581	)		118,653		126,525
Fixed income		563,572		(3,640	)		2,417			18,775			(9,811	)		571,313		551,214
Multi-asset		343,344		18,645			(1,593	)		19,190			(10,540	)		369,046		351,477
Alternatives		87,060		11,004			3,374			1,674			(1,974	)		101,138		91,929

Active subtotal		1,130,446		12,873			(98	)		42,835			(25,906	)		1,160,150		1,121,145
Index:
Equity		1,649,248		(100,000	)		4,749			84,973			(30,934	)		1,608,036		1,624,596
Fixed income		662,189		48,657			2,051			23,973			(30,944	)		705,926		651,967
Multi-asset		7,986		1,047			(243	)		(167	)		(218	)		8,405		7,965
Alternatives		4,904		(30	)		1			(27	)		(135	)		4,713		4,610

Index subtotal		2,324,327		(50,326	)		6,558			108,752			(62,231	)		2,327,080		2,289,138

Institutional subtotal		3,454,773		(37,453	)		6,460			151,587			(88,137	)		3,487,230		3,410,283

Long-term		5,861,061		127,702			26,814			159,962			(117,244	)		6,058,295		5,865,804
Cash management		454,784		2,971			686			2,184			(5,354	)		455,271		453,287
Advisory⁽⁴⁾		1,139		676			—			22			(58	)		1,779		1,473

Total	$	6,316,984	$	131,349		$	27,500		$	162,168		$	(122,656	)	$	6,515,345	$	6,320,564


Year-over-Year Component Changes by Investment Style and Product Type (Long-term)

			Net			Acquisitions
	March 31,		inflows			and			Market						March 31,
	2018		(outflows)			dispositions⁽¹⁾			change			FX impact⁽²⁾			2019		Average AUM⁽³⁾
Active:
Equity	$	308,367	$	(22,909	)	$	(2,160	)	$	2,532		$	(6,886	)	$	278,944	$	291,305
Fixed income		816,274		1,419			16,487			15,878			(13,108	)		836,950		809,653
Multi-asset		464,945		15,832			926			16,725			(11,484	)		486,944		471,245
Alternatives		104,297		13,756			5,002			1,247			(2,265	)		122,037		111,234

Active subtotal		1,693,883		8,098			20,255			36,382			(33,743	)		1,724,875		1,683,437
Index andiSharesETFs:
iSharesETFs
Equity		1,344,564		81,482			—			9,013			(11,855	)		1,423,204		1,367,394
Fixed income		394,191		79,923			—			3,410			(6,363	)		471,161		418,978
Multi-asset		3,766		366			—			43			(4	)		4,171		3,908
Alternatives		25,404		1,804			—			(933	)		(101	)		26,174		25,078

iSharesETFs subtotal		1,767,925		163,575			—			11,533			(18,323	)		1,924,710		1,815,358
Non-ETF Index
Equity		1,710,306		(95,998	)		4,750			87,714			(33,035	)		1,673,737		1,687,834
Fixed income		676,058		51,009			2,051			24,527			(31,790	)		721,855		666,600
Multi-asset		7,986		1,047			(243	)		(167	)		(218	)		8,405		7,965
Alternatives		4,903		(29	)		1			(27	)		(135	)		4,713		4,610

Non-ETF Index subtotal		2,399,253		(43,971	)		6,559			112,047			(65,178	)		2,408,710		2,367,009

Index &iShares ETFs subtotal		4,167,178		119,604			6,559			123,580			(83,501	)		4,333,420		4,182,367

Long-term	$	5,861,061	$	127,702		$	26,814		$	159,962		$	(117,244	)	$	6,058,295	$	5,865,804


Year-over-Year Component Changes by Product Type (Long-term)
			Net			Acquisitions
	March 31,		inflows			and			Market						March 31,
	2018		(outflows)			dispositions⁽¹⁾			change			FX impact⁽²⁾			2019		Average AUM⁽³⁾
Equity	$	3,363,237	$	(37,425	)	$	2,590		$	99,259		$	(51,776	)	$	3,375,885	$	3,346,533
Fixed income		1,886,523		132,351			18,538			43,815			(51,261	)		2,029,966		1,895,231
Multi-asset		476,697		17,245			683			16,601			(11,706	)		499,520		483,118
Alternatives:
Illiquid alternatives		49,472		11,965			4,968			1,238			(1,181	)		66,462		56,670
Liquid alternatives		52,091		1,932			28			77			(1,010	)		53,118		52,039
Currency and commodities⁽⁵⁾		33,041		1,634			7			(1,028	)		(310	)		33,344		32,213

Alternatives subtotal		134,604		15,531			5,003			287			(2,501	)		152,924		140,922

Long-term	$	5,861,061	$	127,702		$	26,814		$	159,962		$	(117,244	)	$	6,058,295	$	5,865,804

⁽¹⁾

Amounts include net AUM from the acquisitions of Tennenbaum Capital Partners in August 2018 and the asset management business of Citibanamex in September 2018, AUM reclassifications and net dispositions related to the transfer of BlackRock’s UK Defined Contribution Administration and Platform business to Aegon N.V. in July 2018, and net AUM dispositions related to the sale of BlackRock’s minority interest in DSP BlackRock Investment Managers Pvt. Ltd. to The DSP Group in August 2018.

⁽²⁾	Foreign exchange reflects the impact of translatingnon-US dollar denominated AUM into US dollars for reporting purposes.

⁽³⁾	Average AUM is calculated as the average of themonth-end spot AUM amounts for the trailing thirteen months.

⁽⁴⁾	Advisory AUM represents long-term portfolio liquidation assignments.

⁽⁵⁾	Amounts include commodity iShares ETFs.

SUMMARY OF REVENUE


		Three Months							Three Months
		Ended							Ended
		March 31,							December 31,
(in millions), (unaudited)		2019		2018		Change			2018		Change
Investment advisory, administration fees and securities lending revenue:
Equity:
Active		$	375	$	438	$	(63	)	$	385	$	(10	)
iShares ETFs			847		926		(79	)		827		20
Non-ETF Index			164		176		(12	)		153		11

Equity subtotal			1,386		1,540		(154	)		1,365		21
Fixed income:
Active			457		456		1			466		(9	)
iShares ETFs			220		208		12			205		15
Non-ETF Index			97		93		4			95		2

Fixed income subtotal			774		757		17			766		8
Multi-asset			276		296		(20	)		287		(11	)
Alternatives:
Illiquid alternatives			110		77		33			99		11
Liquid alternatives			94		101		(7	)		94		—
Currency and commodities			24		25		(1	)		23		1

Alternatives subtotal			228		203		25			216		12

Long-term			2,664		2,796		(132	)		2,634		30
Cash management			141		151		(10	)		145		(4	)

Total base fees			2,805		2,947		(142	)		2,779		26
Investment advisory performance fees:
Equity			—		18		(18	)		23		(23	)
Fixed income			2		3		(1	)		6		(4	)
Multi-asset			—		5		(5	)		4		(4	)
Alternatives:
Illiquid alternatives			20		—		20			48		(28	)
Liquid alternatives			4		44		(40	)		19		(15	)

Alternatives subtotal			24		44		(20	)		67		(43	)

Total performance fees			26		70		(44	)		100		(74	)
Technology services revenue			204		184		20			203		1
Distribution fees:
Retrocessions			161		192		(31	)		168		(7	)
12b-1 fees (US mutual funds distribution fees)			89		108		(19	)		93		(4	)
Other	��		12		11		1			10		2

Total distribution fees			262		311		(49	)		271		(9	)
Advisory and other revenue:
Advisory			19		21		(2	)		33		(14	)
Other			30		50		(20	)		48		(18	)

Total advisory and other revenue			49		71		(22	)		81		(32	)

Total revenue		$	3,346	$	3,583	$	(237	)	$	3,434	$	(88	)

Highlights

•

Investment advisory, administration fees and securities lending revenue decreased $142 million from the first quarter of 2018, primarily driven by the negative impact of markets and foreign exchange on average AUM and the impact of strategic pricing investments, partially offset by the positive impact of acquisitions and organic growth. Securities lending revenue of $148 million in the current quarter compared with $155 million in first quarter of 2018.

Investment advisory, administration fees and securities lending revenue increased $26 million from the fourth quarter of 2018, driven by the impact of higher average AUM and higher securities lending revenue, partially offset by the effect of two less days in the quarter. Securities lending revenue of $148 million in the current quarter compared with $129 million in the fourth quarter of 2018.

•

Performance fees decreased $44 million from the first quarter of 2018, primarily reflecting lower revenue from liquid alternatives and long-only products, partially offset by higher revenue from illiquid alternatives.

Performance fees decreased $74 million from the fourth quarter of 2018, primarily due to a seasonally higher number of funds with a performance measurement period that ended in the fourth quarter of 2018.

•

Technology services revenue increased $20 million from the first quarter of 2018, primarily reflecting higher revenue fromAladdin.

•

Advisory and other revenue decreased $22 million from the first quarter of 2018, primarily reflecting lower earnings from an equity method investment.

Advisory and other revenue decreased $32 million from the fourth quarter of 2018, primarily reflecting lower fees from advisory and transition management assignments.

SUMMARY OF OPERATING EXPENSE


	Three							Three
	Months Ended							Months Ended
	March 31,							December 31,
(in millions), (unaudited)	2019		2018		Change			2018		Change
Operating expense
Employee compensation and benefits	$	1,064	$	1,121	$	(57	)	$	1,020	$	44
Distribution and servicing costs:
Retrocessions		161		192		(31	)		168		(7	)
12b-1 costs		88		106		(18	)		92		(4	)
Other		155		134		21			160		(5	)

Total distribution and servicing costs		404		432		(28	)		420		(16	)
Direct fund expense		242		261		(19	)		224		18
General and administration:
Marketing and promotional		81		85		(4	)		108		(27	)
Occupancy and office related		74		74		—			73		1
Portfolio services		62		70		(8	)		68		(6	)
Technology		69		53		16			62		7
Professional services		33		32		1			47		(14	)
Communications		9		10		(1	)		9		—
Foreign exchange remeasurement		8		1		7			4		4
Contingent consideration fair value adjustments		6		6		—			31		(25	)
Product launch costs		—		11		(11	)		—		—
Other general and administration		46		41		5			47		(1	)

Total general and administration expense		388		383		5			449		(61	)
Restructuring charge		—		—		—			60		(60	)
Amortization of intangible assets		15		11		4			15		—

Total operating expense	$	2,113	$	2,208	$	(95	)	$	2,188	$	(75	)

Highlights

•

Employee compensation and benefits expense decreased $57 million from the first quarter of 2018, primarily reflecting lower incentive compensation, driven in part by lower operating income.

Employee compensation and benefits expense increased $44 million from the fourth quarter of 2018, primarily reflecting higher seasonal payroll taxes and an increase in stock-based compensation expense related to the effect of additional grants at the end of January 2019, partially offset by lower incentive compensation, driven in part by lower performance fees and operating income.

•

General and administration expense increased $5 million from the first quarter of 2018, primarily due to higher technology expense, partially offset by the impact of product launch costs recorded in the first quarter of 2018.

General and administration expense decreased $61 million from the fourth quarter of 2018, primarily due to seasonally lower marketing and promotional expense, lower professional services expense, and the impact of contingent consideration fair value adjustments related to prior acquisitions recorded in the fourth quarter of 2018.

•

In the fourth quarter of 2018, a restructuring charge of $60 million, primarily comprised of severance and accelerated amortization expense of previously granted deferred compensation awards, was recorded in connection with an initiative to modify the size and shape of the workforce.

INCOME TAX EXPENSE

Three

Months Ended

March 31,

December 31,

(in millions), (unaudited)

2019

2018

Change

2018

Change

Income tax expense

298

265

247

Effective tax rate

22.1

19.6

250

bps

21.0

110

bps

Highlights

•

First quarter 2019 and 2018 income tax expense included $22 million and $56 million, respectively, of discrete tax benefits related to stock-based compensation awards that vested in the first quarter of each respective year.

SUMMARY AND RECONCILIATION OF US GAAP NONOPERATING INCOME (EXPENSE) TO NONOPERATING INCOME (EXPENSE), AS ADJUSTED


	Three Months									Three Months
	Ended									Ended
	March 31,									December 31,
(in millions), (unaudited)	2019			2018			Change			2018			Change
Nonoperating income (expense), GAAP basis	$	125		$	(16	)	$	141		$	(72	)	$	197
Less: Net income (loss) attributable to noncontrolling interests (“NCI”)		7			5			2			—			7

Nonoperating income (expense), as adjusted⁽¹⁾⁽²⁾	$	118		$	(21	)	$	139		$	(72	)	$	190


	Three Months									Three Months
	Ended									Ended
	March 31,									December 31,
(in millions), (unaudited)	2019			2018			Change			2018			Change
Net gain (loss) on investments⁽¹⁾⁽²⁾
Private equity	$	—		$	1		$	(1	)	$	(15	)	$	15
Real assets		6			5			1			2			4
Other alternatives⁽³⁾		8			3			5			(3	)		11
Other investments⁽⁴⁾		73			1			72			(50	)		123

Subtotal		87			10			77			(66	)		153
Other gains⁽⁵⁾		48			—			48			(1	)		49

Total net gain (loss) on investments⁽¹⁾⁽²⁾		135			10			125			(67	)		202
Interest and dividend income		29			15			14			41			(12	)
Interest expense		(46	)		(46	)		—			(46	)		—

Net interest expense		(17	)		(31	)		14			(5	)		(12	)

Nonoperating income (expense), as adjusted⁽¹⁾⁽²⁾	$	118		$	(21	)	$	139		$	(72	)	$	190

⁽¹⁾	Net of net income (loss) attributable to NCI.

⁽²⁾

Management believes nonoperating income (expense), as adjusted, is an effective measure for reviewing BlackRock’s nonoperating contribution to results. For more information on other as adjusted items and the reconciliation to GAAP see notes (1) through (3) to the condensed consolidated statements of income and supplemental information on pages 10-11.

⁽³⁾	Amounts primarily include net gains (losses) related to direct hedge fund strategies and hedge fund solutions.

⁽⁴⁾	Amounts primarily include net gains (losses) related to equity and fixed income investments.

⁽⁵⁾	Amounts primarily include noncashpre-tax gains related to the revaluation of certain minority strategic investments.

RECONCILIATION OF US GAAP OPERATING INCOME AND OPERATING MARGIN TO OPERATING INCOME AND OPERATING MARGIN, AS ADJUSTED



	Three Months Ended
	March 31,						December 31,
(in millions), (unaudited)	2019			2018			2018
Operating income, GAAP basis	$	1,233		$	1,375		$	1,246
Non-GAAP expense adjustments:
Restructuring charge		—			—			60
PNC LTIP funding obligation		—			3			4

Operating income, as adjusted (1)		1,233			1,378			1,310
Product launch costs and commissions		—			12			—

Operating income used for operating margin measurement	$	1,233		$	1,390		$	1,310

Revenue, GAAP basis	$	3,346		$	3,583		$	3,434
Non-GAAP adjustment:
Distribution and servicing costs		(404	)		(432	)		(420	)

Revenue used for operating margin measurement	$	2,942		$	3,151		$	3,014

Operating margin, GAAP basis		36.8	%		38.4	%		36.3	%

Operating margin, as adjusted (1)		41.9	%		44.1	%		43.5	%

See note (1) to the condensed consolidated statements of income and supplemental information on page 11 for more information on as adjusted items and the reconciliation to GAAP.

RECONCILIATION OF US GAAP NET INCOME ATTRIBUTABLE TO BLACKROCK TO NET INCOME ATTRIBUTABLE TO BLACKROCK, AS ADJUSTED



	Three Months Ended
	March 31,				December 31,
(in millions), (unaudited)	2019		2018		2018
Net income attributable to BlackRock, Inc., GAAP basis	$	1,053	$	1,089	$	927
Non-GAAP adjustments:
Restructuring charge, net of tax		—		—		47
PNC LTIP funding obligation, net of tax		—		3		3
Income tax matters		—		—		(2	)

Net income attributable to BlackRock, Inc., as adjusted (2)	$	1,053	$	1,092	$	975

Diluted weighted-average common shares outstanding (3)		159.3		162.9		160.5
Diluted earnings per common share, GAAP basis (3)	$	6.61	$	6.68	$	5.78
Diluted earnings per common share, as adjusted (2) (3)	$	6.61	$	6.70	$	6.08

See notes (2) and (3) to the condensed consolidated statements of income and supplemental information on page 11 for more information on as adjusted items and the reconciliation to GAAP.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION(unaudited)

BlackRock reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”); however, management believes evaluating the Company’s ongoing operating results may be enhanced if investors have additionalnon-GAAP financial measures. Management reviewsnon-GAAP financial measures to assess ongoing operations and considers them to be helpful, for both management and investors, in evaluating BlackRock’s financial performance over time. Management also usesnon-GAAP financial measures as a benchmark to compare its performance with other companies and to enhance the comparability of this information for the reporting periods presented.Non-GAAP measures may pose limitations because they do not include all of BlackRock’s revenue and expense. BlackRock’s management does not advocate that investors consider suchnon-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.Non-GAAP measures may not be comparable to other similarly titled measures of other companies.

Management uses both GAAP andnon-GAAP financial measures in evaluating BlackRock’s financial performance. Adjustments to GAAP financial measures(“non-GAAP adjustments”) include certain items management deems nonrecurring or that occur infrequently, transactions that ultimately will not impact BlackRock’s book value or certain tax items that do not impact cash flow.

Computations for all periods are derived from the condensed consolidated statements of income as follows:

(1) Operating income, as adjusted, and operating margin, as adjusted: Management believes operating income, as adjusted, and operating margin, as adjusted, are effective indicators of BlackRock’s financial performance over time and, therefore, provide useful disclosure to investors.

•

Operating income, as adjusted, includesnon-GAAP expense adjustments. A restructuring charge, primarily comprised of severance and accelerated amortization expense of previously granted deferred compensation awards, has been excluded to provide more meaningful analysis of BlackRock’s ongoing operations and to ensure comparability among periods presented. The portion of compensation expense associated with certain long-term incentive plans (“LTIP”) funded, or to be funded, through share distributions to participants of BlackRock stock held by The PNC Financial Services Group, Inc. (“PNC”) has been excluded because it ultimately does not impact BlackRock’s book value.

•

Operating income used for measuring operating margin, as adjusted, is equal to operating income, as adjusted, excluding the impact of product launch costs (e.g.closed-end fund launch costs) and related commissions. Management believes the exclusion of such costs and related commissions is useful because these costs can fluctuate considerably and revenue associated with the expenditure of these costs will not fully impact BlackRock’s results until future periods.

Revenue used for operating margin, as adjusted, excludes distribution and servicing costs paid to third parties. Management believes such costs represent a benchmark for the amount of revenue passed through to external parties who distribute the Company’s products. BlackRock excludes from revenue used for operating margin, as adjusted, the costs related to distribution and servicing costs as a proxy for such offsetting revenue.

(2) Net income attributable to BlackRock, Inc., as adjusted: Management believes net income attributable to BlackRock, Inc., as adjusted, and diluted earnings per common share, as adjusted, are useful measures of BlackRock’s profitability and financial performance. Net income attributable to BlackRock, Inc., as adjusted, equals net income attributable to BlackRock, Inc., GAAP basis, adjusted for significant nonrecurring items, charges that ultimately will not impact BlackRock’s book value or certain tax items that do not impact cash flow.

See aforementioned discussion regarding operating income, as adjusted, and operating margin, as adjusted, for information on the PNC LTIP funding obligation and restructuring charge.

For each period presented, thenon-GAAP adjustment related to the restructuring charge and PNC LTIP funding obligation was tax effected at the respective blended rates applicable to the adjustments. Amounts for income tax matters represent net noncash (benefits) expense primarily associated with the revaluation of certain deferred tax liabilities related to intangible assets and goodwill. Amounts have been excluded from the as adjusted results as these items will not have a cash flow impact and to ensure comparability among periods presented.

Per share amounts reflect net income attributable to BlackRock, Inc., as adjusted divided by diluted weighted average common shares outstanding.

(3) Nonvoting participating preferred stock is considered to be a common stock equivalent for purposes of determining basic and diluted earnings per share calculations.

FORWARD-LOOKING STATEMENTS

This filing, and other statements that BlackRock may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to BlackRock’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” and similar expressions.

BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

BlackRock has previously disclosed risk factors in its Securities and Exchange Commission (“SEC”) reports. These risk factors and those identified elsewhere in this filing, among others, could cause actual results to differ materially from forward-looking statements or historical performance and include: (1) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management; (3) the relative and absolute investment performance of BlackRock’s investment products; (4) the impact of increased competition; (5) the impact of future acquisitions or divestitures; (6) the unfavorable resolution of legal proceedings; (7) the extent and timing of any share repurchases; (8) the impact, extent and timing of technological changes and the adequacy of intellectual property, information and cyber security protection; (9) the potential for human error in connection with BlackRock’s operational systems; (10) the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to BlackRock or PNC; (11) changes in law and policy and uncertainty pending any such changes; (12) terrorist activities, international hostilities and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (13) the ability to attract and retain highly talented professionals; (14) fluctuations in the carrying value of BlackRock’s economic investments; (15) the impact of changes to tax legislation, including income, payroll and transaction taxes, and taxation on products or transactions, which could affect the value proposition to clients and, generally, the tax position of the Company; (16) BlackRock’s success in negotiating distribution arrangements and maintaining distribution channels for its products; (17) the failure by a key vendor of BlackRock to fulfill its obligations to the Company; (18) any disruption to the operations of third parties whose functions are integral to BlackRock’s exchange-traded funds platform; (19) the impact of BlackRock electing to provide support to its products from time to time and any potential liabilities related to securities lending or other indemnification obligations; and (20) the impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions.

BlackRock’s Annual Report on Form10-K, Quarterly Reports on Form10-Q and BlackRock’s subsequent filings with the SEC, accessible on the SEC’s website atwww.sec.gov and on BlackRock’s website atwww.blackrock.com, discuss these factors in more detail and identify additional factors that can affect forward-looking statements. The information contained on the Company’s website is not a part of this filing.

PERFORMANCE NOTES

Past performance is not indicative of future results. Except as specified, the performance information shown is as of March 31, 2019 and is based on preliminary data available at that time. The performance data shown reflects information for all actively and passively managed equity and fixed income accounts, including US registered investment companies, European-domiciled retail funds and separate accounts for which performance data is available, including performance data for high net worth accounts available as of February 28, 2019. The performance data does not include accounts terminated prior to March 31, 2019 and accounts for which data has not yet been verified. If such accounts had been included, the performance data provided may have substantially differed from that shown.

Performance comparisons shown aregross-of-fees for institutional and high net worth separate accounts, andnet-of-fees for retail funds. The performance tracking shown for index accounts is based ongross-of-fees performance and includes all institutional accounts and alliShares funds globally using an index strategy. AUM information is based on AUM available as of March 31, 2019 for each account or fund in the asset class shown without adjustment for overlapping management of the same account or fund. Fund performance reflects the reinvestment of dividends and distributions.

Performance shown is derived from applicable benchmarks or peer median information, as selected by BlackRock, Inc. Peer medians are based in part on data either from Lipper, Inc. or Morningstar, Inc. for each included product.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	BlackRock, Inc.
	(Registrant)

	By:	/s/ Gary S. Shedlin
Date: April 17, 2019	Gary S. Shedlin
	Chief Financial Officer and
	Senior Managing Director

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