BlackRock(BLK) - 2022 Q4 - Annual Report

Financial Performance - Total revenue for 2022 was $17.873 billion, a decrease from $19.374 billion in 2021[7] - Operating income for 2022 was $6.385 billion, with an operating margin of 35.7%[7] - Net income attributable to BlackRock, Inc. for 2022 was $5.178 billion, with diluted earnings per common share of $33.97[7] - Total revenue for 2022 was $17.873 billion, a decrease from $19.374 billion in 2021[7] - Operating income for 2022 was $6.385 billion, with an operating margin of 35.7%, down from 38.5% in 2021[7] - Net income attributable to BlackRock, Inc. for 2022 was $5.178 billion, compared to $5.901 billion in 2021[7] - Diluted earnings per common share for 2022 were $33.97, down from $38.22 in 2021[7] Assets Under Management (AUM) - Total AUM as of December 31, 2022, was $8.594 trillion, representing a 5-year CAGR of 6%[8] - Equity AUM as of December 31, 2022, was $4.435 trillion, with a 5-year CAGR of 6%[9] - Fixed income AUM as of December 31, 2022, was $2.537 trillion, with a 5-year CAGR of 6%[9] - Multi-asset AUM as of December 31, 2022, was $684.904 billion, with a 5-year CAGR of 7%[9] - Alternatives AUM as of December 31, 2022, was $266.210 billion, with a 5-year CAGR of 16%[9] - Total AUM at December 31, 2022, was $8.6 trillion, representing a CAGR of 6% over the last five years[11] - Equity AUM at December 31, 2022, was $4.435 trillion, with a 5-year CAGR of 6%[8] - Fixed income AUM at December 31, 2022, was $2.537 trillion, with a 5-year CAGR of 6%[8] - ETFs AUM at December 31, 2022, was $2.9 trillion, representing 37% of long-term AUM and 42% of long-term base fees and securities lending revenue[15] - Retail long-term AUM at December 31, 2022, was $843.475 billion, with 69% managed for investors in the Americas, 26% in EMEA, and 5% in Asia-Pacific[14] - ETFs generated net inflows of $220 billion in 2022, with record fixed income ETF net inflows of $123 billion and equity ETF net inflows of $101 billion[15] - Total AUM for 2022 ended at $2.9 trillion, with net inflows of $220.3 billion, market changes of $(554.5) billion, and FX impact of $(23.6) billion[16] - US ETF AUM reached $2.2 trillion with $165 billion of net inflows, led by core equity and fixed income ETFs[16] - International ETF AUM stood at $745 billion with $55 billion of net inflows, driven by core equity, fixed income, and sustainable ETFs[16] - Institutional active AUM ended 2022 at $1.6 trillion, reflecting $169 billion of net inflows, driven by outsourcing mandates and growth in LifePath® and private markets platforms[18] - Fixed income net inflows of $115 billion were driven by a significant insurance client outsourcing mandate[18] - Alternatives net inflows of $10 billion were led by private credit, infrastructure, and private equity, with $35 billion raised in illiquid alternatives fundraising[18] - Equity AUM totaled $4.4 trillion at year-end 2022, with net inflows of $105 billion, including $101 billion into ETFs[21] - Fixed income AUM ended 2022 at $2.6 trillion, with net inflows of $250 billion, including $123 billion into ETFs[21] - Multi-asset AUM represented 9% of long-term AUM and 10% of long-term base fees and securities lending revenue for 2022[21] - Retail AUM ended 2022 at $843.5 billion, with net outflows of $(19.5) billion and market changes of $(160.8) billion[22] - Multi-asset AUM decreased to $684.9 billion in 2022 from $816.5 billion in 2021, driven by net outflows of $140.8 billion and FX impact of $22.0 billion[24] - Institutional clients contributed $33 billion in net inflows to multi-asset strategies, with $19 billion from defined contribution plans[24] - Target date and target risk products generated $24 billion in net inflows, representing 89% of AUM from institutional investors[24] - Alternatives generated $14 billion in net inflows, with $28 billion excluding return of capital/investment, and represented 3% of long-term AUM and 12% of long-term base fees[25] - Illiquid alternatives AUM reached $117.8 billion, with $16.1 billion in net inflows, led by private equity and opportunistic strategies[27][28] - Liquid alternatives experienced $2 billion in net outflows, primarily from direct hedge fund strategies[27] - Currency and commodities products saw $7 billion in net outflows, mainly from commodities ETFs and institutional separate accounts[27] - Cash management AUM totaled $671 billion, with $77 billion in net outflows due to institutional client redemptions from US government money market funds[27] - BlackRock waived $72 million in management fees on certain money market funds to maintain minimum daily net investment income, which ceased after rate hikes in March 2022[27] - The company has $34 billion in non-fee paying, unfunded, uninvested commitments expected to be deployed in future years[25] - Total AUM as of December 31, 2022, was $8,594,485 million, with Americas representing 67%, EMEA 25%, and Asia-Pacific 8%[30] - Americas net inflows were $147 billion, driven by fixed income ($174 billion), multi-asset ($31 billion), equity ($23 billion), and alternatives ($5 billion), partially offset by cash and advisory net outflows of $77 billion and $9 billion, respectively[30] - EMEA net inflows were $74 billion, primarily from fixed income ($73 billion) and alternatives ($2 billion)[30] - Asia-Pacific net inflows were $86 billion, mainly due to equity ($85 billion) and fixed income ($3 billion)[30] Retail and Institutional AUM - Retail represented 10% of long-term AUM at December 31, 2022, and 32% of long-term investment advisory and administration fees[11] - Active and index mutual funds totaled $660 billion, or approximately 80%, of retail long-term AUM at year-end[11] - Retail long-term AUM decreased to $843.475 billion in 2022 from $1,040.053 billion in 2021, driven by net outflows of $19.523 billion, market changes of $(160.808) billion, and FX impact of $(16.247) billion[14] - US retail long-term net outflows were $9 billion, with fixed income and multi-asset outflows of $16 billion and $4 billion, respectively, partially offset by equity and alternatives inflows of $8 billion and $3 billion[14] - International retail long-term net outflows were $10 billion, primarily due to equity outflows of $8 billion and fixed income outflows of $4 billion[14] - Retail equity AUM decreased by 21.5% from $471,937 million in 2021 to $370,612 million in 2022, driven by net outflows of $103 million and market changes of $90,767 million[22] - Multi-asset AUM saw net inflows of $31,222 million in 2022, with $33 billion coming from institutional clients, primarily into target date and target risk products[24] - Target date/risk products within multi-asset strategies generated $24 billion in net inflows, with 89% of AUM coming from institutional investors and 84% from defined contribution plans[24] - Retail AUM ended 2022 at $843.5 billion, with net outflows of $(19.5) billion and market changes of $(160.8) billion[22] - Multi-asset AUM decreased to $684.9 billion in 2022 from $816.5 billion in 2021, driven by net outflows of $140.8 billion and FX impact of $22.0 billion[24] - Institutional clients contributed $33 billion in net inflows to multi-asset strategies, with $19 billion from defined contribution plans[24] - Target date and target risk products generated $24 billion in net inflows, representing 89% of AUM from institutional investors[24] ETFs - ETF AUM reached $2.9 trillion in 2022, with net inflows of $220 billion, led by fixed income ETF inflows of $123 billion and equity ETF inflows of $101 billion[15] - ETFs subtotal AUM decreased by 11% from $3,267,354 million in 2021 to $2,909,610 million in 2022, with net inflows of $220,335 million offset by market changes of $554,468 million[22] - ETFs generated net inflows of $220 billion in 2022, with record fixed income ETF net inflows of $123 billion and equity ETF net inflows of $101 billion[15] - Total AUM for 2022 ended at $2.9 trillion, with net inflows of $220.3 billion, market changes of $(554.5) billion, and FX impact of $(23.6) billion[16] - US ETF AUM reached $2.2 trillion with $165 billion of net inflows, led by core equity and fixed income ETFs[16] - International ETF AUM stood at $745 billion with $55 billion of net inflows, driven by core equity, fixed income, and sustainable ETFs[16] Alternatives and Illiquid Investments - Alternatives generated $14 billion in net inflows in 2022, with $28 billion excluding return of capital/investment, driven by opportunistic and credit strategies, infrastructure, and private equity[25] - Illiquid alternatives AUM grew to $58 billion in 2022, with $6 billion in net inflows led by infrastructure investments[27] - Total illiquid alternatives AUM reached $117.751 billion, with private equity and opportunistic strategies contributing $52.962 billion and real assets contributing $58.144 billion[28] - Alternatives generated $14 billion in net inflows, with $28 billion excluding return of capital/investment, and represented 3% of long-term AUM and 12% of long-term base fees[25] - Illiquid alternatives AUM reached $117.8 billion, with $16.1 billion in net inflows, led by private equity and opportunistic strategies[27][28] - Liquid alternatives experienced $2 billion in net outflows, primarily from direct hedge fund strategies[27] - Currency and commodities products saw $7 billion in net outflows, mainly from commodities ETFs and institutional separate accounts[27] Cash Management and Securities Lending - Cash management AUM totaled $671 billion at the end of 2022, reflecting $77 billion in net outflows, primarily from institutional client redemptions from US government money market funds[27] - BlackRock voluntarily waived $72 million in management fees on certain money market funds in 2022 to maintain minimum daily net investment income levels[27] - Securities lending outstanding loan balances ended 2022 at $355 billion, down from $389 billion in 2021, with higher intrinsic lending spreads but lower cash reinvestment spreads[33] - BlackRock employs a conservative investment style for cash and securities lending collateral that emphasizes quality, liquidity, and interest rate risk management[33] - BlackRock waived $72 million in management fees on certain money market funds to maintain minimum daily net investment income, which ceased after rate hikes in March 2022[27] Technology and Innovation - Technology services revenue grew 6% year-over-year to $1.4 billion, with Aladdin representing the majority of revenue and benefiting from global platform consolidation trends[32] - Aladdin's annual contract value (ACV) increased 8% year-over-year, driven by record net sales in 2022, with about half of new client mandates spanning multiple Aladdin products[32] - Approximately 25% of Aladdin's revenue was denominated in non-US currencies, with the majority of positions managed on the platform being fixed income[32] - BlackRock is migrating Aladdin to the cloud, enhancing capabilities and building Aladdin Data Cloud in partnership with Snowflake for next-generation data solutions[32] - BlackRock made minority investments in financial technology and digital distribution companies, including Human Interest, Circle, Envestnet, Scalable Capital, iCapital, Acorns, and Clarity AI[32] - Technology services revenue grew 6% year-over-year to $1.4 billion, with Aladdin representing the majority of this revenue[32] - Aladdin's annual contract value (ACV) increased 8% year-over-year, driven by record net sales in 2022, with about half of new client mandates spanning multiple Aladdin products[32] - Aladdin's revenue was 25% denominated in non-US currencies, with the majority of positions managed on the platform being fixed income[32] - BlackRock is migrating Aladdin to the cloud, enhancing capabilities and building Aladdin Data Cloud in partnership with Snowflake[32] Workforce and Diversity - BlackRock employs approximately 19,800 employees in more than 30 countries as of December 31, 2022[37] - Approximately 44% of BlackRock's global workforce, 32% of global senior leaders, and 47% of global new hires were women as of January 1, 2023[39] - In the US, 8% of employees, 4% of senior leaders, and 12% of new hires identified as Black or African American, while 8% of employees, 4% of senior leaders, and 10% of new hires identified as Latinx as of January 1, 2023[39] - BlackRock's global workforce is distributed with 47% in the Americas, 31% in EMEA, and 22% in Asia-Pacific regions as of December 31, 2022[39] - BlackRock's DEI strategy includes expanding partnerships with external organizations to increase the diversity of applicant pools and strengthening talent acquisition processes to eliminate bias[39] - BlackRock's Board of Directors oversees human capital management, including DEI strategy, leadership development, and succession planning[40] - As of January 1, 2023, 44% of BlackRock's global workforce, 32% of global senior leaders (Directors or above), and 47% of global new hires were women[39] - As of January 1, 2023, 8% of BlackRock's US employees, 4% of senior leaders, and 12% of new hires identified as Black or African American, while 8% of employees, 4% of senior leaders, and 10% of new hires identified as Latinx[39] - As of December 31, 2022, BlackRock had approximately 19,800 employees, with 47% based in the Americas, 31% in EMEA, and 22% in Asia-Pacific regions[39] - BlackRock's Board of Directors holds an annual meeting to review the company's DEI strategy, talent development, and succession planning, with progress considered in executive compensation outcomes[40] - BlackRock conducts multiple employee opinion pulse surveys annually to gather actionable feedback and uses lifecycle surveys to collect feedback on various employee focus areas[42] - BlackRock offers a wide range of benefits, including retirement savings plans, Flexible Time Off (FTO), parental leave, and comprehensive healthcare and mental-health benefits[43] Regulatory Environment - Increased regulatory focus on ESG and sustainability, with the SEC proposing rules for climate-related disclosures and enhanced ESG disclosures by investment companies[50] - EU regulations require sustainability-related disclosures by financial market participants, with new rules expected in 2023 and beyond[50] - US Inflation Reduction Act of 2022 introduced a corporate book minimum tax and an excise tax on net stock repurchases, with no material impact expected on BlackRock's financial statements[51] - OECD's global minimum tax proposal of 15% for multinational companies, with EU member states agreeing to adopt the rules starting in 2024[53] - Transition from LIBOR continues, with USD LIBOR settings expected to cease publication by June 2023 and the LIBOR Act providing a framework for replacement rates[54] - Global regulators examining ETFs for transparency, liquidity, and structural resiliency, potentially increasing regulatory scrutiny and compliance costs[55] - Enhanced regulation of swaps and derivatives, including mandatory central clearing and trading venue execution requirements in the US and EU[56] - SEC proposed rules for private fund advisers, including quarterly performance reports, annual audits, and restrictions on preferential treatment[62] - SEC proposed rules mandating central clearing of certain US Treasury transactions, potentially increasing transaction costs for clients[65] - EU regulatory changes under AIFMD and UCITS frameworks may increase compliance costs and impact services offered to EU clients[66] - Revised EU capital requirements for investment firms effective June 2021, impacting regulatory capital and liquidity calculations[68] - EU's Digital Operational Resilience Act (DORA) introduces new governance and risk management requirements, effective January 2025[69] - UK Overseas Fund Regime (OFR) enacted in February 2022, requiring EU consumer protection equivalence for UK market access[72] - UK Consumer Duty rules expected in July 2023, focusing on retail customer outcomes and exposing non-compliance risks[73] - UK's Edinburgh Reforms announced in December 2022, potentially impacting PRIIPs Regulation and ESG data provider regulation[74] - MiFID II reforms in Europe increase market transparency and operational complexity, with potential future impacts on product development[75] - China's evolving regulatory environment increases compliance risks and limits data transfer capabilities for the company[76] - US subsidiaries subject to extensive federal and state regulations, including SEC, DOL, and ERISA compliance requirements[79] - California Consumer Privacy Act (CCPA) and CPRA impose obligations on handling personal information for California residents[79] - BlackRock's UK subsidiaries are regulated by the FCA and PRA, with the FCA overseeing capital, liquidity, and conduct of business requirements, while the PRA focuses on prudential requirements for the insurance subsidiary[83] - BlackRock's EU subsidiaries must comply with MiFID II, which includes pre- and post-trade transparency requirements, transaction reporting, and capital adequacy obligations[83] - Black