BlackRock, Inc.

Company Overview

Business Model: BlackRock, Inc. is a leading publicly traded investment management firm that provides a broad range of investment management and technology services to institutional and retail clients worldwide. The Company offers a diverse platform of alpha-seeking active, private markets, index, and cash management investment strategies across various asset classes. Product offerings include single- and multi-asset portfolios investing in equities, fixed income, private markets, liquid alternatives, and money market instruments, delivered through vehicles such as open-end and closed-end mutual funds, iShares exchange-traded funds, separate accounts, collective trust funds, and other pooled investment vehicles. BlackRock, Inc. also provides technology services, including its proprietary Aladdin, Aladdin Wealth, eFront, and Cachematrix platforms, as well as advisory services and solutions. The Company operates as a fiduciary, managing client assets, and does not engage in proprietary trading activities. Revenue is primarily generated from investment management fees (based on a percentage of assets under management and performance fees) and technology services.

Market Position: BlackRock, Inc. is the leading ETF provider globally, with $4.2 trillion of iShares exchange-traded fund assets under management as of December 31, 2024. The Company is also among the world’s largest managers of pension plan assets, managing $3.4 trillion, or 63%, of long-term institutional assets under management for defined benefit, defined contribution, and other pension plans. Its competitive position is differentiated by a client-choice model offering a wide range of solutions, a focus on strong investment performance, extensive research, data and analytics capabilities, and a significant global reach with approximately 59% of employees and 35% of assets under management outside the United States. BlackRock, Inc. emphasizes innovation in technology services, particularly with its Aladdin platform, and maintains differentiated client relationships with a fiduciary focus.

Recent Strategic Developments:

• Global Infrastructure Management, LLC Acquisition: On October 1, 2024, BlackRock, Inc. completed the acquisition of 100% of Global Infrastructure Management, LLC. The consideration at closing included approximately $3 billion in cash and 6.9 million shares of BlackRock, Inc. common stock (valued at $5.9 billion). An additional $4.2 billion in stock is deferred, subject to post-closing events. This acquisition added $116 billion of client assets under management and $70 billion of fee-paying assets under management.
• SpiderRock Advisors Acquisition: In May 2024, BlackRock, Inc. completed the acquisition of the remaining equity interest in SpiderRock Advisors, a provider of customized option overlay strategies in the United States wealth market, adding $4 billion of assets under management.
• Preqin Acquisition (Planned): In June 2024, BlackRock, Inc. announced a definitive agreement to acquire Preqin, a provider of private markets data, for £2.55 billion (approximately $3.2 billion) in cash. The transaction is anticipated to close in the first quarter of 2025, aiming to integrate Preqin's data with Aladdin and eFront.
• HPS Investment Partners Acquisition (Planned): In December 2024, BlackRock, Inc. announced a definitive agreement to acquire 100% of HPS Investment Partners, a global credit investment manager, with consideration paid entirely in BlackRock, Inc. equity. Approximately 9.2 million SubCo Units and restricted stock units will be paid at closing, with 2.9 million SubCo Units in approximately five years, and potential for up to 1.6 million additional SubCo Units based on financial performance. The transaction is anticipated to close in mid-2025.
• Product Innovation: Launched LifePath Paycheck offering in 2024, contributing to multi-asset net inflows. Introduced cryptocurrency exchange-traded products in 2024, driving $41 billion in net inflows for Alternatives, with BlackRock, Inc.'s Bitcoin exchange-traded product becoming the largest exchange-traded fund launch in history, growing to over $50 billion in assets under management in less than a year.
• Strategic Minority Investments: BlackRock, Inc. has made minority investments in financial technology and digital distribution providers, data, and whole portfolio capabilities, including Securitize, Upvest, Avaloq, Human Interest, Circle, Clarity AI, Envestnet, Acorns, Scalable Capital, and iCapital.

Geographic Footprint: BlackRock, Inc. has approximately 21,100 employees in more than 30 countries, serving clients in over 100 countries globally. Approximately 59% of its employees are based outside the United States, and about 35% of its total assets under management are managed for clients domiciled outside the United States.

• Americas: Represents 68% of total assets under management and 65% of total base fees and securities lending revenue for 2024. The Company serves clients through offices across the United States, Mexico, Canada, Brazil, Colombia, Chile, the Dominican Republic, and Peru.
• EMEA (Europe, the Middle East and Africa): Accounts for 24% of total assets under management and 29% of total base fees and securities lending revenue for 2024. Operations include fund families in the United Kingdom, the Netherlands, Luxembourg, and Dublin, as well as exchange-traded funds listed on stock exchanges throughout Europe. Offices are maintained in France, Germany, Ireland, Jersey, Luxembourg, the Netherlands, Switzerland, Dubai, and Riyadh (Saudi Arabia).
• Asia-Pacific: Contributes 8% of total assets under management and 6% of total base fees and securities lending revenue for 2024. Clients are served through offices in India, Singapore, Hong Kong, Japan, Australia, China, Taiwan, Korea, and New Zealand.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Operating Margin: 37.1% (up from 35.1% in 2023)
• Net Margin: 31.21% (up from 30.81% in 2023)

Investment in Growth:

• R&D Expenditure: Technology expense, which includes R&D, was $674 million in 2024, up from $607 million in 2023.
• Capital Expenditures: Purchases of property and equipment totaled $255 million in 2024.
• Strategic Investments:
  • Global Infrastructure Management, LLC Acquisition: Approximately $3 billion in cash and 6.9 million shares of common stock at closing, with $4.2 billion in deferred stock consideration.
  • SpiderRock Advisors Acquisition: $74 million (net of cash acquired).
  • Preqin Acquisition (Planned): £2.55 billion (approximately $3.2 billion) in cash.
  • HPS Investment Partners Acquisition (Planned): Consideration paid in BlackRock, Inc. equity, including approximately 9.2 million SubCo Units and restricted stock units at closing.

Business Segment Analysis

Equity

Financial Performance:

• Revenue: $8,074 million (+12.75% YoY)
• Key Growth Drivers: Net inflows of $226 billion, primarily driven by exchange-traded fund net inflows of $236 billion, partially offset by net outflows from active and non-exchange-traded fund index strategies. Global equity market appreciation also contributed to growth.
• Equity represented 60% of long-term assets under management and 54% of long-term base fees and securities lending revenue for 2024.

Product Portfolio:

• Major product lines: Active equity, iShares exchange-traded funds, and non-exchange-traded fund index equity.
• New product launches/updates: Continued client use of broad-based precision exposure exchange-traded funds and cryptocurrency exchange-traded products.

Market Dynamics:

• Approximately half of BlackRock, Inc.'s equity assets under management are tied to international market strategies, including emerging markets, which typically command higher fee rates than United States equity strategies.

Fixed Income

Financial Performance:

• Revenue: $3,688 million (+5.98% YoY)
• Key Growth Drivers: Net inflows of $164 billion, including $112 billion into exchange-traded funds, $42 billion into non-exchange-traded fund index, and $9 billion into active strategies. Strong flows were observed in treasury, core, and corporate credit exchange-traded funds.
• Fixed income represented 27% of long-term assets under management and 25% of long-term base fees and securities lending revenue for 2024.

Product Portfolio:

• Major product lines: Active fixed income, iShares exchange-traded funds, and non-exchange-traded fund index fixed income.
• Diverse strategies: Unconstrained, high yield, total return, and short-duration products.

Market Dynamics:

• The Company is well-positioned for a stabilizing interest rate environment.
• Nearly two-thirds of fixed income assets are managed for institutions for strategic or liability-matching purposes.

Multi-Asset

Financial Performance:

• Revenue: $1,278 million (+6.23% YoY)
• Key Growth Drivers: Net inflows of $51.7 billion, with $53 billion from institutional clients, driven by significant pension outsourcing mandates and growth in LifePath target-date offerings, which contributed $24 billion to institutional multi-asset net inflows.
• Multi-asset represented 9% of long-term assets under management and 8% of long-term base fees and securities lending revenue for 2024.

Product Portfolio:

• Major product lines: Target date and target risk strategies (including LifePath Paycheck), asset allocation and balanced strategies (e.g., Global Allocation and Multi-Asset Income fund families), and fiduciary management services.

Market Dynamics:

• Ongoing institutional demand for solutions-based advice.
• Defined contribution plans remain a significant driver of flows.

Alternatives

Financial Performance:

• Revenue: $2,011 million (+22.17% YoY)
• Key Growth Drivers: Net inflows of $47.7 billion. Private markets generated $9 billion in net inflows ($22 billion excluding return of capital/investment), led by infrastructure, private credit, and private equity. Currency and commodities saw $41 billion in net inflows, primarily from cryptocurrency exchange-traded products.
• Alternatives represented 4% of long-term assets under management and 13% of long-term base fees and securities lending revenue for 2024.

Product Portfolio:

• Private Markets: Offerings in infrastructure ($110 billion AUM), private credit ($32 billion AUM), private equity ($36 billion AUM), real estate ($26 billion AUM), and multi-alternative solutions ($7 billion AUM).
• Liquid Alternatives: Direct hedge funds and hedge fund solutions, which experienced net outflows of $3 billion.
• Currency and Commodities: Includes active and index products, with cryptocurrency exchange-traded products representing $55 billion of assets under management and commodity exchange-traded products representing $73 billion of assets under management.

Market Dynamics:

• Private markets continue to attract increasing allocations from institutional and wealth investors.
• The acquisition of Global Infrastructure Management, LLC added $116 billion of client assets under management and $70 billion of fee-paying assets under management.
• Planned acquisitions of Preqin and HPS Investment Partners are expected to further enhance private markets capabilities.
• BlackRock, Inc. had approximately $45 billion of non-fee paying, unfunded, uninvested commitments for institutional clients at year-end 2024.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: BlackRock, Inc. repurchased 1.9 million common shares for approximately $1.6 billion in 2024. Approximately 3.8 million shares remain authorized for repurchase under the existing program.
• Dividend Payments: The Company paid cash dividends of $3.1 billion, or $20.40 per share, in 2024.
• Dividend Yield: Based on the closing stock price of $952.80 as of February 24, 2025, and the 2024 dividend of $20.40 per share, the dividend yield is approximately 2.14%.
• Future Capital Return Commitments: On January 29, 2025, the Board of Directors approved a quarterly dividend of $5.21 per share, payable on March 24, 2025.

Balance Sheet Position:

• Cash and Equivalents: $12,762 million (GAAP) at December 31, 2024. Excluding the impact of consolidated sponsored investment products, cash and cash equivalents were $12,593 million.
• Total Debt: $12,314 million in long-term borrowings at December 31, 2024.
• Net Cash Position: $279 million (calculated as cash and cash equivalents excluding consolidated sponsored investment products less total long-term debt).
• Debt Maturity Profile:
  • $725 million (1.25% Notes) due May 2025.
  • $700 million (3.20% Notes) due March 2027.
  • $800 million (4.60% Notes) due July 2027.
  • $1,000 million (3.25% Notes) due April 2029.
  • $500 million (4.70% Notes) due March 2029.
  • $1,000 million (2.40% Notes) due April 2030.
  • $1,250 million (1.90% Notes) due January 2031.
  • $1,000 million (2.10% Notes) due February 2032.
  • $1,250 million (4.75% Notes) due May 2033.
  • $1,000 million (5.00% Notes) due March 2034.
  • $500 million (4.90% Notes) due January 2035.
  • $1,500 million (5.25% Notes) due March 2054.
  • $1,200 million (5.35% Notes) due January 2055.
  • Total aggregate principal amount of $12,425 million.

Cash Flow Generation:

• Operating Cash Flow: $4,956 million (GAAP) in 2024. Excluding the impact of consolidated sponsored investment products, operating cash flow was $7,267 million.

Operational Excellence

Production & Service Model: BlackRock, Inc.'s operational model is centered on its proprietary Aladdin technology platform, which provides an end-to-end SaaS solution for investment and risk management. This platform supports both BlackRock, Inc.'s internal investment advisory activities and external institutional and retail clients. The Company leverages global investment, risk, and technology platforms while maintaining a local distribution presence to deliver tailored solutions. Its operational philosophy emphasizes strong global teamwork and a fiduciary approach to client asset management. Securities lending is managed by a dedicated team, supported by quantitative analysis, proprietary technology, and disciplined risk management, with cash collateral invested conservatively.

Supply Chain Architecture: Key Suppliers & Partners:

• Technology Solutions Providers: Includes third-party providers for cloud hosting and cloud-based operations (e.g., Microsoft Azure for Aladdin infrastructure) and technology solutions for Aladdin's data architecture.
• Data Providers: Third-party providers supply data and analytical inputs, including for developing analytics in areas like sustainability.
• Index Providers: A relatively concentrated group of third-party index providers deliver services integral to client investment decisions.
• Asset Servicers: Utilize Aladdin Provider to connect with asset managers and owners, enhancing operational efficiency.
• Financial Technology & Digital Distribution Providers: Strategic collaborations and minority investments with companies such as Securitize, Upvest, Avaloq, Human Interest, Circle, Clarity AI, Envestnet, Acorns, Scalable Capital, and iCapital.

Facility Network:

• Principal Office: Leased at 50 Hudson Yards, New York, New York.
• Manufacturing: Not applicable as BlackRock, Inc. is an asset manager.
• Research & Development: R&D efforts are integrated into technology services, with a focus on enhancing Aladdin, Aladdin Wealth, eFront, and Cachematrix.
• Distribution: Leases additional office space globally, including Atlanta, Belgrade (Serbia), Budapest, Edinburgh, Gurgaon (India), Hong Kong, London, Mumbai (India), Princeton (New Jersey), San Francisco, and Singapore. Owns an 84,500 square foot office building in Wilmington, Delaware, and a 43,000 square foot data center in Amherst, New York. New data centers are operated in foreign jurisdictions to comply with local data hosting requirements.

Operational Metrics:

• Securities on Loan: Approximately $412 billion at December 31, 2024, up from $359 billion at year-end 2023.
• Collateral for Securities on Loan: Approximately $324 billion in cash and securities held as collateral for indemnified securities on loan at December 31, 2024.
• Technology Services Annual Contract Value (ACV): Increased 12% year-over-year in 2024, driven by strong net sales of Aladdin.
• Aladdin Revenue Denomination: Approximately 25% of Aladdin’s revenue was denominated in non-United States currencies.
• Aladdin Platform Usage: The majority of positions managed on the Aladdin platform are fixed income.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: BlackRock, Inc. maintains a significant global sales and marketing presence focused on establishing and maintaining direct relationships with institutional clients.
• Channel Partners: Retail investors are served principally through intermediaries, including broker-dealers, banks, trust companies, insurance companies, and independent financial advisors. The Company also leverages pension consultants.
• Digital Platforms: Technology solutions and digital distribution tools, such as Aladdin Wealth, are increasingly used by financial advisors and end-retail investors. Online sales channels and e-commerce initiatives are utilized for products like iShares exchange-traded funds.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: Includes tax-exempt institutions (defined benefit and defined contribution pension plans, charities, foundations, endowments), official institutions (central banks, sovereign wealth funds, supranationals, government entities), and taxable institutions (insurance companies, financial institutions, corporations, third-party fund sponsors).
• Strategic Partnerships: BlackRock, Inc. serves institutional investors on six continents, with a diversified client base across product and region.
• Customer Concentration: Not explicitly quantified, but the Company emphasizes serving a diverse mix of institutional and retail clients globally.

Geographic Revenue Distribution:

• Americas: $13,411 million (65.7% of total revenue) in 2024.
• Europe: $6,137 million (30.1% of total revenue) in 2024.
• Asia-Pacific: $859 million (4.2% of total revenue) in 2024.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The investment management industry is highly competitive and dynamic, characterized by evolving client demands, technological advancements, and regulatory changes. Key trends include a secular shift to exchange-traded funds, growing allocations to private markets (such as infrastructure and private credit), increasing demand for outsourcing and whole portfolio solutions, anticipated re-allocations to fixed income, demand for high-performing active strategies, interest in sustainable investment strategies, and a continued focus on income and retirement. The exchange-traded fund industry is experiencing rapid growth driven by structural tailwinds, including the use of exchange-traded funds as active tools, the migration from commission-based to fee-based wealth management, growth in model portfolios, expansion of digital wealth platforms, and the modernization of the bond market. Private markets assets and client allocations to them are also expected to continue growing.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: BlackRock, Inc. competes with a broad array of investment management firms, mutual fund complexes, insurance companies, banks, brokerage firms, financial technology providers, and other financial institutions. Competition is based on factors such as investment performance track records, efficient delivery of beta for index products, investment style and discipline, price, quality and breadth of services and products, name recognition and reputation, and the ability to develop new investment strategies and products. Historically, BlackRock, Inc. has competed on its long-term investment performance, investment process, risk management and analytic capabilities, and client service quality.

Emerging Competitive Threats: Emerging threats include new market entrants, disruptive technologies, and alternative solutions. Increased competition from risk analytics and investment management technology providers with sophisticated and comprehensive product offerings, or a shift in client demand towards standalone or internally developed solutions, could impact BlackRock, Inc.'s competitive position. The rapid evolution of AI technologies and their use by malicious actors or competitors also presents a threat.

Competitive Response Strategy: BlackRock, Inc.'s strategy involves capitalizing on its differentiated competitive position by offering a wide range of index, active, private markets, and whole portfolio solutions. The Company focuses on strong investment performance, leveraging its research, data, and analytics. It is committed to innovation and the continued development of its technology products and solutions, including Aladdin, and has made minority investments in financial technology and digital distribution providers. Strategic acquisitions, such as Global Infrastructure Management, LLC, SpiderRock Advisors, and the planned acquisitions of Preqin and HPS Investment Partners, are aimed at expanding investment capabilities and technology offerings, particularly in private markets and credit. BlackRock, Inc. is also expanding the market for exchange-traded funds and developing outcome-oriented client solutions, including outsourced mandates and model portfolios.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Asset Value Fluctuations: Changes in equity, debt, real assets, commodities, foreign exchange, or other asset markets can cause assets under management, revenue, and earnings to decline. This includes impacts from global fiscal, monetary, and trade policies, and is heightened by market volatility or illiquid conditions.
• Interest and Foreign Exchange Rate Changes: Fluctuations in global interest rates and foreign exchange rates can cause assets under management and base fees to fluctuate, introducing volatility to net income and operating cash flows.
• Beta Divergence: Divergent performance between equity markets can increase the proportion of assets under management weighted toward lower-fee equity products, reducing the effective fee rate.
• Geopolitical Unrest: Geopolitical risks (e.g., trade tensions, tariffs, conflicts like Ukraine-Russia and Middle East, US-China strategic competition, political polarization) and other external events (natural disasters, pandemics, health crises) can adversely affect the global economy, specific markets, supply chains, and BlackRock, Inc.'s operations, leading to declines in assets under management, revenue, and earnings.
• Climate-related Risks: Physical climate risks (extreme weather, temperature changes) and transition risks (policy, regulatory, technology, market changes to a low-carbon economy) can impact BlackRock, Inc.'s business, products, operations, and clients, potentially leading to asset value declines, changes in client preferences, increased costs, business disruptions, and reputational harm.
• Client/Fund Contract Termination: Investment advisory contracts may be terminated or not renewed by clients or fund boards, or funds may be liquidated, leading to reduced fees, carried interest, assets under management, revenue, and earnings. Shareholder activism in closed-end funds is an increasing factor.
• Competitive Product Performance: Poor performance of competitors' products can erode confidence in similar BlackRock, Inc. products, leading to withdrawals, redemptions, and liquidity issues, regardless of BlackRock, Inc.'s own performance.
• Increased Competition: The highly competitive investment management industry, with evolving client demands and new technologies, can lead to fee compression, increased investment needs, and a decline in assets under management, revenue, and earnings.
• Aladdin Competitive Position: Failure to maintain Aladdin's competitive edge against other technology providers or a shift in client demand could result in client loss, impede growth, and reduce revenue and earnings. Intellectual property infringement is also a risk.
• New Product Development: Inability to develop new products and services, or associated reputational harm, additional costs, and operational risks (e.g., implementation, regulatory compliance, data quality for analytics), can adversely impact growth, reputation, and financial performance.
• Seed and Co-investment Value: Changes in the value of BlackRock, Inc.'s net economic investment exposure (approximately $3.9 billion at December 31, 2024) in sponsored investment funds can affect income and increase earnings volatility.
• Securities Lending Indemnification: BlackRock, Inc. indemnifies certain securities lending clients against borrower default (approximately $305 billion on loan at December 31, 2024), which could result in material liabilities if collateral is insufficient.
• Product Support Decisions: Decisions to seed, warehouse, or otherwise support investment products, or the inability to provide such support, may utilize capital and liquidity, be restricted by regulation, or result in losses, impacting assets under management, revenue, and earnings.
• Inorganic Transactions: Acquisitions (e.g., Global Infrastructure Management, LLC, SpiderRock Advisors, planned Preqin and HPS Investment Partners) involve financial, accounting, tax, regulatory, and operational challenges, including integration risks, assumption of pre-existing liabilities, and potential for unanticipated disputes or claims. Failure to successfully integrate or realize anticipated benefits can harm competitive position, assets under management, revenue, and earnings.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Third-Party Dependency: Reliance on key third-party providers for fund administration, custody, market data, index services, technology, and cloud hosting (e.g., Microsoft Azure). Failure of these providers to fulfill obligations or maintain relationships can materially adversely affect operations, reputation, and financial performance.
• Aladdin Operational Risks: Continuous enhancements and expansion of the Aladdin platform into new markets and geographies increase execution, operational, data management, cyber, and information security risks. Failure to manage this growth can lead to client attrition, increased costs, reputational harm, or regulatory fines.
• Human Error: BlackRock, Inc.'s complex operations are dependent on employees, and human errors (e.g., calculation errors, data security failures, errors in judgment) can disrupt operations, cause losses, lead to regulatory fines, or damage reputation.
• Fraud/Circumvention of Controls: Risk of employees, contractors, or third parties deliberately or recklessly circumventing controls to commit fraud or other improper conduct, which can have an adverse effect on reputation, lead to litigation, regulatory inquiries, and financial penalties.

Financial & Regulatory Risks

Market & Financial Risks:

• Liquidity and Capital: Failure to maintain adequate corporate and contingent liquidity can cause assets under management, liquidity, and earnings to decline, and harm growth prospects. Certain subsidiaries are subject to regulatory capital and liquidity requirements.
• Performance Fees Volatility: The portion of revenue derived from performance fees (e.g., $1.2 billion in 2024) can increase the volatility of revenue and earnings, particularly with the increasing component of private markets products, which have longer recognition periods.
• Quantitative Model Errors: Errors or limitations in quantitative models used for investment processes (risk assessment, portfolio management, trading, hedging, valuations) or failures in governance can adversely affect product performance, client relationships, and business.

Regulatory & Compliance Risks:

• Extensive Global Regulation: BlackRock, Inc. is subject to extensive and increasingly detailed regulation globally by numerous authorities (e.g., SEC, DOL, FCA, JFSA, MAS), increasing compliance costs and complexity.
• Anti-Corruption, AML, Sanctions: Compliance with various anti-corruption, anti-money laundering, and economic sanctions laws and regulations (e.g., US Foreign Corrupt Practices Act, Bank Secrecy Act, GDPR) is critical.
• New Global Regulations: New regulations informed by global standard setters (FSB, IOSCO) or national authorities (e.g., on money market funds, open-ended funds, sustainability, technology service providers like EU DORA) can increase regulatory scrutiny and compliance costs, or require alterations to business activities.
• US Regulatory Reforms: Ongoing US regulatory reforms (e.g., antitrust rules, potential SIFI designation, SEC rules on security-based swaps, Form PF, US DOL Fiduciary Rule, US Treasury Clearing Mandate, equity market structure, short sales, predictive data analytics, FinCEN AML rule) can increase compliance burdens, costs, and operational complexity.
• International Regulatory Reforms: International reforms (e.g., EU DORA, Retail Investment Strategy, EMIR 3.0, UK FSMA 2023, Overseas Fund Regime, Conduct Regulation, UK Stewardship Code Review, China's evolving regulatory environment) can lead to increased scrutiny, compliance costs, and operational complexity.
• Legal Proceedings: BlackRock, Inc. is subject to various legal actions and regulatory investigations, which can result in fines, sanctions, restrictions on activities, reputational harm, and financial liabilities.
• Reputational Risk: Damage to BlackRock, Inc.'s reputation from regulatory actions, operational failures, poor performance, cyber incidents, employee misconduct, or scrutiny on environmental and social matters can adversely impact client relationships, employee retention, and business.
• Conflicts of Interest: Failure to effectively manage actual or perceived conflicts of interest between BlackRock, Inc. and its clients, employees, or vendors can lead to adverse publicity, litigation, and regulatory actions.
• US Banking Regulations: BlackRock Institutional Trust Company, N.A. (BTC), a subsidiary, is subject to OCC banking regulations and capital requirements, which may limit its business activities and create a competitive disadvantage.
• Threshold Limits/Ownership Reporting: Extensive regulatory reporting requirements for issuer exposure levels and ownership limits can lead to errors, penalties, and may restrict investment opportunities, impacting fund performance.
• Index Investing/Common Ownership Commentary: Commentary regarding the scale of index investing and the "common ownership theory" could lead to increased regulatory scrutiny, policy changes, or proposed remedies that negatively impact BlackRock, Inc.'s business.
• Tax Legislation Changes: New tax legislation or changes to existing tax laws (e.g., Financial Transaction Tax, OECD Pillar Two) or challenges to historical taxation practices can adversely affect BlackRock, Inc.'s effective tax rate, business, and financial condition.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Aladdin Platform: BlackRock, Inc.'s proprietary end-to-end SaaS solution for investment and risk management, serving both internal and external clients.
• Aladdin Wealth, eFront, and Cachematrix: Specialized technology platforms for wealth management, alternative investment management software, and cash management, respectively.
• Whole Portfolio Solutions: Continued investment in enhancing Aladdin to support integrated public and private markets portfolios.
• Private Markets: Significant focus on eFront and the planned acquisition of Preqin to bolster data and research tools for alternative investments.
• Wealth Management: Enhancements to Aladdin Wealth to provide personalized digital advice, portfolio construction capabilities, and risk analytics for retail distributors.
• Sustainable Investing Solutions: Ongoing investment to integrate sustainability factors into technology offerings.
• Artificial Intelligence (AI): Investments in Aladdin AI copilots and expanding AI capabilities across the business.
• Digital Assets: Advancing whole portfolio solutions to include digital assets.

Innovation Pipeline:

• Aladdin Enhancements: Continuous development to simplify operating infrastructure, offer greater client choice and flexibility, and create connectivity with ecosystem providers (asset servicers, cloud providers, digital asset platforms, trading systems).
• Private Markets Data: The planned acquisition of Preqin aims to create a preeminent private markets technology and data provider by unifying Preqin's data and research tools with Aladdin and eFront workflows.
• Integrated Credit Platform: The planned acquisition of HPS Investment Partners is expected to create an integrated private credit platform.

Intellectual Property Portfolio:

• Patent Strategy: BlackRock, Inc. takes steps to safeguard against infringements of its intellectual property rights in Aladdin.
• IP Litigation: The introduction of new products and services carries a risk of intellectual property-related lawsuits or claims.

Technology Partnerships:

• Strategic Alliances: BlackRock, Inc. has key strategic partnerships, including with Microsoft, where the Aladdin infrastructure and environment are hosted on Microsoft Azure.
• Minority Investments: The Company has made minority investments in financial technology and digital distribution providers, data, and whole portfolio capabilities, including Securitize, Upvest, Avaloq, Human Interest, Circle, Clarity AI, Envestnet, Acorns, Scalable Capital, and iCapital.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Board of Directors actively oversees human capital management, including leadership and succession planning for the Chief Executive Officer and other senior executives. A key element of this is a commitment to building leadership from within the organization.

Board Composition: BlackRock, Inc.'s Board of Directors consists of over 80% independent directors. The Board is actively engaged in the oversight of the Company’s risk management program, with the Risk Committee assisting in the oversight of risk levels, assessment, management, and related policies, including cybersecurity. The Management Development and Compensation Committee periodically reviews the firm’s human capital management strategy. Annually, senior members of the technology, risk, and information security teams provide a comprehensive overview of cyber risk to a joint session of the Board’s Risk and Audit Committees.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 21,100 employees as of December 31, 2024.
• Geographic Distribution: 43% of employees are based in the Americas, 31% in EMEA, and 26% in the Asia-Pacific region.

Talent Management: Acquisition & Retention:

• Hiring Strategy: BlackRock, Inc. actively recruits top talent from diverse backgrounds, including formal programs for Veterans (former service members transitioning to civilian careers) and Returners (individuals re-entering the workforce after a career break).
• Employee Value Proposition: The Company's compensation and benefits practices are designed to attract, motivate, and retain talented employees, align incentives with firm and client interests, and support employees and their families. This includes a strong pay-for-performance culture, retirement savings plans, Flexible Time Off, flexible working arrangements, parental leave, family forming benefits (fertility, adoption, surrogacy assistance), and backup elder and childcare benefits. Comprehensive healthcare and mental-health benefits are also provided.

Diversity & Development:

• Diversity Metrics: BlackRock, Inc. publishes annual SASB-aligned disclosure and EEO-1 reports, providing information on its workforce composition. The Company is committed to fostering a connected and inclusive culture that supports diverse perspectives.
• Development Programs: Employees have access to BlackRock Academies, an online suite of interactive resources and courses for skill development. The Company invests in leadership development programs and the "Managing at BlackRock" program to foster career growth and foundational management skills.
• Culture & Engagement: BlackRock, Inc.'s culture is guided by five core principles: (1) We are a fiduciary to our clients; (2) We are One BlackRock (1BLK); (3) We are passionate about performance; (4) We take emotional ownership; and (5) We are committed to a better future. Employee engagement is fostered through global employee opinion surveys, interactive events, employee networks, and local community involvement (BlackRock Gives committees, matching gifts program, paid volunteer days).
• Workplace Policies: Policies are in place for harassment prevention, equal employment opportunity, and overtime regulations. The Company is committed to providing a safe and healthy work environment, with global environmental and occupational health and safety programs. Employees are encouraged to raise concerns without fear of retaliation.

Environmental & Social Impact

Environmental Commitments: Climate Strategy: BlackRock, Inc. provides clients with choice regarding sustainability factors in their portfolios, including those seeking exposure to the low-carbon transition. The Company aims to deliver risk-adjusted returns within client mandates, underpinned by research, data, and analytics.

Supply Chain Sustainability: The Company is subject to regulations like the Corporate Sustainability Due Diligence Directive (CSDDD) in the EU, which requires in-scope companies to manage actual or potential adverse impacts of their activities and supply chains on human rights and environmental matters.

Social Impact Initiatives:

• Community Investment: BlackRock, Inc. supports nonprofit organizations nominated by employees through local, employee-led BlackRock Gives committees. It also offers a matching gifts program (up to $10,000 annually) and provides full-time employees with up to two paid volunteer days.
• Product Impact: The Company offers sustainable investment strategies to clients who choose to incorporate such objectives.
• Diversity & Inclusion: BlackRock, Inc. is committed to creating an inclusive culture that supports top talent and diverse perspectives, publishing SASB-aligned disclosure and EEO-1 reports on workforce composition.
• Human Rights: The Company is subject to regulations like the CSDDD, which addresses human rights impacts in supply chains.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Investment advisory performance fees can fluctuate quarterly, with a greater number and size of liquid products having performance measurement periods ending in the third and fourth quarters. The timing of carried interest recognition on private market products also contributes to this volatility.
• Economic Sensitivity: BlackRock, Inc.'s business is directly and indirectly affected by changes in global interest rates and overall global market dynamics. Economic uncertainty and market volatility can significantly impact earnings and stockholder returns in any given period.
• Industry Cycles: The Company's diversified multi-product platform is designed to generate more stable cash flows through various market cycles, positioning it to invest for the long term.

Planning & Forecasting: BlackRock, Inc. manages its financial condition and funding to maintain appropriate liquidity, relying on liquid assets, operating cash flows, and borrowing capacity to meet short-term and long-term cash needs.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations: BlackRock, Inc. and its subsidiaries are subject to extensive regulation globally.

• United States: Regulated by the SEC, DOL, Federal Reserve, OCC, FINRA, NFA, FTC, DOJ, and CFTC. Key regulations include the Investment Advisers Act of 1940, Investment Company Act of 1940, Securities Exchange Act of 1934, Securities Act of 1933, Commodity Exchange Act, and ERISA. BlackRock Institutional Trust Company, N.A. (BTC) is regulated by the OCC.
• International: Regulated by authorities such as the FCA and PRA (UK), JFSA (Japan), ASIC (Australia), FMA (New Zealand), SFC (Hong Kong), SFB (Taiwan), CSRC and NFRA (China), and MAS (Singapore). Key international regulations include MiFID II (EU/UK), UCITS Directive, AIFMD, Solvency II, Insurance Distribution Directive, and the Digital Operational Resilience Act (EU DORA).
• Global Standard Setters: Policymaking workstreams by the Financial Stability Board (FSB) and International Organization of Securities Commissions (IOSCO) may lead to new regulations.
• Compliance Costs: Compliance with these detailed operational requirements is costly and complex.

Trade & Export Controls: BlackRock, Inc. is subject to US and non-US anti-corruption, anti-money laundering, and economic sanctions laws and regulations, including the US Foreign Corrupt Practices Act, USA PATRIOT Act, Bank Secrecy Act, EU Anti-Money Laundering Directives, UK Bribery Act, and sanctions imposed by OFAC, the United Nations, the EU, and His Majesty’s Treasury’s Office of Financial Sanctions Implementation.

Legal Proceedings: BlackRock, Inc. is subject to various legal actions, including arbitrations, class actions, and other litigation, as well as periodic examinations and investigations by regulatory authorities. In 2023, the Company responded to SEC requests regarding an industry-wide investigation into record retention for electronic communications. A tax matter with Her Majesty’s Revenue and Customs (HMRC) was resolved in October 2024, with the UK Supreme Court refusing permission to appeal, and the resolution did not have a material impact on the consolidated financial statements. Management does not anticipate that the aggregate liability from current regulatory matters or lawsuits will have a material effect on BlackRock, Inc.'s results of operations, financial position, or cash flows.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate (GAAP): 21.9% in 2024, up from 21.2% in 2023.
• Effective Tax Rate (As Adjusted): 23.5% in 2024, up from 21.4% in 2023.
• Rate Drivers: The Company's tax rate is influenced by tax rates in foreign jurisdictions (e.g., UK, Germany, Canada, Ireland) and the relative amount of income earned in those regions.
• Discrete Tax Benefits (2024): Included $137 million from the reorganization and establishment of a more efficient global intellectual property and technology platform and corporate structure, $63 million from the realization of capital losses, and $37 million related to vested stock-based compensation awards.
• Discrete Tax Expense (2024): Included a net noncash discrete tax expense of $14 million related to the revaluation of deferred income tax liabilities.

Geographic Tax Planning: BlackRock, Inc. completed a reorganization in 2024 to establish a more efficient global intellectual property and technology platform and corporate structure. United States income taxes have been provided on the Company’s undistributed foreign earnings due to the 2017 Tax Cuts and Jobs Act, with the financial statement basis in excess of tax basis of its foreign subsidiaries remaining indefinitely reinvested.

Tax Reform Impact:

• OECD Pillar Two: European Union member states and other countries, including the United Kingdom, have adopted laws implementing the OECD’s 15% global minimum tax rules, effective starting in 2024. This framework did not have a material impact on BlackRock, Inc.'s consolidated financial statements for 2024, and the Company continues to monitor legislative developments.
• Financial Transaction Tax (FTT): Proposed legislation in the United States (federal and state) and the EU could adversely affect BlackRock, Inc.'s financial results and clients’ performance.
• Tax Audits: BlackRock, Inc. is subject to US federal income tax examination for tax years after 2015 and is currently under audit in several state and local jurisdictions, including New York State (2015-2020) and New York City (2012-2014).

Insurance & Risk Transfer

Risk Management Framework: BlackRock, Inc. employs a multi-lines-of-defense model for cybersecurity, integrated into its Enterprise Risk Management (ERM) framework and aligned with recognized standards (NIST CSF, FFIEC CAT, FedRAMP, SOC 1/2, ISO 27001/2). The Risk and Quantitative Analysis (RQA) group provides independent risk oversight across all asset classes, identifying, measuring, monitoring, and managing market, operating, legal, compliance, reputational, fiduciary, and investment risks. The Cash Management Credit Committee establishes risk limits for cash management products. The Company maintains a robust vendor management program for third-party service providers and has incident response and recovery plans for cybersecurity.

Insurance Coverage: BlackRock, Inc. maintains cybersecurity insurance, though there is no assurance it will cover all losses and damages from cyber events, and future coverage may be limited.

Risk Transfer Mechanisms:

• Securities Lending: BlackRock, Inc. receives collateral (typically 102% to 112% of loaned securities value) for securities lending arrangements to mitigate borrower default risk.
• Hedging Strategies:
  • Seed Capital Hedging Program: Utilizes futures contracts to hedge market and interest rate exposure for its total portfolio of seed investments in sponsored investment products, with an aggregate notional value of approximately $1.8 billion at December 31, 2024.
  • Deferred Cash Compensation Hedging: Employs exchange-traded futures to economically hedge market valuation changes on certain deferred cash compensation plans, with an aggregate notional value of approximately $197 million at December 31, 2024.
  • Foreign Currency Hedging: Executes forward foreign currency exchange contracts to mitigate foreign exchange risk, with an aggregate notional value of approximately $3.6 billion at December 31, 2024.
  • Net Investment Hedges: Designates financial instruments, such as its €700 million debt offering, as net investment hedges to offset currency exposure related to net investments in international subsidiaries.