Skip to Content
Morningstar

Blackstone Earnings: Weak Operating Environment Offsets Triumph of Surpassing $1 Trillion in AUM

""
Securities In This Article
Blackstone Inc
(BX)

There was little in narrow-moat Blackstone’s BX second-quarter results that would alter our long-term view of the firm. We are leaving our $105 per share fair value estimate in place, and we view the shares as being fairly valued right now. Blackstone closed out the June quarter with $731.1 billion in fee-earning assets under management, or AUM, down 0.1% sequentially but still up 6.9% year over year. Total AUM finally surpassed the $1 trillion mark, as the company closed out the period with $1.001 trillion in assets, up 1.0% sequentially and 6.4% on a year-over-year basis.

Adjusted net outflows of $5.4 billion during the quarter—driven by a combination of weaker fundraising, weaker capital deployment, and elevated redemptions, specifically for Blackstone Real Estate Income Trust, or BREIT, and Blackstone Private Credit Fund, or BCRED—were not only well off the positive $28.2 billion quarterly run rate we’ve seen for flows the past two years but were the first adjusted net outflows for the firm since the second quarter of 2018, highlighting the difficult operating environment.

Total revenue (which includes the effects of unrealized activity) increased 347.3% year over year on higher levels of unrealized performance allocations (despite lower realized performance and principal investment gains). Management fee income was up 8.3% year over year during the second quarter and was up 10.4% during the first half, which was slightly better than our expectations for the full year.

Fee-related earnings (which measure profits from revenue received on a recurring basis and not subject to future realization events) of $1.1 billion during the June quarter were up 12.1% year over year. Distributable earnings, which remove the effects of unrealized activity, were $1.2 billion, or $0.93 per share, down from $2.0 billion, or $1.49 per share, in the second quarter of 2022. This was slightly better than the FactSet consensus estimate as well as our own estimate of $0.92 per share.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

More in Stocks

About the Author

Greggory Warren

Strategist
More from Author

Greggory Warren, CFA, is a strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers the traditional U.S.-and Canadian-based asset managers, as well as Berkshire Hathaway.

Before assuming his current role in 2017, Warren covered the financial-services sector as a senior analyst since late 2008. Prior to that time, he covered non-alcoholic beverage manufacturers and distributors, packaged food firms, food service distributors, and tobacco companies. Before joining Morningstar in 2005, Warren worked as a buy-side equity analyst for more than seven years, covering consumer staples and consumer cyclicals.

Warren holds a bachelor's degree in accounting and English from Augustana College. He also holds the Chartered Financial Analyst® designation and is a member of the CFA Society of Chicago. During 2014-19, Warren was selected to participate on the analyst panel at Berkshire Hathaway’s annual meeting, asking questions directly of Warren Buffett and Charlie Munger. The analyst panel was disbanded ahead of Berkshire’s 2020 annual meeting. Warren also ranked second in the investment services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

Sponsor Center