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BlackRock stock falls on weak Q3 revenue

Asset manager BlackRock (BLK) reported a 29% jump in earnings for the third quarter helped by higher non-operating income and lower effective tax rate. The bottom line came in ahead of analysts’ expectations. Shares of BlackRock were down 2.8% during the pre-market session after the top line missed estimates.

BlackRock third quarter 2018 Earnings Infographic
BlackRock Q3 2018 Earnings Infographic

Net income climbed 29% to $1.22 billion and earnings soared 31% to $7.54 per share. On an adjusted basis, earnings jumped 27% to $7.52 per share.

Revenue rose 2% to $3.58 billion driven by 4% base fee growth and 18% technology services revenue growth. Asset under management increased 8% year-over-year to $6.4 trillion, which includes $28 billion of net AUM addition from strategic transactions.

The company generated $11 billion of long-term net inflows in the quarter, led by iShares, active multi-asset and illiquid alternatives. Over the last twelve months, total net inflows were $177 billion that reflected continued growth in key areas of its business, including iShares, multi-asset solutions, illiquid alternatives, and Aladdin.

Related: JPMorgan Chase Q3 2018 results

Segment-wise, investment advisory, administration fees, and securities lending revenue rose by 3.7% on the impact of higher markets and organic growth on average AUM. Technology services revenue grew by 18% helped by higher revenue from institutional Aladdin.

However, investment advisory performance fees fell by 21% due to lower fees from liquid alternative and long-only products. Distribution fees dropped by 6.4%.

Related: Citigroup Q3 2018 results

BlackRock reported its earnings after the major US banks announced mixed earnings results last Friday. JP Morgan Chase (JPM) reported solid Q3 results backed by an impressive performance from the commercial banking segment whereas Citigroup (C) posted a 12% jump in Q3 earnings helped by the lower effective tax rate.

Shares of BlackRock ended Monday’s regular session down 0.18% at $426.94 on the NYSE. The stock has fallen over 10% in the past year and over 16% in the year so far.

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