Good morning. My name is Jennifer, and I will be your conference facilitator today. At this time, I'd like to welcome everyone to the BlackRock, Inc. Third Quarter 2024 Earnings Teleconference. Our host for today's call will be Chairman and Chief Executive Officer, Laurence D. Fink; Chief Financial Officer, Martin S. Small; President, Robert S. Kapito; and General Counsel, Christopher J. Meade. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer period. Thank you. Mr. Meade, you may begin your conference.

Good morning, everyone. I'm Chris Meade, the General Counsel of BlackRock. Before we begin, I'd like to remind you that during the course of this call, we may make a number of forward-looking statements. We call your attention to the fact that BlackRock's actual results may, of course, differ from these statements. As you know, BlackRock has filed reports with the SEC which list some of the factors that may cause the results of BlackRock to differ materially from what we say today. BlackRock assumes no duty and does not undertake to update any forward-looking statements. So with that, I'll turn it over to Martin.

Thanks, Chris. Good morning, everyone. It's my pleasure to present results for the third quarter of 2024. Before I turn it over to Larry, I'll review our financial performance and business results. Our earnings release discloses both GAAP and as-adjusted financial results. I'll be focusing primarily on our as-adjusted results. On our previous earnings call, we spoke to improving client sentiment and steadily improving organic growth. We expressed optimism about our growth trajectory in the second half of the year, and in the third quarter organic growth surged, leading to some of the best financial results in our history. We generated $221 billion of net inflows, our highest net inflow quarter ever. We delivered record levels of quarterly revenue and operating income. We expanded our margin by 350 basis points year-over-year. We generated 5% annualized organic base fee growth, our highest quarter in three years. Organic growth is accelerating as we execute on a strong pipeline and clients turn to BlackRock to significantly increase their investments in public and private markets. Our structural growers, iShares, whole portfolio outsourcing, and Aladdin, all delivered strong third quarter growth and are poised to accelerate into year-end. iShares leads the industry in global flows with approximately $250 billion through the third quarter and historically sees upwards of 40% of its total annual flows in Q4. Fixed income ETFs, largely driven by organic growth, now have iShares fixed income ETF assets standing at over $1 trillion, nearly 40% higher than at year-end 2021. Aladdin logged 15% ACV growth, consistent with our long-term low to mid-teens target, showing excellent momentum and key wins with growing clients. Fixed income also performed well across the platform with over $60 billion of net inflows. We believe a continued path of central bank normalization will support sustained inflows across bond funds, ETFs, and institutional accounts. Private markets remain a strategic priority for BlackRock. On October 1st, we closed on our acquisition of Global Infrastructure Partners (GIP), which has tripled infrastructure AUM and doubled private markets run rate management fees. We're already beginning to see the synergies from BlackRock and GIP together. Our partnership with Microsoft and NGX aims to realize the significant investment potential of infrastructure to support AI innovation and it’s just the first of the growth synergies we can create together. We're bringing private markets to wealth clients. BlackRock manages more than $300 billion of assets across model portfolios and separately managed accounts for wealth managers. We believe the model portfolio solution we're building with Partners Group will revolutionize access to private markets for wealth managers and improve portfolio outcomes for millions of households. Information about capital is becoming almost as important as capital itself. Our planned acquisition of Preqin is accelerating this exciting private markets data and analytics journey for BlackRock and our clients. Our focus remains on delivering BlackRock's platform to clients through access to unique opportunities, expertise, and world-class client service. We are also moving swiftly and aggressively to position our firm to achieve or exceed our 5% organic base fee growth target over the long term. We're building our mix towards higher secular growth areas like private markets, technology, whole portfolio mandates, and model portfolios. We believe this will translate to higher and more durable organic growth and provide greater diversification and resilience in revenue and earnings through market cycles. Successful execution of these goals should also result in multiple expansion for our shareholders. We ended the quarter with AUM near $11.5 trillion. Our business tends to be seasonally strongest in the fourth quarter, and we maintain a broad global opportunity set of new asset management and technology mandates that should fuel organic growth. BlackRock generated total net inflows of $221 billion in the third quarter, representing 8% annualized organic asset growth. The third quarter revenue of $5.2 billion was 15% higher year-over-year, driven by 5% organic base fee growth and the impact of market movements on average AUM over the last 12 months, along with alpha generation in our liquid alternative strategies. Operating income of $2.1 billion was up 26% year-over-year. Earnings per share of $11.46 increased 5%, reflecting a higher tax rate compared to a year ago. Non-operating results for the quarter included $108 million of net investment gains, driven primarily by gains linked to a minority investment and unhedged seed capital investments. Our as-adjusted tax rate for the third quarter was 26%. The previous year quarter included $215 million of discrete tax benefits, while the third quarter of 2024 was impacted by $22 million of discrete expense. We continue to estimate that 25% is a reasonable projected tax run rate for the remainder of 2024. The actual effective tax rate may differ due to non-recurring or discrete items or potential changes in tax legislation. The third quarter base fee and securities lending revenue of $4 billion increased 9% year-over-year, reflecting the positive impact of market beta and foreign exchange movements on average AUM and organic base fee growth, partially offset by lower securities lending revenue. Sequentially, base fee and securities lending revenue was up 4%. On an equivalent day count basis, our annualized effective fee rate was approximately four-tenths of a basis point lower compared to the second quarter due to the relative outperformance of lower fee U.S. equity markets and client preferences for lower fee U.S. exposures. The closing of GIP added $116 billion of client AUM and $70 billion of fee-paying AUM on October 1st. We expect GIP to contribute approximately $250 million of management fees in the fourth quarter of 2024. The GIP portfolios contribute competitive private markets fee levels that typically exceed 100 basis points. They add long-dated non-redeemable assets to BlackRock's overall business, further diversifying our revenue and earnings mix. We expect these private market assets to positively impact BlackRock's overall effective fee rate by 0.5 to 1 full basis point. Performance fees of $388 million increased significantly from a year ago, primarily reflecting strong alpha generation over the last 12 months from a hedge fund with an annual lock in the third quarter. Quarterly technology services revenue decreased by 1% compared to a year ago due to the prior year quarter revenue impact of eFront on-premises license renewals for several large clients. Excluding this impact, technology services revenue would have increased approximately 9% year-over-year. Sequentially, technology services revenue went up 2%, reflecting successful client go-lives. Annual contract value or ACV increased 15% year-over-year, driven by sustained demand for our full range of Aladdin technology offerings. Our ACV results include the impact of this client announcement and several other new client mandates. Our results highlight the power of Aladdin as a unifying technology. Aladdin provides a highly scalable operating backbone to clients tailored to meet their needs, enabling new capabilities to drive top-line business growth for clients while also unlocking scale and efficiency. Clients recognize a direct positive impact to the bottom line. Total expenses were 8% higher year-over-year, primarily driven by higher incentive compensation, G&A, and sales, asset, and account expense. Employee compensation and benefits expenses rose 10% year-over-year, reflecting higher incentive compensation due to increased performance fees and operating income. G&A expenses increased by 8% year-over-year, primarily due to the timing of technology spend last year and higher professional services expenses. Sales, asset, and account expenses grew by 6% compared to a year ago, driven by higher direct fund expenses. Direct fund expenses increased by 7% year-over-year and 6% sequentially, primarily attributed to higher average ETF AUM. Our as-adjusted operating margin of 45.8% was up 350 basis points from a year ago, reflecting the positive impact of markets on revenue, significantly higher performance fees, and organic base fee growth. As markets improve, we executed on our financial strategy, aligning controllable expenses with organic growth to add more resilience to our operating margin through greater expense variability and driving fixed cost scalability. This effort has yielded profitable growth and operating leverage. Excluding the impact of Global Infrastructure Partners, Preqin, and related transaction costs, we expect our headcount to be broadly flat in 2024, with a low to mid-single-digit percentage increase in core G&A expense. In line with this outlook, we expect Q4 core G&A to reflect the execution of planned technology investment spending at levels more consistent with Q3 and seasonal increases in marketing expenses. We welcomed approximately 400 new colleagues to BlackRock following the GIP transaction. Including the impact of the GIP acquisition, we expect full-year core G&A expense growth to be closer to the high end of the previously communicated low to mid-single-digit percentage increase range. Our capital management strategy prioritizes investing in our business to scale strategic growth initiatives or drive operational efficiency, with plans to return excess cash to shareholders through a combination of dividends and share repurchases. At times, we may make inorganic investments when opportunities arise to accelerate growth and support our strategic initiatives. Upon closing the GIP transaction, we issued approximately 6.9 million shares of BlackRock common stock, subject to a two-year lockup period. Approximately 30% of the total consideration for the transaction, or 5 million shares, is deferred and is expected to be issued in approximately five years based on the achievement of certain performance milestones. We repurchased $375 million worth of common shares in the third quarter. Based on our capital spending plans for the year, we still anticipate repurchasing at least $375 million of shares in the fourth quarter, consistent with our previous guidance. We expect our planned acquisition of Preqin to close around year-end 2024, subject to regulatory approvals and other customary closing conditions. BlackRock's third quarter net inflows of $221 billion were well diversified and positive across client type, product type, active and indexed strategies, and regions. Momentum in our ETFs continued to build with $97 billion of net inflows in the third quarter. Fixed income and core equity led net inflows of $48 billion and $32 billion, respectively. Precision ETFs had $20 billion net inflows as clients efficiently adjusted tactical portfolio allocations towards U.S. and international developed market equities. BlackRock's cryptocurrency ETPs also grew and added $5 billion of net inflows in the third quarter. Our institutional clients continued to consolidate their portfolios with BlackRock, with our institutional franchise raising $56 billion in net inflows in the third quarter. Our institutional active franchise saw $27 billion of net inflows, primarily in fixed income and multi-asset strategies, benefiting from funds allocated to several large insurance and pension outsourcing mandates. Positive flows into systematic equity, LifePath target date offerings, and private market strategies contributed to this success. Institutional index net inflows of $29 billion reflected large mandate wins and client-specific asset allocation and rebalancing decisions. Retail net inflows of $7 billion were led by strong Aperio inflows into U.S. active fixed income mutual funds. Positive fixed income flows were observed across our municipal bond, high yields, unconstrained, and total return franchises. Demand for our illiquid alternative strategies continued in the third quarter, demonstrating $1.5 billion of net inflows mainly driven by infrastructure and private credit. Net inflows also reflected successful realizations of over $3 billion, primarily from private equity and infrastructure strategies. Cash management saw net inflows of $61 billion in the quarter, driven by both U.S. government and international prime funds, including multiple large new client mandates. Clients recognize the benefits of our scaled and integrated cash offerings, contributing to sizable net inflows at BlackRock. We delivered one of the strongest quarterly results in our history and are well-positioned to grow with our clients as we head into the end of the year and beyond. BlackRock has historically delivered outsized organic growth during periods of investor re-risking, which often occur around election cycles and changes in central bank policy. The fourth quarter has also historically brought strong inflows, and we remain connected with our clients, seeing significant opportunities to deepen relationships and grow our market share. As clients increasingly turn to BlackRock, we anticipate sustained market-leading organic growth, differentiated operating leverage, and earnings and multiple expansion over time. With that, I'll turn it over to Larry.

Thank you, Martin, and good morning, everyone. I hope everyone has had a pleasant summer and a fun fall. Last week, we celebrated two milestones on the same day: the 25th anniversary of BlackRock becoming a public company and the closing of our acquisition of Global Infrastructure Partners. We're excited to officially welcome our GIP colleagues to the BlackRock family. We've established a great rapport with Adebayo, Raj, and the GIP founding partners. We look forward to Adebayo joining our Board of Directors this quarter. Reflecting on these milestones and those that came before, I believe our relationships with clients, corporations, and partners have never been stronger. Our long-term investments and ownership positions are unlocking unique partnerships, especially as we expand into private markets. We founded BlackRock on the belief in the long-term growth of capital markets and their significance within the global economy. In discussions with global clients and policymakers, I hear increasing recognition of the power of American capital markets and a desire among many countries to develop similar markets. Ongoing government deficits and tighter bank lending will drive individuals, companies, and nations to seek financing through markets for their retirements, businesses, and economies. The capacity for growth and prosperity in capital markets will dominate economic trends for decades to come, positioning BlackRock as an essential player in this growth. The present opportunities are more promising than ever. We're experiencing unique deals and partnerships with BlackRock at the forefront, alongside an uptick in client activity. So far in 2024, our net inflows have surpassed the full-year net inflows of both 2022 and 2023. The assets we manage for our clients reached a record high of $11.5 trillion by the end of the third quarter, which has grown by $2.4 trillion or 26% over the past 12 months. Clients have entrusted BlackRock with $456 billion in net assets over this period, which includes a record $221 billion in the third quarter. Third-quarter net inflows and corresponding organic base fee growth of 5% represent our highest level in the last three years. Technology services ACV growth of 15% is also a fresh high. Earlier this year, we discussed with shareholders how we foresee a strong pipeline leading to accelerated organic growth in the second half, and we're seeing these results manifest now. We're effectively using our technology, scale, and global footprint to drive profitable growth. Both quarterly revenues and operating income established new records, increasing by 15% and 26%, respectively, year-over-year. Our operating margin of 45.8% is up 350 basis points. Importantly, organic growth is broad-based and diversified across BlackRock. Third-quarter flows and the first nine months of 2024 were positive and active and indexed across all asset classes, client types, and regions. Active strategies contributed $28 billion in the third quarter, inclusive of positive results in active equities. ETFs remain a significant growth driver, with net inflows of $97 billion in the quarter and $248 billion year-to-date. The global adaptation of ETFs is broadening, and we expect this trend to continue. Notable whole portfolio institutional mandates were funded this quarter as we continue being selected for large global solutions. Last month, we were chosen as a fiduciary manager for a $30 billion Dutch pension fund with over 30,000 members. Our performance, technology, and in-depth understanding of local investment nuances increasingly position us as the preferred partner for institutional clients. Many investors are holding substantial cash reserves as money market industry asset levels hit new records this quarter, including BlackRock's cash position with $61 billion in net inflows. However, investors will need to re-risk to meet their long-term return objectives, and we see significant opportunities fueled by ongoing structural trends, such as rapid technological advancements and the unprecedented necessity for new infrastructure investments. BlackRock is exceptionally well-placed to connect clients to opportunities amid a $9 trillion pool of money market funds across the industry as they transition into public and private markets. We're proactively collaborating with our clients through an integrated whole portfolio framework to help them allocate their capital wisely. Our strategy is ambitious, but it's working. BlackRock is evolving into the premier long-term capital partner across public and private markets. The importance of private markets in financing the economy will only grow as public deficits widen. These dynamics are transforming how clients invest and allocate capital within their portfolios. BlackRock has a long-standing commitment to making bold investments to better serve our clients, whether by creating Aladdin, expanding our ETF offerings, or pioneering whole portfolio advisory in both active and index strategies. The integration of GIP and Preqin is exceeding our high expectations and our clients are enthusiastic about the synergy between GIP and BlackRock's capabilities. The growth of private markets is supported by the continuing rise in infrastructure investments, which presents a generational investment opportunity. In the next 15 years, the world will need to invest $75 trillion to modernize aging infrastructure and to finance new projects like data centers and decarbonization technologies. Given the current cash flow and inflation-protected return profiles of infrastructure, it is an attractive sector for our clients, many of whom are managing savings for retirement. With the close of GIP, we're now providing clients access to leading investment and operational expertise in private markets infrastructure. Clients will benefit from our substantial scale as the second-largest private market infrastructure manager globally, with $170 billion in client assets. Our performance is distinguished; GIP boasts a track record of strategic entries and exits, having returned over $45 billion of capital to investors. In today's environment of higher interest rates, distributions paid to capital are a vital success metric where we excel. The combination of BlackRock’s infrastructure platform with GIP is already revealing significant opportunities for our clients. We have recently partnered with Microsoft and MGX to initiate the Global AI Infrastructure Investment Partnership, making investments in new and expanded data centers to meet growing demand for computing power. We will also invest in energy infrastructure needed to power these facilities. Mobilizing private capital to develop AI infrastructure, such as data centers and energy systems, represents a long-term investment opportunity worth trillions. BlackRock's unique relationships with corporates, including hyperscalers and energy providers, as well as governments globally, position us at the center of this opportunity. We look forward to collaborating with stakeholders in this ecosystem to navigate the associated opportunities and challenges while ensuring favorable investment returns for our clients. This partnership exemplifies how our enhanced capabilities enable us to achieve more for our clients, investing in one of the largest growth imperatives of the coming decades. Besides infrastructure, private credit constitutes a vital piece of our clients' portfolios. Recently, we have organically and inorganically grown our private credit business, managing over $85 billion across diversified lending, investment-grade debt, private placements, infrastructure, and real estate credit. We have consistently ranked among the top 10 fundraisers over the past decade. BlackRock’s nearly $4 trillion in assets across public fixed income, cash, and private credit allows us to provide comprehensive integrated solutions for our clients, which leads to significant scale advantages. Our scale enhances our proprietary deal sourcing capabilities, access to deal flow execution, improved liquidity, and reduced trading costs, all of which benefit our clients. Historically, private markets have mainly been accessible to institutional investors, while private wealth has engaged at much lower levels. For many wealth investors, incorporating private markets into their portfolios can yield diversification benefits and improved returns. To bridge this gap, we recently formed a partnership with Partners Group to develop a first-of-its-kind private markets model portfolio solution that we believe will transform access for retail investors by enabling financial advisors and their clients to access a breadth of private market exposures, including BlackRock funds. We continue to create innovative investment strategies to improve private market access for our clients, bolstered by our investment expertise, proprietary sourcing of deals, and advanced technology. As market complexities and opportunities proliferate, clients increasingly require scaling enablers like Aladdin. Clients utilize Aladdin to consolidate legacy technologies into one cohesive solution, granting agility and resilience. Aladdin combines risk management, investment bookkeeping, performance analytics, risk oversight, and data on a single platform. Research reveals that Aladdin’s scalable capabilities empower clients to scale, operate efficiently, and improve risk management over the long term with their technological expenditures. The value of Aladdin resonates with both asset owners and managers. The ACV growth reflects several notable client mandates, including a large public asset manager and one of our largest Aladdin assignments ever. Aladdin is crucial to consistently delivering favorable performance for our portfolio managers. We leverage our investment insights and technology to provide the performance that our clients seek and deserve. Flows into BlackRock's active strategies accelerated in the third quarter with $28 billion of net inflows, bringing our year-to-date total to $39 billion. This includes engagement with our high-performing quant strategies, where more than 90% of AUM exceeds returns over one, three, and five-year periods. Across asset classes, our long-term investment performance remains strong. This is manifesting in our active flows and liquid performance fees, positioning us favorably for future growth. Index ETFs are increasingly utilized with active management, allowing the ETF structure to pair alpha generation with the liquidity, tax efficiency, and transparency that ETFs offer. These dynamics are cultivating global client demand for iShares ETFs. In the third quarter, we achieved ETF net inflows of $97 billion, with positive flows across all segments and key regions, including double-digit organic growth in Europe. Preparations for the fourth quarter, which traditionally forms our strongest seasonal period, are underway. iShares’ fixed income ETF platform recently reached $1 trillion in assets, and it would rank among the top five bond managers as a standalone entity. This growth has been achieved purely through organic means in a largely flat fixed income beta context. A more normalized, relatively high-rate environment could encourage even greater investor returns to fixed income. We're continuing to innovate within our exchange-traded products to facilitate improved market access. This quarter, we launched our Ethereum ETF, which has attracted over $1 billion in net inflows within its initial two months of trading. This follows the successful launch of our Bitcoin product, which has now accumulated $23 billion in its first nine months. Our aim is to continually develop new products that simplify and make investing more accessible. On October 1st, 1999, BlackRock listed on the New York Stock Exchange at $14 a share. Today, shares are trading around $960. When we went public, it was based on our conviction in growth and the depth of global capital markets. Our intent was to share our success with a broader community of individuals investing for their futures, including our employees. That belief persists today. Our unwavering focus on clients, growth mindset, and adaptability have resulted in a compounded annual total return exceeding 20% for our shareholders since our IPO 25 years ago. In 19 of those 25 years, BlackRock has outpaced the total return of the S&P 500, exemplifying our business model that serves all stakeholders. We're exceptionally well-positioned to serve clients and drive growth for shareholders in the years to come. I feel more optimistic about our positioning today than I have at any point in the past 25 years or across my 37 years in this industry. I want to express my gratitude to all BlackRock employees for their dedication to upholding our culture and delivering excellence for our clients. Additionally, we welcome our new colleagues and clients from GIP. Operator, let's open it up for questions.

Thank you. We'll go first to Craig Siegenthaler from Bank of America.

Hey, Craig.

Hey, good morning, Martin. Hope everyone's doing well. So my question is on the net flow trajectory. From your broad-based client conversations and your current institutional and funded wind pipeline, do you expect the acceleration of re-risking activity to continue into next year post the election? And if your long-term net flows remain strong given that they're already pretty strong in the third quarter, should we expect any outflows in your money market business, which I know might be somewhat protected given the institutional scale?

Thanks, Craig, for the question. So new inflows are strong, as you stated, and very healthy by any measure we track. There’s no doubt, Craig, that we're gaining share with our clients. The $221 billion of Q3 flows exhibited broad breadth across the business, with positive flows in U.S. active fixed income mutual funds, systematic equity, and LifePath target date. Larry highlighted that our long-term active business shows real resilience. Since 2019, we've seen positive active flows in 18 of 23 quarters. Our performance continues to be strong, with inflows 25% higher than the full-year 2023 expectations, and we still have the seasonally strong Q4 ahead. So, we feel confident about the direction of our asset growth. It reaffirms our focus on the right things with clients. Historically, BlackRock has been a strong out-performer during re-risking periods. Going back to previous election cycles or central bank actions, BlackRock consistently saw outsized upside capture, whether that was in 2017, 2018, or 2021, resulting in strong organic asset growth as well as organic base fee growth above our long-term targets. We think the market dynamics are aligning favorably for our clients. Regarding money markets, our business primarily focuses on institutional clients and has proven to be durable. The $61 billion of flows here has been encouraging. Our money market fund business currently stands at $850 billion, which is nearly 70% larger than it was five years ago. While cash holds a vital role in client portfolios, we're also observing a return to fixed income, benefiting the overall flow trajectory.

I would just add that as global capital markets play an increasingly significant role in economic activity, the opportunities to solidify our positioning are phenomenal. This backdrop will support better flows and exciting growth prospects.

We'll go next to Michael Cyprys with Morgan Stanley.

Hey, good morning.

Hi Michael.

Hey, congratulations on the strong quarter here. Great to see the meaningful operating leverage as well in the quarter. Just curious how you're pacing investments spent here into 2025. How is that evolving? And what are some of the levers to drive margin in the next 12 to 18 months? Maybe you can update us on where you are along the journey of variablizing your expenses.

Thanks, Mike. I appreciate it. It’s Martin. Just for context, our approach to shareholder value creation focuses on generating industry-leading differentiated organic growth, driving operating leverage, achieving industry-leading margins, and executing a consistent capital management strategy. BlackRock has a strong record of investing in our business for growth while also expanding profitability. It's not solely about growth; it’s about sustainable and profitable growth over the long term. Our growth is informed by a disciplined approach to making and managing investments in our business. We refer to this as our financial rubric. We size our operating investments based on growth potential with a prudent lens. We're aiming to increase flexibility in our cost base and variablize more expenses where feasible, making significant strides in that area. Most importantly, we're keen on generating fixed cost scale, particularly through technology investments. We’ve consistently delivered industry-leading margins, which are improving. Notably, we generated 350 basis points of margin expansion year-over-year, all while our operating income surged by 26%. Since late 2022, BlackRock's AUM has increased by $3 trillion, with headcount remaining relatively flat. This reflects our pursuit of scale and productivity resulting in margin expansion. We firmly believe that technology, automation, and a strong firm footprint will drive margin expansion moving forward. Market movements, particularly in beta, represent our highest margin item, both when markets show significant upward or downward trends. Conditions are currently in place for reasonable growth in the markets over the near to intermediate term, enabling us to invest in accelerating organic growth while maintaining margin expansion through our defined financial rubric.

We'll go next to Alex Blostein with Goldman Sachs.

Hey, Larry. Hey, Martin. Good morning.

Hi, Alex. How are you?

I'm good, thanks. Question for you guys on private markets. Starting with GIP, can you provide a market update on some of the financial elements? I believe, Martin, you mentioned $250 million in management fees for the fourth quarter. Can you discuss how this might evolve into 2025? What are the flow dynamics on the legacy GIP side, and what efforts are you working on together? Additionally, could you remind us what the operating margin on that business is as well?

Thanks, Alex. The closing of GIP is a significant milestone in BlackRock's history. We’re thrilled to welcome over 400 new colleagues and the leadership team, including Adebayo, Raj, Michael, and John. Our clients and consultants are also excited. We’re eager to collaborate on this new platform. As Larry highlighted, the reception has been overwhelmingly positive. This is primarily a revenue growth narrative for us, centered on expanding our capabilities. We're aiming to unlock considerable growth synergies through origination, capital formation, and scaling our platform. We're seeing strong momentum in fundraising across the GIP and BlackRock platforms, particularly around the AI Innovation Fund. As previously noted in the call, GIP added $116 billion in client AUM and $70 billion in fee-paying AUM. This acquisition is set to double BlackRock’s private markets run rate management fees. We anticipate GIP contributing over $400 million in earnings at approximately 50% margins annually, with management fees expected at around $250 million in the fourth quarter. For 2025, we are modeling sort of a $1 billion in fees, with an FRE margin projected to exceed 50%.

We'll go next to Dan Fannon with Jefferies.

Hi Dan.

Okay, great. I was hoping you could discuss your appetite for additional M&A and the financial constraints you face, but more significantly, the challenges as a management team to properly integrate recent transactions and maximize the opportunities presented by these acquisitions.

Thanks for the question. We're very excited about our clients and the prospects with GIP and Preqin. These acquisitions are significant accelerators for our private market capabilities. However, it will take considerable effort to successfully integrate and realize the planned synergies effectively. Presently, we’re focused on integrating GIP and closing Preqin while delivering an exemplary integration experience for our clients and employees. We've a consistent approach toward making both organic and inorganic investments within our business. Inorganic means are a tool for boosting organic growth, but we don’t require M&A to reach our growth objectives. This quarter, we achieved our 5% organic base fee growth target. So, we’ll remain prudent in managing our capital and financial leverage, consistent with our long-term views. We’ll contemplate inorganic opportunities that can provide benefits for our clients and shareholders. We're rigorous and selective in our criteria, pursuing engagements aligned with our culture, strategy, and organic growth aspirations. There's considerable potential here. Across infrastructure, we've established a $170 billion platform. Our $85 billion private credit platform offers vast room for strategic enhancement with insurance clients. Given that we manage $700 billion in insurance company general account assets, if we could just shift 10% of that to private credit strategies, that's a $70 billion opportunity with our existing clients and capabilities.

We'll go next to Glenn Schorr with Evercore.

Hi, Glenn.

Hi, thanks very much. I think we're all impressed with the broad growth you've been experiencing and your huge margins too. I have a high-level question. You mentioned multiple expansion a couple of times during the conversation and I'm curious about how earnings growth fits into that equation. With robust growth and margins, why should we plan for just 5% EPS growth this quarter? Should we expect these initiatives and the consistent achievement of your base fee targets to contribute to greater earnings growth as well?

Thanks for your question, Glenn. We're dedicated to driving differentiated organic growth, achieving our 5% organic growth targets throughout the market cycle, and leveraging operational efficiencies. As you noted, our results are reflecting this effectively. If we maintain this trajectory with 5% organic growth and continue executing our financial strategy, we anticipate being able to achieve industry-leading margins and margin expansion leading to double-digit EPS growth. In this quarter, I highlighted that our effective tax rate stood at 26%. This primarily accounts for some of the lighter EPS we experienced this quarter due to the $22 million in discrete expense compared to last year's $215 million in benefits from discrete items.

We'll go next to Brian Bedell with Deutsche Bank.

Hi, Brian.

Hi, good morning. Congratulations on a fantastic quarter. Back to the 5% organic base fee growth from a different angle—regarding the fee rate. Given the uptick from the GIP acquisition of 0.5 to 1 basis point, do you feel more confident now than in a long time regarding the potential for a stable fee rate, or even an increase in the coming years compared to the fee pressure you’ve historically faced?

Absolutely. We're thrilled about achieving 5% annualized organic base fee growth in the quarter. We see strong momentum in our organic growth. While we’re growing revenues and operating income at double-digit rates, we’ve noted that average AUM growth was 18% higher than our base fee growth, primarily driven by the outperformance of lower-fee U.S. equities. Spot AUM of $11.5 trillion ended the quarter around 4% higher than average AUM, and our annualized effective fee rate was about four-tenths of a basis point lower sequentially. On a broader scale, our fee rate reflects the mix of assets managed, new flows, and the performance of U.S. equities. Consequently, the recent U.S. public equity market growth outpaced international equities, motivating these fee rate trends. The fee rate for us represents an output; our priority is to meet our clients’ needs throughout the entire portfolio, supported by technology and efficient organic growth. Growing our private markets business from $170 billion of client AUM with GIP to approximately $285 billion is expected to positively influence our base fee revenue and lead to favorable leverage on our average fee rates. Excluding GIP, we aim for a flat entry rate going into Q4, but consolidating GIP’s portfolios into our business should lift our fee rate by about half a basis point to one full basis point. Therefore, as liquid and private markets emerge as prominent growth contributors, we foresee beneficial leverage on the fee rate.

We’ll go next to Bill Katz with TD Cowen.

Thank you very much. Good morning, everyone. Happy anniversary! I think I was there at the beginning. It's nostalgic. So, regarding your statement about revolutionizing the wealth management opportunity, could you elaborate? I believe you mentioned that the whole portfolio opportunity could surpass what’s been accomplished with Evergreen Funds, and I’m curious about the magnitude and opportunities, including any go-to-market strategy for the upcoming year.

Thanks, Bill. We appreciate your question. Our relationships within wealth and retail markets are robust globally. Our intent is to assist wealth managers in curating long-term portfolios that blend public and private market exposures. As we've discussed in previous investor days, we're building the portfolio of the future for wealth managers that's digitally enabled and harnesses the potential of both public and private markets. This market segment remains in its infancy; retail allocations to private markets currently stand in low single digits. We hold an established leading position in retail liquid alternatives, with over $40 billion in assets across various strategies. We’ve achieved significant success introducing retail alternatives into retirement accounts in the UK and Europe and are expanding our Evergreen and credit integral funds in the US. In the U.S., we have a credit strategies integral fund and a non-traded credit BDC with combined assets exceeding $1 billion. BDET is well-suited for RIAs, independent broker-dealers, and offshore wealth markets, and we believe it has strong growth potential. For the long term, we aspire to integrate semi-liquid products into our $300 billion of managed models and separately managed accounts. This integration would yield a significant unlock and competitive advantage for BlackRock. Our partnership with Partners Group is central to developing this model portfolio venture. Collaborations with InvestNet, GOL, iCapital, Case, and Vesmark aim to create seamless model portfolios that merge public and private investments, as we've accomplished with ETFs and mutual funds in the active model portfolio space. We're excited about this journey ahead.

Bill, let me add to your inquiry. Our conviction in acquiring BGI stemmed from the anticipation that ETFs would surge as a significant catalyst in the capital markets. That prediction has proven accurate, especially in fixed income. We're now observing the blending of public and private markets, which will continue to evolve. Institutional clients are increasingly assessing liquidity measurements and deploying between public and private opportunities, redefining the investment landscape. Henceforth, our viewpoint on private markets will transition—no longer an alternative, but now integrated into the marketplace. Our strategic decision to acquire Preqin is a reflection of our understanding that data and analytics will promote a transition where public and private markets converge seamlessly. We'll focus on liquidity as the risk-driver, merging public market liquidity with that of private markets while streamlining risk assessment through data analytics. We're striving to achieve similar transparency and opportunity in privates as we successfully did for ETFs. We’re certain that such developments will become the norm, propelled by enhanced data and analytics. This aim is an integral part of our strategy moving forward.

We’ll go next to Ben Budish with Barclays.

Hey Ben, good morning.

Good morning, and thank you for taking my question. I wanted to discuss your ambitions in digital assets; changing the topic a bit. It appears that we may see a new president next year who could be more favorable to this sector. While it may take time to reveal new regulations, I wanted to know what key opportunities you believe this shift could unlock for BlackRock beyond the ETF market and the custody services that you're already providing.

First, I'm uncertain if either candidate would bring about a significant difference. However, the acceptance of digital assets is poised to grow globally. We're engaging in numerous discussions with institutions about how to approach digital assets and how to allocate them within investment portfolios. We view Bitcoin as a distinct asset class, a potential alternative to other commodities like gold. Moreover, Ethereum's role as a blockchain technology stands to expand significantly. If we can enhance transparency, acceptance, and analytics regarding these assets, their adoption will broaden. I firmly believe this is independent of regulations' influence—whether more or less restrictive. Instead, it depends upon liquidity, transparency, and market developments comparable to how we evolved the mortgage market or high-yield markets in the past. These sector developments began slow but gained traction as we improved analytics and data accessibility, prompting broader acceptance and market expansion. I expect to see considerable growth in these digital asset markets, and how each nation evaluates its own digital currency will vary distinctly from Bitcoin.

We’ll go next to Brennan Hawken with UBS.

Hi, Brennan.

Good morning. I appreciate your time. I was curious whether you’ve noticed any changes in RFP activity within the fixed income sector, especially considering recent regulatory challenges faced by a large institutional bond manager. What insights can you share regarding current market conditions?

As noted in our announcement this quarter, we secured a $30 billion mandate from a pension fund. It's common experience to see large-scale shifts within the marketplace. I'm refraining from discussing specific clients or issues surrounding a particular manager, but I can assure you that we're witnessing money in motion. Significant institutional mandates are currently up for RFP, and this isn't an unusual phenomenon. Big opportunities tend to surface every quarter. I've also noted that OCIO mandates continuously reoccur with increasing frequency and opportunities. This isn't unique to the topic you mentioned, but it's crucial to recognize that substantial movements of capital happen regularly, and we remain adaptable to seize these opportunities.

At this time, this concludes today's Q&A session, and I'd like to turn the call back to Larry Fink for any additional remarks.

Thank you, operator. I want to express my gratitude to everyone for joining us this morning and for your ongoing interest in BlackRock over these past 25 years. The results from our third quarter highlight the value of the global network of relationships we have built, our superior data analytics, and importantly, our integrated technology that has been developed over many years. We have a solid history of successful integrations, whether with BGI, Malim, Aperio, eFront, or currently integrating GIP. We expect a seamless closing and integration of Preqin at year-end. Our position at present has never been stronger, and I'm confident that as we endeavor to deliver robust performance for our clients, we will concurrently generate differentiated growth for our shareholders in the upcoming years. Thank you all, and have a successful and positive quarter. Goodbye.

This concludes today's teleconference. You may now disconnect.