10-QPeriod: Q2 FY2015

Blackstone Inc. Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 6, 2015For Securities:BX

Summary

Blackstone Inc. (BX) reported its second-quarter 2015 financial results, revealing a significant decrease in revenues compared to the same period in the prior year. Total revenues for the quarter ended June 30, 2015, were $1.225 billion, a substantial drop from $2.258 billion in the second quarter of 2014. This decline was primarily driven by lower Performance Fees and Investment Income. Specifically, Performance Fees decreased by 59%, largely due to softer returns in the Private Equity and Real Estate segments. Investment Income also saw a significant 75% reduction, impacted by lower realized and unrealized gains across several segments, particularly Private Equity and Real Estate. Despite the revenue decline, Blackstone's Fee Related Earnings (FRE) and Distributable Earnings showed resilience, indicating strong underlying operational performance. The company's Fee Earning Assets Under Management (AUM) and Total Assets Under Management (AUM) both experienced growth, reaching $239.3 billion and $332.7 billion respectively by the end of the quarter. This growth was fueled by strong inflows across all segments, particularly in Real Estate and Credit, and positive market appreciation. The company maintained a strong liquidity position with $2.2 billion in cash and cash equivalents and significant credit facilities available.

Financial Highlights

33 data points
Beta

Revenue

$1.23B

Net Income

$134.17M

11.0% Net Margin

EPS (Diluted)

$0.21

Total Assets

$24.68B

Cash & Equivalents

$2.16B

Free Cash Flow

$1.11B

Financial Statements
Beta
Revenue$1.23B
Operating Expenses$914.43M
Interest Expense$37.41M
Net Income$134.17M
EPS (Basic)$0.21
EPS (Diluted)$0.21
Shares Outstanding (Basic)631.88M
Shares Outstanding (Diluted)634.19M

Key Highlights

  • 1Total Revenues decreased by 46% year-over-year to $1.225 billion for Q2 2015, primarily due to a 59% drop in Performance Fees.
  • 2Investment Income (Loss) saw a significant 75% decrease year-over-year, impacting overall revenue performance.
  • 3Fee-Earning Assets Under Management increased by 7% sequentially to $239.3 billion, driven by strong inflows and market appreciation.
  • 4Total Assets Under Management (AUM) grew by 7% sequentially to $332.7 billion, reflecting continued fundraising success across segments.
  • 5Blackstone's Private Equity segment experienced a 66% decline in Performance Fees but realized record performance fees for the segment.
  • 6The company maintained a robust liquidity position with $2.2 billion in cash and cash equivalents and $2.8 billion in outstanding senior notes.
  • 7Distributable Earnings remained strong at $1.0 billion for the quarter, demonstrating the underlying operational strength of the business.

Frequently Asked Questions

Blackstone's revenue decreased significantly due to lower Performance Fees and Investment Income. Performance Fees were down 59% year-over-year, primarily driven by softer returns in the Private Equity and Real Estate segments, impacting carried interest and incentive fees. Investment Income also saw a substantial 75% decline due to lower realized and unrealized gains across key segments.

Blackstone experienced growth in both Fee-Earning Assets Under Management and Total Assets Under Management. Fee-Earning AUM increased by 7% sequentially to $239.3 billion, and Total AUM grew by 7% sequentially to $332.7 billion. This growth was driven by strong inflows from new capital raised across its Private Equity, Real Estate, Credit, and Hedge Fund Solutions segments, along with positive market appreciation.

Despite the decline in revenue driven by market performance, Blackstone's Fee Related Earnings (FRE) and Distributable Earnings remained robust. FRE was $178.4 million for the quarter, and Distributable Earnings were $1.0 billion. These figures indicate that the company's core operational business, driven by management and advisory fees, continues to generate strong profits and cash flow, even when market-driven performance fees fluctuate.

Blackstone maintained a strong liquidity position, ending the quarter with $2.2 billion in cash and cash equivalents. The company also has access to a $1.1 billion revolving credit facility and has issued senior notes totaling $2.8 billion. These resources, combined with ongoing cash flows from operations and potential future realizations from its investment funds, provide ample liquidity to meet its operational needs, capital commitments, and shareholder distributions.