10-QPeriod: Q3 FY2020

Blackstone Inc. Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 6, 2020For Securities:BX

Summary

Blackstone Inc. reported a mixed financial performance for the nine months ended September 30, 2020, reflecting the challenging economic environment influenced by COVID-19. While total revenues saw a significant decrease of 53% year-over-year to $2.5 billion, largely driven by a substantial drop in Investment Income (Loss) due to market impacts, Management and Advisory Fees, Net increased by 17% to $2.96 billion. This increase in fee-based revenue highlights the recurring nature of Blackstone's asset management business and its ability to generate consistent income even amidst market volatility. Expenses decreased by 34% year-over-year, primarily due to a reduction in compensation related to performance allocations, which directly correlates with the decline in investment income. The company maintained a strong liquidity position, ending the period with $2.6 billion in cash and cash equivalents and $2.4 billion in corporate treasury investments, alongside its revolving credit facility. The company also successfully issued $900 million in senior notes during the period, further strengthening its financial flexibility. Despite the headwinds from the pandemic, Blackstone's diversified business segments and focus on fee-generating activities demonstrate resilience.

Financial Highlights

37 data points
Beta

Revenue

$3.03B

Net Income

$794.72M

26.2% Net Margin

EPS (Diluted)

$1.13

Total Assets

$25.04B

Cash & Equivalents

$2.63B

Free Cash Flow

$89.69M

Financial Statements
Beta
Revenue$3.03B
Operating Expenses$1.33B
Interest Expense$39.54M
Net Income$794.72M
EPS (Basic)$1.14
EPS (Diluted)$1.13
Shares Outstanding (Basic)700.18M
Shares Outstanding (Diluted)700.53M

Key Highlights

  • 1Total Revenues decreased by 53% year-over-year to $2.5 billion for the nine months ended September 30, 2020, impacted by market volatility.
  • 2Management and Advisory Fees, Net increased by 17% year-over-year to $2.96 billion for the nine months ended September 30, 2020, indicating resilient fee-based income.
  • 3Total Expenses decreased by 34% year-over-year, primarily due to lower performance-related compensation following reduced investment income.
  • 4Blackstone maintained a strong liquidity position with $2.6 billion in cash and cash equivalents and $2.4 billion in corporate treasury investments as of September 30, 2020.
  • 5The company issued $900 million in senior notes during the nine months ended September 30, 2020, enhancing its financial flexibility.
  • 6Segment Distributable Earnings showed variations across segments, with Real Estate decreasing by 25%, Private Equity increasing by 9%, Hedge Fund Solutions decreasing by 4%, and Credit & Insurance decreasing by 15% for the nine months ended September 30, 2020, compared to the prior year period.
  • 7Assets Under Management (AUM) increased to $584.4 billion as of September 30, 2020, reflecting overall growth in assets managed.

Frequently Asked Questions

The COVID-19 pandemic significantly impacted Blackstone's financial performance, particularly in Investment Income (Loss), which saw a substantial year-over-year decrease due to market volatility and unrealized depreciation in investment holdings across various segments. However, Management and Advisory Fees, Net remained resilient, showing an increase, which highlights the stability of Blackstone's recurring fee-based revenue streams.

The increase in Management and Advisory Fees, Net, despite the challenging market conditions, is a key positive indicator. It demonstrates the recurring and resilient nature of Blackstone's asset management business, driven by its substantial Assets Under Management (AUM). This growth suggests continued client trust and an ability to generate stable revenue from its core services.

Blackstone maintained a strong liquidity position, with substantial cash reserves and access to a revolving credit facility. The company also successfully raised $900 million in senior notes during the period, providing further financial flexibility to navigate the economic uncertainty, fund operational needs, and support its investment strategies.

The performance variations across segments reflect differing impacts of market conditions and the specific strategies employed by each. For example, the increase in Private Equity's Segment Distributable Earnings was driven by higher Realized Performance Revenues, while declines in other segments were often linked to lower Realized Performance Revenues and the impact of COVID-19 on specific asset classes like real estate (hospitality, retail) and credit markets.