10-QPeriod: Q2 FY2022

Blackstone Inc. Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 5, 2022For Securities:BX

Summary

Blackstone Inc. reported a significant decrease in total revenues for the second quarter of 2022 compared to the same period in 2021, largely driven by a substantial decline in investment income, particularly unrealized gains, which was a strong contributor in the prior year. Despite the revenue decline, Management and Advisory Fees saw a notable increase, indicating continued growth in the core asset management business. Expenses also decreased, primarily due to lower performance-based compensation reflecting the reduced investment income. The company's segments showed varied performance, with Real Estate and Credit & Insurance demonstrating growth in segment distributable earnings, while Private Equity and Hedge Fund Solutions experienced declines. Liquidity remains robust, with substantial cash and cash equivalents and access to a significant revolving credit facility. The company also continued its share repurchase program. Despite market volatility and economic headwinds, Blackstone's diversified business model and strong fee-generating revenue streams provide a degree of resilience. Investors should monitor the impact of market conditions on unrealized gains and the company's ability to generate performance fees going forward.

Financial Highlights

40 data points
Beta

Revenue

$629.22M

Net Income

-$29.39M

-4.7% Net Margin

EPS (Diluted)

$-0.04

Total Assets

$41.63B

Cash & Equivalents

$4.18B

Free Cash Flow

$1.84B

Financial Statements
Beta
Revenue$629.22M
Operating Expenses$744.11M
Interest Expense$69.64M
Net Income-$29.39M
EPS (Basic)$-0.04
EPS (Diluted)$-0.04
Shares Outstanding (Basic)707.38M
Shares Outstanding (Diluted)707.38M

Key Highlights

  • 1Total revenues decreased significantly in Q2 2022 ($629.2M) compared to Q2 2021 ($5.3B), primarily due to a $5.2 billion drop in Investment Income (Loss), driven by a $7.0 billion decrease in unrealized gains.
  • 2Management and Advisory Fees, Net increased by 29% year-over-year for Q2 2022, reaching $1.56B, indicating strong growth in recurring fee-based revenue.
  • 3Total expenses decreased by $1.5B year-over-year in Q2 2022, largely due to a $1.6B reduction in Performance Allocations Compensation, directly linked to lower investment income.
  • 4Fee Related Earnings increased by 61% year-over-year for Q2 2022, reaching $561.3M, driven by higher management and fee-related performance revenues.
  • 5Net Realizations showed a significant increase in the Real Estate segment, contributing to a 433% rise in total segment net realisations for Q2 2022 compared to Q2 2021.
  • 6Total Assets Under Management (AUM) grew to $940.8B as of June 30, 2022, an increase of $25.3B from the previous quarter, demonstrating continued capital inflows.
  • 7Blackstone Inc. repurchased approximately $195.3 million of its common stock during the second quarter of 2022, indicating a commitment to returning capital to shareholders.

Frequently Asked Questions

The primary driver of the revenue decline was a substantial decrease in Investment Income (Loss), specifically from unrealized gains on investments. This was largely due to market volatility and economic headwinds experienced in Q2 2022, contrasting with a strong performance in unrealized gains during the prior year's comparable period.

Performance varied across segments. The Real Estate segment saw a significant increase in Segment Distributable Earnings, driven by higher Fee Related Earnings and Net Realizations. The Credit & Insurance segment also showed strong growth in Segment Distributable Earnings due to increased fee-related earnings and net realisations. However, the Private Equity segment experienced a decrease in Segment Distributable Earnings, influenced by lower net realisations and higher operating expenses. The Hedge Fund Solutions segment also saw a decline in Segment Distributable Earnings due to lower fee-related earnings and net realisations.

Blackstone maintains a strong liquidity position with $4.2 billion in Cash and Cash Equivalents and access to a $4.1 billion revolving credit facility. The company also continued its share repurchase program, buying back approximately $195.3 million in common stock during the quarter. Capital is managed through operating cash flows, realizations from investments, and strategic debt issuances.

Blackstone generates revenue primarily through management and advisory fees, which are recognized as services are provided. Performance revenues, or carried interest and incentive fees, are recognized when earned based on fund performance, subject to specific contractual terms and realization events. Investments are generally valued at fair value, with changes in fair value recognized in investment income. The company's accounting policies require significant judgment, particularly in valuing Level III assets and determining consolidation for Variable Interest Entities.