01—Abstract
Summary
Summary of the 10-Q filed May 3, 2024. Cited figures are marked; the original filing is the authoritative source.
Blackstone's first-quarter 2024 Form 10-Q shows a sharp swing back to profitability on the GAAP line.
Total revenues were $3.69 billiona versus $1.38 billion a year earlier, driven almost entirely by a $1.64 billion Total Investment Income swing (from a $496 million loss to a $1.64 billion gain) on unrealized appreciation in Corebridge stock, Corporate Private Equity, and Core+ real estate. Net income attributable to Blackstone Inc. rose to $847.4 million ($1.11 diluted EPS) from $85.8 million ($0.11). Because much of this is unrealized and carries through to compensation expense, the GAAP figures overstate the underlying operating trend.
Total expenses rose 51% to $1.79 billionb, including a $496 million jump in Performance Allocations Compensation tied to the investment gains. The segment-level picture, which strips out unrealized items, is steadier. Distributable Earnings were $1.27 billion, Total Segment Distributable Earnings were $1.45 billion (up about 2%), and Fee Related Earnings rose 12% to $1.16 billion, helped by $295.5 million of Fee Related Performance Revenues, nearly double the prior-year figure.
Net Realizations, the more volatile measure of realized carry and principal income, fell to $293 millionc from $389 million, reflecting muted exit activity, which management says it expects to lag any improvement in markets. Fee-Earning Assets Under Management reached $781.4 billion and Total Assets Under Management reached $1.06 trillion, both at record levels for the period. Perpetual Capital AUM grew to $408.1 billion.
Balance sheet items were mixed. Cash and equivalents fell to $2.5 billiond, and borrowings were $10.7 billion, with no revolver draw against the $4.325 billion facility. Shareholders received $1.18 billion in dividends and distributions, and the company repurchased 0.7 million shares for $88.4 million.
Declared dividends were $0.94 per share, against $0.83 per share actually paid in the quarter. Contingent items to watch include a $231 million clawback accrual, a $6.5 billion theoretical clawback exposure in a severe scenario, and ongoing Kentucky Retirement System litigation, where the court denied the Blackstone defendants' motion to dismiss on May 1, 2024, after the filing date.
02—Key points
Key Highlights
- Total revenues rose to $3.69 billion from $1.38 billion, mainly on $1.64 billion of total investment income, largely unrealized gains (Corebridge stock, Corporate Private Equity, Core+ real estate).
- Net income attributable to Blackstone Inc. was $847.4 million ($1.11 diluted EPS), versus $85.8 million ($0.11) a year earlier; GAAP results are heavily influenced by unrealized investment marks.
- Fee Related Earnings grew 12% to $1.16 billion, supported by Fee Related Performance Revenues of $295.5 million, up from $148.2 million.
- Net Realizations fell to $293.3 million from $389.2 million as realization activity remained subdued; management expects a lag before realizations reaccelerate.
- Assets under management reached a record $1.06 trillion and Fee-Earning AUM reached $781.4 billion; Perpetual Capital AUM rose to $408.1 billion, led by BIP and BCRED inflows.
- Cash and equivalents declined to $2.5 billion against $10.7 billion of borrowings; the $4.325 billion revolver is undrawn, and Blackstone returned $1.18 billion to stockholders and unitholders through dividends and distributions.
- Contingent exposures include a $231 million accrued clawback liability, a theoretical $6.5 billion clawback if carry fund investments were worthless (viewed as remote), and continued Kentucky Retirement System litigation.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 3, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $3.69B$1.38B | +166.9% |
| Operating Expenses | $1.79B$1.19B | +50.5% |
| Interest Expense | $108.20M$104.44M | +3.6% |
| Net Income | $847.39M$85.81M | +887.5% |
| EPS (Basic) | $1.12$0.12 | +833.3% |
| EPS (Diluted) | $1.11$0.11 | +909.1% |
| Shares Outstanding (Basic) | 759.80M746.06M | +1.8% |
| Shares Outstanding (Diluted) | 760.26M746.64M | +1.8% |
05—Questions
Frequently Asked Questions
Why did GAAP net income jump so much year over year?
Most of the increase reflects unrealized investment gains rather than cash earnings. Unrealized Performance Allocations rose to $445.9 million from a $759.2 million loss, and unrealized Principal Investment income moved from a $491.4 million loss to a $461.6 million gain. Those marks also drive Performance Allocations Compensation, which increased $494 million on an unrealized basis. Investors focused on recurring earnings should look at Distributable Earnings ($1.27 billion) and Fee Related Earnings ($1.16 billion), which exclude these unrealized items.
How healthy are the fee-based earnings?
Fee-based earnings are strong. Management and advisory fees, net, rose 4% to $1.73 billion, and Fee Related Earnings grew 12% to $1.16 billion. Fee Related Performance Revenues nearly doubled to $295.5 million, mainly from Core+ real estate and BCRED's net investment income. Fee Related Compensation also rose, to $554 million on a segment basis, because it is tied to those revenues. Management fee rates on Real Estate and Multi-Asset Investing AUM compressed year over year, which is a point to monitor.
What is the risk from realizations being slow?
Realizations drive the Net Realizations component of Segment Distributable Earnings and the realized performance income that flows to the company. Net Realizations fell to $293 million from $389 million, with Private Equity down $50 million and Credit & Insurance down $61 million. Management says it expects a lag between improving markets and a reacceleration of exits, and that high interest rates have weighed on real estate realizations. Continued slow exits could keep Net Realizations and Accrued Performance Revenues subdued, though Net Accrued Performance Revenues remain large at $6.08 billion.
What is the capital return and balance sheet position?
Blackstone paid $0.83 per share in dividends in the quarter and declared $0.94 per share, and it repurchased 0.7 million shares for $88.4 million, leaving $668.4 million available under its $2.0 billion program. Dividends and distributions to stockholders and unitholders totaled $1.18 billion. Cash and equivalents fell to $2.5 billion, and borrowings are $10.7 billion, mostly senior notes with maturities extending to 2052. The company has no revolver borrowings and an unused $4.325 billion facility, so near-term liquidity is ample.
What litigation or contingencies could affect the company?
The most prominent matter is the Kentucky Retirement System litigation involving Blackstone Alternative Asset Management and the Kentucky Attorney General. The AG asserted a breach of contract claim for the first time on March 31, 2024. On May 1, 2024, after the period end, the court denied the Blackstone defendants' motion to dismiss the Taylor II case and the AG's consolidated action. Blackstone considers the claims meritless and no unaccrued liability is recorded for them. Separately, the company accrued a liability related to an SEC inquiry about retention of electronic business communications, and clawback exposure totals $231 million accrued and up to $6.5 billion in a remote severe scenario.
06—Continue