01—Abstract
Summary
Summary of the 10-Q filed August 2, 2024. Cited figures are marked; the original filing is the authoritative source.
Blackstone's Q2 2024 10-Q shows a quarter with lower GAAP earnings but solid underlying fee and realization trends.
Total revenues were $2.80 billiona for the three months ended June 30, 2024, roughly flat versus $2.81 billion a year earlier, as a $139.3 million decline in investment income (driven by lower unrealized gains in Real Estate) was offset by higher management fees. Net income attributable to Blackstone Inc. fell 26% to $444.4 million ($0.58 per diluted share) from $601.3 million, with the effective tax rate rising to 21.5% from 15.6%. For the six months, GAAP results were much stronger, with net income attributable to Blackstone of $1.29 billion ($1.69 per share) versus $687 million, largely because of a swing to unrealized performance allocation gains and principal investment gains in the first half.
The segment view, which management emphasizes, shows Segment Distributable Earnings of $1.42 billionb for the quarter, up 5% from $1.35 billion, and $2.87 billion for the six months, up 3%. Fee Related Earnings were $1.11 billion, down 3% year over year, as a $130.7 million drop in Real Estate fee related performance revenues offset gains elsewhere. Credit & Insurance was the standout, with segment distributable earnings up 51% in the quarter, driven by management fee growth tied to BCRED and direct lending.
Total AUM reached $1.08 trillionc (up 1% sequentially and 7% year over year) and Fee-Earning AUM reached $808.7 billion. Perpetual Capital rose to $418.6 billion. Balance sheet liquidity stayed strong, with $2.4 billion of cash and $10.6 billion of senior notes outstanding.
Investors should weigh the quarter's GAAP softness against the stronger segment earnings, while noting that Real Estate remains under pressure from office exposure and the valuation lag that the filing describes. Capital return continued, with 2.0 million shares repurchased in Q2 for $244.3 milliond and a new $2.0 billion repurchase authorization approved on July 16, 2024. The quarterly dividend declared for Q2 was $0.82 per share.
02—Key points
Key Highlights
- Q2 2024 total revenues of $2.80B were roughly flat year over year ($2.81B), with a $139.3M decline in investment income offset by a $77.9M increase in management and advisory fees.
- Q2 GAAP net income attributable to Blackstone Inc. fell 26% to $444.4M ($0.58 per diluted share) from $601.3M ($0.79), reflecting lower unrealized gains and a higher effective tax rate of 21.5%.
- Segment Distributable Earnings rose 5% to $1.42B in Q2 (and 3% to $2.87B for six months), led by Credit & Insurance, whose SDE grew 51% to $354.1M.
- Fee Related Earnings were $1.11B in Q2, down 3% year over year, as a $130.7M drop in Real Estate fee related performance revenues outweighed growth in Credit & Insurance and Private Equity.
- Total AUM reached $1.08T (up 7% year over year) and Fee-Earning AUM reached $808.7B; Perpetual Capital grew to $418.6B, driven by BCRED and BIP.
- Blackstone repurchased 2.0M shares for $244.3M in Q2 and the board authorized a new $2.0B buyback on July 16, 2024; the Q2 dividend was $0.82 per share.
- Real Estate faces ongoing headwinds from U.S. office exposure and a lag in realizations, though the filing cites improving deployment ($14.6B in H1 2024) and a decline in BREIT repurchase requests.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed August 2, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $2.80B$2.81B | −0.7% |
| Operating Expenses | $1.63B$1.48B | +10.7% |
| Interest Expense | $108.62M$108.10M | +0.5% |
| Net Income | $444.41M$601.27M | −26.1% |
| EPS (Basic) | $0.58$0.79 | −26.6% |
| EPS (Diluted) | $0.58$0.79 | −26.6% |
| Shares Outstanding (Basic) | 769.19M758.48M | +1.4% |
| Shares Outstanding (Diluted) | 769.23M758.55M | +1.4% |
05—Questions
Frequently Asked Questions
Why did Blackstone's GAAP net income decline in Q2 2024 even though segment earnings grew?
GAAP results are more volatile than the segment measures because they include unrealized performance allocations and principal investment marks. Q2 2024 unrealized investment income fell by about $188M versus Q2 2023, mainly from lower unrealized appreciation in Real Estate (Core+ depreciation), and the effective tax rate rose to 21.5% from 15.6%. Segment Distributable Earnings, which exclude unrealized activity, rose 5%, so the GAAP decline mostly reflects mark-to-market timing rather than weaker realized earnings.
What drove the strong growth in Credit & Insurance and how sustainable is it?
Credit & Insurance SDE rose 51% in Q2 to $354.1M, driven by a $77.9M... more precisely, a $50.2M increase in management fees (mainly direct lending base fees and BCRED growth) and a $32.3M increase in fee related performance revenues. Blackstone cites $20.6B invested or committed in the quarter and $3.4B of BCRED subscriptions, its highest in two years. The filing notes that a steep decline in interest rates or tighter credit spreads could make it harder for credit funds to replicate recent performance.
Why did Real Estate fee related earnings decline so sharply?
Real Estate Fee Related Earnings fell 18% to $481.3M in Q2 because Fee Related Performance Revenues dropped from $131.3M to $0.6M, mainly from lower BPP co-investment performance fees. Base management fees also declined $24.2M on lower BREIT and BPP co-investment fee-earning AUM, partly offset by higher transaction fees from BREP acquisitions. Other operating expenses rose $20.4M on professional and sub-servicing fees.
How much liquidity and leverage does Blackstone have, and what are the key debt obligations?
As of June 30, 2024, Blackstone held $2.4B of cash and equivalents, $176.3M of corporate treasury investments and $5.4B of other investments, against $10.6B of senior notes outstanding. The $4.325B unsecured revolving credit facility, maturing December 2028, was undrawn. Blackstone's model is described as not capital intensive, and the notes contain customary covenants and make-whole redemption provisions.
What is the outlook for capital returns and the dividend policy?
Blackstone's stated intention is a quarterly dividend of about 85% of its share of Distributable Earnings, at the board's discretion. The Q2 2024 dividend declared was $0.82 per share, and $1.65 per share was declared for the first half. The company repurchased $332.7M of stock in H1 2024 and, after a July 16, 2024 authorization of $2.0B, had a substantial repurchase capacity. The filing also notes $1.7B of expected future tax receivable agreement payments over 15 years.
06—Continue