BlackRock, Inc.

Our host for today's call will be Chairman and Chief Executive Officer Lawrence D. Fink, Chief Financial Officer Gary S. Shedlin, President Robert S. Capito, and General Counsel Christopher J. Meade. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star 2. Thank you, Mr. Mead. You may begin your conference.

Thank you. Good morning, everyone. I'm Chris Mead, the General Counsel of BlackRock. Before we begin, I'd like to remind you that during the course of this call, we may make a number of forward-looking statements. We call your attention to the fact that BlackRock's actual results may, of course, differ from these statements. As you know, BlackRock has filed reports with the SEC, which lists some of the factors that may cause the results of BlackRock to differ materially from what we see today. BlackRock assumes no duty and does not undertake to update any forward-looking statements.

So with that, I'll turn it over to Gary. Thanks, Chris, and good morning, everyone. It's my pleasure to present results for the third quarter of 2022. Before I turn it over to Larry to offer his comments, I'll review our financial performance and business results. While our earnings release discloses both GAAP and as-adjusted financial results, I will be focusing primarily on our as-adjusted results. As a reminder, beginning in the first quarter of 2022, we updated our definitions of as-adjusted operating income, operating margin, and net income. Year-over-year financial comparisons referenced on this call will relate current quarter results to these recast financials. Market conditions remained very challenged in the third quarter, with global equity and debt markets ending down 25 and 14% respectively for the first nine months of 2022. In total, these market declines, along with significant dollar appreciation against major currencies, reduced the value of BlackRock's assets under management by over $2 trillion since December 31st. Inflation, Rising rates, liquidity, market volatility, and geopolitical uncertainty remain significant concerns for clients, but more of them are turning to BlackRock for comprehensive solutions to help build more resilient portfolios. They increasingly value our unparalleled breadth of investment products, styles, and exposures, which allows them to customize portfolios to address the investment policies, return targets, and unique needs of their stakeholders. Our ability to deliver this customization at scale is a unique advantage, and it is during times of market uncertainty that the power of our platform becomes most evident. Despite the most challenging market backdrop in decades, BlackRock generated industry-leading long-term net inflows of $248 billion during the first nine months of 2022, demonstrating the strength and stability of our globally integrated multi-asset solutions-oriented platform. We've invested for years to develop leading franchises in high growth areas such as ETFs, private markets, outsource solutions, and technology. And importantly, we've worked tirelessly to fully integrate these capabilities into our one BlackRock business model and culture. This connectivity and collaboration is more important than ever before as we bring together the entire firm to deliver better outcomes for our clients and differentiate growth for our shareholders. And while we can't control near-term volatility or the specific client risk preferences that may result, BlackRock's platform has been purposely built over time to help clients meet their objectives regardless of the market environment. Over the last 12 months, BlackRock's broad-based platform has generated approximately $400 billion of total net inflows, representing positive organic base fee growth of 2%. During a tumultuous market environment, BlackRock generated third quarter long-term net inflows of $65 billion, representing approximately 3% annualized organic asset growth. Quarterly long-term net inflows were partially offset by net outflows from cash and advisory AUM. However, total quarterly annualized organic-based fee decay of 4% reflected outflows from higher fee precision ETFs, the continued impact of elevated redemptions in active equity and fixed income mutual funds, and outflows in institutional money market funds. Third quarter revenue of $4.3 billion was 15% lower year over year, primarily driven by the impact of significant lower markets and dollar appreciation on average AUM and lower performance fees. Operating income of $1.6 billion was down 22% and reflected the impact of approximately $96 million of closed-end fund launch costs in the third quarter of 2021. Earnings per share of $9.55 declined 16% versus a year ago, also reflecting a lower effective tax rate, partially offset by lower non-operating income compared to a year ago. Our adjusted tax rate for the third quarter was approximately 19%, reflecting $93 million of discrete tax benefits. We continue to estimate that 24% is a reasonable projected tax run rate for the remainder of 2022, but the actual effective tax rate may differ because of non-recurring or discrete items or potential changes in tax legislation. Non-operating results for the quarter included $219 million of net investment income and reflected a $267 million non-cash gain related to our strategic minority investment in iCapital. Third quarter base fee and security lending revenue of $3.5 billion was down 10% year over year, broadly in line with the decline in our average AUM. The negative revenue impact of approximately $1.9 trillion of market beta and foreign exchange movements on AUM over the last 12 months was partially offset by positive organic base fee growth over the same period and the elimination of discretionary yield support money market fund fee waivers versus a year ago. On a constant currency basis, we estimate second quarter base fee and securities lending revenue would have been down 8% year over year. Sequentially, While base fee and securities lending revenue was down 4% on an equivalent day count basis, our effective fee rate was approximately flat. As a result of continued global equity and bond market declines toward the end of the quarter, including the impact of FX-related dollar appreciation, we entered the fourth quarter with an estimated base fee run rate approximately 7% lower than our total base fees for the third quarter. Performance fees of $82 million decreased from a year ago, primarily reflecting lower revenue from liquid alternative products, including lower fees from a single hedge fund with an annual performance measurement period that ends in the third quarter. Our Aladdin business delivered record sales in the first nine months of 2022, and demand for our technology solutions has never been stronger. Quarterly technology services revenue increased 6% from a year ago, reflecting this increased demand. but also reflecting significant headwinds associated with the FX impact on Aladdin's non-dollar revenue and market declines on Aladdin's fixed income platform assets. Annual contract value, or ACV, increased 7% year-over-year. On a constant currency basis, we estimate ACV would have increased 10% from a year ago. Total expense decreased 10% year-over-year, reflecting lower compensation, G&A, and direct fund expense. Employee compensation and benefit expense was down 12%, primarily reflecting lower incentive compensation due to lower operating income and performance fees, partially offset by higher base fee compensation. Quarterly G&A expense declined 6% versus a year ago and reflected the impact of $96 million of closed-end fund launch costs in the third quarter of 2021, which are excluded when reporting our as-adjusted operating margins. Excluding these costs, G&A expense increased 13% due to higher marketing and promotional expense, including the impact of higher T&E expense, and ongoing strategic investments in technology, including cloud computing costs. Sequentially, G&A expense was up 5%, primarily reflecting higher marketing and promotional expense. Direct fund expense was down 10% year-over-year, driven by lower average index AUM. Our third quarter has adjusted operating margin of 42%, was down 560 basis points from a year ago, reflecting the immediate negative impact of markets and foreign exchange movements on quarterly revenue and the ongoing longer-term strategic investments we've been making in technology and our people. BlackRock's industry-leading organic growth is a direct result of the purposeful investments we have consistently made through market cycles. The diversification and stability of our platform has allowed us to pursue critical investment when others have been forced to pull back. But we also recognize that this market environment may require a different playbook. While we continue to have deep conviction in our strategy and the long-term growth of the global capital markets, we have begun to more aggressively manage the pace of certain discretionary spend. We are continuing to pursue critical hires that support our near-term growth, but are pausing the balance of our hiring plans for the remainder of 2022. In addition, We now expect our full year increase in 2022 core G&A to be in the range of 13 to 15 percent, lower than our previous guidance of 15 to 20 percent that we communicated in January. While these steps will not materially impact our 2022 results, they will better position us going into 2023 should market headwinds persist. Throughout our history, we've demonstrated that we are pragmatic and agile in managing our expenses. As always, remain committed. to optimize organic growth in the most efficient way possible and will be prudent in continuing to assess our overall level of spend in the current environment. Our capital management strategy remains to first invest in our business and then to consistently return excess cash to shareholders through a combination of dividends and share repurchases. We repurchased nearly $1.4 billion worth of shares in the first nine months of this year, including $375 million in the third quarter. At present, Based on our capital spending plans for the year and subject to market conditions, including the relative valuation of our stock price, we still anticipate repurchasing at least $375 million of shares in the fourth quarter, consistent with our previous guidance. BlackRock's third quarter long-term net inflows of $65 billion once again demonstrate the stability of our diversified platform and the strategic alignment with clients. We're increasingly looking for partners who can provide them with global insights and whole portfolio solutions tailored to their future goals. Third quarter ETF net inflows of $22 billion were led by surging demand for our bond ETFs, partially offset by sentiment-driven outflows from commodities, broad emerging markets, exposures, and small cap equity precision ETFs. As we have seen repeatedly in periods of market volatility, investors turned to iShares precision exposure ETFs to express risk and tactical asset allocation preferences. Bond ETFs generated $37 billion in net inflows, the second best quarter in our history. We're not only leading the bond ETF industry in terms of AUM and net new business market share, but we're working with all stakeholders to grow the bond ETF industry itself. It took 17 years for the industry to reach $1 trillion in 2019. It is now closing in on $2 trillion. And we believe that the industry will be at $5 trillion before the end of the decade. with BlackRock leading that significant growth. Retail net outflows of $5 billion reflected ongoing industry pressures in active fixed income and world allocation strategies, partially offset by strength in index SMAs and our systematic equity income and multi-strategy alternatives funds. Institutional active net inflows of $71 billion were led by fixed income and multi-asset net inflows and included the impact of several previously announced significant outsourced CIO mandates, including the funding of approximately 45% of the AIG core bridge fixed income assignment. Institutional index net inflows of $23 billion net outflows of $23 billion primarily reflected equity net outflows as clients sought to de-risk or rebalance in the current environment. Demand for alternatives also continued with $2 billion of net inflows and $4 billion of new commitments raised across our liquid and illiquid platform during the quarter. New illiquid commitments were driven by private credit and infrastructure. We now have approximately $37 billion of committed capital to deploy for institutional clients in a variety of alternative strategies representing a significant source of future base and performance fees. Our cash management platform experienced net outflows of $40 billion, primarily driven by redemptions from U.S. government money market funds as reduced debt issuance in a higher rate environment, coupled with ongoing capital management and a general reduction in corporate cash levels contributed to industry-wide institutional outflows. As rates stabilize, BlackRock is well-positioned to grow market share by leveraging our scale, product breadth, technology, and risk management on behalf of liquidity clients. Finally, third quarter advisory net outflows of $9 billion were primarily linked to the successful transition of the last remaining assets managed in connection with our assignment with the New York Federal Reserve Bank. Throughout our history, BlackRock has led by listening to clients. This connectivity has been foundational to our growth over the last 34 years, and our relationships with clients have never been deeper. We have always capitalized on market disruption to emerge stronger by continuing to innovate, to work collaboratively and to deliver the full power of our platform. While challenging, this market environment is no exception. With that, I'll turn it over to Larry.