BlackRock, Inc. (BLK - Analyst Report) reported third-quarter adjusted earnings of $5.21 per share, outpacing the Zacks Consensus Estimate of $4.71 for the fourth consecutive quarter. Further, this rose a significant 34% from the year-ago quarter.

Solid revenue growth along with strong inflows aided the better-than-expected results. However, this was partially mitigated by a rise in expenses. Moreover, growth in assets under management (AUM) was a tailwind.

After considering certain non-recurring items, net income for BlackRock came in at $917 million or $5.37 per share, up from $730 million or $4.21 per share in the prior-year quarter.

Quarter in Detail

Total revenue (on a GAAP basis) grew 15% to $2.85 billion from the year-ago quarter. Higher investment advisory, administration fees and securities lending revenue as well as performance fees were the primary growth drivers. Moreover, the reported figure came in higher than the Zacks Consensus Estimate of $2.83 billion.

Total expenses escalated 12% on a year-over-year basis to $1.69 billion. The increase was mainly driven by a rise in employee compensation and benefits, direct fund expenses as well as general and administration expenses.

Non-operating expenses, net of non-controlling interests, declined 62% year over year to $8 million.

BlackRock’s operating income, on a GAAP basis, summed $1.16 billion, up 20% from the year-ago quarter.

As of Sep 30, 2014, AUM totaled $4.52 trillion, rising 10% from the prior-year quarter. Further, the company witnessed total long-term inflows of $28.7 billion.

Share Repurchase

BlackRock bought back shares worth about $250 million in the reported quarter.

Our Viewpoint

BlackRock’s consistent efforts to enhance the exchange-traded fund (ETF) business are expected to propel top-line growth in the upcoming quarters. Moreover, the company’s steady capital deployment activities along with its organic and inorganic growth strategies will likely be accretive to the overall performance going forward. However, mounting expenses and high dependence on fee-based revenues continue to pose a challenge.

Among other investment managers, Ameriprise Financial, Inc. (AMP - Analyst Report) and Waddell & Reed Financial, Inc. (WDR - Analyst Report) are scheduled to release results on Oct 28, while Invesco Ltd. (IVZ - Analyst Report) is slated to report on Oct 30.

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