Good morning. My name is Katie, and I will be your conference facilitator today. At this time, I'd like to welcome everyone to the BlackRock, Inc. second quarter 2023 earnings teleconference. Our host for today will be Chairman and Chief Executive Officer, Laurence D. Fink; Chief Financial Officer, Martin S. Small; President, Robert S. Kapito; 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 one on your telephone keypad. If you would like to withdraw your question, please press star two. Thank you. Mr. Meade, you may begin your conference. Good morning, everyone. I'm Chris Meade, 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 say today. BlackRock assumes no duty and does not undertake to update any forward-looking statements. With that, I'll turn it over to Martin. Thanks, Chris. Good morning, everyone. It's my pleasure to present results for the second quarter of 2023. Before I turn it over to Larry, I'll review our financial performance and business results. Our earnings release discloses both GAAP and as-adjusted financial results. I'll be focusing primarily on our as-adjusted results. As a reminder, beginning in the first quarter of 2023, we updated our definitions of as-adjusted operating income, operating margin, non-operating income, and net income. The adjustments exclude the compensation expense impact of mark-to-market volatility associated with certain deferred cash compensation plans and the non-operating impact of an economic hedge, which the company began in 2023. Clients entrusted BlackRock with an industry-leading $190 billion of net inflows in the first half of 2023. Our $9.4 trillion in assets, $9.4 trillion units of trust, are up over $830 billion since year-end. This increase reflects continued strong organic growth and ongoing client confidence in the work that BlackRock's doing on their behalf as markets evolve. Clients choose BlackRock for performance. We deliver durable long-term investment performance by executing on alpha opportunities, sourcing unique deals, and managing risk. The foundation of a market-leading asset management platform is comprehensive, high-quality investment products with strong long-term investment performance. Investors and asset owners choose portfolio goals, BlackRock enables them through our investment products and solutions. This is BlackRock's Platform as a Service in action. We bring together the entire firm to combine investment technology and portfolio servicing capabilities to meet clients' specific business needs. Our diversified platform strategy, backed by strong performance, is powering our differentiated, industry-leading organic growth. It's widening our growth premium as clients choose to do more with BlackRock, while much of the asset management sector faces continued outflows. Clients are coming to BlackRock for performance and scale, using our Platform as a Service to streamline and support the growth and commercial agility of their own businesses. Both first half and second quarter net inflows were positive across regions, client types, and active and index. In the second quarter, BlackRock generated total net inflows of $80 billion, representing 4% annualized organic asset growth and 2% annualized organic base fee growth. Second quarter revenue of $4.5 billion was 1% lower year-over-year, primarily driven by the impact of market movements over the last 12 months on average AUM mix. Operating income of $1.7 billion was down 3% year-over-year, while earnings per share of $9.28 was up 26%, reflecting meaningfully higher non-operating income compared to a year ago. Non-operating results for the quarter included $158 million of debt investment gains, driven primarily by non-cash mark-to-market gains in the value of our private equity co-investment portfolio. Our as-adjusted tax rate for the second quarter was approximately 25%. We continue to estimate that 25% is a reasonable projected tax run rate for the remainder of 2023. The actual effective tax rate may differ because of non-recurring or discrete items or potential changes in tax legislation. Second quarter base fee and securities lending revenue of $3.6 billion was down 2% year-over-year and reflected the impact of underperformance on non-U.S. equity markets and fixed income market movements on our average AUM, partially offset by higher securities lending revenue. Sequentially, base fee and securities lending revenue was up 3%, reflecting higher average AUM and securities lending revenue and the impact of 1 additional day in the second quarter. On an equivalent day count basis, our annualized effective fee rate was 0.2 basis points lower compared to the first quarter, mainly due to divergent equity beta and changing client risk preferences. Performance fees of $118 million increased from a year ago, primarily reflecting higher revenue from illiquid alternatives. Business momentum remains strong across our technology platform, with clients turning to Aladdin for business transformation and scale enablement. Clients are increasingly partnering with BlackRock for integrated technology solutions. Approximately half of our year-to-date mandates have been across multiple technology offerings, such as combining eFront with core Aladdin. Quarterly technology services revenue was up 8% compared to a year ago, reflecting this demand. Also the impact of negative fixed income market movements over the last 12 months on client positions on Aladdin. Sequential technology revenue reflected the successful completion of integrations for several large clients that went live on Aladdin in the second quarter. Annual contract value, or ACV, increased 8% year-over-year. We remain committed to low to mid-teens ACV growth over the long term, driven by demand for Aladdin's broadening technology capabilities and the growing value proposition it represents for clients. Total expense was modestly lower year-over-year. Lower incentive compensation and distribution and servicing costs were partially offset by higher direct fund expense. Employee compensation and benefit expense was flat year-over-year, primarily reflecting lower incentive compensation due to lower operating income, offset by higher base compensation. Direct fund expense increased 13% year-over-year and 9% sequentially as a result of higher rebates in the prior year quarter and higher average index AUM. G&A expense was flat year-over-year, partially due to timing of planned investment spend. Our second quarter as-adjusted operating margin of 42.5% was down 120 basis points from a year ago, reflecting the negative impact of market movements on quarterly revenue. Our platform strategy has delivered scale and operating leverage through time, with 240 basis points of margin expansion in the last 10 years. Markets have improved since the end of 2022, and we aim to be disciplined in driving profitable growth by prioritizing investments to repel our differentiated organic growth and operating leverage. In line with our guidance in January at present, we would expect our headcount to be broadly flat in 2023. We would also expect a mid to high single-digit percentage increase in 2023 core G&A expense. Our capital management strategy remains first, to invest in our business, and then to return excess cash to shareholders through a combination of dividends and share repurchases. We continue to invest through prudent use of our balance sheet to best position BlackRock for sustained success, primarily through seed and co-investments to support organic growth. At times, we may make inorganic investments where we see an opportunity to accelerate growth and support our strategic initiatives. Consistent with this inorganic strategy, last month, we announced a private markets acquisition and a minority investment as part of a technology partnership. We expect our acquisition of Kreos Capital to close in the third quarter of this year, adding venture debt capabilities and further bolstering BlackRock's global credit franchise. Through our technology partnership with Avaloq, we aim to link Aladdin Wealth and Avaloq's core banking system, which will ultimately scale both businesses and better serve joint clients. We repurchased $375 million worth of common shares in the second quarter. At present, based on our capital spending plans for the year and subject to market conditions, we still anticipate repurchasing at least $375 million of shares per quarter for the balance of the year, consistent with our previous guidance in January. In May, we capitalized on the improved conditions for debt issuance, issuing $1.25 billion of 10-year debt at a coupon of 4.75%. We expect to invest the proceeds of the offering at substantially the same rate as the cost of borrowing, effectively eliminating incremental costs of carrying additional debt in 2023. Our ambition is to be the cloud of investment management and technology. We organize around three key principles: access, expertise, and service to deliver value to our clients. Our platform strategy, backed by these three principles, drove $80 billion of total net inflows in the second quarter. Broadening adoption of iShares ETFs by asset managers, insurance companies, and wealth managers fueled net inflows of $48 billion in the second quarter, led by fixed income ETF net inflows of $35 billion. Our iShares range is unlocking client demand by providing efficient and expanded access to broad swaths and finer slices of the bond market. Retail net inflows of $4 billion were led by strength and index SMAs through Aperio and broad-based net inflows into active fixed income. BlackRock's institutional franchise generated $5 billion of net inflows in the second quarter. We're partnering with clients across their whole portfolio, and our clients are leveraging our scaled advisory, asset allocation, OCIO, and technology services. Institutional active net inflows of $9 billion included demand for customized LifePath, target date mandates, and illiquid alternatives. Private markets continued to scale in the quarter. Net inflows of $3 billion represented 10% annualized organic asset growth and were led by private credit and infrastructure. We have approximately $30 billion of non-fee paying committed capital to deploy in a variety of alternative strategies, representing a significant source of future base and performance fees. Finally, cash management net inflows of $23 billion in the second quarter were led by U.S. government money market funds. We're actively working with clients on their liquidity management strategy, providing technology, market, and operational insights, and of course, a full range of cash management capabilities. Looking ahead, we see significant opportunity to grow our market share and consolidate our position with clients as they choose to do more with BlackRock. We're the only asset manager delivering Platform as a Service. We believe our platform strategy will continue to deliver for both our clients and shareholders, resulting in sustained, market-leading organic growth and differentiated operating leverage over time. With that, I'll turn it over to Larry. Thank you, Martin. Good morning to everyone. Thanks for joining the call. Throughout our history, BlackRock has been serving clients. We listen to them, we deliver to them as a fiduciary. We evolve our capabilities to help them achieve their long-term outcomes across market regimes. We bring together the entire firm as a platform to deliver client outcomes. That's a defining factor of BlackRock's differentiated and industry-leading leadership. As many of you have heard, at our investment day last month, we are building the sole platform strategy in asset management that brings together products, services, and technology to solve our clients' investment and technology needs. We envision BlackRock to be the investment manager cloud for asset managers and for asset owners. BlackRock's industry-leading results reflect our clients' continued confidence in our long-term performance. We are delivering sustained organic growth and base fee growth, even as the traditional asset management industry logs persistent outflows. BlackRock generated $190 billion of total net inflows in the first half of 2023, including $80 billion in the second quarter, reflecting positive flows from wealth and institutional clients across regions. We grew technology services revenues and ACV as clients leveraged Aladdin to support their investment processes. We again delivered strong margin for our shareholders. Our scale platform and technology allows us to invest for future growth while maintaining a differentiating margin, which we've expanded in seven of the last 10 years. Organic growth, combined with positive markets and foreign exchange movements, have led to an over $830 billion increase in BlackRock's AUM in the first six months of 2023. As I speak with clients, I hear how their expectations of asset managers are expanding. It's why clients are doing more business with fewer managers. Clients are seeking a broad range of integrated services alongside a strong performance track record to help them achieve their desired outcomes. Clients value BlackRock's unparalleled breadth and investment strategies, which span regions, index and active, in both public and private markets, and they're confident in our ability to deliver the investment performance they need through durable alpha and active proprietary deal flow in private markets or proper index tracking of ETFs. Through a diversification and strong performance, we can help clients better match their long-dated liabilities, achieve their operational objectives, and streamline their processes. This better enables them to address the needs of their own stakeholders. Today, client conversations more often move beyond products. They're about portfolios. They're about business transformation and how they could benefit from BlackRock's platform scale. That evolution from product to portfolio to platform creates enormous growth potential for BlackRock. We are intentionally organizing ourselves around our clients, which helps ensure the One BlackRock we deliver is greater than any one part of the organization. Investors are facing a complex landscape of competing fiscal and monetary policies, with a number of structural forces shaping returns now and over the long term. These forces include a fragmented geopolitical landscape, causing a rewiring supply chains, a transition to a lower carbon economy, and the aging population in the developed world, all of which are likely to be inflationary over time. This year, U.S. equity markets' rally has been fueled by just a few technology firms and hope that artificial intelligence will gain widespread adoption. I believe AI has a huge potential to enhance productivity and transform margins across sectors. It may be a technology that could bring down inflation, but in the meantime, central banks continue to face a sharp trade-off between living with some inflation and/or damaging economic activity. Against this backdrop, clients are turning to BlackRock to provide insights to help them manage risks, to capture new opportunities, and to implement enterprise technologies. Clients are choosing BlackRock for our platform combination of technology and advisory alongside ETFs, active investing, and private market capabilities. Our ETF platform and franchise cuts horizontally across clients, products, and the market ecosystem to provide access to the expanding world of investments. BlackRock captured the number one share of ETF industry flows in the second quarter of 2023, generating $48 billion of net inflows. These industry-leading net inflows was led by a continued demand for iShares bond ETFs, and we aim for our bond ETF AUM to more than triple to $2.5 trillion by 2030. This is not just because of the generational opportunities in fixed income, but because bond ETFs are also delivering benefits such as access, transparency, and liquidity to both institutional and wealth clients at an accelerating pace. BlackRock will continue to drive bond ETF innovation and growth as the bond market modernizes, and as investors move to capture significant opportunities in fixed income. Our ETF business is evolving to increase access to all kinds of markets more efficiently, with more transparency and more conveniently than ever before. We recently completed the largest global ETF launch in history with two transition-focused ETFs. The launch is another example of our commitment to provide choice and access to our clients through the breadth of our leading transition and ETF capabilities. The ETF launch was nearly $3 billion in seed capital as we connected with BlackRock to execute on an innovative client solution. Our clients are also focused on outcomes, this manifests in a portfolio blending active, index, private markets, and cash. We often talk about how index ETFs are being used actively by all types of investors, active managers are increasingly leveraging the many benefits of the ETF wrapper. In May, we launched two active ETFs led by Rick Rieder and Tony DeSpirito. These ETFs will be great tools for clients and advisors to gain access to our active insights within our ETF structure. Clients choose BlackRock for performance. This is across multiple dimensions, including investment performance, client service, and operational excellence. Across our active franchise, BlackRock has delivered durable investment performance, with 81% and 90% of our fundamental equities and taxable fixed income AUM above benchmark our peer medium for the last five years. Our global connectivity, our scale, our technology, our market access positions us to deliver the alpha our clients need. Our expertise in portfolio construction and asset allocation, combined with strong investment performance, has differentiated BlackRock in the market. We saw $73 billion of active net inflows in the first half of 2023 compared to active industry outflows. We are also unlocking opportunities for clients in private markets, where we have a $30 billion of committed capital, we're growing in private markets organically through new launches, scaling of our successor funds. At times, we will execute on inorganic transactions to further expand our capabilities and global reach. To this end, we recently announced our planned acquisition of Kreos Capital, a leading provider of venture debt financing in Europe. When we talk to clients about their private market allocation, the number 1 thing they're looking for as they select a manager is proprietary, differentiated deal flow. BlackRock's global network of relationships, our data, our analytics, and flexible, adaptable capital means we could source unique deals for our clients. In doing so, we deliver value for our clients and our fund portfolio companies. Our long-term private capital team acquisition of Creed in May 2020, is an excellent example of the outcomes that can be achieved through the strength of our proprietary sourcing, our proprietary underwriting, and value creation capabilities. LTPC acquired Creed during the depths of the COVID lockdown. Last month, we announced that they had entered an agreement to sell the company to a strategic buyer, Kering Beauté. The LTPC team had the conviction that Creed was an extraordinary business with multiple levers for value creation that would help accelerate growth even during the pandemic. With last month's agreement, the fund is expected to realize significant alpha for our clients. I find more often now that companies want BlackRock as a trusted investor and a trusted partner. BlackRock is a long-term friendly capital with global client relationships. We invest early, and we can stay invested through cycles, whether it's debt or equity, or a pre-IPO through post-IPO. Companies recognize the uniqueness of our global reach, our brand, and our expertise across markets and industries. We are a valued partner to these clients, and companies want to work with BlackRock, and this enables our proprietary origination. We are tapping into our deal flow across our private markets asset classes, and especially focusing on credit and infrastructure. Our connectivity across the real economy is bringing benefits to both clients and the communities in which our underlying investment projects operate. As I meet with clients around the world, I hear how our profile is strengthening in local markets as a result of our leadership in infrastructure investing. In the United States, we partnered with AT&T on Gigapower JV and invested in Jupiter Power, which operates one of the largest battery storage fleets in Texas. Our relationships around the world continue to expand our reach in new ways. This is evident from our most recent investments, whether it's First Air in South Korea or Akaysha Energy, which is building the world's largest grid-scale battery storage facility, the Waratah Battery, in Australia. These are just a few examples. Our growing profile from these investments is leading to more and larger deal opportunities, which will deliver growth for BlackRock's clients and to you, our shareholders. The portfolio of the future is outcome-oriented, customized, and seamlessly combined public and private markets. BlackRock is the only company that can offer both the portfolio investments and technology through eFront and Aladdin. Aladdin is bringing the portfolio of the future to life by providing technology in a digital-enabled and customized way. Combining risk management, the investment book of record, performance, accounting, and data, all in one place. Market volatility and growing cost pressures and complexities in optimizing whole portfolios underscore the need of enterprise operating and risk management technology. The value of Aladdin's integrated end-to-end technology platform is resonating. In the same way that clients are consolidating their portfolios with fewer asset managers, clients are looking to do much more with Aladdin. Over the last 12 months, 40% of our new annual contract value came from the expansion of existing relationships, and I'm pleased to say that our retention rates remain very high at 98%. We're not only expanding Aladdin's capabilities, we're also tackling bigger addressable markets by extending into adjacent offerings. We're enabling a whole portfolio ecosystem, empowering clients through data and opening Aladdin to drive even more innovation. We are creating deep integration with ecosystem providers and third-party technology solutions. Our recently announced partnership with Avaloq is the latest example. As clients look to do more with fewer partners, our SaaS technology business will enable greater agility for clients in delivering higher recurring revenues for our shareholders. Aladdin and Aladdin Wealth are increasingly core components of outsourcing relationships. Our success across a number of significant outsource solutions over the past several years are catalyzing a dialogue with more and more clients. We're bringing our expertise to clients in all segments, not just large pension funds or insurers, but also wealth managers and charities and endowments and family offices. Second quarter results, including continued momentum in institutional and wealth outsourcing, particularly in family office models and SMAs. Last week, Quintet Private Bank announced they selected BlackRock to provide an expanded set of investment solutions, advisory solutions, and risk management and technology. This is another example of how clients are turning to BlackRock as they scale and they grow their own business. We help them do that. Whether it's asset management or technology or the multitude of other industries, clients are consolidating their relationships and moving to platforms that provide strong performance and integrated services. BlackRock intentionally invested and built our business model to be in the forefront of this trend. This is resonating in our results as clients increasingly turn to BlackRock for performance and for our platform services. Our industry-leading results and momentum are a direct result of our dedicated employees and leadership team. Our success over the last 35 years has been built on the steadfast commitment to operate as One BlackRock, fully connected to our clients on one platform, with one culture, using one technology. It is our leadership team that is delivering the power of this hyper-connected platform to our clients. These leaders make us a hyper-connected team. The collaboration and their horizontal leadership are essential to our success and growth. As I said in our Investor Day, I'm not planning to leave BlackRock anytime soon. My goal has always been to ensure that when Rob Kapito and I move on, the firm is in even better hands than it is today. I'm confident we are gonna achieve that. In building the company, we have always taken a long-term view. Our approach in developing our leadership talent is no different. BlackRock's board and I are highly focused on identifying and developing our next generation of leaders. We also seek to align their long-term interests with those of our shareholders, our clients, and one another, through shared incentives that reward long-term value creation. A key part of this ongoing initiative is the recent issuance of a one-time, long-term equity incentive grant for a small group of leaders. Featuring extended vesting periods, these awards represent a key long-term strategic investment in the success and stability of BlackRock's leadership plans. As we execute our Platform as a Service strategy, our goal is that these grants, will help promote a continued, collaborative, long-term performance culture between our leaders across our horizontal leadership capabilities and for many years to come. To close, I want to underscore that we are in the very early days of a long-term shift in client consolidation of their investment managers, their technology requirements towards a more comprehensive platform. In the same way that organizations have tradition from on-site data to hardware to cloud providers, many clients are now transitioning from in-house investment and technology models to BlackRock. For years, we have focused on delivering One BlackRock to our clients with horizontal connectivity, integrated services, and a strong performance. I truly believe this is the future of investing, BlackRock is at the forefront. I believe we're at one of the most exciting times in BlackRock's history. I could say very clearly that both Rob and I are energized by these new examples that we see every day, how we are delivering value for all of our BlackRock stakeholders. Thank you, and let's open it up for questions. Thank you. At this time, I'd like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad. If you do ask a question, please take your phone off of its speaker settings, so, and use your handset to avoid any potential feedback. Please limit yourself to one question. If you have a follow-up, please reenter the queue. We'll pause for just a moment to compile the Q&A roster. We'll go first to Craig Siegenthaler with Bank of America. Hi, Craig. How are you? Hey, good morning, Larry. I'm good. Hope everyone's doing well. Yep. I have a two-parter on the potential for large bond reallocations. You know, we actually haven't seen any big reallocations yet outside the money market fund business and bond ETFs. Do you expect these two products to be the most dominant drivers of flow still? Also from your recent conversations with large institutions and retail platforms, do you believe most investors are waiting, just given that the Fed will likely still raise rates a couple of times? Craig, let me have Rob answer that one. Craig, the two answers are yes and yes. That is because currently, yields are back, but I think in general, most people think that yields are going to continue to rise. They're preparing for what I would call a generational change in the fixed income market, because you can actually earn attractive yields without taking much duration or credit risk. If you go back, clients shifted towards illiquid investments over the last decade to get those returns. While there's still demand for the private markets to diversify and pursue outperformance, investors, as you know, can get most of that yield in their liabilities and meet them through bonds. We are so well positioned for that, both with our $3.4 trillion fixed income and cash platform. To give you some numbers, 80% of all fixed income is now yielding over 4%. This is a pretty remarkable shift in our history. We're calling this a once in a generation opportunity. There is finally income to be earned in the fixed income market, and we are expecting a resurgence in demand. You touched on something very important, the cash market. This is not the last stop for that cash, and there are trillions now, I think the number is around $7 trillion in money market accounts. That is ready when people feel that rates have peaked to flood the fixed income market, and we need to position ourselves to capture that. How do you do that? One is by product, and the other is by performance. We saw positive fixed income mutual fund flows in the quarter, led by our high yield, total return, and muni franchises. We have strong long-term investment performance, with 90% of taxable fixed income AUM above the benchmark or peer median for the five-year period. With strong performance, a diversified product offering, we are just in the right spot to take active fixed income share as investors look to capitalize on these opportunities for alpha in the bond market. I want to add one other point about fixed income. We anticipate that bond ETFs are going to be used alongside of our top performing active offerings. I know that because in the first half of the year, we saw $12 billion in active fixed income net inflows alongside of $68 billion from bond ETFs. On the active side, we believe there's finally an opportunity for alpha, and that hasn't been there as much as it is in many years. Keep in mind, bond ETFs are also increasingly being used by active managers for liquidity management, hedging, and efficient tactical asset allocation. In fact, nine of the top 10 global asset managers now use iShares. Lastly, we have over 450 bond ETF choices, which is more than five times the next largest issuer, diversified across exposures and the yield curve. We also have the most diversified client base, including wealth advisors, active managers, insurance companies, pensions, and other institutions. Lastly, through the capital markets expertise here, we're advising clients on new use cases for bond ETFs, such as replacing more expensive futures or swaps as cash and liquidity instruments, and as tools for large-scale portfolio transitions. The answer is yes and yes, the iShares fixed income ETFs, we had leading industry flows now, $35 billion in the second quarter. This is one of the biggest opportunities that we have in front of us, we believe we're gonna be able to capture those opportunities. Thank you. Your next question comes from Michael Cyprys with Morgan Stanley. Good morning, Michael. Hey, good morning. Good morning. Question on private markets. If we go back to Investor Day, you guys spoke about doubling base fees in private markets over the next five years. I was hoping you might be able to help unpack the drivers of that, and where might there be scope for upside, such as with new products and a more meaningful scaling of your existing strategies? I know, why don't I give that to Martin? Great. Thanks. Thanks, Michael. How are you? I'd start with clients, which is the client need for income and uncorrelated returns in a higher inflation world with more volatile public equities. We think that'll continue to drive demand for alternatives. Most definitely, we saw that in our BlackRock Global Private Markets survey that we recently completed. Over half the clients said that they expect to increase their allocations to private markets and alternatives. We think we're really well positioned there. We've built a comprehensive platform, as you heard from Edwin on Investor Day, provides exposures across all liquid alternative asset classes, and we're really well positioned as a multi-alternatives provider. Larry talked a bit about some of the differentiated sourcing and access to high-quality opportunities that we've had. Our ability to integrate private markets investing with technology, with eFront and Aladdin. We really think that that's a great opportunity for us as we move forward. Our platform's over $150 billion in private markets today. In the second quarter, we had 10% organic growth on the liquids, which we think is good, strong growth. We talked to you about adding nearly $2 billion of base and performance fees in 2022, and our fundraising has actually held up pretty well since 2021. We've raised over $85 billion of gross capital. I think where some of the upside is really, I think, one, in private credit and infrastructure. We've built really strong leading franchises, and we see good growth there in the next three to five years. In private credit, as banks potentially become more constrained in lending, we think investors will turn more to private credit for financing. If you like those yields in the low interest rate environment, I think investors will find them even more compelling in a more normalized rate environment. Also some of these extraordinary government stimulus and tax incentives that I think are following the Inflation Reduction Act, similar moves, I believe, coming in Europe, are going to be, I think, strong secular tailwinds for infrastructure. Last thing I'd just say is there's upside on product innovation, which is one, we've already done some really compelling innovating and decarbonization, both in sourcing deals and in raising assets in this space. We've launched a number of non-traded products across private credit, real estate debt, and 40 Act private equity into retail and wealth channels. I think the next horizon for us is to think about how to integrate these things in positions of strength in BlackRock, like model portfolios. How do you really build that portfolio of the future that Larry referenced, that's public, private, digital, tax managed? Those are the places where we see real upside for BlackRock. Thank you. We'll take our next question from Michael Brown with KBW. Hi, Mike. Hi, good morning, everyone. I just wanted to talk about the expectation for expenses this year. Obviously, equity markets have been up year to date, S&P is up over 17%, and that's provided a nice boost for AUM. How do you guys think about the earnings power today in the context of BlackRock's expense base and your investment priorities? Have you or do you plan to allocate more dollars towards investment in the platform, and how do people tack our capabilities? Martin? Thanks, Mike. Appreciate it. I'd start with the, you know, our industry-leading organic growth. It's been the result of exactly what you flagged. I think really disciplined investments that we've consistently made through market cycles, and we try to obviously be financially flexible so that even in sort of the most uncertain markets, we continue playing offense and come out even stronger. We have a really strong track record, I think, of making good investments and delivering a differentiated operating margin. We obviously had a 42.5% operating margin. Over the longer term, we've expanded our adjusted margin in the last seven of 10 years. Even in 2022, as I talked about, on Investor Day, Mike, we expanded our margin by 240 basis points over the last decade. Those results, I think, are really, well above the large cap peers, who've seen a good amount of margin contraction, over the same period. As you're flagging, in the first half of the year here, we've seen $830 billion, increase in AUM. We're now at $9.4 trillion. Obviously, the move in markets, has an impact or can have an impact on our operating margin in a meaningful way. As markets recover, I think we expect to see our revenue growth outpace growth in discretionary expense items and be accretive to operating margin. I think some of the real actions are investing for growth in the most efficient way possible. Like, we're going to continue to drive more fixed cost scale through technology. Rob Goldstein talked about in Investor Day, our opportunities for Aladdinizing alts with eFront, which we think can drive more scale. Larry talked a bit about sourcing. I think we can drive more systematized and efficient, differentiated sourcing through our BlackRock Capital Markets team. When you think about some of these technology integrations that we've done, whether it's Avaloq, Envestnet, those drive a lot of scale, and they're investments that really drive differentiated operating, organic growth. We see great opportunities. We have no change in our expense guidance. We expect to finish the year, as I said, broadly flat in headcount, and with G&A up mid to high single digits. Thank you. We'll take our next question from Ken Worthington with JP Morgan. Hi, good morning. Hi, Ken. Thanks for taking the questions. Good morning. Cash management flows were strong this quarter. Maybe two questions here. First, the SEC launched updated money market rules this week. Any reaction to the new rules and the implications for the U.S. Money Fund business? Second, how enthusiastic are you about the longer term growth prospects for cash management? Your response to Craig's question earlier suggested that cash, in some cases, is a placeholder for assets that are gonna move to fixed income products when the shape of the yield curve changes. Can cash management grow as that transition is taking place? Rob? You know, we're supportive of any efforts to improve the resiliency and transparency of U.S. money market funds. Non-government institutional money market funds, which were really the main focus of the rules, are a very small part of our cash business. Ours are U.S. government funds and separate accounts. That's really the bulk of our assets. Of course, we have a diverse set of cash offerings, including money market funds and separate accounts, CTFs, ETFs, and other short duration strategies. We're gonna work together with our clients as they consider the best tools for their liquidity management, and we will continue to review the regulatory rules to see what impact it could have on our business, which I think is quite limited. Remember, in asset allocation and when there's money in motion, it moves to cash, it moves to longer term assets. It's something you must have as a liquidity tool to do all the things that clients need to do. Since we're gonna be, I think, a beneficiary out of the long-term assets, going after corporations and treasury management and other institutions for their cash, puts us in the game in a much better way than if they're just coming into our products from the outside. It's an important business for us. It also is a business which has to do with performance. It also has to do with quality. As you've seen, issues in the banking industry and other, issues in the markets, people look for the high quality, and they look for the brand, and we have that. We're very optimistic, and we will continue to really build our sales force to continue to be a leader in the cash management business, knowing that it's also going to lead to other opportunities for us. Thank you. We'll take our next question from Brian Bedell with Deutsche Bank. Great. Hi, Brian. Thanks. Good morning, folks. Hi, good morning. Let me just to focus a little bit on transition management. You talked a lot about this at Investor Day. Just wanted to sort of think about the timing and organic growth potential. You definitely have one of the most unique capabilities across, you know, multi-product areas in this endeavor. Obviously, we're gonna see the pace of global spending on this almost double to nearly $4 trillion per annum. Between the debt part of it, in particular, direct lending and venture debt and your Kreos acquisition, how quickly do you think you can put all of that together and, you know, significantly expand, I think the $17 billion that you have right now in transition private markets? Is it a build that can happen as early as sort of in the next couple of quarters, or is this more like 2024, 2025? First of all, thanks for that question. I think the transition investing is probably one of the greatest opportunities in the world today. The dialogues that we're having with governments worldwide are very unique. There's not a government that is not focused on this, especially for countries that are dependent on importation of power. They're all looking for different ways across the board in terms of how do they successfully navigate their economy. Energy and power is becoming one of the dominant conversations. Through the United States IRA, we are seeing just huge interest with, you know, U.S. and non-U.S. companies coming into the United States and take advantage of the opportunities that present to us in terms of elevated returns because of the IRA. We look at this as a multi-year growth opportunity. We are working. We announced, as I said earlier in my talk about the Acacia Energy, the largest battery storage capability in the world. That just has set us, and the conversation we're having with other countries related to that type of activity is becoming a much conversational component of what we're doing. We look at this as, you know, a significant, we're talking tens of trillions of dollars of market opportunity. Now, if you overlay more and more issues around debt to GDP in more and more countries, more and more countries are gonna have to look to private capital. It cannot be funded by the public sector. That is one of the great positioning opportunities for BlackRock in our relationships worldwide. We have that unique opportunity to present with us. Two, as I talked about, proprietary origination. We're having more and more conversations with more and more corporations, and how do they think about their platform related to decarbonization? That is, you know, we have deep and broad conversations with traditional energy companies, and how are they gonna be focused on sequestration of carbon? They own the geology. BlackRock already has one of the largest sequestration projects in the United States, in Navigator CO2. That is another good example, and it is those type of reference investments that are giving us greater and greater opportunity. I do believe our positioning of our global platform, working with more and more governments, talking about public-private types of investments, at the same time, working with corporations and how do they move forward, really gives us a unique opportunity for the many, many years ahead, to be partnering with them. In terms of corporations, many shareholders are questioning how corporations should move forward. Some shareholders don't think they should move forward in that area, and in that case, some of the companies are asking us, can we co-invest with them? Some companies are looking to expand in various different ways, and they need. They just don't have a generation of capital in doing that to the speed in which they are looking forward to in doing that. Between our relationships with companies, with our broad relationships with governments, gives us a real opportunity to be one of the leaders in the transition. I believe this is going to be a multi-year global opportunity for BlackRock. Thank you. Ladies and gentlemen, we have reached the allotted time for questions. Mr. Fink, do you have any closing remarks? Thank you, operator. I want to thank all of you for joining us this morning, and your continued interest in BlackRock. I'm proud of what we've done as a firm in delivering value for our clients, and obviously, delivering values for our shareholders. The power of our connected platform and the collaboration and creativity of our leadership team, will enable us to continue to deliver differentiating growth into the future for you, our shareholders. I wanna thank you again for being part of the call, and I wish everyone have a very pleasant summer and a great quarter. Thank you. This concludes today's teleconference. You may now disconnect.