Matthew Nicholls Executive Vice President Chief Financial Officer Chief Operating Officer Jenny Johnson President Chief Executive Officer Highlights........................................2 AUM, revenue, and investment performance……………….…….....4 AUM and flows...............................5 Franklin Resources, Inc. Third Quarter Results July 26, 2024| Executive earnings commentary Adam Spector Executive Vice President Head of Global Distribution Contents Conference call details: Access to the teleconference ...

Franklin Resources Inc.’s (BEN) third-quarter fiscal 2024 (ended Jun 30, 2024) adjusted earnings of 60 cents per share beat the Zacks Consensus Estimate of 57 cents. The bottom line declined 5% year over year.BEN’s results have benefited from a rise in revenues and an improvement in the assets under management (AUM) balance. However, higher expenses were headwinds.   Adjusted operating income was $424.9 million compared with the prior-year quarter’s $476.8 million. Net income (GAAP) attributable to Franklin ...

分组1 - Franklin Resources reported quarterly earnings of $0.60 per share, exceeding the Zacks Consensus Estimate of $0.57 per share, but down from $0.63 per share a year ago, representing an earnings surprise of 5.26% [1] - The company generated revenues of $2.12 billion for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 1.49% and increasing from $1.97 billion year-over-year [1] - Over the last four quarters, Franklin Resources has exceeded consensus EPS estimates three times and topped consensus revenue estimates four times [1] 分组2 - The stock has underperformed, losing about 20.7% since the beginning of the year, while the S&P 500 has gained 13.2% [2] - The current consensus EPS estimate for the upcoming quarter is $0.66 on revenues of $2.13 billion, and for the current fiscal year, it is $2.43 on revenues of $8.36 billion [4] - The Financial - Investment Management industry is currently ranked in the bottom 33% of over 250 Zacks industries, which may impact stock performance [5]

Core Insights - Brand Engagement Network (BEN) has entered a commercial agreement with Vybroo and Farmacia Roma to enhance customer engagement through innovative AI and audio messaging strategies [1][2][3] Company Overview - BEN is an emerging provider of safe, personalized customer engagement AI, headquartered in Jackson, WY, and listed on NASDAQ as BNAI [5] - Vybroo specializes in creating auditory content and services, focusing on innovative solutions that strengthen customer relationships [4] - Farmacia Roma is a well-established pharmacy chain in Baja California, known for its trust among consumers over 60 years [2] Partnership Details - The collaboration aims to merge BEN's AI assistant technology with Vybroo's audio communication technology to improve consumer engagement [2][3] - BEN's AI technology can process complex user inquiries, providing tailored suggestions to enhance efficiency and productivity in daily activities [2] - The partnership will utilize various media platforms, including radio and streaming services, to reach consumers in convenient ways [3] Strategic Goals - BEN aims to create effective channels for customer engagement and meaningful interactions between brands and consumers [3] - The partnership is expected to optimize processes that improve lives in sectors such as health, business, and government [3] - Vybroo's evolving strategies aim to conquer new markets by implementing advanced communication technologies [4]

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Franklin Resources reported GAAP net income of **$174.0 million** and adjusted net income of **$326.4 million** for Q3 2024, with total AUM reaching **$1,646.6 billion** - The company repurchased **4.3 million** shares of its common stock for a total cost of **$101.5 million** during the quarter[8](index=8&type=chunk) Q3 2024 Key Financial Results (GAAP) | Metric | Q3 2024 (ended Jun 30) | Q2 2024 (ended Mar 31) | Q3 2023 (ended Jun 30) | | :--- | :--- | :--- | :--- | | Net Income | $174.0M | $124.2M | $227.5M | | Diluted EPS | $0.32 | $0.23 | $0.44 | | Operating Income | $222.5M | $129.3M | $314.9M | Q3 2024 Key Financial Results (Adjusted, Non-GAAP) | Metric | Q3 2024 (ended Jun 30) | Q2 2024 (ended Mar 31) | Q3 2023 (ended Jun 30) | | :--- | :--- | :--- | :--- | | Adjusted Net Income | $326.4M | $306.6M | $326.1M | | Adjusted Diluted EPS | $0.60 | $0.56 | $0.63 | | Adjusted Operating Income | $424.9M | $419.6M | $476.8M | [CEO Commentary and Strategic Initiatives](index=1&type=section&id=CEO%20Commentary%20and%20Strategic%20Initiatives) CEO Jenny Johnson highlighted diversification, strong net flows in key areas, and strategic technology investments - The company is executing its long-term diversification plan, leading to positive net flows in multi-asset and alternative strategies[4](index=4&type=chunk) - Strong performance was noted in retail Separately Managed Accounts (SMAs), Canvas®, and Exchange-Traded Funds (ETFs), with ETFs generating over **$3 billion** in net inflows[4](index=4&type=chunk) - The non-U.S. business recorded its fifth consecutive quarter of positive net flows, ending the quarter with approximately **$492 billion** in AUM[4](index=4&type=chunk) - Key technology and strategic investments announced during the quarter include: - Collaboration with Microsoft to build an advanced financial AI platform for sales and marketing[5](index=5&type=chunk) - A planned strategic minority investment in Envestnet[5](index=5&type=chunk) - Selection of a single platform to unify investment management technologies across public market asset classes[5](index=5&type=chunk) [Assets Under Management (AUM) and Flows](index=2&type=section&id=Assets%20Under%20Management%20%28AUM%29%20and%20Flows) Total AUM reached **$1,646.6 billion** as of June 30, 2024, influenced by cash management inflows, market changes, and long-term outflows [AUM and Flows Summary](index=2&type=section&id=AUM%20and%20Flows%20Summary) - Total AUM increased by **15%** year-over-year, from **$1,431.5 billion** at June 30, 2023 to **$1,646.6 billion** at June 30, 2024[7](index=7&type=chunk) AUM and Flows Summary (in billions) | Metric | Three Months Ended Jun 30, 2024 | Three Months Ended Jun 30, 2023 | | :--- | :--- | :--- | | Beginning AUM | $1,644.7 | $1,422.1 | | Long-term net flows | $(3.2) | $0.2 | | Cash management net flows | $3.0 | $(7.3) | | Total net flows | $(0.2) | $(7.1) | | Net market change, distributions and other | $2.1 | $16.5 | | **Ending AUM** | **$1,646.6** | **$1,431.5** | [AUM by Asset Class](index=5&type=section&id=AUM%20by%20Asset%20Class) AUM by Asset Class (in billions) | Asset Class | Jun 30, 2024 | Mar 31, 2024 | Jun 30, 2023 | | :--- | :--- | :--- | :--- | | Equity | $595.0 | $592.7 | $458.0 | | Fixed Income | $564.5 | $571.4 | $505.1 | | Alternative | $254.5 | $255.5 | $257.2 | | Multi-Asset | $168.1 | $163.4 | $148.3 | | Cash Management | $64.5 | $61.7 | $62.9 | | **Total AUM** | **$1,646.6** | **$1,644.7** | **$1,431.5** | [AUM by Sales Region](index=5&type=section&id=AUM%20by%20Sales%20Region) AUM by Sales Region (in billions) | Region | Jun 30, 2024 | Mar 31, 2024 | Jun 30, 2023 | | :--- | :--- | :--- | :--- | | United States | $1,155.0 | $1,155.9 | $1,026.0 | | International | $491.6 | $488.8 | $405.5 | | **Total AUM** | **$1,646.6** | **$1,644.7** | **$1,431.5** | [Detailed AUM Flows by Asset Class](index=6&type=section&id=Detailed%20AUM%20Flows%20by%20Asset%20Class) - For the quarter, Alternative and Multi-Asset strategies experienced positive long-term net inflows of **$1.4 billion** and **$1.8 billion** respectively, while Equity and Fixed Income saw long-term net outflows[17](index=17&type=chunk) Net Flows by Asset Class for Q3 2024 (in billions) | Asset Class | Long-term Net Flows | Cash Management Net Flows | Total Net Flows | | :--- | :--- | :--- | :--- | | Equity | $(1.6) | — | $(1.6) | | Fixed Income | $(4.8) | — | $(4.8) | | Alternative | $1.4 | — | $1.4 | | Multi-Asset | $1.8 | — | $1.8 | | Cash Management | — | $3.0 | $3.0 | | **Total** | **$(3.2)** | **$3.0** | **$(0.2)** | [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) Q3 2024 saw total operating revenues of **$2.12 billion**, operating income of **$222.5 million**, and net income of **$174.0 million** - Quarter-over-quarter, operating income increased **72%** from **$129.3 million** in Q2 2024 to **$222.5 million** in Q3 2024, primarily due to a **13%** decrease in compensation and benefits expense[13](index=13&type=chunk) Consolidated Statement of Income Summary (Three Months Ended June 30) | (in millions, except per share data) | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Total operating revenues | $2,122.9 | $1,969.0 | 8% | | Total operating expenses | $1,900.4 | $1,654.1 | 15% | | **Operating Income** | **$222.5** | **$314.9** | **(29%)** | | **Net Income Attributable to Franklin Resources, Inc.** | **$174.0** | **$227.5** | **(24%)** | | Diluted Earnings per Share | $0.32 | $0.44 | (27%) | | Dividends Declared per Share | $0.31 | $0.30 | 3% | [Supplemental Non-GAAP Financial Measures](index=7&type=section&id=Supplemental%20Non-GAAP%20Financial%20Measures) Non-GAAP measures, including adjusted operating income and net income, are provided to offer useful financial performance indicators and facilitate peer comparison - Management believes non-GAAP measures are useful for evaluating relative performance against industry peers by excluding certain items not considered reflective of underlying operations[19](index=19&type=chunk) - Key adjustments to derive non-GAAP figures include excluding acquisition-related items (retention, amortization), special termination benefits, and the impact of consolidating investment products[21](index=21&type=chunk)[24](index=24&type=chunk) Reconciliation of GAAP to Adjusted Operating Income (in millions) | | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | **Operating income (GAAP)** | **$222.5** | **$129.3** | **$314.9** | | Adjustments (e.g., acquisition-related, amortization) | $202.4 | $290.3 | $161.9 | | **Adjusted operating income (Non-GAAP)** | **$424.9** | **$419.6** | **$476.8** | Reconciliation of GAAP to Adjusted Net Income (in millions) | | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | **Net income attributable to Franklin Resources, Inc. (GAAP)** | **$174.0** | **$124.2** | **$227.5** | | Adjustments (net of tax) | $152.4 | $182.4 | $98.6 | | **Adjusted net income (Non-GAAP)** | **$326.4** | **$306.6** | **$326.1** | [Company Overview and Forward-Looking Statements](index=11&type=section&id=Company%20Overview%20and%20Forward-Looking%20Statements) Franklin Templeton is a global investment management firm with over **$1.6 trillion** in AUM, and this report contains forward-looking statements subject to inherent risks - Franklin Templeton is a global investment management organization with over **1,500** investment professionals and over **$1.6 trillion** in AUM as of June 30, 2024[29](index=29&type=chunk) - The report includes forward-looking statements based on current expectations and assumptions, which are subject to inherent risks and uncertainties that could cause actual results to differ materially[30](index=30&type=chunk)[31](index=31&type=chunk) - The company undertakes no obligation to update forward-looking statements unless required by law[32](index=32&type=chunk)

Core Viewpoint - Franklin Resources Inc. (BEN) is expected to report a decline in earnings for the third quarter of fiscal 2024, while revenues are anticipated to rise, reflecting mixed performance in the asset management sector [1][2]. Financial Performance - The consensus estimate for earnings is 58 cents per share, indicating a 7.9% decline from the previous year [1]. - Revenue is projected at $2.15 billion, representing a year-over-year increase of 9.2% [2]. - Franklin's total assets under management (AUM) as of June 30, 2024, are estimated at $1.66 trillion, a 20.9% increase from the prior year [3]. Market Conditions - The S&P 500 Index rose over 4% in the April-June quarter, positively impacting asset managers, although the fixed-income market lagged behind [3]. - Client activity remained decent despite lower volatility in the fixed-income market, as investors sought higher yields [4]. Revenue Breakdown - Investment management fees are estimated at $1.65 billion, down 3.9% sequentially [4]. - Sales and distribution fees are projected at $344.5 million, also reflecting a 3.9% decline from the previous quarter [4]. - Shareholder servicing fees are expected to be $61.8 million, indicating a 9% sequential decline [5]. Expense Outlook - Compensation and benefits are anticipated to total $820 million, including performance fees of $40 million [6]. - Information systems and technology expenses are projected at $150 million, with occupancy expenses at $80 million [7]. - General, administrative, and other expenses are estimated between $175 million and $180 million, influenced by advertising spending [7]. Earnings Prediction - The current Earnings ESP for Franklin is -3.13%, indicating a lower likelihood of an earnings beat [8]. - Franklin holds a Zacks Rank of 4 (Sell), suggesting a cautious outlook for the upcoming earnings report [8].

Core Viewpoint - The market anticipates a year-over-year decline in earnings for Franklin Resources (BEN) despite an increase in revenues, with the upcoming earnings report expected to be released on July 26 [1] Group 1: Earnings Expectations - Franklin Resources is expected to report quarterly earnings of $0.58 per share, reflecting a year-over-year decline of 7.9% [2] - Revenues are projected to be $2.15 billion, which is an increase of 9.2% compared to the same quarter last year [2] - The consensus EPS estimate has been revised down by 0.85% over the last 30 days, indicating a reassessment by analysts [2] Group 2: Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for Franklin Resources is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -3.13% [5] - The stock currently holds a Zacks Rank of 4, suggesting a bearish outlook [5][6] - A positive Earnings ESP is generally a strong predictor of an earnings beat, especially when combined with a favorable Zacks Rank [4] Group 3: Historical Performance - In the last reported quarter, Franklin Resources was expected to post earnings of $0.57 per share but delivered $0.56, resulting in a surprise of -1.75% [7] - Over the past four quarters, the company has beaten consensus EPS estimates three times [7] Group 4: Market Sentiment - An earnings beat or miss may not solely determine stock price movement, as other factors can influence investor sentiment [8] - Franklin Resources does not appear to be a compelling candidate for an earnings beat, suggesting caution for investors [8]

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Core Viewpoint - Franklin Resources Inc. (BEN) is well-positioned for growth through acquisitions, a solid distribution platform, and an organic growth strategy, but faces challenges from rising expenses and concentrated revenues from investment management fees [1][5]. Acquisitions and Growth Strategy - The company has been actively growing through acquisitions, including the recent acquisition of Putnam Investments in January 2024, which is expected to enhance its defined contribution AUM to over $100 billion [1]. - Previous acquisitions, such as Alcentra and Lexington, have strengthened its presence in various investment sectors, including private debt and real estate, aiding in the expansion of alternative investments and multi-asset solutions [2]. Assets Under Management (AUM) Performance - Franklin's AUM has shown solid growth, with a five-year CAGR of 18.7% from 2018 to 2023, despite a dip in fiscal 2022 [3]. - The company is diversifying into asset classes with rising demand, which is expected to support AUM growth, projected to achieve an 11.8% CAGR by fiscal 2026 [3]. Revenue Growth and Diversification - The company has demonstrated organic growth through an 8% CAGR in revenues over the last four fiscal years (2019-2023), with continued growth in the first half of fiscal 2024 [4]. - Franklin's distribution platform has led to increased diversification across funds and asset classes, with a focus on fixed income to expand revenue streams [4]. Revenue Concentration and Expense Challenges - A significant portion of Franklin's revenues (81.2% in the first half of fiscal 2024) comes from investment management fees, which are subject to volatility due to market fluctuations and other factors [5]. - The company has experienced a 12.5% CAGR in expenses over the last four years, with ongoing inflationary pressures and rising headcount expected to keep expenses elevated, projected to grow at a 6.5% CAGR over the next three fiscal years [6].

Franklin Resources, Inc. (BEN) reported its preliminary assets under management (AUM) of $1.64 trillion as of May 31, 2024. This reflected an increase of 2% from the prior month’s level.The improvement in AUM balance was primarily due to the impact of positive markets, partially offset by long-term net outflows. BEN recorded equity assets of $583.9 billion, which increased 3.5% from the previous month. Further, fixed income AUM of $563.6 billion at the end of May 2024 increased nearly 1% from the previous m ...