Financial Data and Key Metrics Changes - Cash earnings for the full year were $514.6 million, down 8.4% year on year, primarily due to a decrease in non-interest income and higher funding costs impacting margins in the first half [5][17] - Operating expenses increased by 7.7% year on year, reflecting planned investment spending and inflationary pressures, but only rose 2.1% in the second half [6][30] - The common equity tier one (CET1) capital ratio was 11%, down 17 basis points over the half but still above the board-approved target [36][37] Business Line Data and Key Metrics Changes - The consumer division saw strong mortgage growth of 8% for the full year, but cash earnings remained flat [7] - The business and agri divisions experienced a 10% decrease in cash earnings, primarily due to reduced net interest income from competitive pressures [8] - The digital EasySaver product launched in February drove a 23% growth in EasySaver balances, contributing to low-cost deposit growth [8] Market Data and Key Metrics Changes - Customer numbers increased by 11%, with the digital bank reaching 1.2 million customers, marking the strongest growth since its inception [4] - Digital deposits through Bendigo Bank branded products grew by 58% over the year, while UP deposits increased by 34% [10][29] - The household deposit to loan ratio remained strong at 73%, significantly above the industry average [29][35] Company Strategy and Development Direction - The company is focusing on a refreshed strategy that emphasizes trust, agility, regional presence, and a strong deposit-gathering franchise [38][39] - The strategy includes five pillars aimed at enhancing digital experiences, streamlining operations, deepening customer relationships, and reinforcing community support [41][42] - The company plans to optimize its deposit franchise and enhance productivity to achieve a return on equity (ROE) target of above 10% by 2030 [43][51] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by a competitive environment and the need for disciplined pricing strategies to maintain margins [56][96] - The company anticipates a gradual improvement in ROE, with significant investments and productivity improvements required over the next two years [71][72] - Management expressed optimism about the potential for improved deposit growth through enhanced digital capabilities and customer engagement [65][99] Other Important Information - The company has invested over $416 million into local communities through sponsorships and grants over the last twenty years, with over $50 million invested this year alone [12] - The company has implemented a productivity program, with restructuring costs expected to continue as part of a comprehensive strategy [6][19] Q&A Session Summary Question: Margin stability and expectations for the next half - Management expressed a desire for more stability in margins, noting that they have managed pricing effectively despite cash rate impacts [56][57] Question: Building blocks for the 10% ROE target - Management highlighted the importance of optimizing the deposit franchise and maintaining costs in line with inflation to support ROE growth [58][60] Question: Funding strategy for growth in business and agri - Management indicated that improving online deposit account opening capabilities would support growth ambitions in business and agri lending [64][65] Question: Regulatory changes and their impact - Management expressed hope that regulatory changes would reduce burdens for mid-sized banks, allowing for more investment in customer-facing capabilities [67][68] Question: Trajectory of ROE towards FY 2030 - Management indicated that the path to improved ROE would not be linear, with significant efforts required in the next two years [71][72] Question: Capital generation and dividend policy - Management reassured that organic capital generation would improve as the company grows, despite a high payout ratio [76][78] Question: Monetizing the UP client base - Management noted that UP's strong customer satisfaction scores would facilitate growth in home lending as the product offerings expand [85][87] Question: Margin compression in business and agri - Management acknowledged competitive pressures impacting margins but emphasized the importance of strategic pricing and deposit management [89][90]

Financial Data and Key Metrics Changes - Cash earnings for the full year were $514.6 million, down 8.4% year on year, primarily due to a decrease in noninterest income and higher funding costs impacting margins in the first half [4] - Operating expenses increased by 7.7% year on year, reflecting planned investment spending and inflationary pressures, but only rose 2.1% in the second half [5][30] - The common equity tier one (CET1) capital ratio remained strong at 11%, down 17 basis points from the previous half [36][35] Business Line Data and Key Metrics Changes - The consumer division saw strong mortgage growth of 8% for the full year, but cash earnings remained flat [6] - The business and agri divisions experienced a 10% decrease in cash earnings, primarily due to reduced net interest income amid competitive pressures [7] - The digital EasySaver product launched in February drove a 23% growth in EasySaver balances, contributing to low-cost deposit growth [7] Market Data and Key Metrics Changes - Customer numbers increased by 11%, with the digital bank reaching 1.2 million customers [3] - Digital deposits grew significantly, with Bendigo Bank branded deposits up 58% over the year and UP deposits increasing by 34% [10] - The household deposit to loan ratio stood at 73%, significantly above the industry average [35] Company Strategy and Development Direction - The company is focusing on a refreshed strategy that emphasizes trust, agility, regional presence, and a strong deposit-gathering franchise [38][40] - The strategy includes five pillars aimed at enhancing digital experiences, streamlining operations, deepening customer relationships, and reinforcing community support [41][42] - The company plans to optimize its deposit franchise and enhance productivity to achieve a return on equity (ROE) target of above 10% by 2030 [51][43] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by a competitive environment and the need for disciplined pricing strategies to maintain margins [55][56] - The company expects cash rates to continue their downward trend, impacting net interest margins but aims to stabilize margins through strategic repricing [23][24] - Management expressed confidence in the ability to grow deposits and maintain a strong funding mix to support lending growth [59][60] Other Important Information - The company has invested over $416 million into local communities through sponsorships and grants over the last twenty years, with over $50 million invested this year alone [12] - The company is committed to sustainability and has implemented a climate approach to support decarbonization in various sectors [13] Q&A Session Summary Question: Expectations for margin stability - Management indicated a desire for more stability in margins and discussed the impact of cash rate changes on net interest margins [55][56] Question: Building blocks for the 10% ROE target - Management highlighted the importance of optimizing the deposit franchise and maintaining costs in line with inflation to support ROE growth [58][60] Question: Funding strategy for growth in business and agri - Management discussed plans to enhance digital capabilities for deposit gathering and cross-selling deposit products to existing customers [66][67] Question: Regulatory environment and its impact - Management expressed hope for a more balanced regulatory burden for mid-sized banks, which could support growth [68][69] Question: Trajectory of ROE towards FY '30 - Management acknowledged that achieving the ROE target will require significant effort over the next few years, with expectations of gradual improvement rather than linear growth [72][74] Question: Capital generation and dividend policy - Management reassured that the business can continue to generate organic capital despite a high payout ratio, with expectations of improved profitability [78][79] Question: Monetizing the UP client base - Management noted that UP is expected to contribute positively to the bottom line by FY '27, with plans to expand product offerings to include investment properties [86][88] Question: Margin compression in business and agri - Management acknowledged ongoing price pressure in a competitive market, impacting net interest margins [90][91]

Financial Performance - The company's customer base increased by 11% year-on-year, reaching 2.9 million customers[8] - Customer deposits grew by 6.6%, with lower-cost deposits increasing by 8.5%[8] - The company declared a dividend of 33 cents, consistent with the previous year[8] - Total lending increased by 2.8% to $85.9 billion in 2H25[30] - Customer deposits increased by 1.2% to $72.9 billion in 2H25[30] - Net interest income increased by 1.1% to $844.1 million in 2H25[32] - Digital deposits experienced growth of 44% year-on-year and 14% compared to the prior half, driven by Bendigo Bank's eBanking functionality[67] Up Performance - Up's customer base reached 1.2 million, representing a 29% year-on-year growth[17] - Up's deposits totaled $2.8 billion, a 34% year-on-year increase[18] - Up's home loans amounted to $1.7 billion, a 194% year-on-year increase[18] Community Bank Impact - Community Banks contributed a net benefit of approximately $14 billion in additional deposits[94] - Community Banks have invested $416 million back into communities since the inception of the model[27, 200] - Community Bank branches increased deposits for the broader Group by $2.9 billion in FY25[194]

Core Viewpoint - Franklin Resources, Inc. (BEN) has reached a 52-week high of $25.79, with an 18.3% increase over the past three months, outperforming both the industry and the S&P 500 [1][6] Group 1: Stock Performance - BEN stock has gained 18.3% over the last three months, while peers T. Rowe Price Group, Inc. (TROW) and Invesco Ltd (IVZ) have gained 12.1% and 35.9%, respectively [1] - The stock's recent performance raises questions about its potential for further upside despite hitting a 52-week high [1] Group 2: AUM Growth Factors - Franklin has consistently increased its Assets Under Management (AUM), achieving a compound annual growth rate (CAGR) of 3.1% over the last five fiscal years, with growth continuing into fiscal 2025 [2] - Strategic acquisitions, including the purchase of Putnam Investments and a partnership with SBI Holdings, have significantly contributed to AUM growth and diversification into emerging asset classes [3][4][6] Group 3: Business Diversification - The company is diversifying into asset classes with growing client demand, which is expected to further enhance AUM growth [4][14] - A regionally-focused distribution model has improved Franklin's non-U.S. business, resulting in favorable net flows [4] Group 4: Financial Position - As of March 31, 2025, Franklin had no short-term debt and a liquidity position of $5.7 billion, indicating a strong balance sheet [9] - The company has demonstrated impressive capital distribution activities, including a share repurchase authorization of 27.2 million shares and a 3.2% increase in its common stock dividend [10][11] Group 5: Earnings and Sales Estimates - Earnings estimates for 2025 indicate year-over-year declines, with a projected decrease of 12.97% [16] - Sales estimates also reflect a potential decline, with a year-over-year growth estimate of -0.12% for the current year [19]

Core Insights - Franklin Resources, Inc. (BEN) reported preliminary assets under management (AUM) of $1.62 trillion for July 2025, reflecting a slight increase from the previous month due to market gains and flat long-term net inflows, which included $3 billion of long-term net outflows at Western Asset Management [1][10]. AUM Breakdown - Equity assets reached $662.8 billion, marking a 1% increase from the previous month. Multi-asset AUM was $184.7 billion, also up nearly 1%. Cash management balance increased marginally to $72 billion. However, fixed income AUM declined to $440 billion, and alternative AUM fell to $257.5 billion [2]. Growth Trends - Over the last five fiscal years ending in 2024, BEN's AUM experienced a compound annual growth rate (CAGR) of 3.1%, with continued growth in the first nine months of fiscal 2025. Strategic acquisitions have played a significant role in supporting this growth [3]. Strategic Partnerships and Acquisitions - In July 2024, Franklin partnered with Japan's SBI Holdings to focus on ETFs and emerging asset classes, including digital assets and cryptocurrencies. The acquisition of Putnam Investments in January 2024 is expected to enhance Franklin's growth in the retirement sector, increasing its defined contribution AUM to over $100 billion [4]. Diversification Efforts - Franklin's strategy to diversify into asset classes with growing client demand is anticipated to drive AUM growth. A regionally-focused distribution model has improved BEN's non-U.S. business, resulting in favorable net flows [5]. Competitor Performance - Competitors like Invesco and T. Rowe Price have also shown AUM growth. Invesco's AUM grew at a CAGR of 8.5% over the last five years, while T. Rowe Price's AUM saw a CAGR of 2.3% over the past four years [6][8]. Price Performance and Valuation - Franklin's shares have increased by 24.4% in 2025, contrasting with a marginal decline in the industry. The company trades at a forward price-to-earnings (P/E) ratio of 10.91, which is below the industry average [9][11]. Earnings Estimates - The Zacks Consensus Estimate indicates a year-over-year decline of 13% in fiscal 2025 earnings, with a projected growth of 14.7% for fiscal 2026. Earnings estimates for both years have been revised upward over the past 30 days [12].

Core Insights - Franklin Resources modestly surpassed analysts' expectations for Q3 FY2025 in both revenue and non-GAAP earnings per share, with EPS at $0.49 versus an estimate of $0.48 and GAAP revenue reaching $2,064.0 million compared to a consensus of $1,582.2 million [1][2] - Despite the positive surprise, both revenue and profit metrics declined year-over-year, with GAAP revenue down 2.8% and operating income down 30.7% [2][5] - The company experienced improved net flows outside of its Western Asset Management subsidiary, although pressures from Western continued to impact overall profitability and margins [1][6] Financial Performance - Non-GAAP EPS for Q3 FY2025 was $0.49, down 18% from $0.60 in Q3 FY2024 [2] - GAAP revenue was $2,064.0 million, a decrease of 2.8% from $2,122.9 million in the previous year [2] - Operating income fell to $154.1 million, a 30.7% decline year-over-year [2] - Operating margin decreased to 7.5% from 10.5% a year ago, while adjusted operating margin narrowed to 23.7% from 25.7% [2][5] - Assets under management (AUM) were $1,611.8 billion, down 2.1% from the previous year [2][6] Business Overview - Franklin Resources manages a diverse range of investment portfolios across various asset classes, with a business model focused on collecting management fees based on AUM [3][4] - The company aims to capture client assets through mutual funds, ETFs, separately managed accounts, and alternative investment strategies [4] Growth Areas - Alternative investments are a significant growth area, with fundraising totaling $19.0 billion year-to-date, including $15.7 billion in private markets [7] - The company announced an agreement to acquire a majority interest in Apera Asset Management, enhancing its capabilities in private credit [7] - The ETF platform achieved record assets of $44.1 billion, supported by $4.3 billion in positive flows, marking 15 consecutive quarters of inflows [8] Geographic Performance - The international business performed well, with AUM from outside the U.S. nearing $500 billion, and positive net flows reported in both the EMEA region and the Americas ex-U.S. [9] Cost Management and Shareholder Returns - The company is focused on expense control, with FY2025 expenses expected to remain consistent with the previous year, excluding performance compensation related to acquisitions [9] - A quarterly dividend of $0.32 per share was declared, reflecting a 3% increase from the same period last year, alongside a share buyback of 7.3 million shares [10] Strategic Focus - Management emphasized priorities such as the integration of new acquisitions, expansion in alternatives, and disciplined cost management, with a goal to reduce costs by $200–$250 million entering FY2026 [11] - The firm's institutional "won-but-unfunded" pipeline reached a record $24.4 billion, indicating strong future potential [11] - Ongoing investments in ETFs, digital asset vehicles, and custom indexing are part of the company's strategy to diversify its product lineup [12]

Core Viewpoint - Franklin Resources Inc. reported third-quarter fiscal 2025 adjusted earnings of 49 cents per share, exceeding the Zacks Consensus Estimate of 48 cents, but down from 60 cents in the same quarter last year. The results were influenced by improved assets under management (AUM), although lower revenues and higher expenses negatively impacted performance [1][10]. Financial Performance - Net income on a GAAP basis was $92.3 million, reflecting a 46.9% decline year over year, compared to an estimate of $131.2 million [2]. - Total operating revenues decreased by 2.8% year over year to $2.06 billion, although this figure surpassed the Zacks Consensus Estimate of $2 billion [3]. - Investment management fees fell by 2.9% year over year to $1.64 billion, while sales and distribution fees decreased by 1.8% to $351.9 million. Shareholder-servicing fees also declined by 3.1% to $59.9 million, and other revenues dropped by 11.6% to $11.4 million [4]. - Total operating expenses increased slightly year over year to $1.91 billion, driven by higher compensation and benefits costs, technology expenses, and other operational costs. The operating margin shrank to 7.5% from 10.5% in the previous year [5]. Assets Under Management (AUM) - As of June 30, 2025, total AUM was $1.61 trillion, marking a 4.6% sequential increase, despite long-term net outflows of $9.3 billion during the quarter. The average AUM was $1.57 trillion, showing a slight decrease on a sequential basis [6]. Capital Position and Distribution - As of June 30, 2025, the company held cash and cash equivalents of $6.8 billion, with total stockholders' equity at $13.1 billion [7]. - In the reported quarter, Franklin repurchased 7.3 million shares for $157.4 million [8]. Strategic Outlook - The company is focusing on diversifying its business through acquisitions and leveraging its rising AUM and strong distribution platform, which may support revenue growth. However, increasing expenses related to technological upgrades could pressure profitability [11].

PART I Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Franklin Resources, Inc.'s unaudited consolidated financial statements for Q3 2025, showing decreased net income and EPS [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Q3 2025 total operating revenues decreased to $2,064.0 million, with net income falling to $92.3 million and diluted EPS to $0.15 Consolidated Statements of Income Highlights (in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total operating revenues** | $2,064.0 | $2,122.9 | $6,427.0 | $6,266.8 | | **Operating Income** | $154.1 | $222.5 | $518.7 | $558.3 | | **Net Income Attributable to Franklin Resources, Inc.** | $92.3 | $174.0 | $407.3 | $549.5 | | **Diluted Earnings per Share** | $0.15 | $0.32 | $0.70 | $1.03 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased slightly to $32,552.2 million as of June 30, 2025, while total liabilities rose and stockholders' equity decreased Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$32,552.2** | **$32,464.5** | | Cash and cash equivalents | $3,253.9 | $3,309.5 | | Goodwill | $6,211.6 | $6,211.4 | | Intangible assets, net | $4,440.3 | $4,802.1 | | **Total Liabilities** | **$18,117.3** | **$17,899.7** | | Debt | $2,666.7 | $2,780.3 | | **Total Stockholders' Equity** | **$13,054.4** | **$13,243.0** | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Nine months ended June 30, 2025, saw net cash from operations increase to $1,086.8 million, with a total decrease in cash of $451.9 million Cash Flow Summary (Nine Months Ended June 30, in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $1,086.8 | $413.1 | | **Net cash used in investing activities** | $(1,901.3) | $(1,222.7) | | **Net cash provided by financing activities** | $363.9 | $506.4 | | **Decrease in cash and cash equivalents** | $(451.9) | $(290.7) | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes cover accounting policies, investments, fair value, CIPs, and legal proceedings, with sponsored funds contributing 83% of revenues - Revenues from sponsored funds accounted for **83% of total operating revenues** for the nine months ended June 30, 2025[25](index=25&type=chunk) - The company's maximum exposure to loss from nonconsolidated Variable Interest Entities (VIEs), consisting of investments and receivables, was **$1,623.8 million** as of June 30, 2025[45](index=45&type=chunk) - No significant changes occurred in the India Credit Fund Closure Matters, while SEC and DOJ investigations into Western Asset Management (WAM) are ongoing, and new lawsuits were filed regarding the Franklin Templeton 401(k) Retirement Plan and WAM trade allocations[46](index=46&type=chunk)[47](index=47&type=chunk)[49](index=49&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 2025 financial performance, noting decreased AUM to $1,611.8 billion, lower revenues, and a contracted operating margin of 7.5% [Assets Under Management (AUM)](index=24&type=section&id=Assets%20Under%20Management%20%28AUM%29) Total AUM decreased 2% to $1,611.8 billion at June 30, 2025, driven by $80.1 billion in net outflows, primarily from Fixed Income AUM by Asset Class (in billions) | Asset Class | June 30, 2025 | June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Equity | $656.6 | $595.0 | 10% | | Fixed Income | $441.7 | $564.5 | (22%) | | Alternative | $258.4 | $254.5 | 2% | | Multi-Asset | $183.2 | $168.1 | 9% | | Cash Management | $71.9 | $64.5 | 11% | | **Total** | **$1,611.8** | **$1,646.6** | **(2%)** | Change in AUM (Nine Months Ended June 30, 2025, in billions) | Component | Amount | | :--- | :--- | | Beginning AUM (Oct 1, 2024) | $1,678.6 | | Long-term net flows | $(85.5) | | Cash management net flows | $5.4 | | **Total net flows** | **$(80.1)** | | Net market change, distributions and other | $13.5 | | **Ending AUM (June 30, 2025)** | **$1,611.8** | - For the nine months ended June 30, 2025, long-term net outflows totaled **$85.5 billion**, including **$118.6 billion** of long-term net outflows at Western Asset Management (WAM)[79](index=79&type=chunk) [Investment Performance](index=28&type=section&id=Investment%20Performance) As of June 30, 2025, Fixed Income performance was strong, with 65% of AUM in top two quartiles (1-year), while Equity performance was weaker at 41% Investment Performance as of June 30, 2025 (% of AUM) | Category | Metric | 1-Year | 3-Year | 5-Year | 10-Year | | :--- | :--- | :--- | :--- | :--- | :--- | | **Equity** | % AUM in Top 2 Quartiles | 41% | 63% | 51% | 59% | | | % AUM Exceeding Benchmark | 31% | 45% | 35% | 44% | | **Fixed Income** | % AUM in Top 2 Quartiles | 65% | 72% | 68% | 61% | | | % AUM Exceeding Benchmark | 65% | 74% | 82% | 86% | [Operating Revenues and Expenses](index=28&type=section&id=Operating%20Revenues%20and%20Expenses) Q3 2025 operating revenues decreased 3% to $2.1 billion due to lower AUM, while expenses remained flat, impacted by increased amortization and decreased occupancy costs - Investment management fees decreased in Q3 2025 due to a **4% drop in average AUM**, primarily in fixed income, with an effective investment management fee rate of **40.5 basis points** for the quarter[90](index=90&type=chunk)[91](index=91&type=chunk) - Performance fees were **$60.6 million** for Q3 2025, up from **$56.6 million** in the prior year quarter[92](index=92&type=chunk) - Amortization of intangible assets increased significantly for both the three and nine-month periods, primarily due to a reduction in the remaining useful life of definite-lived intangible assets related to WAM[111](index=111&type=chunk) - An impairment charge of **$24.4 million** was recognized during the nine months ended June 30, 2025, related to certain indefinite-lived intangible assets for acquired mutual fund investment management contracts[112](index=112&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $5.6 billion in liquid assets, repurchased 8.1 million shares for $173.2 million, and entered a new $1.1 billion credit agreement Liquid Assets and Debt (in millions) | Category | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $3,213.4 | $3,261.1 | | Receivables | $1,215.3 | $1,261.6 | | Investments | $1,216.1 | $1,141.7 | | **Total Liquid Assets** | **$5,644.8** | **$5,664.4** | | **Debt** | **$2,666.7** | **$2,780.3** | - During the nine months ended June 30, 2025, the company repurchased **8.1 million shares** of common stock at a cost of **$173.2 million**, with **21.9 million shares** remaining available for repurchase[147](index=147&type=chunk) - On April 30, 2025, the company entered into a new five-year, **$1.1 billion** Amended and Restated Revolving Credit Agreement[142](index=142&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in market risk disclosures from the Annual Report on Form 10-K for the fiscal year ended September 30, 2024 - No material changes occurred from the market risk disclosures in the Form 10-K for the fiscal year ended September 30, 2024[159](index=159&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The Company's principal executive and financial officers concluded that disclosure controls and procedures as of June 30, 2025, were effective[160](index=160&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[161](index=161&type=chunk) PART II Other Information [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings include ongoing SEC/DOJ investigations into WAM, a related class-action lawsuit, and a new lawsuit regarding the Franklin Templeton 401(k) Retirement Plan - The company provides an update on the Western Asset Management (WAM) investigations, noting the CFTC has closed its investigation, but SEC and DOJ investigations remain ongoing, with a related class-action lawsuit filed on July 3, 2025[47](index=47&type=chunk)[48](index=48&type=chunk) - A new lawsuit was filed on July 22, 2025, by former employees concerning the Franklin Templeton 401(k) Retirement Plan, alleging breaches of fiduciary duties related to the inclusion of proprietary funds[49](index=49&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) No material changes occurred from the Risk Factors previously disclosed in the Annual Report on Form 10-K for fiscal year 2024 - No material changes occurred from the Risk Factors disclosed in the last Annual Report on Form 10-K[164](index=164&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2025, the company repurchased 7,295,376 shares of common stock, with 21.9 million shares remaining authorized for repurchase Common Stock Repurchases (Q3 2025) | Month | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 100,572 | $19.22 | | May 2025 | 7,190,234 | $21.61 | | June 2025 | 4,570 | $21.15 | | **Total** | **7,295,376** | **N/A** | - In December 2023, the Board of Directors authorized the repurchase of up to an additional **27.2 million shares**, for a total of up to **40.0 million shares** available under the program[166](index=166&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q3 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the quarter ended June 30, 2025[167](index=167&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications and iXBRL formatted financial data

Financial Data and Key Metrics Changes - The company's assets under management (AUM) ended the quarter at $1,610 billion, an increase from the prior quarter due to positive market impacts and strengthening flows, partially offset by long-term outflows at Western Asset Management [18][19] - Adjusted operating income was $378 million, flat from the prior quarter, driven by lower compensation expenses, offset by the impact of Western outflows and lower average AUM [34] Business Line Data and Key Metrics Changes - Long-term net outflows totaled $9.3 billion, representing a marked improvement from the prior quarter's outflows of $26.2 billion. Excluding Western Asset Management, long-term net inflows were $7.8 billion this quarter [19][20] - Multi-asset and alternatives generated another quarter of positive net flows, resulting in a combined $4.3 billion for the quarter, with multi-asset flows being positive for 16 consecutive quarters [20] - Fixed income net outflows improved to $13 billion this quarter, while excluding Western, fixed income net inflows were $3.5 billion, driven by Franklin Templeton fixed income and Brandywine Global [21][22] Market Data and Key Metrics Changes - The S&P 500 posted a recovery, rising 25% from its April lows and ending the quarter up nearly 11%, with large-cap growth stocks leading the recovery [9][10] - International markets outperformed the US, with the MSCI EAFE up 19% through June, aided by a weaker US dollar [10] Company Strategy and Development Direction - The company aims to manage local businesses combined with global scale, focusing on local investing and client needs, with approximately 30% of AUM in countries outside the US [8] - The company is committed to growing its global alternatives platform, with a recent agreement to acquire a majority interest in Apira Asset Management, expanding direct lending capabilities across Europe's lower middle market [24][25] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously constructive on the outlook for the US equity market, citing solid fundamentals but caution due to geopolitical and policy uncertainties [11][12] - The company continues to expect at most one more rate cut by the Fed this year, with additional monetary easing possible should growth begin to deteriorate [14] Other Important Information - The company has seen cash management net inflows for four out of the last five quarters, with $2.7 billion in each of the last two quarters, increasing cash management AUM to $72 billion [23] - The ETF platform achieved its fifteenth consecutive quarter of positive net flows, attracting $4.3 billion and reaching a new high of $44.1 billion in AUM, reflecting a 19% growth from the prior quarter [28] Q&A Session Summary Question: Integration and Growth of Private Credit - Management emphasized the importance of integrating acquisitions like Apira into the broader private credit platform, aiming for a unified private credit group rather than standalone entities [37][40] Question: Tokenization's Economic Value Proposition - Management believes tokenization will fundamentally change the financial system, enhancing capabilities and reducing costs through blockchain technology [44][48] Question: Regulatory Conversations and Capital Deployment - Management reiterated the strength of their fixed income franchise and noted ongoing cooperation with regulators regarding Western Asset Management, while focusing on organic growth and share repurchases [51][56] Question: Outlook for Private Markets Growth - Management expects alternative fundraising to be in the range of $13 to $20 billion, with a focus on expanding the wealth channel and increasing distributor relationships [62][66]

Core Insights - Franklin Resources reported $2.06 billion in revenue for the quarter ended June 2025, a year-over-year decline of 2.8%, with EPS of $0.49 compared to $0.60 a year ago, exceeding the Zacks Consensus Estimate of $2 billion by 3.4% [1] - The company delivered an EPS surprise of 2.08%, with the consensus EPS estimate being $0.48 [1] Financial Performance - Total Net Flows were reported at $-6.60 billion, better than the three-analyst average estimate of $-12.88 billion [4] - Assets Under Management (AUM) totaled $1,611.80 billion, exceeding the three-analyst average estimate of $1,588.40 billion [4] - AUM in Fixed Income was $441.70 billion, below the estimate of $452.27 billion; Multi-Asset AUM was $183.20 billion, above the estimate of $175.25 billion; Equity AUM was $656.60 billion, above the estimate of $639.18 billion; Alternative AUM was $258.40 billion, above the estimate of $250.18 billion; Cash Management AUM was $71.90 billion, slightly above the estimate of $71.51 billion [4] Revenue Breakdown - Operating Revenues from Investment Management Fees were $1.64 billion, exceeding the average estimate of $1.56 billion, representing a year-over-year change of -2.9% [4] - Operating Revenues from Shareholder Servicing Fees were $59.9 million, compared to the estimated $58.57 million, reflecting a -3.1% change year-over-year [4] - Operating Revenues from Sales and Distribution Fees were $351.9 million, exceeding the three-analyst average estimate of $344.14 million, with a year-over-year change of -1.8% [4] Stock Performance - Shares of Franklin Resources returned -3.5% over the past month, while the Zacks S&P 500 composite increased by 2.3% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]