Franklin Resources(US:BEN)2026-01-30 13:43Financial Performance - Operating revenues for the three months ended December 31, 2025, were $2,327.1 million, reflecting a 3% increase compared to $2,251.6 million in the same period of 2024[69]. - Net income attributable to Franklin Resources, Inc. for the same period was $255.5 million, a significant 56% increase from $163.6 million in the prior year[69]. - The company’s diluted earnings per share increased by 59% to $0.46 from $0.29 year-over-year[69]. - The adjusted operating income for the three months ended December 31, 2025, was $437.3 million, a 6% increase from $412.8 million in the prior year[69]. - Total operating revenues increased by 3% to $2,327.1 million for the three months ended December 31, 2025[84]. - Adjusted net income rose to $378.4 million in Q4 2025, compared to $320.5 million in Q4 2024, marking an increase of 18.0%[123]. - Diluted earnings per share increased to $0.46 in Q4 2025 from $0.29 in Q4 2024, a growth of 58.6%[123]. Assets Under Management (AUM) - Total assets under management (AUM) as of December 31, 2025, reached $1,684.0 billion, a 1% increase from September 30, 2025, and a 7% increase from December 31, 2024[66]. - Average AUM for the three months ended December 31, 2025, was $1,676.1 billion, a 3% increase from $1,634.5 billion in the same period of 2024[71]. - AUM by asset class showed a 12% increase in equity to $697.2 billion, while fixed income decreased by 7% to $437.7 billion[70]. - AUM in the United States increased by 8% to $1,195.7 billion as of December 31, 2025[77]. - Long-term inflows increased by 22% to $118.6 billion compared to the prior period, driven by higher inflows in equity open-end funds and alternative private funds[75]. - Long-term outflows decreased by 38% to $90.6 billion, primarily due to lower outflows across multiple fixed income vehicles[75]. Expenses and Cost Management - Total operating expenses for the three months ended December 31, 2025, were $2,046.1 million, a 1% increase from $2,032.6 million in 2024[1]. - Compensation and benefits expenses rose to $1,030.7 million, reflecting a 4% increase from $991.4 million in the prior year, driven by higher incentive compensation and annual salary increases[1][2]. - Sales, distribution, and marketing expenses totaled $540.9 million, a 6% increase from $512.3 million, mainly due to a rise in asset-based expenses[1][4]. - The company remains focused on expense management while investing strategically in systems and technology to support its evolving business[68]. Cash Flow and Investments - Operating cash flows for Q4 2025 were $(255.1) million, compared to $(145.2) million in Q4 2024, indicating a decline in cash flow[124]. - Cash and cash equivalents decreased to $2,636.6 million as of December 31, 2025, down from $3,050.1 million at September 30, 2025[127]. - The company has $500.0 million of short-term commercial paper available for issuance under an uncommitted private placement program[135]. - The total aggregate commitments under the Credit Agreement increased by $400.0 million to $1.5 billion as of December 31, 2025[133]. - The investment portfolio included $451.9 million in alternative investments, $344.1 million in equity investments, and $211.6 million in fixed income investments[143]. Acquisitions and Strategic Initiatives - The acquisition of Apera Asset Management, a pan-European private credit firm, was completed on October 1, 2025[67]. - The acquisition of Apera Asset Management was completed for €65.2 million, with potential additional payments of up to €125.0 million based on revenue targets[140]. Tax and Other Income - The effective income tax rate decreased to 23.2% from 25.9%, primarily due to excess tax benefits related to stock-based compensation and a higher proportion of foreign earnings in lower-tax jurisdictions[1][7]. - Other income, net increased to $170.8 million, an 81% rise from $94.2 million, largely due to gains on investments and a strategic investment dividend[1][6]. - Dividend and interest income increased by 27% to $54.6 million, driven by a dividend from a strategic investment[1][9]. Workforce and Employment - The global workforce decreased to approximately 9,900 employees from 10,100 in the prior year, reflecting cost-saving initiatives[1][8].