Robust AUM Performance on Strong Markets to Aid Invesco's Q2 Earnings

Core Viewpoint - Invesco (IVZ) is expected to report second-quarter 2025 results on July 22, with anticipated revenue growth year-over-year but a likely decline in earnings [1][8]. Financial Performance - In the last reported quarter, Invesco's adjusted earnings exceeded the Zacks Consensus Estimate, supported by higher adjusted net revenues and an increase in assets under management (AUM) due to strong inflows, although higher operating expenses raised concerns [2][8]. - The preliminary total AUM as of June 30, 2025, was $2 trillion, reflecting an 8.7% sequential increase driven by strong market returns and net inflows [3][8]. - The Zacks Consensus Estimate for investment management fees is $1.11 billion, indicating a 1.3% rise from the previous quarter [3][4]. - Performance fees are estimated at $8.99 million, showing a significant increase from the previous quarter, while service and distribution fees are expected to rise 1.3% to $376 million [4]. Cost Structure - Despite cost-saving initiatives, rising compensation and marketing costs are expected to negatively impact overall expenses in the upcoming quarter [5]. - Management anticipates one-time implementation costs of Alpha to be between $10-15 million in Q2 2025 [5]. Strategic Developments - In April, Invesco announced a strategic partnership with MassMutual's Barings to focus on private credit solutions, supported by an initial investment of $650 million from MassMutual [6][7]. - Invesco plans to repurchase approximately $1 billion of its Series A preferred stock, funded by debt financing, which is expected to enhance earnings starting in the second half of 2025 [7]. Earnings Estimates - The consensus estimate for Invesco's earnings is 40 cents, reflecting a 7% decline year-over-year, while sales are expected to rise 1.9% to $1.11 billion [11]. - The Earnings ESP for Invesco is +1.65%, indicating a high likelihood of beating the Zacks Consensus Estimate for earnings [9]. Market Position - Invesco currently holds a Zacks Rank 1 (Strong Buy), suggesting a favorable outlook in the market [10].