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].

Financial Data and Key Metrics Changes - Total client assets increased to $176.1 billion, up $9.5 billion or 6% from the end of the previous year [6] - Adjusted earnings per diluted share rose more than 7% to $1.45 in the fourth quarter, a record high, and up 26% from $1.15 in the same quarter last year [7] - Year-over-year adjusted earnings per diluted share increased 19% from $4.51 in 2023 to $5.36 in 2024 [7] - Adjusted EBITDA reached $125.5 million in the fourth quarter, a 3% increase from the third quarter, with an adjusted EBITDA margin of 54% [18][26] Business Line Data and Key Metrics Changes - VictoryShares ETF platform saw significant growth, with AUM increasing to nearly $12 billion from less than $200 million since its acquisition in 2015 [12] - Victory Income Investors posted its fourth consecutive quarter of positive net flows, contributing to the overall positive long-term net flows in various franchises [21] - Active ETFs, particularly in fixed income, showed strong performance, with several products driving net inflows [82] Market Data and Key Metrics Changes - Amundi's U.S. business reported net long-term flows of $2.6 billion in 2024, with strong performance across its institutional and non-U.S. businesses [9][71] - The non-U.S. AUM is projected to exceed $45 billion post-acquisition, with a consistent record of positive net flows since Amundi's acquisition in 2017 [10][11] Company Strategy and Development Direction - The company is on track to close the acquisition of Amundi by the end of the current quarter, expecting to realize $100 million in cost synergies by the end of the second year of ownership [8] - The focus remains on leveraging the combined strengths of both companies to enhance growth opportunities, particularly in the institutional channel and through the VictoryShares ETF platform [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about organic growth prospects, citing a strong start to 2025 and a robust pipeline of opportunities [22][72] - The company anticipates continued growth in its ETF business, driven by market demand for active and solutions-oriented products [13][85] Other Important Information - The company returned $132.4 million to shareholders in the fourth quarter through share repurchases and cash dividends, with a new $200 million share repurchase program authorized [14][19] - A 7% increase in the quarterly cash dividend was announced, raising it to $0.47 per share [19] Q&A Session Summary Question: What strategies do you expect to be most in favor and contribute the most to organic growth in 2025? - Management highlighted the strong performance of the VictoryShares ETF platform and opportunities in the institutional channel as key growth drivers [30] Question: What sort of revenue synergies do you expect from the Amundi deal? - Management noted the establishment of a 15-year exclusive distribution agreement with Amundi, which is expected to enhance revenue through the addition of Victory products to Amundi's distribution network [32][33] Question: Can you discuss margin differences across different products? - Management explained that over two-thirds of expenses are variable, allowing for significant scale and strong margins across all product lines, including ETFs [40][41] Question: Can you provide context on the one but not yet funded pipeline? - Management indicated that the pipeline is the largest in the company's history, diversified across various franchises and channels, with expectations for most funding in 2025 [42][44] Question: How rapidly can you introduce Victory products in the Non-U.S. distribution? - Management expects to introduce products throughout 2025 and into 2026, leveraging Amundi's existing infrastructure [50][52] Question: What is the outlook for potential M&A this year? - Management expressed confidence in participating in industry consolidation, with compelling discussions ongoing and a strong balance sheet post-Amundi acquisition [55][56] Question: How should we think about capital allocation going forward? - Management emphasized the priority of accretive acquisitions while balancing share repurchases and dividends, with a focus on being opportunistic [89][92]