Financial Data and Key Metrics Changes - The company achieved a record AUM of $2.1 trillion, with net long-term inflows of nearly $29 billion, representing an 8% annualized organic growth, the best flow quarter since 2021 [13][24] - Total AUM increased by $123 billion, or 6%, from the previous quarter, and by $329 billion, or 18%, year-over-year [24] - Adjusted diluted earnings per share for the third quarter was $0.61, with a significant improvement in operating margin to 34.2% [25][36] Business Line Data and Key Metrics Changes - The ETF platform reached a milestone of $1 trillion in AUM, with an annualized organic growth of 15% [14] - Fundamental fixed income garnered over $4 billion in net long-term inflows, with total fixed income inflows reaching nearly $13 billion when including ETFs [16] - The company recorded net outflows of $5 billion in fundamental equities, primarily due to a broader secular outflow trend in actively managed equities [21] Market Data and Key Metrics Changes - Nearly 40% of long-term AUM is now from clients outside the U.S., with two-thirds of net inflows this quarter coming from EMEA and Asia-Pacific regions [13] - The China joint venture reached a record high AUM of $122 billion, reflecting a 16% increase over the last quarter, with $8.1 billion in net long-term inflows [17] - The company launched 12 new products in its China JV, including its first fixed income ETF, indicating strong demand for innovative products [19] Company Strategy and Development Direction - The company is focused on capital management and has repaid approximately 25% of the term loans used for a $1 billion preferred stock repurchase, enhancing earnings accretion [5][26] - A hybrid investment platform is being implemented, expected to be completed by the end of 2026, aimed at simplifying operations and improving investment performance [7][32] - The company is pursuing growth through partnerships, such as the Barings private markets partnership, which has already launched its first joint product [9][10] Management's Comments on Operating Environment and Future Outlook - Management noted strong momentum in the market, with key indices reaching new highs and increased investor confidence following a Fed rate cut [12] - The company is optimistic about future growth, particularly in fixed income and private markets, despite some volatility in the credit space [56][57] - Management emphasized the importance of investment performance, with over half of funds performing in the top quartile of peers on a three-year basis [23] Other Important Information - The company is in the process of selling a majority interest in its Indian business, expecting cash proceeds of $140 million to $150 million [35] - A non-cash impairment charge of $36 million was recorded related to the sale of intelliflo, which is expected to close in the fourth quarter [33][34] - The effective non-GAAP tax rate for the third quarter was significantly impacted by a favorable resolution of a tax matter, resulting in an effective rate of 11.2% [34] Q&A Session Summary Question: Update on QQQ shareholder vote and marketing expenses - Management is pleased with the progress of the QQQ shareholder vote, noting overwhelming support for the fee change, but cannot disclose specific quorum details [40][41] - The reclassification of marketing expenses does not impact operating income or the proposal's approval likelihood [42] Question: Use of proxy voting firm and expense classification - The proxy solicitation firm's expenses are considered marketing expenses of the fund and are not expected to affect Invesco's operating expenses [45][46] Question: Fixed income flows and market outlook - Management reported strong fixed income performance and organic growth, with no material implications from recent market events [55][56] Question: Details on divestitures and capital return priorities - Proceeds from the India sale are expected to enhance balance sheet flexibility, while the intelliflo sale is anticipated to have negligible impact on overall results [61][63] Question: Expense growth and Alpha platform integration - Implementation costs for the Alpha platform are expected to remain high through 2026, with a focus on managing fixed expenses [67][68] Question: Variable expenses and operating leverage - Variable expenses are expected to fluctuate with revenue, while fixed expenses will be closely managed to drive operating leverage [75][76]

Invesco (NYSE:IVZ) Q3 2025 Earnings Call October 28, 2025 09:00 AM ET Company ParticipantsPatrick Davitt - PartnerAllison Dukes - CFOGreg Ketron - Head of Investor RelationsBenjamin Budish - DirectorAndrew Schlossberg - President and CEOBrian Bedell - DirectorMichael Cyprys - Managing DirectorGlenn Schorr - Senior Managing DirectorAlex Blostein - Managing DirectorConference Call ParticipantsBill Katz - Senior Equity AnalystKen Worthington - AnalystBrennan Hawken - Senior Equity Research AnalystDan Fannon - ...

Financial Data and Key Metrics Changes - The company reported a record total assets under management (AUM) of slightly over $2,000 billion, which is $157 billion or 8% higher than the end of the first quarter and $286 billion or 17% higher than the end of the second quarter of 2024 [28] - Average long-term AUM increased by 1% over the last quarter and 12% over the second quarter of last year, reaching $1,340 billion [28] - Adjusted diluted earnings per share were $0.36 for the second quarter, with net revenues of $1,100 million, which is $19 million higher than the same quarter last year [30][38] Business Line Data and Key Metrics Changes - The company generated $15.6 billion in net long-term asset inflows, representing a 4.7% annualized growth rate [10] - The global ETFs and index platform reported 10% annualized organic growth, with $12.6 billion of long-term net inflows in the quarter [11] - Fundamental fixed income garnered nearly $3 billion of net long-term inflows, while private markets experienced net outflows of $2 billion [29][22] Market Data and Key Metrics Changes - The Asia Pacific and EMEA regions accounted for 40% of overall long-term client AUM, generating $31 billion of net flows in the first half of 2025 [11] - The China joint venture and India capabilities delivered $5.6 billion of net long-term inflows, with a record high AUM of $105 billion in the China JV [21] - The company saw net outflows of $3.6 billion in fundamental equities, although there were positive flows from EMEA and Asia Pacific [22][23] Company Strategy and Development Direction - The company is focused on enhancing client outcomes, improving operating leverage, and strengthening its balance sheet [4] - A partnership with MassMutual and Barings aims to leverage private credit strengths and expand product offerings in the U.S. Wealth channel [6] - The company is pursuing a hybrid approach to investment management, utilizing platforms from both State Street and BlackRock to optimize outcomes for clients [40] Management's Comments on Operating Environment and Future Outlook - Management noted that the second quarter experienced pronounced market volatility, but strong momentum carried into July, leading to a global rebound for equities [10] - The company is optimistic about its ability to navigate market cycles due to a diversified asset mix and strong geographic presence [25][32] - Management emphasized the importance of improving operating cash flow to balance growth and deleveraging efforts [59][62] Other Important Information - The company completed the repurchase of $1 billion of preferred stock held by MassMutual, funded by bank term loans, which is expected to reduce preferred dividends significantly [30][44] - The company intends to continue common share repurchases and aims for a total payout ratio of near 60% from 2025 [45] - The filing of a preliminary proxy statement seeks approval to change the operational structure of the QQQ from a unit investment trust to an open-end fund ETF [35] Q&A Session Summary Question: Why is the company proposing changes to the QQQ structure now? - Management indicated that the proposal aims to modernize the structure to enhance outcomes for clients and shareholders, reflecting changes in market conditions since the QQQ was launched in 1999 [52][53] Question: How will the changes impact marketing spend and incremental margin? - The anticipated marketing budget for the trust is between $60 million to $100 million, translating to 2 to 3 basis points of annual assets, with an expected addition of four basis points to net revenue and operating income if approved [55] Question: How does the company balance deleveraging with growth? - Management stated that both growth and deleveraging are priorities, with a focus on improving operating cash flow to provide flexibility for growth initiatives [59][62] Question: What is the company's strategy for private markets? - The company is focused on partnerships and acquisitions to enhance its private markets capabilities, with a strong emphasis on organic growth as well [76] Question: How does the company view the potential for private markets in the 401(k) space? - Management believes there is promise for private markets in defined contribution plans, contingent on regulatory changes and market demand [84]