Franklin Resources, Inc. Announces First Quarter Results

SAN MATEO, Calif.–(BUSINESS WIRE)–Franklin Resources, Inc. (the “Company”) [NYSE: BEN] today announced net income¹ of $255.5 million or $0.46 per diluted share for the quarter ended December 31, 2025, as compared to $117.6 million or $0.21 per diluted share for the previous quarter, and $163.6 million or $0.29 per diluted share for the quarter ended December 31, 2024. Operating income was $281.0 million for the quarter ended December 31, 2025, as compared to $85.4 million for the previous quarter and $219.0 million for the prior year.

As supplemental information, the Company is providing certain adjusted performance measures which are based on methodologies other than generally accepted accounting principles. Adjusted net income² was $378.4 million and adjusted diluted earnings per share² was $0.70 for the quarter ended December 31, 2025, as compared to $357.5 million and $0.67 for the previous quarter, and $320.5 million and $0.59 for the quarter ended December 31, 2024. Adjusted operating income² was $437.3 million for the quarter ended December 31, 2025, as compared to $472.4 million for the previous quarter and $412.8 million for the prior year.

“Our first fiscal quarter continued the momentum we built last year with strong client activity across Franklin Templeton’s diversified global platform, with positive net flows in both public and private markets,” said Jenny Johnson, Chief Executive Officer of Franklin Resources, Inc. “Long-term net inflows were $28.0 billion, with record AUM and positive net flows across equity, multi-asset and alternatives strategies, as well as ETFs, retail SMAs and Canvas®. Excluding Western Asset Management, long-term net inflows totaled $34.6 billion, nearly double the prior year quarter, extending our track record to a ninth consecutive quarter of positive flows on a comparable basis.

“Alternatives fundraising remained a key contributor to our growth, with $10.8 billion raised during the quarter, including $9.5 billion in private market assets. Fundraising was diversified across our alternative specialist investment managers and reflected client demand in secondary private equity, alternative credit, real estate and venture capital from institutions as well as from the wealth channel.

“Lexington Co-Investment Partners VI, one of the largest dedicated global co-investment funds, closed in late October with $4.6 billion in committed capital. Today, Lexington’s AUM stands at $83 billion, a 46% increase since its acquisition in 2022. In addition, we continued to expand our private credit platform with the October 1st closing of the Apera Asset Management acquisition, enhancing our direct lending capabilities in Europe’s growing lower middle market. Franklin Templeton’s US and European alternative credit businesses are now aligned under an updated Benefit Street Partners brand, representing $95 billion in AUM at quarter end. Furthermore, Clarion Partners, with $75 billion in real estate assets under management, continues to be well positioned with a large, diversified portfolio in a challenging capital-raising environment. Recent M&A activity in the industry underscores the importance of alternative assets, reinforcing the strategic rationale behind our acquisitions and investments and further highlights our ability to grow our alternatives platform at scale.

“In other areas of growth, our ETF platform reached a new high with $58 billion in AUM and delivered $7.5 billion in net flows, inclusive of $3.5 billion in mutual fund conversions, its 17th consecutive positive quarter. Retail SMA AUM increased to over $170 billion, with $2.4 billion in net inflows. Canvas AUM increased 11% to $18 billion and generated $1.4 billion in net flows and has been net flow positive since acquisition.

“We remain disciplined in managing expenses while continuing to invest strategically in areas of growth and innovation for the benefit of all stakeholders. We are confident that our diversified business model, global scale and client-first culture positions us well to capture the long-term trends reshaping our industry across public and private markets.”

Total AUM was $1,684.0 billion at December 31, 2025, up $22.8 billion during the quarter due to $28.0 billion of long-term net inflows, inclusive of $6.6 billion of long-term net outflows at Western, and $6.1 billion from the acquisition of Apera Asset Management, partially offset by the negative impact of $10.1 billion of net market change, distributions, and other, and $1.2 billion of cash management net outflows. Long-term net inflows for the quarter include $28.9 billion of long-term reinvested distributions.

Cash and cash equivalents and investments were $5.1 billion and, including the Company’s direct investments in consolidated investment products (“CIPs”), were $6.2 billion⁴ at December 31, 2025. Total stockholders’ equity was $13.1 billion and the Company had 520.0 million shares of common stock outstanding at December 31, 2025. The Company repurchased 1.8 million shares of its common stock for a total cost of $41.9 million during the quarter ended December 31, 2025.

Conference Call Information

A written commentary on the results by Jenny Johnson, CEO; Daniel Gamba, Co-President and Chief Commercial Officer; and Matthew Nicholls, Co-President, CFO and COO; will be available via investors.franklinresources.com today at approximately 8:30 a.m. Eastern Time.

Ms. Johnson and Messrs. Gamba and Nicholls will also lead a live teleconference today at 11:00 a.m. Eastern Time to answer questions. Access to the teleconference will be available via investors.franklinresources.com or by dialing (+1) (877) 407-0989 in North America or (+1) (201) 389-0921 in other locations. A replay of the teleconference can also be accessed by calling (+1) (877) 660-6853 in North America or (+1) (201) 612-7415 in other locations using access code 13757935 after 2:00 p.m. Eastern Time on January 30, 2026 through February 6, 2026, or via investors.franklinresources.com.

Analysts and investors are encouraged to review the Company’s recent filings with the U.S. Securities and Exchange Commission and to contact Investor Relations at [email protected] before the live teleconference for any clarifications or questions related to the earnings release or written commentary.

Supplemental Non-GAAP Financial Measures

As supplemental information, we are providing performance measures for “adjusted operating income,” “adjusted operating margin,” “adjusted net income” and “adjusted diluted earnings per share,” each of which is based on methodologies other than generally accepted accounting principles (“non-GAAP measures”). Management believes these non-GAAP measures are useful indicators of our financial performance and may be helpful to investors in evaluating our relative performance against industry peers.

“Adjusted operating income,” “adjusted operating margin,” “adjusted net income” and “adjusted diluted earnings per share” are defined below, followed by reconciliations of operating income, operating margin, net income attributable to Franklin Resources, Inc. and diluted earnings per share on a U.S. GAAP basis to these non-GAAP measures. Non-GAAP measures should not be considered in isolation from, or as substitutes for, any financial information prepared in accordance with U.S. GAAP, and may not be comparable to other similarly titled measures of other companies. Additional reconciling items may be added in the future to these non-GAAP measures if deemed appropriate.

Adjusted Operating Income

We define adjusted operating income as operating income adjusted to exclude the following:

• Elimination of operating revenues upon consolidation of investment products.
• Acquisition-related items:
  • Acquisition-related retention compensation.
  • Other acquisition-related expenses including professional fees, technology costs and fair value adjustments related to contingent consideration assets and liabilities.
  • Amortization of intangible assets.
  • Impairment of intangible assets and goodwill, if any.
• Special termination benefits and other expenses related to workforce optimization initiatives related to past acquisitions and certain initiatives undertaken by the Company.
• Impact on compensation and benefits expense from gains and losses on investments related to deferred compensation plans, which is offset in investment and other income (losses), net.
• Impact on compensation and benefits expense related to minority interests in certain subsidiaries, which is offset in net income (loss) attributable to redeemable noncontrolling interests.

Adjusted Operating Margin

We calculate adjusted operating margin as adjusted operating income divided by adjusted operating revenues. We define adjusted operating revenues as operating revenues adjusted to exclude the following:

• Elimination of operating revenues upon consolidation of investment products.
• Acquisition-related performance-based investment management fees which are passed through as compensation and benefits expense.
• Sales and distribution fees and a portion of investment management fees allocated to cover sales, distribution and marketing expenses paid to the financial advisers and other intermediaries who sell our funds on our behalf.

Adjusted Net Income and Adjusted Diluted Earnings Per Share

We define adjusted net income as net income attributable to Franklin Resources, Inc. adjusted to exclude the following:

• Activities of CIPs.
• Acquisition-related items:
  • Acquisition-related retention compensation.
  • Other acquisition-related expenses including professional fees, technology costs and fair value adjustments related to contingent consideration assets and liabilities.
  • Amortization of intangible assets.
  • Impairment of intangible assets and goodwill, if any.
  • Interest expense for amortization of debt premium from acquisition-date fair value adjustment.
• Special termination benefits and other expenses related to workforce optimization initiatives related to past acquisitions and certain initiatives undertaken by the Company.
• Net gains or losses on investments related to deferred compensation plans which are not offset by compensation and benefits expense.
• Net compensation and benefits expense related to minority interests in certain subsidiaries not offset by net income (loss) attributable to redeemable noncontrolling interests.
• Unrealized investment gains and losses.
• Net income tax expense of the above adjustments based on the respective blended rates applicable to the adjustments.

We define adjusted diluted earnings per share as diluted earnings per share adjusted to exclude the per share impacts of the adjustments applied to net income in calculating adjusted net income.

In calculating our non-GAAP measures, we adjust for the impact of CIPs because it is not considered reflective of our underlying results of operations. Acquisition-related items and special termination benefits are excluded to facilitate comparability to other asset management firms. We adjust for compensation and benefits expense related to funded deferred compensation plans because it is partially offset in other income (expense), net. We adjust for compensation and benefits expense and net income (loss) attributable to redeemable noncontrolling interests to reflect the economics of certain profits interest arrangements. Sales and distribution fees and a portion of investment management fees generally cover sales, distribution and marketing expenses and, therefore, are excluded from adjusted operating revenues. In addition, when calculating adjusted net income and adjusted diluted earnings per share we exclude unrealized investment gains and losses included in investment and other income (losses) because the related investments are generally expected to be held long term.

The calculations of adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted earnings per share are as follows:

Contacts

Franklin Resources, Inc.

Investor Relations: Selene Oh (650) 312-4091, [email protected]
Media Relations: Jeaneen Terrio (212) 632-4005, [email protected]
investors.franklinresources.com

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