Franklin Resources, Inc. Announces Third Quarter Results

SAN MATEO, Calif.–(BUSINESS WIRE)–Franklin Resources, Inc. (the “Company”) [NYSE: BEN] today announced net income¹ of $92.3 million or $0.15 per diluted share for the quarter ended June 30, 2025, as compared to $151.4 million or $0.26 per diluted share for the previous quarter, and $174.0 million or $0.32 per diluted share for the quarter ended June 30, 2024. Operating income was $154.1 million for the quarter ended June 30, 2025, as compared to $145.6 million for the previous quarter and $222.5 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 $263.4 million and adjusted diluted earnings per share² was $0.49 for the quarter ended June 30, 2025, as compared to $254.4 million and $0.47 for the previous quarter, and $326.4 million and $0.60 for the quarter ended June 30, 2024. Adjusted operating income² was $377.8 million for the quarter ended June 30, 2025, as compared to $377.2 million for the previous quarter and $424.9 million for the prior year.

“As investors navigate today’s complex market and geopolitical landscape, we remain committed to being a trusted partner to our clients, offering solutions across public and private markets,” said Jenny Johnson, President and CEO of Franklin Resources, Inc. “This quarter, we saw progress across asset classes, investment vehicles and geographies, highlighting the strength of our diversified global platform. Long-term net outflows were $9.3 billion, a significant improvement from last quarter, and excluding Western Asset Management, long-term net inflows were $7.8 billion, the seventh consecutive quarter of positive net flows. Our institutional pipeline of won-but-unfunded mandates rose by net $4 billion to a record $24.4 billion, reflecting strong client demand across all asset classes.

“This quarter, we continued to successfully execute on our long-term corporate priorities, which reflect key areas of long-term growth. Fundraising in alternatives generated $6.2 billion for the quarter, of which private market assets totaled $5.3 billion. This brings alternative asset fundraising to $19 billion fiscal year-to-date, including $15.7 billion in private markets. In June, we announced an agreement to acquire a majority interest in Apera Asset Management, a pan-European private credit firm with approximately $5.7 billion in assets under management (“AUM”) bringing our pro forma private credit AUM to nearly $90 billion. This transaction will expand our direct lending capabilities across Europe’s lower middle market and reflects our continued commitment to growing our world-class global alternatives platform, which had $258 billion in AUM at quarter-end.

“Strong growth continued across investment vehicles in the U.S. and overseas. Our ETF platform achieved its 15th consecutive quarter of positive net flows, attracting $4.3 billion, a 5% increase from the prior quarter, and reached a new high of $44.1 billion in AUM. Retail SMAs and our Canvas® custom indexing platform also attracted notable inflows, with Canvas’ AUM of $13.7 billion, increasing 20% from the prior quarter. Internationally, we had positive net flows during the quarter with ending AUM of approximately $500 billion.

“We continue to focus on expense discipline and operational efficiencies. Our balance sheet remains strong, providing the flexibility to pursue strategic investments and return capital to shareholders. Looking ahead, we are well positioned to help clients navigate this period of market volatility by offering comprehensive solutions across public and private markets.”

Total AUM was $1,611.8 billion at June 30, 2025, up $71.2 billion during the quarter due to the positive impact of $78.0 billion of net market change, distributions, and other, and $2.7 billion of cash management net inflows, partially offset by $9.3 billion of long-term net outflows, inclusive of $17.1 billion of long-term net outflows at Western and $3.9 billion of long-term reinvested distributions, and $0.2 billion from the disposition of funds.

Cash and cash equivalents and investments were $5.9 billion and, including the Company’s direct investments in consolidated investment products (“CIPs”), were $6.8 billion⁴ at June 30, 2025. Total stockholders’ equity was $13.1 billion and the Company had 518.4 million shares of common stock outstanding at June 30, 2025. The Company repurchased 7.3 million shares of its common stock for a total cost of $157.4 million during the quarter ended June 30, 2025.

Conference Call Information

A written commentary on the results by Jenny Johnson, President and CEO; Matthew Nicholls, Executive Vice President, CFO and COO; and Adam Spector, Executive Vice President, Head of Global Distribution will be available via investors.franklinresources.com today at approximately 8:30 a.m. Eastern Time.

Ms. Johnson and Messrs. Nicholls and Spector will also lead a live teleconference today at 10:00 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 13754756 after 2:00 p.m. Eastern Time on August 1, 2025 through August 8, 2025, 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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