Franklin Resources (BEN) Q4 2024 earnings summary

Executive summary

• Achieved record AUM of $1.68 trillion, up 22% year-over-year, driven by organic growth, market appreciation, and the Putnam Investments acquisition.

• Specialist managers now represent 64% of AUM and 55% of adjusted operating revenue.

• Long-term net outflows totaled $32.6 billion, but excluding Western Asset Management, long-term net inflows were $16.0 billion.

• Putnam Investments AUM grew 21% since closing, with $11 billion in positive net flows and cost savings exceeding $150 million.

• Focused on innovation, investing in AI, blockchain, digital asset solutions, and partnerships, including with Microsoft.

Financial highlights

• Adjusted operating revenues for the year were $6.6 billion, up 8% year-over-year; adjusted operating income was $1.7 billion, down 6%.

• Adjusted net income declined 4% to $1.3 billion; adjusted EPS was $2.39, down 8% year-over-year.

• Adjusted operating margin for the year was 26.1%, compared to 29.9% prior year.

• Returned $946 million to shareholders via dividends and buybacks; paid down $250 million in debt.

• Cash and investments at year-end were $6.7 billion.

Outlook and guidance

• Targeting $100 billion in private markets fundraising over five years, primarily from existing managers.

• Expense growth expected to remain flat year-over-year, normalizing for a full year of Putnam and excluding performance fees.

• Plans to expand wealth management, scale ETFs and Canvas, and incorporate AI across investment and operational processes.

• Guidance for next quarter: EFR in mid-37 bps, compensation at $860 million, IS&T at $155–$160 million, occupancy $78–$80 million, G&A ~$180 million, and GAAP tax rate 24–26%.

• Expects continued growth in ETFs, SMAs, and Canvas, with plans to triple ETF AUM and quintuple Canvas assets in five years.