Franklin Resources (BEN) Q4 2025 earnings summary

Executive summary

• Fiscal 2025 marked the first year of a five-year plan, ending with AUM of $1.66T, diversified by asset class, client type, and region, and strong momentum in alternatives, ETFs, and digital assets.

• Recognized as 2025 Asset Manager of the Year in the $500B+ AUM category by Money Management and Barron's, and by Central Banking for expertise with central banks.

• Expanded leadership team and strengthened private wealth management and digital innovation, including AI and blockchain initiatives.

• Long-term inflows rose 7.8% to $343.9B, but net outflows increased to $97.4B, mainly due to Western Asset Management; excluding Western, long-term net inflows were $44.5B, with eight consecutive quarters of positive net flows.

• Over half of mutual fund/ETF and composite AUM outperformed benchmarks and peer medians across all periods.

Financial highlights

• Q4 ending AUM reached $1.66T, up $49.4B during the quarter; average AUM was $1.63T, up 4.4%.

• Adjusted Q4 operating revenues rose 13.9% to $1.82B; adjusted operating income up 25% to $472.4M; adjusted net income up 35.7% to $357.5M; adjusted EPS $0.67, up 36.7%.

• Fiscal 2025 adjusted operating revenues $6.7B, up 2.1%; adjusted operating income $1.64B, down 4.3%; adjusted net income $1.2B, down 6.3%; adjusted EPS $2.22, down 7.5%.

• Adjusted operating margin for the year was 24.5%; Q4 margin was 26%.

• $200M non-cash impairment charge related to Western Asset mutual fund contracts.

Outlook and guidance

• Fiscal 2026 Q1 guidance: EFR expected at mid-37 bps; compensation/benefits ~$880M; IS&T $155M; occupancy $70M; G&A $190M–$195M; tax rate 26–28%.

• $200M in gross expense efficiencies targeted for fiscal 2026, expected to fund investments and absorb APIRA acquisition costs.

• Anticipate ending fiscal 2026 at or below 2025 adjusted expenses, with higher operating margin.

• Private market fundraising target for 2026: $25B–$30B, with Lexington potentially half.

• Continued focus on organic growth, digital assets, and strategic M&A to double AUM over five years.