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Franklin Q2 Earnings Meet Estimates, Costs & Revenues Fall, Stock Up
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Franklin Resources Inc. (BEN - Free Report) reported second-quarter fiscal 2025 (ended March 31) adjusted earnings of 47 cents per share, which matched the Zacks Consensus Estimate. However, the bottom line compared unfavorably with 56 cents reported in the year-ago quarter.
BEN’s results were affected by lower revenues and assets under management (AUM) balance. Yet, lower expenses supported the results to some extent. In light of this, Franklin’s shares rose 1.1% in Friday’s pre-market trading session.
Net income (GAAP basis) was $151.4 million, up 21.9% year over year. Our estimate for the metric was $98.1 million.
Franklin’s Revenues & Expenses Decline Y/Y
Total operating revenues decreased 1.9% year over year to $2.11 billion in the fiscal second quarter. The fall was due to a decline in almost all the components except sales and distribution fees. Nonetheless, the reported figure outpaced the Zacks Consensus Estimate of $1.98 billion.
Investment management fees declined 2.4% year over year to $1.67 billion. We projected the same to be $1.57 billion. Sales and distribution fees increased 1.8% to $364.9 million. We projected the metric to be $328 million. Shareholder-servicing fees fell 9% on a year-over-year basis to $61.9 million. We projected the metric to be $58.5 million. Other revenues decreased 12.7% to $11 million.
Total operating expenses fell 2.9% year over year to $1.97 billion. The decline was due to a decrease in compensation and benefits costs, occupancy expenses, and general, administrative, and other expenses. Our estimate for the metric was pegged at $1.88 billion.
Franklin reported an operating margin of 6.9% compared with 6% in the year-ago quarter.
Franklin’s AUM Declines
As of March 31, 2025, total AUM was $1.54 trillion, down 2.2% sequentially. We projected the same to be $1.51 trillion.
Franklin’s long-term net outflows were $26.2 billion in the reported quarter.
The average AUM was $1.57 trillion, which decreased 3.9% sequentially. We had projected an average AUM of $1.54 trillion.
Franklin’s Capital Position
As of March 31, 2025, cash and cash equivalents and investments were $6.1 billion, while total stockholders' equity was $13.2 billion.
Franklin’s Capital Distribution
In the reported quarter, Franklin repurchased 0.5 million shares for $10 million.
Our View on Franklin
Franklin’s efforts to diversify business through acquisitions, its rising AUM, and a strong distribution platform that offers it a first-mover advantage will aid its top line. However, a rising expense base due to the company’s focus on technological upgrades is likely to hurt the bottom line.
Franklin Resources, Inc. Price, Consensus and EPS Surprise
Invesco’s (IVZ - Free Report) first-quarter 2025 adjusted earnings of 44 cents per share surpassed the Zacks Consensus Estimate of 39 cents. Moreover, the bottom line jumped 33.3% from the prior-year quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
IVZ’s results were primarily aided by higher adjusted net revenues. An increase in the AUM balance due to decent inflows was a positive too. However, higher adjusted operating expenses were a woe.
BlackRock’s (BLK - Free Report) first-quarter 2025 adjusted earnings of $11.30 per share handily surpassed the Zacks Consensus Estimate of $10.43. The figure reflects a rise of 15% from the year-ago quarter.
BLK’s results benefited from a rise in revenues. AUM witnessed robust growth and touched a record high of $11.58 trillion, driven by net inflows and favorable forex impact, partially offset by market depreciation. However, higher expenses and lower non-operating income were headwinds.
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Franklin Q2 Earnings Meet Estimates, Costs & Revenues Fall, Stock Up
Franklin Resources Inc. (BEN - Free Report) reported second-quarter fiscal 2025 (ended March 31) adjusted earnings of 47 cents per share, which matched the Zacks Consensus Estimate. However, the bottom line compared unfavorably with 56 cents reported in the year-ago quarter.
BEN’s results were affected by lower revenues and assets under management (AUM) balance. Yet, lower expenses supported the results to some extent. In light of this, Franklin’s shares rose 1.1% in Friday’s pre-market trading session.
Net income (GAAP basis) was $151.4 million, up 21.9% year over year. Our estimate for the metric was $98.1 million.
Franklin’s Revenues & Expenses Decline Y/Y
Total operating revenues decreased 1.9% year over year to $2.11 billion in the fiscal second quarter. The fall was due to a decline in almost all the components except sales and distribution fees. Nonetheless, the reported figure outpaced the Zacks Consensus Estimate of $1.98 billion.
Investment management fees declined 2.4% year over year to $1.67 billion. We projected the same to be $1.57 billion. Sales and distribution fees increased 1.8% to $364.9 million. We projected the metric to be $328 million. Shareholder-servicing fees fell 9% on a year-over-year basis to $61.9 million. We projected the metric to be $58.5 million. Other revenues decreased 12.7% to $11 million.
Total operating expenses fell 2.9% year over year to $1.97 billion. The decline was due to a decrease in compensation and benefits costs, occupancy expenses, and general, administrative, and other expenses. Our estimate for the metric was pegged at $1.88 billion.
Franklin reported an operating margin of 6.9% compared with 6% in the year-ago quarter.
Franklin’s AUM Declines
As of March 31, 2025, total AUM was $1.54 trillion, down 2.2% sequentially. We projected the same to be $1.51 trillion.
Franklin’s long-term net outflows were $26.2 billion in the reported quarter.
The average AUM was $1.57 trillion, which decreased 3.9% sequentially. We had projected an average AUM of $1.54 trillion.
Franklin’s Capital Position
As of March 31, 2025, cash and cash equivalents and investments were $6.1 billion, while total stockholders' equity was $13.2 billion.
Franklin’s Capital Distribution
In the reported quarter, Franklin repurchased 0.5 million shares for $10 million.
Our View on Franklin
Franklin’s efforts to diversify business through acquisitions, its rising AUM, and a strong distribution platform that offers it a first-mover advantage will aid its top line. However, a rising expense base due to the company’s focus on technological upgrades is likely to hurt the bottom line.
Franklin Resources, Inc. Price, Consensus and EPS Surprise
Franklin Resources, Inc. price-consensus-eps-surprise-chart | Franklin Resources, Inc. Quote
Currently, Franklin has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
Invesco’s (IVZ - Free Report) first-quarter 2025 adjusted earnings of 44 cents per share surpassed the Zacks Consensus Estimate of 39 cents. Moreover, the bottom line jumped 33.3% from the prior-year quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
IVZ’s results were primarily aided by higher adjusted net revenues. An increase in the AUM balance due to decent inflows was a positive too. However, higher adjusted operating expenses were a woe.
BlackRock’s (BLK - Free Report) first-quarter 2025 adjusted earnings of $11.30 per share handily surpassed the Zacks Consensus Estimate of $10.43. The figure reflects a rise of 15% from the year-ago quarter.
BLK’s results benefited from a rise in revenues. AUM witnessed robust growth and touched a record high of $11.58 trillion, driven by net inflows and favorable forex impact, partially offset by market depreciation. However, higher expenses and lower non-operating income were headwinds.