Franklin Resources reported its fourth‑quarter 2025 results, with an adjusted earnings per share of $0.67—$0.10 above the consensus estimate of $0.57—while revenue rose 5.9% year‑over‑year to $2.34 billion. GAAP net income was $117.6 million, or $0.21 per diluted share, and GAAP operating margin was 3.6%.
Revenue growth was driven primarily by the firm’s high‑margin alternatives, ETFs, and separately managed accounts, which together added $11.9 billion in long‑term net flows. The acquisition of Apera Asset Management added $95 billion in private‑credit AUM, further boosting fee income. Legacy fixed‑income and traditional mutual‑fund segments saw modest declines, partially offset by a $200 million non‑cash impairment related to Western Asset Management’s outflows.
Operating income under GAAP was $85.4 million, but adjusted operating income climbed to $472.4 million, reflecting a 26% adjusted operating margin—up from 23.7% in Q3. The margin expansion is largely attributable to the higher mix of fee‑based alternatives and the cost discipline applied to legacy operations, while the impairment charge reduced the legacy business’s profitability.
Total assets under management reached $1.661 trillion, an increase of $49.4 billion from the prior quarter. Cash and investments stood at $6.7 billion. The company declared a dividend of $1.28 per share and completed $67.1 million in share repurchases during the quarter, contributing to a $930 million total shareholder return for the fiscal year.
CFO Matthew Nicholls guided full‑year adjusted operating income to $2.15 billion and revenue to $4.40 billion, signaling confidence in fee growth and operational leverage. CEO Jenny Johnson highlighted the firm’s continued focus on high‑margin alternatives and digital innovation, noting that while Western Asset Management outflows remain a headwind, the Apera platform and broader alternative strategy position Franklin for sustained growth.
Despite the earnings beat, market sentiment remained cautious. Analysts maintained hold ratings, citing valuation concerns and uncertainty around the impact of Western Asset Management’s outflows on future profitability. The muted reaction underscores the importance of the firm’s ongoing cost discipline and the need to sustain margin expansion in its legacy businesses.
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