Franklin Resources (BEN) investor relations material

Executive summary

• Assets under management (AUM) reached $1,682.1 billion, up 9% year-over-year, with long-term net inflows of $16.9–$17 billion and positive flows in every region and asset class, supported by strong momentum in alternatives and multi-asset strategies.

• Record alternative AUM of $283 billion, with $14.3 billion fundraised in the quarter, and ETF AUM at $61.6 billion, reflecting robust demand for diversified investment vehicles.

• Over half of mutual fund and ETF AUM outperformed peers and benchmarks across 1-, 3-, 5-, and 10-year periods.

• Operating revenues for Q2 2026 rose 9% year-over-year to $2.29 billion, with net income attributable to shareholders up 77% to $268.2 million and diluted EPS up 88% to $0.49.

• Ahead of the five-year plan, with a focus on delivering strong investment outcomes, deepening client relationships, and evolving capabilities for sustainable long-term growth.

Financial highlights

• Adjusted operating income was $474.6 million, up 8.5% quarter-over-quarter and 25.8% year-over-year; adjusted net income was $384.5 million, up 51.1% year-over-year.

• Adjusted operating margin reached 27.1%, up from 23.4% a year ago; operating margin improved to 14.1% from 6.9% a year ago.

• Adjusted diluted EPS was $0.71, up 1% sequentially and 51% year-over-year.

• Investment management fees increased 9% to $1.82 billion, with performance fees up to $100.8 million.

• Cash and investments portfolio totaled $6.2 billion at quarter-end.

Outlook and guidance

• Expense guidance assumes flat markets, with expenses expected to be about 1.5% higher than 2025 and investment management fee revenue to increase by at least 6% year-over-year.

• Margin expansion expected, with fiscal fourth quarter margin in the high 29s and full-year margin in the 27s, on track for 30%+ margins in 2027.

• Management remains focused on investment performance, expense management, and strategic investments in personnel and technology.

• The company expects to continue regular dividends and opportunistic share repurchases, with a focus on investing in business growth and product innovation.

• Fiscal year 2026 expense, excluding performance fee incentive compensation, is expected to be in line with fiscal years 2024 and 2025.