Franklin Q3 Earnings Beat on Higher Revenues, AUM Hits Record High

Franklin Resources Inc. BEN reported third-quarter fiscal 2026 (ended June 30, 2026) adjusted earnings of 72 cents per share, which surpassed the Zacks Consensus Estimate of 66 cents per share. The bottom line also improved from 49 cents reported in the year-ago quarter.

Results benefited from higher operating revenues and record assets under management (AUM). However, elevated operating expenses acted as a headwind.

Results include certain items. After considering those, net income (GAAP basis) was $171.5 million, up 85.8% year over year.

Franklin's Revenues & Expenses Increase Y/Y

Total operating revenues increased 14.3% year over year to $2.36 billion in the fiscal third quarter. Further, the reported figure outpaced the Zacks Consensus Estimate of $2.27 billion.

The increase was driven by growth across all revenue categories. Investment management fees rose 13.7% year over year to $1.87 billion. Sales and distribution fees increased 14.9% to $404.5 million from the prior-year quarter. Shareholder servicing fees climbed 24% to $74.3 million, while other revenues grew 17.5% to $13.4 million from the year-ago quarter.

Total operating expenses increased 12.2% year over year to $2.14 billion, primarily due to higher compensation and benefits, sales, distribution and marketing expenses, general and administrative costs, and impairment charges.

Franklin reported an operating margin of 9.2% compared with 7.5% in the year-ago quarter.

Franklin Resources' AUM Improves

As of June 30, 2026, total AUM was a record $1.79 trillion, increasing 11.2% from the prior-year quarter.

The company generated $18.4 billion of long-term net inflows during the quarter compared with long-term net outflows of $9.3 billion in the year-ago period.

The average AUM increased 11.8% year over year to $1.75 trillion.

Franklin's Capital Position

As of June 30, 2026, cash and cash equivalents and investments totaled $5.4 billion, while total stockholders' equity was $12.9 billion.

Franklin's Capital Distribution

During the quarter, Franklin Resources repurchased 10.4 million shares of common stock for $348.1 million. Overall, the company returned $521.5 million to shareholders during the quarter through share repurchases and dividends.

Major Developments for Franklin

In June 2026, the company's asset management arm, Franklin Templeton completed its previously announced acquisition of 250 Digital, an active cryptocurrency investment management firm. The transaction included 250 Digital's investment team and all liquid cryptocurrency strategies previously managed by CoinFund.

Story Continues

Following the completion, the company formally launched Franklin Crypto, a dedicated active digital asset management division focused on institutional clients. The move strengthens BEN's cryptocurrency investment capabilities by combining crypto-native expertise with Franklin Templeton's global distribution, research, portfolio construction and risk-management platform.

Our View on Franklin

Franklin Resources delivered a strong quarter, supported by broad-based revenue growth, record AUM and robust long-term net inflows. The company also continued returning capital to shareholders through sizable share repurchases. However, rising operating expenses and impairment-related charges remain areas to monitor.

Franklin Resources, Inc. Price, Consensus and EPS SurpriseFranklin Resources, Inc. Price, Consensus and EPS Surprise

Franklin Resources, Inc. price-consensus-eps-surprise-chart | Franklin Resources, Inc. Quote

Currently, Franklin sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Performance of Franklin's Peers

Invesco's IVZ second-quarter 2026 adjusted earnings of 71 cents per share surpassed the Zacks Consensus Estimate of 67 cents. The bottom line increased 97.2% from the prior-year quarter.

IVZ's results primarily benefited from an increase in adjusted revenues and substantial growth in AUM balance. Record net long-term inflows also supported the quarter. However, an increase in adjusted expenses was a headwind.

Ameriprise Financial's AMP second-quarter 2026 adjusted operating earnings were $11.07 per share, which handily surpassed the Zacks Consensus Estimate of $10.72. The bottom line reflected a rise of 22% from the year-ago quarter.

Results benefited from higher revenues and an improvement in AUM and assets under administration balances to record levels. However, an increase in expenses was a headwind for AMP.

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This article originally published on Zacks Investment Research (zacks.com).

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