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Introduction & Market Context
Franklin Resources, Inc. (NYSE:BEN) released its third quarter 2025 results on August 1, 2025, showing signs of stabilization in its business despite ongoing challenges. The investment management firm’s stock was down 2.46% in premarket trading to $23.41, suggesting investors may have concerns about certain aspects of the results despite some positive developments.
The company, which operates under the Franklin Templeton brand, reported total assets under management (AUM) of $1.61 trillion as of June 30, 2025, with a diversified business spanning multiple asset classes, client types, and regions. While year-over-year comparisons showed declines in key financial metrics, sequential improvements and reduced outflows indicated potential stabilization.
Quarterly Performance Highlights
Franklin Resources reported a significant improvement in its flow picture for Q3 2025, with long-term net outflows of $9.3 billion, substantially better than the $26.2 billion in outflows from the previous quarter. Notably, when excluding Western Asset Management, the company achieved its seventh consecutive quarter of positive net flows, with inflows of $7.8 billion.
As shown in the following chart of quarterly flows:
The company’s alternatives and multi-asset strategies continued to demonstrate strength, generating combined positive net flows of $4.3 billion. These growth areas have become increasingly important to Franklin’s business strategy as it diversifies beyond traditional equity and fixed income offerings.
The institutional pipeline showed promising momentum, with won but unfunded mandates increasing by $4.0 billion to reach a record $24.4 billion. This pipeline represents potential future inflows as these mandates are funded over time.
Investment performance remained solid, with over half of the company’s mutual fund AUM outperforming its peer median in the 3-, 5-, and 10-year periods, as illustrated in this performance summary:
Detailed Financial Analysis
Franklin Resources reported adjusted revenue of $1,593.2 million for Q3 2025, representing a slight decrease from $1,610.2 million in the previous quarter and a more significant decline from $1,654.1 million in the same quarter last year. The company’s adjusted operating income remained relatively stable sequentially at $377.8 million compared to $377.2 million in Q2 2025, but was down from $424.9 million in Q3 2024.
The following chart illustrates the trend in adjusted operating income and margin:
Adjusted net income showed a sequential improvement to $263.4 million from $254.4 million in the previous quarter, though it remained below the $326.4 million reported in the same quarter last year. Similarly, adjusted diluted earnings per share increased to $0.49 from $0.47 in Q2 2025 but was lower than the $0.60 reported in Q3 2024.
The company’s adjusted operating margin improved slightly to 23.7% from 23.4% in the previous quarter, though it remained below the 25.7% reported in the same period last year. This margin compression reflects ongoing industry challenges and competitive pressures.
Franklin Resources maintained its focus on capital management, continuing to return capital to shareholders through dividends and share repurchases as shown in this capital allocation chart:
Strategic Initiatives
The company’s diversification strategy remains a key focus, with assets spread across multiple categories. As of June 30, 2025, equity represented 41% of AUM, fixed income 27%, alternatives 16%, multi-asset 11%, and cash 5%. This diversification helps mitigate concentration risks in any single asset class.
The following chart illustrates the company’s diversification across asset classes, client types, and regions:
Alternative investments continue to be a growth driver for Franklin Resources, with AUM in this category reaching $258 billion. The company fundraised $6.2 billion in alternatives during the quarter, including $5.3 billion in private market assets distributed across various strategies.
The company also announced the acquisition of Apera Asset Management during the quarter, continuing its strategy of targeted acquisitions to enhance capabilities and scale. This follows a pattern of strategic acquisitions in recent years to strengthen the firm’s position in key growth areas.
In the digital assets space, Franklin Resources launched an intraday yield feature on Benji, its tokenized money market fund, demonstrating its commitment to innovation in financial technology.
Forward-Looking Statements
Franklin Resources’ flow trends by asset class provide insight into areas of strength and challenge for the company. The following charts detail flows for equity and fixed income:
And for alternatives and multi-asset strategies:
While equity experienced modest net outflows and fixed income saw more significant outflows (particularly at Western Asset Management), the alternatives and multi-asset categories demonstrated resilience with neutral to positive flows.
The company’s progress in the insurance channel was highlighted, with $7.5 billion of AUM won but not yet funded in sub-advisory mandates during the quarter. This represents another potential growth avenue as these mandates are implemented.
Non-US business showed positive momentum with approximately $497 billion in AUM and positive net flows, indicating the company’s international diversification strategy is yielding results.
Financial Summary
The following table provides a comprehensive overview of Franklin Resources’ financial performance for Q3 2025 compared to previous periods:
While year-over-year comparisons show challenges, the sequential stabilization in key metrics and improvement in flow trends suggest the company’s diversification and growth initiatives may be gaining traction. The reduction in outflows, particularly when excluding Western Asset Management, indicates that parts of the business are performing well despite industry headwinds.
As Franklin Resources continues to execute on its strategic initiatives in alternatives, digital assets, and international markets, investors will be watching closely to see if these efforts can drive sustainable growth and improved financial performance in coming quarters.
Full presentation:
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