Franklin Resources Reports 13% Revenue Growth, Decline in Net Income for December 2024

Franklin Resources, Inc. reported its financial results for the three months ended December 31, 2024, revealing total operating revenues of $2.25 billion, a 13% increase from $1.99 billion in the same period of the previous year. The growth was primarily driven by a 9% rise in investment management fees, which reached $1.80 billion, up from $1.65 billion. However, net income attributable to Franklin decreased to $163.6 million, down from $251.3 million in the prior year, resulting in diluted earnings per share of $0.29 compared to $0.50.

The company experienced significant changes in its operating expenses, which rose to $2.03 billion from $1.78 billion, largely due to increased compensation and benefits expenses associated with a higher headcount following the acquisition of Putnam Investments. Compensation and benefits totaled $991.4 million, up from $968.3 million, while sales, distribution, and marketing expenses also increased significantly to $512.3 million from $400.8 million. The overall operating income saw a slight increase to $219 million from $206.5 million, but the operating margin declined to 9.7% from 10.4%.

In terms of strategic developments, Franklin completed the acquisition of Putnam Investments on January 1, 2024, which contributed to the increase in both revenues and expenses. The acquisition is expected to enhance Franklin's product offerings and market presence. The company reported a total assets under management (AUM) of $1.58 trillion, a decrease of 6% from the previous quarter, but an increase of 8% year-over-year. The decline in AUM was attributed to long-term net outflows of $50 billion and negative market changes of $52.9 billion, particularly in fixed income and multi-asset classes.

Operationally, Franklin's workforce expanded to approximately 10,100 employees, up from 9,100 a year earlier, reflecting the integration of Putnam. The company reported that 83% of its total operating revenues were derived from sponsored funds, indicating a strong reliance on this segment. The geographic distribution of AUM showed growth in the United States, which accounted for $1.10 trillion, while international markets also saw increases, particularly in the Asia-Pacific region.

Looking ahead, Franklin Resources anticipates continued challenges in the global economic environment, including regulatory complexities and market volatility. The company remains focused on enhancing investment performance and client service while managing expenses. Franklin plans to leverage its recent acquisitions to drive growth and improve its competitive position in the investment management industry.