Franklin Resources' QQ1 2025 results reflect a resilient top line amid a challenging macro backdrop, underpinned by strong fee-based revenue in an asset-management-focused business. Revenue for the quarter was $2.2516 billion, up 13.08% year over year and 1.83% quarter over quarter, with gross profit of $1.828 billion and a notably high gross margin of about 81.2%. Operating income stood at $219.0 million, delivering an operating margin of approximately 9.7%, while EBITDA reached $479.1 million (EBITDA margin ~21.3%). Despite these positives, net income declined year-on-year to $163.6 million (EPS $0.29), down about 34.9% YoY, though QoQ net income surged by roughly 293% from Q4 2024âs loss to Q1 2025âs positive result. The quarter also featured a pronounced swing in operating profitability versus Q4 2024, highlighting stronger operating leverage and a favorable mix, even as headline earnings were pressured by non-operating items and higher effective tax contribution for the period.
From a cash flow perspective, the firm generated negative operating cash flow of $145.2 million and negative free cash flow of about $217 million in QQ1 2025, driven predominantly by working capital movements (change in working capital of about -$541 million and other working capital items around -$598 million). Capital deployment included modest stock buybacks (-$5.8 million) and a dividend payout of $166.2 million, with cash and cash equivalents totaling $3.645 billion at period end. The balance sheet remains sizable and liquid: total assets of $32.39 billion, cash and equivalents of $3.645 billion, and a strong liquidity profile (current and quick ratios both at about 2.64x). Leverage remains material, with total debt of $12.779 billion and net debt around $9.132 billion, yielding a debt-to-capitalization profile near 50%.
Overall, the QQ1 2025 result underscores a defensible revenue engine in asset management, steady risk-adjusted profitability, and solid capital structure, but with persistent cash-flow headwinds that investors will want to monitor alongside potential AUM-driven growth in the coming quarters.