Franklin Resources Inc (BEN) Q1 2025 Earnings Report

Franklin Resources (BEN) reported QQ1 2025 revenue of $2.2516 billion, up 13.1% YoY and 1.8% QoQ, with a gross profit of $1.0725 billion and a net income of $163.6 million ($0.29 per share). The quarter was highlighted by meaningful Western Asset Management outflows and a continued regional diversification of the business through growth in alternatives, ETFs and Canvas SMAs. Excluding Western, long‑term inflows rose 34% YoY, with equity, multi-asset and alternatives delivering net positive flows of $17 billion across asset classes, while fixed income net outflows reached $66.7 billion. Franklin ended QQ1 2025 with $1.58 trillion of assets under management, modestly down versus the prior quarter due to Western Asset’s pressures, but with strong organic growth in non‑Western segments. Adjusted operating income was $412.8 million, down 9% QoQ and down 1% YoY, reflecting Western’s headwinds and ongoing investments in growth initiatives across Fixed Income, Alternatives, ETFs and Canvas platforms.

Management signaled a strategic re‑engineering of Western Asset, aiming to retain investment autonomy while integrating select corporate functions to achieve scale, improve efficiency and fund AI/data initiatives. The company reaffirmed a long‑term margin target near 30% and outlined a plan to realize roughly $200–$250 million of annualized expense reductions by fiscal 2026, with 2025 expenses expected to be roughly flat excluding market action and Putnam’s incremental costs. Putnam has delivered meaningful flows and performance since the acquisition, with 12–month net flows around $12–15 billion and quarterly growth sales up 68% since close, underscoring the benefits of scale and distribution, particularly in retirement and wealth channels. The firm also highlighted early success in Evergreen Secondaries, Real Estate and Private Markets in both U.S. and international markets, along with continued ETF strength (13th straight quarter of positive flows) and Canvas SMAs achieving record inflows.

Looking ahead, BEN’s investment thesis rests on diversified, active-management capabilities, breadth of distribution, and a disciplined cost approach that positions the company to gain from higher dispersion and opportunities in private markets, alternatives and structured solutions. The key watch items for investors include Western Asset’s run‑rate revenue, execution of the 2025 cost‑reduction plan into 2026, Putnam flow sustainability, Alt/Canvas‑driven fundraising momentum, ETF and SMAs growth, and the ongoing integration and monetization of Western assets within a scaled Franklin Templeton platform.