Franklin Templeton Earns Preliminary $380.1 Million Quarterly Profit As Expenses Fall 8%
Adjusted margins widened, but a change in how Franklin Templeton counts commitments complicates comparisons of investment flows.
Franklin Templeton, which manages investments for individuals, institutions and wealthy clients worldwide, reported preliminary fourth-quarter profit of $380.1 million Friday, up 223% from a year earlier. Revenue grew 4% while operating expenses fell 8%, according to the unaudited results released with its SEC filing.
Lower Expenses, Wider Margins
Quarterly revenue reached $2,434.9 million, against expenses of $2,079.1 million. Investment management fees—the company's main revenue source—rose 4% to $1,945.5 million.
The expense comparison benefited from a different mix of charges. The year-earlier quarter included $202.2 million in impairment charges against intangible assets; the latest quarter had none. Amortization of those assets fell to $42.0 million from $69.2 million, while special termination benefits rose to $81.1 million from $25.0 million.
Operating profit reached $355.8 million, versus $85.4 million a year earlier, and the operating margin widened to 14.6% from 3.6%. The company's adjusted operating margin was 31.8%, compared with 26.0% a year earlier and 28.0% in the preceding quarter.
Jenny Johnson, Franklin Templeton's chief executive officer, said the company was "increasing our adjusted operating margin ahead of plan" while continuing to invest.
Quarterly diluted earnings were $0.72 per share, versus $0.21 a year earlier. Adjusted profit increased 38% to $493.4 million, or $0.94 per diluted share, from $357.5 million, or $0.67. That measure excludes items including acquisition costs, termination benefits and unrealized investment gains and losses.
For the fiscal year ended September 30, 2026, revenue rose 7% to $9,415.3 million. Preliminary profit was $1,075.3 million, or $1.97 per diluted share, versus $524.9 million, or $0.91, the previous year. Adjusted annual profit reached $1,642.6 million, or $3.07 per diluted share, compared with $1,195.8 million, or $2.22.
Inflows Come With A Counting Change
Long-term net inflows totaled $84.1 billion for the fiscal year and $20.8 billion for the quarter. Those totals included reinvested distributions of $39.5 billion and $3.3 billion, respectively.
The comparison with earlier periods requires care. Starting in fiscal 2026, Franklin Templeton counts committed capital that has not yet been called—and generates no fees—as long-term inflows. Previously, those commitments appeared under market changes, distributions and other factors; earlier periods were not revised.
Assets under management ended September at $1,795.1 billion, up 8% year-over-year but only $3.5 billion above the preceding quarter. Quarterly long-term inflows were partly offset by a negative $11.3 billion contribution from market changes, distributions and other factors, plus $6.0 billion in cash-management withdrawals.
For the year, Western Asset Management recorded $11.7 billion in long-term net outflows, included in the company's overall flow total. Acquisitions added $6.2 billion to assets, while market changes, distributions and other factors contributed $46.4 billion.
ETFs Grow, Shareholders Get Cash
Franklin Templeton earns most of its revenue by charging fees tied to assets managed. Its mutual funds, exchange-traded funds and separately managed accounts span stocks, bonds, private markets and other investments, sold directly and through advisers, banks and other intermediaries.
Exchange-traded fund assets grew 73% during the fiscal year to $84.6 billion. Retail separately managed accounts reached $196.3 billion, up 19%, while Canvas assets doubled to $32.6 billion. Alternative assets reached $304.6 billion, with annual fundraising of $48.7 billion, including $43.2 billion in private markets.
Johnson put international assets at approximately $525 billion and annual international long-term net inflows at $29.0 billion. She said net flows were positive in every quarter of the fiscal year across all regions and both retail and institutional channels.
The company returned $1.2 billion through dividends and buybacks during the year. Quarterly repurchases totaled 2.5 million shares costing $86.1 million. Cash and investments were $6.0 billion, or $7.4 billion including direct investments in consolidated investment products.
Franklin Templeton also had $22.0 billion in institutional mandates it had won but clients had not yet funded. Those commitments remain distinct from money already invested.
