Preliminary brief— based on press release only. Full analysis including management tone and Q&A will be added when the transcript is available.

BEN · Q3 2025 Earnings

Franklin Resources

Reported August 1, 2025

30-second summary

Franklin closed FY2025 with Q4 revenue of $2.34B (+6% YoY, +13.5% QoQ) and non-GAAP EPS of $0.67, with adjusted operating margin recovering to 26.0% from 23.7% last quarter. The headline -$11.9B of long-term net outflows masks the underlying signal: excluding Western Asset, Q4 long-term net flows were +$11.4B — the eighth consecutive quarter of positive ex-Western flows, and an improvement from Q3's +$7.8B ex-Western. Western itself re-accelerated to -$23.3B of long-term outflows in Q4, well above the ~$3B/month July telegraph from last quarter. Alternative AUM reached a record $270B after closing the Apera acquisition, and FY alts fundraising landed at $26.2B — above the prior ~$18.5B telegraph and within the $25-30B range.

Headline numbers

EPS

Q3 FY2025

$0.67

Revenue

Q3 FY2025

$2.34B

+6.0% YoY

Operating margin

Q3 FY2025

3.6%

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY
Revenue	$2.34B	+6.0%
EPS	$0.67	—
Operating margin	3.6%	—

Guidance

Alternative asset fundraising guidance reaffirmed at midpoint of annual range; no material changes to forward guidance or financial outlook disclosed.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Reaffirmed unchanged this quarter: Alternative asset fundraising (approximately the middle of annual guidance range with one more quarter to go)

Other KPIs

Q3 FY2025

Segment	Q3 FY2025
Assets Under Management (AUM)	$1,661.2 billion
Long-term net flows (Q3)	-$11.9 billion
Long-term inflows (Q3)	$84.6 billion
Long-term net flows excl. Western Asset (FY)	$44.5 billion
Alternative AUM	$263.9 billion
Adjusted operating margin	26.0%
Investment management fees	$1,868.1 million
Won-but-unfunded mandates	$20.4 billion

Management tone

The Q4 press release shifts from prior-quarter stabilization framing to a "growth and diversification" posture across public and private markets. Johnson: "As we enter fiscal 2026, we are confident that our business strategy positions us well to capture the long-term trends reshaping our industry across public and private markets."

Ex-Western momentum is now the headline framing, not a footnote. Press release: "Excluding Western Asset Management, we had $11.4 billion in net inflows, our eighth consecutive quarter of positive flows, excluding Western Asset." A year ago this was defensive disclosure; this quarter it is the lead operating metric, and the underlying number improved sequentially (Q3 ex-Western: +$7.8B; Q4 ex-Western: +$11.4B). The risk to this framing is that Western itself re-accelerated to -$23.3B of long-term outflows in Q4 — materially above the ~$3B/month July run-rate telegraphed last quarter, implying outflows that may have stepped back up to a ~$7-8B/month average pace in the September quarter.

Alternatives reached a milestone print. Alternative AUM hit a record $270B after closing the Apera acquisition, supported by FY fundraising of $26.2B (including $22.9B private markets). That fundraising number lands above the ~$18.5B FY telegraph from last quarter and within the prior $25-30B range — a positive surprise rather than a mid-range landing.

Institutional pipeline framing flipped to a conversion story. Won-but-unfunded mandates of $20.4B (down from $24.4B in Q3) is explicitly attributed to record fundings in the quarter rather than weakening wins: "our institutional pipeline of won-but-unfunded mandates remains healthy at $20.4 billion following record fundings in the quarter."

Vehicles narrative reinforced. Press release calls out "record growth in retail SMAs, ETFs and Canvas®, each delivering positive net flows with double-digit assets under management growth rates" and $25.7B of FY ex-Western net inflows into multi-asset and alternative strategies.

Recurring themes management leaned on this quarter:

Western Asset stabilization and regulatory cooperationAlternative assets expansion (private credit, secondary PE, real estate)Wealth channel penetration in alternatives with perpetual fund vehiclesTokenization infrastructure and white-label partnershipsNon-U.S. growth and emerging markets positioning amid geopolitical uncertaintyFee rate stability through offsetting mix pressures

Risks management surfaced:

Ongoing regulatory engagement with government on Western Asset (pace not controlled by FT)Market volatility and geopolitical uncertainty affecting IPO/M&A liquidity in private marketsLitigation risk and lack of DOL safe harbor slowing defined contribution adoption of private marketsTariff-driven price pressures and fiscal deficit exerting upward pressure on yieldsPotential credit deterioration in private credit space requiring selective LP deployment

Answers to last quarter's watch list

Whether Western Asset monthly outflows continue trending toward zero — Q4 Western long-term outflows were -$23.3B, materially above the July ~$3B/month telegraph. This is a re-acceleration, not stabilization. Status: Continue monitoring — deteriorated

Apera close and integration milestones — Apera closed in the quarter, lifting Alternative AUM to a record $270B. Status: Resolved positively

Alternative fundraising landing the year — FY alts fundraising came in at $26.2B (incl. $22.9B private markets), within the prior $25-30B range and above the ~$18.5B telegraph from last quarter. Status: Resolved positively

Adjusted operating margin trajectory — Adjusted operating margin recovered to 26.0% in Q4 from 23.7% in Q3, comfortably above the 23% threshold and the strongest quarterly print of the year. Status: Resolved positively

What to watch into next quarter

Western outflow trajectory — Q4's -$23.3B reverses the prior stabilization narrative; a return toward low-single-digit monthly outflows is needed to restore that story

Pro forma private credit AUM disclosure post-Apera — with Alternative AUM now at a record $270B, investors need fee-rate and pro forma private credit AUM transparency to size the integrated franchise

Won-but-unfunded mandates trajectory — $20.4B following record Q4 fundings; watch whether new institutional wins replenish the pipeline at a comparable pace

FY2026 fundraising guide for alternatives — FY25 landed above the prior telegraph; the FY26 bar setting will frame the alts growth narrative

Adjusted operating margin sustainability above 25% — Q4's 26.0% benefited from revenue rebounding +13.5% QoQ; watch whether mix and expense discipline hold the margin above 25% in a flatter revenue quarter

Sources

Franklin Resources Q4 FY2025 Press Release (Exhibit 99.1): https://www.sec.gov/Archives/edgar/data/38777/000003877725000234/exhibit991q4fy25.htm

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