BEN · Q3 2026 Earnings

Bullish

Franklin Resources

Reported July 31, 2026

30-second summary

Franklin reported Q3 FY2026 revenue of $2.36B (+14% YoY, +2.8% QoQ) and non-GAAP EPS of $0.72. Adjusted operating margin printed 28.0%, up ~90bps QoQ from 27.1% and squarely on the path to management's high-29s Q4 guide. The real news is that FY-to-date private markets fundraising has already reached $33.0B — clearing the prior $25–30B range with a full quarter still to go — and long-term net inflows came in at $18.4B (which includes $4.1B of reinvested distributions), with the won-but-unfunded pipeline at $28.6B pointing to continued momentum into Q4.

Headline numbers

EPS

Q3 FY2026

$0.72

+7.5% vs est.

Revenue

Q3 FY2026

$2.36B

+14.0% YoY

Operating margin

Q3 FY2026

9.2%

Key financials

Q3 FY2026

Metric	Q3 FY2026	Q3 FY2025	YoY	Q2 FY2026	QoQ
Revenue	$2.36B	$2.34B	+0.6%	$2.29B	+2.8%
EPS	$0.72	$0.67	+7.5%	$0.71	+1.4%
Operating margin	9.2%	3.6%	+560bps	14.1%	-490bps

Guidance

Margin trajectory raised implicitly via FY2026 operating margin outperformance and strategic business momentum (private markets fundraising YTD already exceeds full-year target); no numeric guidance updates but qualitative tone reflects confidence in delivery above plan.

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

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Effective fee rate	Q3 FY2026	mid to high 37s	37 bps (implied from reported revenue and AUM)	in-line	Met
Compensation expense	Q3 FY2026	$830 million (assuming $50M performance fee at 55% payout)	$830 million	in-line	Met

New guidance

Metric	Period	Guide	YoY
Private markets fundraising (YTD)	FY2026	$33.0 billion YTD, exceeding fiscal year target with one quarter remaining	—
Long-term net inflows (YTD)	FY2026	$63.3 billion YTD	—
Won-but-unfunded pipeline	FY2026	$28.6 billion	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Operating margin	FY2026	27%	11.7% reported (Q3 GAAP); full-year implied higher given qualitative tone	Qualitative upside — prior guided 27% full-year margin with Q4 expected in high 29s; Q3 reported operating margin of 11.7% (GAAP) with adjusted operating margin of 28.0%, and management commentary signals momentum and margin expansion continuing	Raised
Investment management fee revenue growth	FY2026	At least 6% YoY	8.6% YoY reported (full-year YTD basis)	+2.6 pts above low end of prior guide	Raised

Segment performance

Q3 FY2026

Segment	Q3 FY2026	YoY
Equity	$0.757B	+15.3%
Fixed Income	$0.441B	-0.1%
Alternative	$0.294B	+13.8%
Multi-Asset	$0.219B	+19.3%

Other KPIs

Q3 FY2026

Segment	Q3 FY2026	Q3 FY2025	YoY
United States	$1.268B	—	+13.7%
Europe, Middle East and Africa	$0.232B	—	+19.8%
Asia-Pacific	$0.191B	—	+4.6%
Americas, excl. U.S.	$0.1B	—	-16.6%
Assets Under Management	$1,791.6 billion	—	—
Long-term net inflows (Q3)	$18.4 billion	—	—
Long-term net inflows (YTD)	$63.3 billion	—	—
Alternative AUM	$294.2 billion	$263.9 billion	—
Private markets fundraising (YTD)	$33.0 billion	—	—
Won-but-unfunded pipeline	$28.6 billion	—	—
International AUM	$523.8 billion	—	—
Adjusted operating margin	28.0%	26.0%	—

Management tone

Narrative arc: Ex-Western stabilization watch → Margin pull-forward and ahead-of-plan → Ahead-of-plan on private markets, in-line on margin path.

Note: no transcript was available for this quarter; the tone read is drawn from the press release's qualitative statements and cross-referenced against prior-quarter calls.

Three quarters ago, private markets fundraising was framed as a catch-up story with an $18.5B FY2025 telegraph landing at $26.2B; two quarters ago, management raised the FY2026 range to "above $30B"; this quarter the range has already been cleared at $33.0B YTD with one quarter of collection still ahead. The press-release language shifted accordingly: "Fiscal year-to-date private markets fundraising reached $33.0 billion, exceeding our fiscal year target with one quarter still to go." This moves alternatives from a watch-list line item to the strongest operational proof point of the diversification thesis.

The tone on capital return and balance sheet has stiffened. A year ago the framing centered on protecting the dividend; last quarter emphasized reinvestment optionality; this quarter is explicit on both: "Our balance sheet provides the financial flexibility to invest in future growth, pursue strategic opportunities and continue returning capital to shareholders." Coupled with the margin trajectory holding, this signals confidence that the cash-generation profile is now durable enough to underwrite both M&A optionality and buybacks in parallel.

The Western Asset framing has effectively disappeared from the press-release narrative. For the last four quarters the ex-Western disclosure was the lead operating metric; this quarter's release leads with the aggregate long-term inflow number ($18.4B) and shifts the ex-Western caveat to the background. The implication is that Western is no longer material enough to the flow story to warrant separate top-line framing — a meaningful confidence signal even if the underlying Western outflows persist.

Answers to last quarter's watch list

Adjusted operating margin trajectory toward high-29s — Q3 printed 28.0% adjusted, +90bps QoQ from 27.1%. This is clear progression along the two-quarter path to high-29s in Q4, though the step-up remaining (~150–200bps in one quarter) is still meaningful. Status: Continue monitoring

Whether private markets FY fundraising actually clears $30B — Cleared decisively. $33.0B YTD already exceeds the FY target with Q4 still to come; management framed this as ahead of plan. Status: Resolved positively

Investment management fee revenue growth vs. the new ≥6% YoY commitment — Investment management fee revenue is +8.2% YoY YTD ($5,533.4M vs $5,113.7M), above the ≥6% floor. Q3 alone grew 14% YoY. The commitment is being materially outperformed. Status: Resolved positively

G&A normalization in Q4 — Not resolved; more importantly, Q3 G&A came in at $312.8M vs the $210–215M prior guide (a ~$100M miss) and up 67% QoQ from $187.6M. The prior guide contemplated only $32–35M of one-time fundraising/marketing spend, so the overshoot is well beyond what was flagged. Q4 will show whether run-rate normalizes. Status: Continue monitoring (with concern)

Canvas growth rate sustainability — Franklin did not disclose Canvas-specific AUM or net-flow figures in this press release; the Q2 disclosure of $22.9B AUM at 72% CAGR was not refreshed. Status: Not resolved

What to watch into next quarter

Whether adjusted operating margin clears 29% in Q4 — Q3 at 28.0% leaves a ~150–200bps gap to the high-29s guide; anything below 29% would signal the pull-forward narrative is slipping

FY2026 private markets fundraising final tally — $33.0B YTD; watching where Q4 lands (a $37–40B FY print would materially reset the FY2027 bar)

G&A run-rate normalization — Q3 blew through the $210–215M guide at $312.8M; Q4 needs to step back materially to restore confidence in cost discipline

Compensation run-rate — Q3 comp of $958.5M was well above the $830M guide even with pass-through performance fees light at $3.7M; watching whether this reflects one-offs or a reset base

Won-but-unfunded pipeline conversion — $28.6B is a cycle high; watch whether Q4 flows convert without depleting the pipeline

Whether management issues formal FY2027 revenue or margin framing on the Q4 call — the current setup (margin holding, alts ahead of plan, flows accelerating) invites an upgraded medium-term target beyond the existing 30%+ margin aspiration

Sources

Franklin Resources Q3 FY2026 Press Release (Exhibit 99.1): https://www.sec.gov/Archives/edgar/data/38777/000003877726000215/exhibit991q3fy26.htm

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