BEN

Franklin Resources is a global active manager whose earnings remain a fraction of their former selves. FY2025 GAAP net income recovered 12.9% to $525M and diluted EPS rose 7.1% to $0.91, but that follows a steep multi-year decline — net income was $1.83B in FY2021 and $883M in FY2023 before bottoming near $465M in FY2024. Operating margin of 6.9% (up from 4.8% but down from 14.0% in FY2023) reflects integration costs and persistent fee pressure. Management's own adjusted figures tell the truer trend: adjusted operating income fell to $1,640.2M and adjusted net income to $1,195.8M, both down YoY, with adjusted operating margin sliding to 24.5% from 26.1%.

The core problem is the franchise's revenue engine. Total AUM was $1,661.2 billion at September 30, 2025, 1% lower than a year earlier even as equity and bond markets rose double digits (S&P 500 +14.8%, Global Aggregate +7.9%). That gap implies net outflows being masked by market appreciation. The risk factors are explicit that a mix shift toward lower-fee fixed income and ETFs and away from higher-fee equity/alternatives directly compresses revenue and income — the central structural headwind for active managers.