BEN Q3 Deep Dive: Alternatives, Tech, and Platform Shifts Shape Outlook Amid Negative Market Reaction

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Its non-GAAP profit of $0.67 per share was 14% above analysts’ consensus estimates.Is now the time to buy BEN? Find out in our full research report (it’s free for active Edge members). Revenue: $2.34 billion vs analyst estimates of $1.73 billion (36.5% year-on-year growth, 35.4% beat)Adjusted EPS: $0.67 vs analyst estimates of $0.59 (14% beat)Adjusted Operating Income: $472.4 million vs analyst estimates of $449.5 million (20.2% margin, 5.1% beat)Operating Margin: 3.6%, up from -8.8% in the same quarter last yearMarket Capitalization: $11.54 billionFranklin Resources’ third quarter results surpassed Wall Street’s expectations, driven by strong momentum in alternative assets, continued ETF inflows, and expansion in digital and customized investment solutions. Despite this outperformance, the market reaction was negative, with management acknowledging ongoing challenges in legacy business lines and higher expenses tied to new initiatives. CEO Jennifer Johnson noted that improvements in investment performance, product lineup optimization, and targeted acquisitions underpinned the quarter, while the integration of new capabilities and platforms required substantial upfront investment.Looking ahead, management is focused on accelerating private markets fundraising, scaling tokenization and digital asset initiatives, and deepening penetration into the wealth and retirement channels. Johnson emphasized that the company is positioning itself for growth through expanded partnerships, infrastructure fund launches, and continued investment in AI. However, CFO Matthew Nicholls cautioned that expense discipline and the pace of cost efficiencies will be critical, stating, "We expect to end the year at or below adjusted expenses versus last year and at a higher operating margin, assuming market conditions remain stable."Management attributed the quarter’s performance to rapid growth in alternatives, digital asset innovation, and operational streamlining, while also highlighting shifts in product demand and expense management challenges.Alternatives fundraising momentum: Franklin Resources reported $22.9 billion raised in private markets this year, staying ahead of its five-year $100 billion goal. Management cited ongoing demand for differentiated alternative strategies, with the Apera acquisition extending direct lending capabilities in Europe and broadening the firm’s reach in the lower middle market.ETF and SMA platform growth: The ETF business grew at a 75% compound annual rate since 2023, with 16 straight quarters of net inflows and active ETFs representing more than 50% of flows. Retail separately managed accounts (SMAs) also saw robust demand, as clients seek personalized, tax-efficient investment solutions, driving 21% compound annual growth since 2023.Advances in digital assets and tokenization: The company’s digital asset AUM reached $1.7 billion, up 75% year-on-year. Franklin Resources is the only global asset manager offering digitally native on-chain mutual fund tokenization, enabling features such as intraday yield calculation and daily yield payouts. Partnerships with major crypto exchanges like Binance are opening new distribution channels for tokenized funds.Operational restructuring and expense discipline: Cost savings initiatives and the unification of investment management technology platforms are underway. However, higher incentive compensation, fundraising costs, and integration expenses offset some of the realized efficiencies, requiring continued attention to cost management going forward.Leadership changes and strategic hires: The transition of Adam Spector to CEO of Fiduciary Trust International and the addition of Daniel Gamba as Chief Commercial Officer reflect a focus on strengthening leadership in private wealth and global distribution. These moves are intended to support targeted growth and deepen expertise across key business lines.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P 5006,728.80 +8.48 (+0.13%)Dow 3046,987.10 +74.80 (+0.16%)Nasdaq23,004.54 -49.46 (-0.21%)Russell 20002,432.82 +14.00 (+0.58%)VIX19.08 -0.42 (-2.15%)Gold4,009.80 +18.80 (+0.47%)PortfolioSign in to access your portfolioSign inTop gainersGMED Globus Medical, Inc. 83.89 +22.18 (+35.94%)FROG JFrog Ltd. 60.00 +12.74 (+26.96%)EOSE Eos Energy Enterprises, Inc. 18.26 +2.97 (+19.42%)OS OneStream, Inc. 22.74 +3.66 (+19.18%)EXPE Expedia Group, Inc. 258.25 +38.55 (+17.55%)Top losersUI Ubiquiti Inc. 612.19 -147.38 (-19.40%)PRMB Primo Brands Corporation 14.46 -3.24 (-18.31%)RUN Sunrun Inc. 17.13 -3.29 (-16.11%)DIOD Diodes Incorporated 44.28 -7.53 (-14.53%)DOCS Doximity, Inc. 54.29 -8.29 (-13.25%)Most activeNVDA NVIDIA Corporation 188.15 +0.07 (+0.04%)OPEN Opendoor Technologies Inc. 6.56 0.00 (0.00%)ACHR Archer Aviation Inc. 8.18 -0.70 (-7.88%)PLUG Plug Power Inc. 2.6500 +0.1400 (+5.58%)PFE Pfizer Inc. 24.43 +0.01 (+0.04%)Earnings eventsMy earnings eventsEarnings eventsTrending tickersBTC-USD Bitcoin USD 101,588.45 -754.80 (-0.74%)PYPL PayPal Holdings, Inc. 66.22 -0.04 (-0.06%)ETH-USD Ethereum USD 3,396.67 -41.82 (-1.22%)XYZ Block, Inc. 65.45 -5.48 (-7.73%)XRP-USD XRP USD 2.27 -0.04 (-1.78%)Top economic events