Franklin Templeton manages investment funds and accounts for individuals, institutions and wealthy clients, mainly for fees tied to the assets it manages. In fiscal 2026, ended September 30, management fees rose 7.1% as demand improved and withdrawals from Western Asset slowed. Operating profit nearly doubled to $1.18 billion, although lower accounting charges on past acquisitions explained much of that increase. Franklin enters the next year with a stronger fee business, while investment commitments and payments to shareholders continue to draw on its cash.
Research cutoff: November 10, 2026, New York date. The latest company evidence used is the November 9 annual filing, including its disclosures about October events, and the November 6 results release.
Source: Franklin Templeton FY2026 Form 10-K, Item 7, pp. 35–45 and 50–52; Note 21, p. 98.
1. Clients are returning, but the headline inflow figure has a new definition
Improved demand extends beyond Western Asset’s slower withdrawals. Equity strategies, which invest in stocks, attracted $21.1 billion more than clients withdrew in fiscal 2026, compared with $0.4 billion of net withdrawals a year earlier. Multi-asset strategies, which combine different types of investments, brought in $26.1 billion net, against $12.8 billion. These businesses helped Franklin rebuild the pool of assets on which it earns fees.
Western Asset Management, or WAM, was still losing client assets. Its annual net withdrawals fell to $11.7 billion from $141.9 billion in fiscal 2025. That is a substantial reduction in the damage, but it leaves an important distinction: fewer departures can stabilize a business before new demand produces growth. Across Franklin’s fixed-income business, which invests in bonds and other debt, average assets managed during the year still fell 6%, reflecting the lasting effect of earlier withdrawals.
Sources: FY2026 Form 10-K, Item 7, pp. 36–38; FY2025 annual report, Item 7, printed p. 36, PDF p. 26, for the prior-year WAM figure.
The longer comparison shows why this recovery matters. Assets under management, or AUM, are clients’ investments managed by Franklin; they are not the company’s own cash. Average AUM matters more for annual fees than the balance on the final day of the year.
| Companywide client assets and flows, USD billions | FY2024 | FY2025 | FY2026 |
|---|---|---|---|
| AUM at September 30 | 1,678.6 | 1,661.2 | 1,795.1 |
| Average AUM during the fiscal year | 1,565.8 | 1,606.7 | 1,735.4 |
| Reported long-term net inflows / (outflows) | -32.6 | -97.4 | 84.1 |
| AUM added / (removed) through acquisitions and disposals | 148.3 | -0.2 | 6.2 |
Reporting basis: Beginning in FY2026, Franklin counts some promises by clients to provide money later as long-term inflows. These commitments have not yet been called and do not yet earn fees. Previously, these appeared in “net market change, distributions and other.” Earlier periods were not revised. Average AUM uses thirteen month-end balances. FY2024’s acquisition contribution is separate from client flows.
Source: FY2026 Form 10-K, Item 7, pp. 36–38.
The change in definition means the full swing from outflows to $84.1 billion of inflows is not a like-for-like measure of improvement. The current-year figure also includes $39.5 billion of investment distributions that clients reinvested. Removing those distributions leaves $44.6 billion, but that remainder still includes the newly classified commitments. It is therefore not a measure of fresh cash already deposited and earning fees.
Nevertheless, fee revenue supplies a separate test of whether the recovery reached the business. Management fees excluding performance fees rose from $6.51 billion to $7.06 billion, an 8.6% increase. Performance fees are additional payments earned when products meet contractual investment targets. Those fees declined, so they did not create the increase in the main management-fee business.
Source: FY2026 Form 10-K, Item 7, pp. 37–40. Calculation: management fees less performance fees; exact inputs appear in the calculation notes.
Market gains also helped. Investments managed for clients appreciated by $126.1 billion during the year. Distributions to investors, currency changes and other movements reduced the reported net contribution of this category to $46.4 billion. Together with client flows and acquisitions, that raised ending AUM by $133.9 billion. Franklin is winning more business, but its fees still depend on what happens to clients’ investments after they arrive.
Source: FY2026 Form 10-K, Item 7, pp. 37–38.
2. Fee growth improved profit, while lower acquisition charges magnified the gain
The earnings recovery survives adjustment, but its reported size needs context. Total revenue rose 7.3%, while reported operating expenses rose only 0.9%. The gap lifted the operating margin—the share of revenue left after running the business—from 6.9% to 12.5%.
| Consolidated reported results, USD millions except margins and EPS | FY2024 | FY2025 | FY2026 |
|---|---|---|---|
| Revenue | 8,478.0 | 8,770.7 | 9,415.3 |
| Operating profit | 407.6 | 604.1 | 1,175.9 |
| Operating margin | 4.8% | 6.9% | 12.5% |
| Net income attributable to Franklin Templeton | 464.8 | 524.9 | 1,075.3 |
| Diluted earnings per common share, USD | 0.85 | 0.91 | 1.97 |
Source: FY2026 Form 10-K, consolidated income statements, p. 64; Item 7, p. 36. All columns cover twelve months ended September 30.
Much of the apparent cost restraint came from past acquisitions. When Franklin buys investment-management contracts and brand names, it records assets representing their expected future benefits. Amortization gradually charges part of their purchase cost against profit. Impairment is an additional write-down when expected benefits fall.
Those two charges together dropped by $401.7 million, equivalent to about 70% of the $571.8 million increase in operating profit. Amortization declined mainly because some acquired assets reached the end of their accounting lives. The previous year also contained a $200 million impairment of WAM management contracts. This year’s total impairment was $33 million, caused primarily by lower assets in acquired mutual-fund contracts.
Excluding just amortization and impairment, operating expenses increased 6.3%, rather than 0.9%. That calculation still includes restructuring, the regulatory settlement and other unusual items. It shows why the reported expense total should not be read as evidence that almost every operating cost stood still.
Source: FY2026 Form 10-K, Item 7, pp. 41–43; Note 8, pp. 80–81. These comparisons are pretax calculations, not estimates of adjusted net income.
There was operating progress underneath those accounting effects. Average equity, multi-asset and alternative AUM increased, while Apera’s acquisition added management fees. The effective management-fee rate excluding performance fees edged up from 40.5 to 40.7 basis points—about $4.07 a year per $1,000 of average managed assets. This is an average across different products, not evidence of a uniform price increase. Performance fees fell from $474.0 million to $414.1 million, principally because alternative managers earned less of them.
Growth also raised costs. Distribution and marketing expenses rose 9.4%, faster than revenue, as the company managed more assets, sold a different mix of products and paid more marketing support fees. Franklin pays substantially all its sales and distribution revenue to intermediaries. Some selling costs also draw on management fees. Thus, additional sales create a larger fee base, but the company does not retain every dollar it records as revenue.
Source: FY2026 Form 10-K, Item 7, pp. 40–43.
Management’s adjusted operating profit rose 23.1% to $2.02 billion. Its adjusted operating margin increased from 24.5% to 28.0%, recovering beyond fiscal 2024’s 26.1%. That supports a broader improvement than the decline in acquisition charges alone. The complete reconciliation appears below because management removes several real business costs, including $204.5 million of special termination benefits and the $100 million WAM settlement.
Workforce changes have both a purpose and a price. Management attributes the termination costs to workforce optimization, and says cost-reduction initiatives partly offset salary increases and Apera-related compensation. Acquisition-retention expense also benefited from a $67.3 million reversal when certain equity awards were forfeited. These are different mechanisms: future staffing savings, current severance costs and a reversal of previously recognized expense should not be combined into one recurring savings estimate.
Source: FY2026 Form 10-K, Item 7, pp. 42 and 45–49.
Net income rose faster than operating profit for additional reasons. Company investment and other income increased, including gains on selling owned office space. The reported tax rate fell from 30.2% to 21.0%, partly because more income belonged to outside investors and because Franklin could recognize more tax benefits from prior losses. The tax calculation includes a $31.5 million benefit from changing estimates of which tax assets it can use. The much larger $132.8 million fall in the related allowance balance also includes expired tax benefits being removed from the accounts; that whole decrease did not become profit.
The company’s reported $1.08 billion profit is the amount attributable to Franklin after removing outside investors’ earnings. That distinction prevents the strong investment results of consolidated funds from being mistaken for profit belonging entirely to Franklin. The lower tax rate and property-sale gains help explain this year’s result; they are not measures of client-fee growth.
Source: FY2026 Form 10-K, Item 7, pp. 44–45; income statements, p. 64; Notes 10 and 13, pp. 83 and 88–90.
3. New investment formats broaden the business, but performance and selling costs still matter
Franklin’s expansion is reaching areas where clients are adding money. Management’s strategy is to bring public-market investments, private-market investments and customized accounts together for clients who want broader relationships with fewer providers. The intended benefit is more business through its existing investment teams and distribution network.
In its November 6 release, Franklin reported September 30 assets of $84.6 billion in ETFs, $196.3 billion in retail separately managed accounts and $32.6 billion in Canvas. ETFs trade on exchanges; separately managed accounts hold portfolios for individual clients; Canvas provides customized portfolios. These categories can overlap and should not be added together. Management also reported $22 billion of institutional mandates won but not yet funded—a potential source of assets, rather than current revenue.
Sources: November 6, 2026 results release, CEO commentary; FY2026 Form 10-K, Item 1, pp. 4–8.
The industry supports the choice of format, while competition limits the fees available. The Investment Company Institute reports that U.S. ETF net share issuance increased from $1.1 trillion in calendar 2024 to $1.5 trillion in 2025. Vanguard announced fee reductions across 84 mutual-fund and ETF share classes in February 2026. Franklin is participating in a growing market where competitors are also lowering customer costs. ETF growth therefore creates an opportunity to gather assets, but does not by itself establish higher profit margins.
Sources: ICI’s April 27, 2026 Fact Book announcement, key takeaways for calendar 2025; Vanguard’s February 2, 2026 fee announcement. These industry figures are not Franklin fiscal-year results or directly comparable management-fee rates.
Franklin is also buying capabilities in private markets, where investments are negotiated outside public exchanges. Apera, acquired on October 1, 2025, adds European lending expertise. Franklin paid €65.2 million after closing adjustments and may pay up to another €125 million if revenue targets are achieved. The proposed purchase of a majority interest in Stoneshield through Clarion would extend European real-assets capabilities. At filing, it remained subject to closing conditions and regulatory approval, with completion expected in the fourth calendar quarter of 2026.
An October transaction expanded Benefit Street Partners’ business financing loans backed by assets. A fund backed by Franklin and BSP-affiliated funds acquired a seed portfolio with approximately $480 million of commitments originated by Encina, and an investment team joined BSP. That figure describes portfolio commitments; it is not a disclosed $480 million acquisition payment by Franklin. The business opportunity is to originate and manage more investments, with the benefit depending on deployment, client funding and credit performance.
Source: FY2026 Form 10-K, Item 1, “Recent Developments,” p. 5; Item 7, p. 52.
Investment performance remains the strongest counterweight to the growth story. Franklin groups portfolios following the same investment approach and compares their returns with a relevant market index. Only 35% of measured equity assets beat that index over one year, and 44% over three years. Fixed-income results were stronger, at 78% and 75%. These percentages cover measured strategies, not every client asset, and some comparisons are before fees while others are after fees. Still, the contrast shows that new products and a broad sales network do not eliminate the need to improve investment outcomes in the largest asset class.
International operations also contributed meaningfully. Revenue attributed to Luxembourg rose to $1,559.0 million from $1,295.7 million; the U.S. increase was similar in dollars, from $6,614.2 million to $6,874.9 million. These figures identify where subsidiaries provide services, not where clients live. Franklin reports only one operating segment, so the filing does not establish a separate profit margin for ETFs, Canvas, alternatives or any region. The practical test is whether these growing businesses add fees faster than their investment, compensation and distribution costs.
Source: FY2026 Form 10-K, Item 7, p. 39, including performance-coverage and fee-basis footnotes; Notes 4 and 18, pp. 76–77 and 96.
4. Fund investment activity obscures how much cash the manager can use
The fall in consolidated operating cash flow partly reflects investment purchases inside managed funds. Reported operating cash flow declined to $836.7 million from $1,066.1 million even as profit rose. The accounts include certain investment funds that Franklin controls for accounting purposes, called consolidated investment products, or CIPs. Their cash transactions can be large, although much of their money belongs to outside investors.
These funds used $879.7 million for net investment purchases recorded within operating cash flow, compared with $369.4 million a year earlier. The additional $510.3 million outflow exceeded the decline in total operating cash flow. Other movements partly offset it. This explains why the consolidated cash-flow headline alone is an incomplete measure of cash generation from managing clients’ portfolios.
Source: FY2026 Form 10-K, cash-flow statements, pp. 68–69; Item 7, pp. 49–50; Note 10, p. 83.
Cash was also affected by ordinary payment timing. Receivables and other operating assets absorbed $258.2 million, versus $128.7 million: more money was waiting to be collected or had been committed to other operating assets. Higher unpaid compensation and other liabilities supplied cash in the opposite direction, because expenses and obligations had been recorded before payment. These timing benefits defer cash use; they do not remove the obligations.
Taxes were another significant use. Cash tax payments rose to $521.4 million from $465.4 million and included the final $231.6 million federal installment of the transition tax on historical foreign earnings. Finishing that scheduled obligation removes a specific future payment. It does not determine next year’s total tax bill, which will also depend on earnings and other settlements.
Source: FY2026 Form 10-K, cash-flow statements, pp. 68–69; Note 13, pp. 90–91.
The cash summary shows how fund borrowing and investment activity dominate the consolidated totals.
| Consolidated cash movements, USD millions | FY2025 | FY2026 |
|---|---|---|
| Cash and cash equivalents at beginning of year | 4,408.9 | 3,573.9 |
| Operating cash flow | 1,066.1 | 836.7 |
| Investing cash flow | -2,342.7 | -4,323.0 |
| Financing cash flow | 452.4 | 4,335.9 |
| Currency effect on cash | -10.8 | -33.6 |
| Cash and cash equivalents at end of year | 3,573.9 | 4,389.9 |
Reporting basis: Includes CIPs. FY2026 closing cash consists of $3,227.8 million reported outside CIPs and $1,162.1 million inside them; the corresponding FY2025 figures are $3,088.1 million and $485.8 million. The company cash category includes money-market holdings for deferred employee compensation that are restricted in use; Note 6 identifies $80.8 million at September 2026. Closing consolidated cash is therefore not all available for corporate spending.
Source: FY2026 Form 10-K, balance sheets, p. 66; cash-flow statements, pp. 68–69; Notes 1 and 6, pp. 72 and 79.
Consolidated loan funds bought $4.04 billion more investments than they sold, while CIPs raised $4.21 billion through net debt issuance. Those are fund financing activities. Separately, Franklin spent $431.0 million net on investments outside the CIP investment-purchase lines and $81.2 million on acquisitions, net of cash acquired. Management says these investments help launch products and develop investment capabilities.
Payments to shareholders increased to $1,230.8 million, comprising $697.6 million of cash dividends and $533.2 million of buybacks. The prior-year total was $924.0 million. Corporate debt proceeds less repayments added $300 million during fiscal 2026, and cash outside CIPs increased by $139.7 million. These figures establish that investment, shareholder payments and borrowing all remained material parts of cash management. They do not assign individual borrowed dollars to particular expenditures.
The property-and-equipment cash line fell to $20.5 million from $154.5 million, but the statement labels it net additions. Franklin also sold owned office space. Treating that line as gross capital spending would overstate how far physical investment fell. Given this net presentation and the fund transactions within operating cash flow, this report does not present a simple operating-cash-minus-capex figure as cash freely available to shareholders.
Source: FY2026 Form 10-K, Item 7, pp. 44 and 51–52; cash-flow statements, pp. 68–69. The profit-to-cash reconciliation is in the calculation notes.
5. Corporate funding is manageable, but the cash-and-investment total has several claims on it
Most balance-sheet expansion came from consolidated funds, while Franklin’s own funding needs also increased. Total assets rose from $32.37 billion to $38.63 billion. CIPs accounted for $5.55 billion, or about 89%, of that increase. Their debt rose to $14.69 billion from $9.94 billion. Lenders to these funds generally have recourse to fund assets and Franklin’s committed exposure, rather than its wider corporate assets.
Franklin’s direct investment in CIPs was $1.35 billion. That is real company money exposed to the funds, even though the much larger gross fund balances do not belong entirely to Franklin. The distinction matters both ways: excluding outside investors’ assets prevents overstating liquidity, and separating their debt prevents overstating corporate borrowing.
Source: FY2026 Form 10-K, Item 7, p. 50; balance sheets, p. 66; Note 10, p. 83.
The operating business also committed more money to fees awaiting collection and investments. Receivables excluding CIPs rose from $1,228.6 million to $1,345.2 million. These are principally fees owed by investment products. The increase accompanies higher fee revenue and ties up cash, although the disclosed balances alone do not establish that customers are paying more slowly.
Investments outside CIPs increased from $2,374.0 million to $2,807.9 million, led by holdings in entities whose earnings Franklin shares but does not fully consolidate. Property and equipment fell from $949.1 million to $870.8 million as the company depreciated assets and reduced owned office space. Goodwill increased $88.6 million, reflecting $97.2 million added through acquisitions less currency effects. Other intangible assets declined $189.5 million amid amortization, impairment and other changes.
Together, goodwill and other intangibles remained $10.27 billion. These assets represent much of the value recorded for acquired businesses, contracts and brands. Their usefulness depends on retaining clients and earning future fees; they cannot supply near-term cash like a bank deposit.
Source: FY2026 Form 10-K, Item 7, pp. 44 and 50; balance sheets, p. 66; Notes 5, 7 and 8, pp. 77 and 80–81.
At September 30, corporate notes had $2.50 billion of principal outstanding and a $2.64 billion accounting carrying value. The difference includes acquisition-related premiums, discounts and issuance costs. Franklin repaid $450 million of Legg Mason notes in March, then issued $750 million of notes in August. This moved funding into a longer maturity, at a higher cash interest rate than the retired notes.
| Corporate notes outstanding at September 30, 2026 | Principal, USD millions | Annual contractual interest rate | Maturity |
|---|---|---|---|
| Franklin Templeton | 850.0 | 1.600% | October 2030 |
| Franklin Templeton | 750.0 | 5.500% | August 2036 |
| Legg Mason, guaranteed by Franklin | 550.0 | 5.625% | January 2044 |
| Franklin Templeton | 350.0 | 2.950% | August 2051 |
| Total principal | 2,500.0 | — | — |
Calculation notes: The four notes require approximately $96.1 million of annual cash interest at their stated rates, before facility fees, other financing costs and subsequent borrowing. This is a full-year contractual calculation, not FY2026 reported interest expense. The first note maturity is $850 million in 2030, or 34% of this principal.
Source: FY2026 Form 10-K, Note 9, pp. 81–83.
The $1.5 billion revolving credit facility was undrawn at year-end and matures in July 2031. Franklin borrowed $300 million on October 19 for general corporate purposes; that amount remained outstanding when the filing was submitted. The rate is the floating Term SOFR benchmark plus 0.875 percentage points. The agreement limits debt relative to an earnings measure, using its defined consolidated net leverage ratio, to 3.25 times. Franklin reported compliance at September 30. The filing does not give a post-October covenant calculation. The facility provides flexibility, but the October draw means year-end debt does not describe the latest borrowing position.
Source: FY2026 Form 10-K, Item 7, pp. 50–51; Notes 9 and 21, pp. 82–83 and 98.
The company’s $7.38 billion cash-and-investment presentation includes its direct CIP holdings, illiquid investments, operational balances and employee-related assets. Management identifies about $468 million needed for regulatory requirements and about $605 million of investments subject to repurchase agreements or other net financing arrangements. These disclosures describe different business uses and financing arrangements; they do not provide a single calculation of unrestricted cash. The narrower liquidity presentation identifies $3.11 billion of cash and cash equivalents plus receivables and selected liquid investments.
Other obligations also require planning. Franklin had $1,411.1 million of unfunded investment commitments and $950.4 million of purchase obligations. Operating leases require $133.6 million in fiscal 2027 and $1,296.1 million over their remaining terms, before discounting. The balance-sheet lease liability was $977.9 million. Investment-backed repurchase financing of $215.1 million sits in other liabilities, outside the corporate-note balance. These obligations have different timing and conditions, but all limit the amount of cash available for discretionary uses.
Source: FY2026 Form 10-K, Item 7, pp. 50–52; Notes 5, 14 and 15, pp. 77 and 91–95.
Share repurchases exceeded new issuance: Franklin bought back 17.0 million shares and issued 8.5 million, reducing issued and outstanding shares to 512.5 million from 521.0 million. The accounts reduce share capital for repurchases rather than showing a separate treasury-stock balance. Management says buybacks help offset equity-compensation dilution, while it expects more post-dividend cash to support business investment and the initial capital needed to launch products.
The average diluted share count declined only 0.4%, so the large EPS increase came principally from higher earnings. The EPS calculation also assigns some earnings to unvested employee awards with dividend rights before calculating earnings for common shares. Equity compensation remains an ongoing cost: Note 16 reports $179.0 million of expense and $219.3 million of unrecognized award expense expected over a weighted-average 2.3 years.
Source: FY2026 Form 10-K, Item 7, p. 51; equity statement, p. 67; Notes 3 and 16, pp. 76 and 95–96.
Franklin’s own stockholders’ equity declined to $11,893.0 million from $12,077.8 million despite the profit increase. Dividends, buybacks and a $226.3 million increase in the recorded value of redeemable minority stakes absorbed earnings and other additions. The minority-stake adjustment reduces accumulated earnings directly because outside owners can require Franklin to buy their interests under the relevant arrangements. It is recorded outside operating profit. These claims on capital matter alongside ordinary dividends and repurchases.
Source: FY2026 Form 10-K, equity statement, p. 67; Notes 1 and 11, pp. 73–74 and 87. Full equity checks appear in the calculation notes.
6. Western Asset’s regulatory settlement narrows one risk, while civil claims remain
The $100 million WAM settlement resolved the SEC investigation, but did not close every related exposure. The SEC’s June 5 order found failures to detect and prevent the former co-chief investment officer’s alleged unfair trade allocations, and failures in supervision and implementation of policies. WAM settled without admitting the findings. The filing also says the Justice Department ended its investigation of WAM in June.
For the business, resolution removes a specific regulatory uncertainty that accompanied heavy client withdrawals. The annual flow data show stabilization, although they do not isolate how much was caused by the settlement. A related fund-shareholder lawsuit remains pending. Franklin, WAM and other defendants still face claims arising from the allocations.
Sources: SEC’s June 5, 2026 settlement announcement; FY2026 Form 10-K, Note 15, pp. 93–94.
Other unresolved claims involve Franklin’s employee retirement plan and disclosures by certain Putnam mutual funds. Franklin disputes the claims and says it cannot estimate reasonably possible losses or a range of losses for the reported lawsuits. That leaves an unquantified exposure, rather than a zero-cost outcome.
India’s older fund-closure proceedings also remain relevant. Appeals of orders from India’s securities regulator, SEBI, are pending. The orders require repayment of fees and interest totaling INR 512.5 crore, with continuing 12% interest, plus penalties of INR 20 crore. Enforcement was stayed subject to an escrow deposit. The filing’s approximate dollar equivalents of $61.7 million and $2.4 million describe the reported orders, not a new estimate of today’s final liability. Closing a separate police proceeding in July did not resolve these appeals.
Source: FY2026 Form 10-K, Note 15, pp. 92–94.
Tax disputes create a separate potential demand for cash. The company had $101.4 million of tax benefits it had not recognized because their acceptance remained uncertain, with another $21.0 million of accrued interest. These balances do not estimate every possible outcome of its ongoing examinations and litigation. Settlements would use corporate resources otherwise available for new products and shareholder distributions.
Acquisitions create additional conditional payments. Apera’s payments and Putnam partnership payments of up to $375 million depend on future business targets. Putnam payments can fall between the third and seventh anniversaries of its January 2024 acquisition. Meeting those targets can bring more revenue, but Franklin must also plan for the related cash payments.
Source: FY2026 Form 10-K, Item 7, p. 52; Notes 6 and 13, pp. 79 and 90–91.
7. The next test is turning broader demand into fees and available cash
Franklin’s operating position improved, with the clearest evidence in higher management fees and stronger adjusted operating profit. Slower WAM withdrawals reduced a major drag, while equity, multi-asset products and newer investment formats attracted business. The improvement is broader than a market-driven increase in year-end assets.
Fiscal 2027 has an additional accounting benefit in sight: the existing acquired-asset schedule estimates $145.0 million of amortization, below fiscal 2026’s $198.4 million. That would support reported profit if the schedule remains unchanged, but would not itself bring in cash. The more consequential business opportunity is to turn unfunded mandates and private-market commitments into fee-paying assets while keeping client performance and selling costs under control.
The evidence supports a stronger business entering the next year, with substantial liquidity and no corporate-note maturity before 2030. Continued success depends on retaining clients, improving weaker equity investment results and earning enough from expansion to cover its staffing, distribution and funding demands. Renewed large withdrawals, disappointing investment outcomes or a material litigation payment would weaken that assessment; successful funding of new mandates and steadier cash generation would strengthen it.
Sources: FY2026 Form 10-K, Item 7, pp. 36–52; Notes 8, 9 and 15, pp. 81–83 and 92–95; November 6, 2026 results release, institutional mandates disclosure.
Reporting basis:
The registrant is Franklin Templeton, Inc., formerly Franklin Resources, Inc.; CIK 0000038777; NYSE ticker BEN. The corporate name changed on August 17, 2026 without changing its capital structure. This analysis uses the consolidated U.S. GAAP Form 10-K for October 1, 2025–September 30, 2026, filed November 9, 2026, accession 0000038777-26-000289. Comparative annual results cover the same twelve-month periods in fiscal 2025 and 2024. Balance-sheet comparisons use September 30, 2026 and 2025.
The supplied complete filing text is the foundation. SEC submission metadata and annual XBRL facts were checked against the financial statements, using the accession, actual start/end dates, units and reporting scope; the fiscal-year label alone was not used to select comparative facts. “Net income attributable to Franklin” excludes profit belonging to outside owners. Consolidated net income before that allocation is used in the cash-flow reconciliation. Franklin reports one operating segment.
Sources: SEC registrant submission metadata; SEC company facts; FY2026 Form 10-K, cover, Item 1, Note 1 and Note 18. PricewaterhouseCoopers’ November 9 audit opinion covers the consolidated financial statements and internal control, pp. 62–63. External industry evidence uses the dates stated beside each source; this report does not assert that every development through November 10 was independently checked.
Calculation notes:
A. What management removes from operating profit. All amounts below are USD millions. Positive adjustments are added to reported operating profit. These are the company’s non-GAAP calculations, before tax. They do not produce an adjusted after-tax earnings figure.
| Reported operating profit plus management’s adjustments | FY2024 | FY2025 | FY2026 |
|---|---|---|---|
| Reported operating profit | 407.6 | 604.1 | 1,175.9 |
| Restore management fees eliminated when funds are consolidated | 47.4 | 50.7 | 68.2 |
| Acquisition-related retention compensation | 263.6 | 162.4 | 75.1 |
| Compensation expense from deferred-compensation investment gains | 50.5 | 23.4 | 41.3 |
| Other acquisition-related expenses | 97.4 | 41.4 | 63.3 |
| Amortization of intangible assets | 338.2 | 406.5 | 198.4 |
| Impairment of intangible assets | 389.2 | 226.6 | 33.0 |
| Special termination benefits | 75.8 | 69.7 | 204.5 |
| Compensation related to minority interests in subsidiaries | 43.4 | 55.4 | 59.7 |
| Significant regulatory settlement charges | 0.0 | 0.0 | 100.0 |
| Adjusted operating profit | 1,713.1 | 1,640.2 | 2,019.4 |
Management also changes the revenue base used to calculate its adjusted margin. It removes fees passed through to employees or intermediaries and restores fees eliminated on consolidation. That smaller revenue base is why the adjusted margin cannot be compared directly with the reported margin as though only costs had changed.
| Revenue calculation for adjusted margin, USD millions | FY2024 | FY2025 | FY2026 |
|---|---|---|---|
| Reported revenue | 8,478.0 | 8,770.7 | 9,415.3 |
| Remove acquisition-related performance fees passed through | -97.5 | -109.4 | -82.2 |
| Remove sales and distribution fees | -1,381.2 | -1,474.7 | -1,593.7 |
| Remove management fees allocated to selling costs | -481.9 | -536.2 | -606.8 |
| Restore fees eliminated on consolidation | 47.4 | 50.7 | 68.2 |
| Adjusted revenue | 6,564.8 | 6,701.1 | 7,200.8 |
| Adjusted operating margin | 26.1% | 24.5% | 28.0% |
Reporting basis: The FY2024 sales-and-distribution adjustment is reproduced as $1,381.2 million from management’s reconciliation; the reported income-statement revenue line is $1,381.0 million. Other ordinary operating costs remain in adjusted profit. Acquisition and workforce expenses can arise again as Franklin continues to change its business.
Source: FY2026 Form 10-K, Item 7, definitions and reconciliations, pp. 45–49. Adjusted operating profit divided by adjusted revenue produces the displayed margins.
B. Checking the earnings and asset-growth claims. Calculations use unrounded source inputs; presentation is rounded.
- Management fees excluding performance fees: FY2026 $7,478.9 million − $414.1 million = $7,064.8 million; FY2025 $6,981.8 million − $474.0 million = $6,507.8 million. Growth is $7,064.8 million ÷ $6,507.8 million − 1 = 8.6%.
- Reported operating-profit increase: $1,175.9 million − $604.1 million = $571.8 million. Lower amortization and impairment: ($406.5 million + $226.6 million) − ($198.4 million + $33.0 million) = $401.7 million. This equals 70.3% of the reported profit increase. It is a pretax accounting contribution, without an assumed tax adjustment.
- Reported margins: operating profit divided by revenue gives 12.49% in FY2026 and 6.89% in FY2025, an improvement of 5.60 percentage points. Adjusted operating-profit growth is $2,019.4 million ÷ $1,640.2 million − 1 = 23.1%.
- AUM reconciliation, USD billions: opening assets of 1,661.2 + long-term net inflows of 84.1 − cash-management net outflows of 2.8 + acquisitions of 6.2 + net market change, distributions and other of 46.4 = closing assets of 1,795.1. The last category is used in full; it is not relabeled as pure market appreciation.
- Common-share EPS: FY2026 attributable profit of $1,075.3 million less $59.3 million allocated to participating employee awards leaves $1,016.0 million. Dividing by 515.4 million diluted average shares gives $1.97. FY2025 uses ($524.9 million − $53.2 million) ÷ 517.4 million shares = $0.91. Average diluted shares fell 0.39%.
Source: FY2026 Form 10-K, Item 7, pp. 36–43 and 48; Note 3, p. 76.
C. Why profit differs from operating cash. The table groups every operating cash-flow reconciliation line. All amounts are USD millions; a minus sign reduces cash relative to reported profit.
| Consolidated profit-to-cash reconciliation | FY2025 | FY2026 |
|---|---|---|
| Net income, including outside investors’ share | 548.9 | 1,502.8 |
| Add back stock compensation, depreciation, amortization and impairment | 1,053.0 | 635.2 |
| Remove investment gains and income included in profit | -44.5 | -409.7 |
| Net investment purchases by CIPs classified in operating activities | -369.4 | -879.7 |
| Deferred taxes and other reconciliation adjustments | 127.2 | 121.6 |
| Net changes in operating assets and liabilities | -249.1 | -133.5 |
| Operating cash flow | 1,066.1 | 836.7 |
The grouped amounts above can be checked against these inputs. Every number below is USD millions and uses the sign shown in the cash-flow statement.
| Inputs to the grouped cash adjustments | FY2025 | FY2026 |
|---|---|---|
| Stock compensation added back | 214.8 | 197.2 |
| Deferred selling commissions charged to profit | 79.8 | 97.0 |
| Depreciation and other amortization | 125.3 | 109.6 |
| Amortization of acquired intangible assets | 406.5 | 198.4 |
| Impairment | 226.6 | 33.0 |
| Reverse company investment gains / losses | 37.6 | -13.0 |
| Remove earnings from partly owned investments | -78.0 | -90.8 |
| Reverse CIP investment gains | -4.1 | -305.9 |
| Deferred income taxes | -47.2 | 35.4 |
| Other reconciliation adjustments | 174.4 | 86.2 |
| Receivables and other assets | -128.7 | -258.2 |
| Operating investments | 19.0 | -25.8 |
| Unpaid compensation | -32.9 | 99.1 |
| Income taxes payable | -181.5 | -156.7 |
| Other payables and liabilities | 90.0 | 315.3 |
| CIP payables | -15.0 | -107.2 |
Reporting basis: Stock compensation here is a cash-statement adjustment, a different measure from total expense in Note 16. The reconciliation includes funds and their outside owners throughout. Adding back only CIP investment purchases would leave other fund transactions in the result, so it would not isolate cash generated by the management business.
Source: FY2026 Form 10-K, cash-flow statements, pp. 68–69.
D. Checking equity and the balance sheet. All amounts in this note are USD millions. Redeemable outside ownership is shown between liabilities and permanent equity because its holders can require repayment under the relevant arrangements.
| Balance-sheet equation | September 30, 2025 | September 30, 2026 |
|---|---|---|
| Liabilities | 18,179.5 | 23,961.9 |
| Redeemable noncontrolling interests | 1,182.0 | 1,415.9 |
| Total stockholders’ equity, including other outside owners | 13,006.8 | 13,248.7 |
| Sum, equal to total assets | 32,368.3 | 38,626.5 |
The next table explains the two largest equity-account movements. Retained earnings are accumulated profits after distributions and specified adjustments. Paid-in capital is the recorded contribution from share issuance above the shares’ small legal face value.
| FY2026 equity movements, USD millions | Retained earnings | Paid-in capital above par |
|---|---|---|
| September 30, 2025 balance | 11,516.0 | 956.8 |
| Adoption of crypto-asset accounting standard | 25.3 | 0.0 |
| Profit attributable to Franklin | 1,075.3 | 0.0 |
| Dividends declared | -702.0 | 0.0 |
| Share repurchases | 0.0 | -531.5 |
| Share issuance | 0.0 | 258.8 |
| Stock-compensation equity entries | 13.5 | -50.9 |
| Other movements | 0.0 | 0.2 |
| Revaluation of redeemable minority interests | -226.3 | 0.0 |
| September 30, 2026 balance | 11,701.8 | 633.4 |
Share capital at face value fell from $52.1 million to $51.2 million. Accumulated other comprehensive loss increased from $447.1 million to $493.4 million, mainly because currency translation reduced equity by $45.9 million. Adding the closing share capital, paid-in capital and retained earnings, then subtracting accumulated other comprehensive loss, gives Franklin’s $11,893.0 million equity.
These are accounting entries, not all cash movements. Declared dividends of $702.0 million differ from cash dividends paid of $697.6 million. Share issuance added $259.6 million to total equity but brought in $23.8 million of cash. The equity statement includes employee-share transactions as well as cash issuance.
Outside owners’ nonredeemable equity increased to $1,355.7 million from $929.0 million. That explains why consolidated equity rose while Franklin’s own equity declined. Redeemable interests follow a separate reconciliation:
| Redeemable outside ownership, USD millions | FY2026 |
|---|---|
| Opening balance | 1,182.0 |
| Outside owners’ share of earnings | 126.3 |
| Net subscriptions and other movements | 688.5 |
| Removal of products no longer consolidated | -840.0 |
| Acquisitions | 32.8 |
| Revaluation | 226.3 |
| Closing balance | 1,415.9 |
Source: FY2026 Form 10-K, balance sheets and equity statement, pp. 66–67; cash-flow statement, p. 69; Notes 1, 2, 11, 16 and 20, pp. 73–75, 87, 95–96 and 98.
This report is for general information and business analysis. It is not investment advice or a recommendation to transact in any security.