Franklin Resources Inc (BEN) · Nov 6, 2026 · Earnings
Beat — Adjusted diluted EPS $0.94 vs ~$0.77 consensus
Franklin Templeton earnings beat consensus as positive flows, alternatives growth and wider margins strengthen its turnaround story.
Franklin Templeton is trying to diversify beyond its legacy mutual-fund and fixed-income base into alternatives, ETFs, SMAs, private markets and international distribution; earlier fiscal 2026 materials already showed record alternative and ETF growth, while Western Asset remained a drag.
The quarter beats the published earnings bar. Adjusted diluted EPS was $0.94 versus roughly $0.77 consensus, a sizable beat; revenue grew 4% year over year, while adjusted operating margin expanded to 31.8% from 26.0%. The earnings outperformance is not just a low-quality GAAP rebound: adjusted operating income rose 27% year over year, although reported net income also benefited from investment gains and the absence of last year’s large impairment.
| Q4 FY26 | Q4 FY25 | Consensus | |
|---|---|---|---|
| Adjusted diluted EPS (Adjusted EPS reconciliation) | $0.94 | $0.67 | ~$0.77 |
| Operating revenues (Financial Results) | $2,434.9M (+4%) | $2,343.7M | |
| Adjusted operating margin (Non-GAAP reconciliation) | 31.8% | 26.0% | |
| Long-term net flows (AUM flows) | $20.8B | $(11.9B) | |
| Ending AUM (AUM summary) | $1,795.1B (+8%) | $1,661.2B |
The more important change is in asset gathering, not the EPS headline. Franklin generated $20.8 billion of fourth-quarter long-term net inflows and $84.1 billion for the year, versus $97.4 billion of full-year outflows a year earlier. That supports the strategic shift toward growth businesses, with alternatives, equity and multi-asset attracting money; however, fixed income still posted a small quarterly outflow and the company disclosed $11.7 billion of Western Asset long-term outflows for the year.
The growth mix is improving, but the turnaround is not complete. Alternative AUM reached $304.6 billion and the company reported $48.7 billion of annual alternatives fundraising, including $43.2 billion in private markets; ETF AUM rose 73% to $84.6 billion and retail SMA AUM rose 19% to $196.3 billion. Those are meaningful advances against the company’s stated diversification plan, but total AUM was essentially flat sequentially because market effects and cash-management outflows offset the inflows.
The margin improvement gives the new mix operating leverage. Adjusted operating margin reached 31.8%, up from 28.0% a year earlier and ahead of management’s stated plan, while full-year adjusted operating income increased 23%. Still, general and administrative expense rose 19% for the year and the company continues to exclude acquisition costs, termination benefits and other charges from adjusted results, so the improvement is best read as strong execution rather than a fully clean earnings base.
Bottom line: This is more than a routine earnings beat: Franklin is showing both better execution and a real reversal in asset flows, especially in alternatives and newer investment vehicles. The story strengthens materially, though Western Asset and fixed-income outflows remain the main unfinished piece of the turnaround.
Fiscal 2027 first-quarter earnings report
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