AI Takeaway
Franklin Resources (BEN) delivered strong Q1 FY2026 results with revenue up 3.4% YoY to $2.33B and net income surging 56.2% to $255.5M, though operating cash flow remained negative at -$255.1M.
Revenue
$2.33B
++3.35% YoY
EPS (Basic)
$0.46
++58.62% YoY
Operating Income
$281M
++28.31% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Total revenue increased 3.4% YoY from $2.25B to $2.33B in Q1 FY2026, suggesting improved assets under management levels or fee realization, likely supported by market appreciation and net flows into higher-fee strategies.
Source: Source: 10-Q Income Statement
Operating income jumped 28.3% YoY from $219.0M to $281.0M, with operating margin expanding approximately 230 basis points to 12.1%, indicating meaningful cost discipline or favorable revenue mix relative to expense growth.
Source: Source: 10-Q Income Statement
Net income rose 56.2% YoY to $255.5M, outpacing operating income growth of 28.3%, which suggests favorable below-the-line items such as investment gains, tax benefits, or reduced interest expense contributing to the bottom line.
Source: Source: 10-Q Income Statement
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Upgrade to unlockBEN generated -$255.1M in operating cash flow in Q1 FY2026, worsening significantly from -$145.2M in the prior year period. If this trend continues beyond seasonal patterns, it could pressure liquidity and limit the company's ability to fund dividends, buybacks, or strategic investments without external financing.
Source: Source: 10-Q Cash Flow Statement
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Upgrade to unlockReported EPS of $0.70 versus the $0.56 analyst consensus — a +25.2% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $2.33B | $2.25B | +3.35% |
Operating Income | $281M | $219M | +28.31% |
Net Income | $255.5M | $163.6M | +56.17% |
EPS (Basic) | $0.46 | $0.29 | +58.62% |
EPS (Diluted) | $0.46 | $0.29 | +58.62% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $32.55B | $32.39B | +0.49% |
Total Liabilities | $18.16B | $17.05B | +6.49% |
Stockholders' Equity | $12.13B | $12.46B | -2.63% |
Long-Term Debt | $2.36B | $2.78B | -15.08% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $-255.1M | $-145.2M | -75.69% |
Investing Cash Flow | $-317.2M | $-656.5M | +51.68% |
Financing Cash Flow | $487.4M | $87.9M | +454.49% |
Share Buybacks | $41.9M | $5.8M | +622.41% |
D&A | $28.8M | $30.2M | -4.64% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 12.1% | 9.7% | +2.35% |
Net Margin | 11.0% | — | — |
ROE | 2.1% | — | — |
ROA | 0.8% | — | — |
Debt to Equity | $1.496 | — | — |
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Franklin Resources (BEN) reported Q1 FY2026 revenue of $2.33B (+3.4% YoY) and net income of $255.5M (+56.2% YoY), with EPS of $0.46 versus $0.29 in the prior year period. Operating margin also expanded significantly to approximately 12.1% from 9.7%, reflecting strong operating leverage.
BEN's net income surged 56.2% YoY to $255.5M in Q1 FY2026, outpacing operating income growth of 28.3%, which suggests favorable below-the-line contributions such as investment gains, reduced interest expense from lower long-term debt, or tax benefits. Long-term debt fell 15.1% YoY to $2.36B, which would have reduced interest costs.
BEN's operating cash flow was -$255.1M in Q1 FY2026, deteriorating from -$145.2M in the prior year period, which is a notable concern despite strong reported earnings. The company offset this with $487.4M in financing cash flows, but relying on financing activities to cover operational cash needs is not sustainable long-term.
Key risks include persistent negative operating cash flow, rising total liabilities (up 6.5% YoY to $18.16B) against declining stockholders' equity (down 2.6% to $12.13B), and the inherent sensitivity of AUM-based revenues to market volatility and net outflows. The debt-to-equity ratio of approximately 1.50 also signals elevated financial leverage.
BEN's balance sheet shows mixed signals: total assets grew modestly to $32.55B and long-term debt declined 15.1% YoY to $2.36B, which are positives. However, total liabilities rose 6.5% to $18.16B, stockholders' equity fell 2.6% to $12.13B, and the debt-to-equity ratio stands at approximately 1.50, suggesting moderate leverage that investors should monitor.