Key Highlights

  • Net long-term inflows of USD 35.1 billion drove 6.3% annualized organic growth, and ending AUM reached USD 2.54 trillion.
  • Adjusted operating margin rose 320 basis points from the second quarter to 40.7%, while adjusted diluted EPS was USD 0.72.
  • GAAP diluted EPS was USD 0.65 against USD 0.66 a year earlier, with net income of USD 294.5 million.
  • On Oct. 26 the company repurchased USD 1.5 billion of Series A Preferred Stock from MassMutual using a term loan.

Flows Led by ETFs and Index

Invesco (NYSE:IVZ) reported third-quarter net long-term inflows of USD 35.1 billion on Tuesday, against USD 45.1 billion in the second quarter and USD 28.9 billion a year earlier. It was the 13th consecutive quarter of net long-term inflows. Retail inflows were USD 41.7 billion while institutional outflows were USD 6.6 billion. ETFs and Index contributed USD 28.5 billion, QQQ USD 6.7 billion, Multi-Asset and Other USD 3.3 billion and the China joint venture USD 1.5 billion, while Fundamental Fixed Income lost USD 2.6 billion, Fundamental Equities USD 1.9 billion and Private Markets USD 0.4 billion.

By region, EMEA, the Americas and Asia Pacific added USD 15.9 billion, USD 10.3 billion and USD 8.9 billion. Money market funds added USD 52.9 billion, for total net flows of USD 88.5 billion. Net market losses reduced assets by USD 26.4 billion and currency moves added USD 4.5 billion. Ending AUM was USD 2.538 trillion, up 2.7% in the quarter and 19.4% from a year earlier.

Chief Executive Andrew Schlossberg tied the quarter to execution against strategic priorities and a strong global market position.

Earnings and Margin

Operating revenues were USD 1.873 billion, up 2.6% from the second quarter and 14.2% from a year earlier. Net revenues were USD 1.382 billion, up 4.0% sequentially and 16.5% annually. Operating expenses fell 1% from the prior quarter, and headcount was 7,416 against 8,368 a year earlier.

Operating income was USD 436.5 million, a 23.3% margin up 340 basis points. Adjusted operating income rose 12.8% to USD 562.3 million, a 40.7% margin. Net income attributable to the company was USD 294.5 million against USD 345.3 million in the second quarter and USD 301.3 million a year earlier. Adjusted net income was USD 326.4 million against USD 275.4 million a year earlier.

Investment management fees rose USD 50.4 million on higher average assets, partly offset by the second-quarter sale of Canadian fund management agreements to CI Global Asset Management.

Balance Sheet and Capital

Net debt fell USD 393 million in the quarter, and common share repurchases rose to USD 65 million, or 2.1 million shares. On Oct. 26 the company repurchased a further USD 1.5 billion of Series A Preferred Stock held by MassMutual, funded by a five-year floating-rate bank term loan. Total preferred repurchases reach USD 3 billion over 18 months, leaving USD 1 billion outstanding. Management said the repurchases reduce leverage and increase earnings available to common shareholders.

Asset Manager Markers to Follow

Tracking points include net long-term inflows against USD 35.1 billion, institutional flows relative to the USD 6.6 billion outflow, and the adjusted operating margin against 40.7%.

Further items are the effect of the new term loan on interest costs, the remaining USD 1 billion of preferred stock, and market-driven changes to ending AUM against USD 2.538 trillion.