Invesco Q4 Earnings Call Highlights

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Invesco NYSE: IVZ executives used the company’s fourth-quarter earnings call to highlight what CEO Andrew Schlossberg described as “significant milestones” in 2025, pointing to balance sheet actions, portfolio reshaping, and strong long-term net inflows that helped lift assets under management to a record $2.2 trillion at year-end.

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Strategic actions: balance sheet, business simplification, and partnerships

Schlossberg said Invesco spent 2025 “transforming key aspects of our business” and “unlocking value across the organization,” with a focus on streamlining, improving profitability, and strengthening the balance sheet. A central theme was the firm’s recapitalization efforts, including repurchasing preferred stock that had otherwise been non-callable.

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During 2025, Invesco repurchased $1.5 billion of preferred stock, reducing outstanding preferred stock from $4.0 billion to $2.5 billion at year-end. CFO Allison Dukes said the preferred repurchases ultimately are expected to deliver a $0.20 run-rate EPS benefit once associated debt used to fund the repurchases is repaid. She added that because $500 million of the $1.0 billion in term loans has already been repaid earlier than projected, the company has captured $0.11 of the EPS run-rate benefit on a go-forward basis.

The company also advanced several portfolio and partnership initiatives:

Hybrid alpha investment platform: Schlossberg said onboarding has progressed in “several waves of assets,” with completion targeted by the end of 2026. Management framed the initiative as simplifying operations and consolidating systems.
Asset sales and joint ventures: Invesco completed the sale of Intelliflo to Carlyle and sold a majority interest in its Indian asset management business to the Hinduja Group, creating a local joint venture in which Invesco retains a minority ownership interest.
Canada strategic partnership: Invesco announced a deal with CI Global Asset Management under which CI GAM will acquire Invesco’s Canadian mutual fund and ETF complex (100 funds, about $19 billion in AUM). Invesco will remain sub-advisor on 63 funds totaling about $10 billion in AUM. Dukes said the transaction is expected to close toward the end of the second quarter, with an operating income headwind beginning in the third quarter.

Private markets and QQQ modernization highlighted as growth priorities

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Schlossberg called private markets a key strategic pillar, noting Invesco’s $130 billion private markets platform and two partnerships announced in 2025 aimed at the U.S. wealth and defined contribution channels. He cited the firm’s partnership with Barings, including $650 million in capital committed by MassMutual to support two jointly managed credit strategies, and a second partnership with LGT Capital Partners to develop co-managed multi-asset private market products. Schlossberg said LGT is committing seed capital and that product launches are expected to begin later this year.

Late in December, Invesco completed the modernization and conversion of its QQQ ETF, which Schlossberg said lowered fees for shareholders while enabling Invesco to earn revenue on more than $400 billion of AUM in the fund. Dukes noted that with the QQQ conversion in late December, long-term AUM now includes the QQQ ETF; however, only 12 days of QQQ being classified as long-term were included in fourth-quarter average long-term AUM.

Fourth-quarter flows, AUM, and segment trends

Management pointed to favorable market conditions and broad-based inflows in the fourth quarter. Schlossberg said Invesco reached record AUM of $2.2 trillion and delivered $19 billion in net long-term inflows during the quarter, equating to a 5% annualized long-term organic growth rate.

Within investment capabilities, executives highlighted several flow dynamics:

ETF and index: Schlossberg said ETF and index AUM (excluding QQQ) reached a record $630 billion, with nearly $12 billion in net inflows in the quarter, despite an annual fourth-quarter “BulletShares redemption” headwind of nearly $4 billion.
QQQ flows now included in long-term view: Because the conversion occurred on Dec. 20, only a fraction of the fund’s $13 billion in total net flows was counted in the fourth-quarter long-term flow presentation. QQQ AUM ended the quarter at a record $407 billion, according to Schlossberg.
Fixed income: Fundamental fixed income generated $2.2 billion in net long-term inflows, though Schlossberg said the broader fixed income category across capabilities—including related ETFs and China-based fixed income products—was nearly $12 billion in inflows for the quarter.
China JV (Invesco Great Wall): Schlossberg said the China JV posted record AUM of $132 billion and $8.9 billion in net long-term inflows, led by “fixed income plus” products.
Private markets: Invesco recorded $300 million of net inflows, driven by direct real estate. Schlossberg said the firm’s INCREF real estate debt strategy reached $4.7 billion in assets with leverage after just over two years and is on three of four major U.S. wealth management platforms.
Fundamental equities: Invesco reported $5.5 billion in net outflows in the quarter, reflecting broader industry pressure in actively managed equities and expected outflows from developing markets funds. Schlossberg said gross sales were the best quarter for the segment since early 2022 and highlighted $3 billion of quarterly inflows into the Global Equity Income Fund, which grew to $23 billion in AUM.

Financial results: margin expansion, yield stabilization, and 2026 expense considerations

Dukes said total AUM ended the quarter at $2.2 trillion, up $45 billion from the third quarter and up $324 billion from the fourth quarter of 2024. She attributed AUM growth during the quarter largely to net long-term inflows of $19 billion and market gains of $11 billion.

Net revenue for the fourth quarter was $1.3 billion, $102 million higher than the year-ago quarter, driven mainly by investment management fees from higher average AUM and the QQQ reclassification late in December. Dukes said adjusted diluted EPS was $0.62 for the quarter and that the adjusted operating margin improved to 36.4% in the fourth quarter, reflecting positive operating leverage of 340 basis points sequentially and 440 basis points year over year.

On net revenue yield, Dukes said the overall fourth-quarter net revenue yield was 22.5 basis points and noted a slower pace of decline than earlier periods. She said the exit net revenue yield at quarter-end was 22.7 basis points, partly driven by the QQQ reclassification. In Q&A, Dukes said the addition of QQQ revenue “does create some level of stabilization,” while cautioning that forecasting yield remains difficult due to market and quarterly factors.

Looking ahead to 2026, Dukes provided several expense-related items, including continued hybrid platform costs and QQQ-related marketing. She said annualized operating expenses based on fourth-quarter AUM would be $3.2 billion, calling it “a good base to start with” for 2026, while noting multiple moving parts. For the hybrid platform specifically, Dukes expects 2026 one-time implementation costs to start in the $10 million-$15 million quarterly range and trend toward about $15 million per quarter, with incremental expense related to AUM on the platform building toward $10 million per quarter later in 2026. She said combined hybrid platform costs are expected to be $25 million-$30 million higher in 2026 than in 2025.

Dukes also said marketing associated with QQQ will be recognized in operating expenses starting in 2026 and is expected to be near the midpoint of the previously disclosed $60 million-$100 million range. She added that the company expects to target a total payout ratio (common dividends plus share repurchases) near 60% for 2026, and that common share repurchases are expected to increase to $40 million in the first quarter.

Capital priorities and balance sheet trajectory

In response to analyst questions, Dukes said Invesco remains focused on using operating cash flow to reduce debt, including revolving credit and term loans, and noted that the company recently redeemed $500 million in senior notes that matured on Jan. 15. She said Invesco has the opportunity to continue discussions with MassMutual about repurchasing additional preferred stock, while prioritizing near-term balance sheet items.

Management also discussed the earnings and leverage impact of 2025 balance sheet actions. Dukes said repurchasing $1.5 billion of preferred stock reduced preferred dividends by $88.5 million annually. She also reported that the leverage ratio improved from 2.8x a year ago to 2.2x for the fourth quarter, and that leverage excluding preferred stock was 0.73x.

Schlossberg closed by emphasizing continued execution in 2026, highlighting the firm’s global mix, with Asia Pacific and EMEA representing a substantial portion of long-term AUM, and reiterating a focus on operating leverage, balance sheet strength, and capital return.

About Invesco NYSE: IVZ

Invesco Ltd. is an independent global investment management firm headquartered in Atlanta, Georgia, and publicly traded on the New York Stock Exchange NYSE: IVZ. With origins dating back to 1935, the company is dedicated to offering a wide array of investment strategies and solutions to both individual and institutional clients worldwide.

The firm's product suite encompasses actively managed equity and fixed income funds, passive index funds, exchange-traded funds (ETFs), closed-end funds, and unit investment trusts, alongside specialized offerings such as private markets, real estate, and structured products.

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