• Net Long-Term Inflows: $26 billion increase in AUM during the quarter, representing an organic growth rate of nearly 8%.
• Total Assets Under Management (AUM): $1.85 trillion at the end of the quarter, a 3% increase from last quarter and 16% higher than the end of 2023.
• Operating Income: Increased to $1.4 billion for the year.
• Operating Margin: Improved to over 31% for the year and 34% for the fourth quarter.
• Adjusted Diluted Earnings Per Share: $0.52 for the fourth quarter, up from $0.44 in the prior quarter.
• Net Revenue: $1.2 billion in the fourth quarter, an 11% increase from the fourth quarter of last year.
• ETF and Index Capabilities Net Inflows: Nearly $30 billion.
• QQQ Net Inflows: $10 billion.
• Money Market Fund Inflows: $25 billion.
• Net Cash Position: Ended the quarter with cash and cash equivalents exceeding debt by nearly $100 million.
• Share Buybacks: $25 million repurchased during the quarter.
• Net Revenue Yield: 24.6 basis points overall, with an exit yield of 24.1 basis points.
• Performance Fees: $14 million higher than last year and $32 million higher than the third quarter.
• Adjusted Operating Expenses: $767 million in the fourth quarter, a slight decrease from the fourth quarter of last year.
• Effective Tax Rate: 22.2% in the fourth quarter.

• Warning! GuruFocus has detected 6 Warning Signs with IVZ.

Release Date: January 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Invesco Ltd (NYSE:IVZ) achieved strong long-term net inflows of $65 billion in 2024, representing a 5% organic growth rate.
• The company improved its operating income to $1.4 billion, with operating margins increasing to over 31% for the year and 34% for the fourth quarter.
• Invesco Ltd (NYSE:IVZ) saw significant growth in its ETF and index platform, with near-historic organic long-term flows of $30 billion in the fourth quarter.
• The Asia Pacific region experienced a notable rebound, with 10% organic growth in 2024, marking its best year since 2021.
• The company reduced its debt and ended the year with a net cash position of nearly $100 million, enhancing financial flexibility.

Negative Points

• Invesco Ltd (NYSE:IVZ) faced modest net long-term outflows in its fundamental fixed income strategies during the fourth quarter.
• The company experienced net long-term outflows of $1.5 billion in its multi-asset related capabilities, driven by global asset allocation.
• Fundamental equity flows continued to face pressure, with net outflows in the $2 billion per quarter range.
• The company's net revenue yield decreased due to ongoing mix shifts within various categories.
• Invesco Ltd (NYSE:IVZ) anticipates higher costs related to the Alpha platform implementation, with expenses expected to increase by $20 million to $25 million in 2025 compared to 2024.

Q & A Highlights

Q: Can you provide more details on the expected increase in expenses related to the Alpha platform in 2025 compared to 2024? A: L. Allison Dukes, CFO, explained that Alpha-related costs were just under $50 million in 2024. For 2025, these costs are expected to be $20 million to $25 million higher. This includes all costs related to Alpha, with a total operating expense increase of about 1% over 2024, assuming flat markets.

Q: How is Invesco approaching capital management given the improved liquidity position? A: L. Allison Dukes, CFO, stated that the primary focus remains on investing in organic growth. Inorganic growth, particularly in private credit, is also considered, but the space is currently crowded and expensive. The firm is open to partnerships and joint ventures to enhance capabilities.

Q: What are the expectations for the Alpha platform's implementation costs and eventual benefits? A: L. Allison Dukes, CFO, noted that implementation costs will continue at $10 million to $15 million per quarter through 2025. The full benefits, including cost reductions from decommissioning legacy systems, are expected post-2026 once all assets are transitioned.

Q: Can you discuss the growth and future expectations for Invesco's business in China? A: Andrew Schlossberg, CEO, highlighted that Invesco saw $2.5 billion in flows this quarter, driven by equity ETFs and fixed income plus strategies. The business is diverse, with 30% in equities, 30% in fixed income, and 20% in money markets. The firm is optimistic about future growth, supported by government stimulus.

Q: How is Invesco planning to defend and grow its Fundamental Equities business? A: Andrew Schlossberg, CEO, emphasized the importance of delivering high-quality investment performance and differentiating product offerings. The firm is also focusing on active ETFs, with about $10 billion currently in active ETFs and plans to expand further.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.