Invesco Q2 Earnings Call Highlights
Key Points
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- Invesco reported record growth in the second quarter, with $45.1 billion in net long-term inflows, assets under management reaching $2.5 trillion, and adjusted EPS rising to $0.71 from $0.36 a year earlier.
- ETFs, QQQ and fixed income led demand: ETF and index products attracted a record $30 billion in inflows, while QQQ generated $14 billion and broader fixed-income activity brought in $14 billion.
- Invesco reduced debt by more than $450 million on a net basis, repurchased $50 million of shares and plans to maintain a regular buyback program alongside its increased quarterly dividend.
Invesco (NYSE:IVZ) reported record second-quarter net long-term inflows and higher profitability as demand for ETFs, fixed income, separately managed accounts and private-market strategies helped push assets under management to $2.5 trillion.
President and CEO Andrew Schlossberg said the firm generated $45.1 billion of net long-term inflows during the quarter, representing nearly 9% annualized organic growth and extending its streak of positive flows to 12 consecutive quarters. Including liquidity inflows, Invesco recorded $13.2 billion in global liquidity inflows and ended the period with $215 billion in liquidity assets.
For the first half of 2026, Schlossberg said Invesco posted record net inflows of $67 billion, or a 7% annualized organic growth rate. Net revenue rose 17% from the prior-year first half, while operating income increased 35% and the operating margin expanded by nearly 470 basis points.
Second-Quarter Financial Results
Chief Financial Officer Allison Dukes said second-quarter net revenue totaled $1.3 billion, increasing $65 million from the first quarter and $224 million from a year earlier. The increase was primarily driven by investment-management fees tied to higher average assets under management, as well as the year-over-year effect of the QQQ fund’s reclassification to fee earnings.
Adjusted operating income increased 14% sequentially to nearly $500 million, while adjusted diluted earnings per share rose to $0.71 from $0.57 in the first quarter. Compared with the same quarter last year, adjusted operating income rose 45% and adjusted EPS nearly doubled from $0.36.
Adjusted operating expenses were essentially flat sequentially, rising $2 million, while net revenue increased 5%. That produced nearly 500 basis points of positive operating leverage and lifted the adjusted operating margin by 300 basis points from the prior quarter to 37.5%.
Dukes said Invesco remains focused on expanding and sustaining operating margins in the high 30% range over the near to medium term. She added that expense growth continues to be influenced by the company’s hybrid investment-platform implementation, which incurred $14 million in one-time costs during the second quarter.
- One-time hybrid-platform implementation costs are expected to be closer to $15 million per quarter during the second half of 2026.
- Incremental platform expenses tied to assets moved onto the system were $5 million in the second quarter and are expected to build toward about $10 million per quarter later this year.
- The company is targeting completion of the platform implementation by year-end, though some costs may carry into the first quarter of 2027.
The company’s second-quarter net revenue yield was 22.4 basis points, with an exit rate of 22 basis points. Dukes attributed the lower exit yield to strong flows and market appreciation in lower-fee products, including QQQ, QQQM and RSP.
ETF, QQQ and Fixed-Income Demand Drive Flows
ETF and index assets ended the quarter at a record $753 billion, or nearly $1.25 trillion including QQQ. The category generated a record $30 billion of net inflows during the quarter, equivalent to 17% annualized organic growth.
Schlossberg said the company’s QQQ Innovation Suite and quality and momentum equity factor funds led ETF demand. The factor funds raised a record $7 billion in net inflows during the quarter, while QQQ drew $14 billion of net inflows, representing 12% annualized organic growth.
Invesco expanded its ETF lineup with seven new BulletShares funds in the U.S. and five ETF launches in Europe, the Middle East and Africa, including two active funds. The company manages $25 billion in active ETFs across more than 40 products, a figure that rises above $40 billion when including index strategies run by active investment teams.
During the question-and-answer session, Schlossberg and Dukes emphasized QQQ’s scale, liquidity and brand recognition in discussing competitive pricing for similar products. Schlossberg said the fund is the fifth-largest ETF and the second-most actively traded ETF globally, while Dukes said the company does not plan a short-term competitive pricing response.
The QQQ franchise also continued its international expansion. QQQ is cross-listed in Hong Kong and Tokyo, where it has accumulated more than $10 billion in combined assets in a relatively short period, according to Schlossberg.
Fixed-income demand remained broad across regions and channels. While the company reported $4 billion of net inflows in its fundamental fixed-income category, flows rose to $14 billion when fixed-income ETF and China joint-venture activity were included. Invesco cited U.S. wealth-management demand for individual SMAs and institutional fixed-income demand in EMEA as key contributors.
Its U.S. wealth-management SMA platform, which includes fixed income and a portion of equity assets, reached nearly $40 billion in assets and generated 23% annualized organic growth during the quarter.
China and Private Markets Add to Growth
Invesco’s China joint venture reached a record $163 billion in assets, up 15% from the prior quarter. The business generated $6.9 billion in net long-term inflows, or 22% annualized organic growth, led by fixed-income and fixed-income-plus strategies. The joint venture launched 11 new funds during the quarter, which collectively brought in $1.2 billion of net inflows.
Private-market strategies recorded $1.9 billion of net inflows across alternative credit and direct real estate. Private real estate generated $1.4 billion of net inflows, or 8% annualized organic growth, led by the INCREF real estate debt fund for U.S. wealth-management clients. Schlossberg said INCREF has surpassed $6 billion in assets including leverage.
Dukes said Invesco has about $7 billion of dry powder in real estate and is seeing some pickup in transaction activity, though she described the firm as “modestly optimistic” given the interest-rate outlook.
Fundamental equities remained in net outflows of $7.7 billion, including several large institutional liquidations tied to allocation and reallocation decisions. However, Schlossberg highlighted positive flows in Asia-Pacific, including nearly $3 billion of inflows into the Global Equity Income Fund in Japan, and a second consecutive quarter of net inflows in U.S. value-equity strategies.
Debt Reduction and Capital Returns
Invesco reduced total debt by $343 million and net debt by more than $450 million during the quarter. Its revolving-credit-facility balance declined to $736 million at quarter-end from $1.1 billion at the end of the first quarter.
The leverage ratio including preferred stock fell to 1.9 times from 2.7 times a year earlier. Excluding preferred stock, leverage declined to 0.54 times during the second quarter.
The company repurchased $50 million, or 1.9 million shares, of common stock during the quarter and raised its quarterly common dividend in April to $0.215 per share. Dukes said Invesco intends to maintain a regular share-repurchase program and target a combined dividend-and-buyback payout ratio near 60%.
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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With 19 Buy predictions and not the single Sell prediction the community is currently very high on Invesco Ltd..
At the moment Invesco Ltd. has reached the predicted target price of 26 €, with a current price of 25.84 €.
