Invesco Q3 2026 Earnings: Higher AUM Lifts Adjusted Margin to 40.7%

Invesco (NYSE: IVZ) reported Q3 2026 operating revenue of $1.87 billion, up 14.2% year over year, while diluted EPS slipped to $0.65 from $0.66. Higher average assets under management and QQQ-related revenue lifted adjusted diluted EPS by 18.0% to $0.72, with adjusted operating margin reaching 40.7%.

Core Earnings Data

Operating leverage was the quarter’s central improvement. GAAP operating income increased much faster than revenue, while adjusted operating expenses grew more slowly than adjusted net revenue.

GAAP net income and EPS did not show the same improvement, largely because the year-earlier quarter included a favorable tax resolution. Adjusted results, which exclude specified tax and valuation items, showed stronger underlying earnings growth.

Adjusted measures and cash flow excluding consolidated investment products, or CIP, are non-GAAP measures provided by Invesco.

Business and Flow Performance

Average AUM increased 21.8% year over year to $2.51 trillion, supporting higher management fees. Ending AUM reached $2.54 trillion, up 19.4% from Q3 2025 and 2.7% from the preceding quarter.

Net long-term inflows were $35.1 billion, compared with $28.9 billion a year earlier but below Q2 2026’s $45.1 billion. The annualized long-term organic growth rate was 6.3%, down from 8.5% in the preceding quarter and 7.9% a year earlier.

The flow mix remained concentrated in several capabilities:

• ETFs and Index generated $28.5 billion of net long-term inflows.
• QQQ contributed $6.7 billion.
• Multi-Asset/Other and the China joint venture added $3.3 billion and $1.5 billion, respectively.
• Fundamental Fixed Income recorded $2.6 billion of outflows, while Fundamental Equities had $1.9 billion and Private Markets had $0.4 billion of outflows.
• Retail clients contributed $41.7 billion of net long-term inflows, offset partly by $6.6 billion of institutional outflows.
• EMEA, the Americas, and Asia Pacific all generated positive net long-term flows of $15.9 billion, $10.3 billion, and $8.9 billion, respectively.

Money-market funds added another $52.9 billion, bringing total net flows to $88.5 billion. These flows, along with $4.5 billion from currency movements and $0.9 billion of reinvested distributions, more than offset $26.4 billion of market losses during the quarter.

QQQ’s conversion to an open-end fund ETF in late 2025 continued to reshape reported revenue. Investment management fees increased $327.5 million year over year, driven by QQQ fees and higher average AUM, while service and distribution fees fell $87.5 million because the conversion eliminated QQQ pass-through service revenue.

Profitability, Cash Flow, and the Balance Sheet

Adjusted operating expenses were $819.4 million, about 5.0% above the prior-year period, compared with 16.5% growth in adjusted net revenue. Higher variable compensation and QQQ-related advertising contributed to the increase, but the slower expense growth enabled adjusted operating margin to expand to 40.7%.

Sequentially, adjusted expenses declined $11.0 million. GAAP employee compensation fell $52.9 million from Q2, primarily reflecting a $43.7 million reduction in mark-to-market expense on deferred compensation liabilities and a $9.7 million decrease related to the timing of expense recognition for retirement-eligible employees. Because these valuation effects are removed from adjusted results, the underlying sequential expense reduction was smaller than the GAAP change suggests.

Operating cash flow excluding CIP reached $654.6 million, up from $585.5 million a year earlier. Quarter-end cash and cash equivalents were $965.5 million, while debt declined to $1.28 billion from $1.62 billion at the end of Q2. Net debt fell by approximately $393 million to $315.8 million.

Invesco repurchased 2.1 million common shares for $65 million during the quarter. It also paid $98.4 million in common dividends and $37.0 million in preferred dividends.

On October 26, after the quarter ended, Invesco repurchased $1.5 billion of Series A preferred stock held by MassMutual using a $1.5 billion, five-year floating-rate bank term loan. The transaction reduced the remaining preferred stock balance to $1 billion, but the new loan was not included in the September 30 quarter-end debt figures.

Operating Leverage Improved, but a Prior-Year Tax Benefit Limited GAAP EPS

Income before taxes increased 33.8% to $463.9 million, yet GAAP net income attributable to Invesco declined 2.3%. The main difference was taxation: Q3 2026 included a $108.3 million tax provision and a 23.3% effective tax rate, while Q3 2025 recorded a $9.7 million tax benefit and a negative 2.8% effective rate following the favorable resolution of a tax matter.

The current quarter also included $34.2 million of net other losses, mainly related to market-value changes in deferred compensation and other investments. After removing designated tax and valuation adjustments, adjusted net income rose 18.5% to $326.4 million and adjusted EPS increased 18.0%, better reflecting the improvement in operating profit.

Management View

CEO Andrew Schlossberg highlighted that Q3 marked Invesco’s 13th consecutive quarter of net long-term inflows. Management connected the higher margin and cash generation with increased financial flexibility, including common-share repurchases, debt reduction during the quarter, and the subsequent preferred-stock transaction.

Recent Insider Transactions

The provided insider data reports 436,944 shares acquired across 18 transactions and 222,540 shares sold across four transactions over the latest six-month period, producing net acquisitions of 214,404 shares. The detailed records include grants and derivative exercises, so the acquisition total should not be treated as entirely open-market buying.

The grant, exercise, and gift records are not open-market purchases, and the transactions do not by themselves establish insiders’ outlook for the business.

Risks Investors Need to Watch

• Flow growth slowed sequentially: Net long-term inflows declined from $45.1 billion in Q2 to $35.1 billion, while the annualized organic growth rate fell from 8.5% to 6.3%.
• Flows remain concentrated: ETFs and Index and QQQ produced most of the long-term inflows, while Fundamental Fixed Income, Fundamental Equities, Private Markets, and institutional clients recorded outflows.
• AUM remains exposed to markets: Market movements reduced AUM by $26.4 billion during Q3. Because management fees are tied partly to AUM, sustained market declines could pressure revenue and margins.
• The capital structure changed after quarter-end: The $1.5 billion preferred-stock repurchase was funded with floating-rate debt, introducing additional interest-rate exposure not reflected in September 30 debt and net-debt figures.
• QQQ brings costs as well as revenue: QQQ supported management-fee growth, but it also increased third-party costs and advertising spending, making expense discipline important to sustaining the improved margin.

Conclusion

Invesco’s Q3 2026 results showed stronger operating leverage as higher average AUM and QQQ-related revenue outpaced expense growth. Adjusted earnings and margins improved materially, while GAAP EPS remained slightly below the prior year because that comparison included a favorable tax benefit. The main issues to monitor are the durability and breadth of long-term inflows, market-driven AUM changes, and the balance-sheet effects of replacing preferred stock with floating-rate debt.