Invesco Q3 2026 Margin Rises to 40.7% on Broad Inflows

Invesco Ltd. (NYSE: IVZ) reported stronger third-quarter 2026 adjusted operating results as broad-based inflows and higher average assets under management lifted revenue, while lower sequential expenses expanded margins. Net long-term inflows reached $35.1 billion, marking the asset manager’s 13th consecutive quarter of positive flows.

Adjusted operating income rose 12.8% from the second quarter to $562.3 million, while the adjusted operating margin increased 320 basis points to 40.7%. Adjusted diluted earnings per share were $0.72, up 18.0% from $0.61 a year earlier and 1.4% from the prior quarter.

On a U.S. GAAP basis, operating income increased 19.9% sequentially to $436.5 million. Net income attributable to Invesco was $294.5 million, and diluted EPS was $0.65, compared with $345.3 million and $0.76, respectively, in the second quarter.

Inflows remain broad as ETF assets reach a record

Ending assets under management rose to $2.54 trillion from $2.47 trillion at the end of the second quarter and $2.12 trillion a year earlier. Average AUM increased to $2.51 trillion from $2.37 trillion sequentially.

The $35.1 billion of quarterly net long-term inflows represented a 6.3% annualized organic growth rate. Invesco said flows were positive across active and passive products and across the Americas, Europe, the Middle East and Africa, and Asia-Pacific.

ETFs and index strategies excluding QQQ generated $28.5 billion of net inflows and ended the quarter with a record $774.6 billion in AUM. The category posted 15% annualized organic growth, with 14 products attracting more than $500 million each. EMEA accounted for nearly half of the category’s inflows and recorded a 26% annualized organic growth rate.

QQQ added $6.7 billion of net inflows and ended the period with $498.9 billion in assets, representing annualized organic growth of nearly 6%. The China joint venture recorded $1.5 billion of net inflows, driven primarily by institutional fixed-income demand, and reached a record $166.3 billion in AUM.

Multi-asset and other strategies generated $3.3 billion of inflows, supported by systematic equities, quantitative strategies and customized equity products. Those gains were partly offset by $2.6 billion of outflows from fundamental fixed income, $1.9 billion from fundamental equities and $400 million from private markets.

In fixed income, retail demand for active ETFs and separately managed accounts was offset by reallocations from investment-grade and stable-value mandates by several institutional clients. Private-market inflows into U.S. wealth-management real estate debt funds and institutional collateralized loan obligations were offset by withdrawals from a senior bank loan ETF and U.S. core real estate strategies.

Revenue growth and expense discipline lift profitability

Adjusted net revenue increased 4.0% sequentially to $1.38 billion and rose 16.5% from a year earlier. Invesco attributed the year-over-year increase to QQQ revenue and higher average AUM, alongside controlled expenses.

Adjusted operating expenses declined 1.3% from the second quarter to $819.4 million, though they were 5.0% higher year over year. The combination of sequential revenue growth and lower costs produced 530 basis points of operating leverage.

The net revenue yield excluding performance fees declined to 21.5 basis points from 22.4 basis points in the second quarter and 22.9 basis points a year earlier. The presentation said strong growth in lower-yielding global liquidity assets affected the third-quarter yield. Global liquidity, which consists mainly of money-market funds, ended the quarter with $261.6 billion in AUM.

Balance-sheet actions remain a priority

Invesco reduced net debt by $393 million during the quarter, bringing net debt to $316 million from $652 million a year earlier. Its leverage ratio declined to 0.33 times from 0.54 times in the second quarter, while the ratio including preferred stock fell to 1.60 times from 1.90 times.

The company repurchased $65 million of common stock, or 2.1 million shares, during the quarter and paid a quarterly common dividend of $0.215 per share.

Invesco also outlined an additional $1.5 billion preferred-stock repurchase financed with a five-year bank term loan, taking total preferred-stock repurchases to $3.0 billion. Management forecast that the repurchases would ultimately add $0.41 to annual run-rate EPS in total. The company expects to repay $2.0 billion of bank term loans through 2031 and projects its pro forma leverage ratio will decline to 0.39 times over five years. These figures are forecasts rather than guarantees of future performance.

Management’s operating priorities include expanding scalable fixed-income and ETF capabilities, improving active-equity investment performance, growing private-market offerings, developing customized portfolios and using technologies including artificial intelligence to support operating leverage.

The company cautioned that future results, cash flow, expenses and AUM could differ materially from its expectations. Risks identified in the presentation include market and industry conditions, geopolitical conflict, global trade tensions and tariffs, regulatory developments, financing and debt obligations, product demand and pricing, acquisitions and divestitures, and broader economic conditions.