Invesco (IVZ) 26 Jan 212020 Q4 Earnings call transcript

Good morning and thank you all for joining us.

As a reminder, this conference call and the related presentation may include forward-looking statements, which reflects management's expectation about future events and overall operating plans and performance. These forward-looking statements are made as of today and are not guaranteed. They involve risks, uncertainties and assumptions, and there can be no assurance that actual results will not differ materially from our expectations.

For a discussion of these risks and uncertainties, please see the risks described in our most recent Form 10-K and subsequent filings with the SEC. to forward-looking obligation no makes update statements. any Invesco financial today's call. may also during non-GAAP discuss We measures Reconciliations non-GAAP end of of at our found these earnings financial measures presentation. be may the

participants until the session. Fourth Conference Quarter recorded. Welcome is Today's question-and-answer in to mode Call. [Operator Invesco's All listen-only a will conference Results being Instructions]. be

CEO to I to turn and the you objections, disconnect Invesco; please Flanagan, like If of for at this Marty call Dukes, would Officer. over your Allison have any time. speakers today, And may Chief now Flanagan, Mr. and conference begin. President Financial you

Thank you, New everybody joining Year and operator, Happy and thanks to everybody. for

strategy on clients very we I will the forward was while to serving think challenging XXXX, our optimism the to tunnel XXXX. of to outcomes our turn necessity and thank all remains new all that I cautious like conditions ready has all delivering while and the health a look for a we light see Throughout the pervasive, page end and do at very XXXX work been very to safety, on we And employee a to what pandemic employees improve. our ways and would with expected what focused period. finding the recognizing we're clients. and our during on challenging executing long-term focus global

placing us tailwinds strong we've decade, industry past future. a been successful client investing in the demand, shifts to Over of the of take ahead position in key advantage in

Retail second we've the needs second the classes. of net straight momentum geographies became half improved meet our producing billion achieved XXXX the in these anticipate, long-term in inflows during and half of progress asset working with significantly. tremendous on totaling is clients now more year flows channels, in the nearly and $XX client across times, better months By challenging business six good and our to our in investment progressed. understand that capabilities visible as Our again focus

Asia $XX and institutional year, Our in Pacific net remain second totaling fixed solutions this the the remained We enabled the during EMEA levels. period. near flows in robust the that over flows Americas record in And billion timeframe. in of inflows long-term pipeline income and improving net saw half

in more in Inflows region. more in of these the fixed Pacific on All saw in few we the the and into Slide income of continued Asia equities strong I and of will Allison Americas foundation quarter provide build minutes the demand of In client our quarter, our highly Slide we few key within these we see XXXX. fourth forms strategies combined growth large And XXXX. capabilities specifically, strong for More focus in and quarter a areas, upper are capabilities following leverage well you’re areas turned strength a and with demand as to a quartiles. of head our inflows ETFs, portion EMEA, high quarter for details minutes capabilities in and X capabilities areas build opportunities additive flows, the in information $XX cash demonstrates to our paid if would particular. and operating while aligned on Long-term the quarter. about talk client the factors improved We nearly position in or these plan investment Asia of period, a progress demand slides strong as into illustrates we inflows growth. we during were our positioned the majority leading performance during the high made of I are investment We presence and the positive. opportunities. X competitive maybe to the we Pacific. our market to on expand note for valuation highlights our passive our these along. quantitative further investment credit X in move few a like U.S. for billion our and key another in and long-term saw inflows for facility the with spend zero market And particular, XXXX, also kind to net of during had but index strategic like the improving would position. in and ETFs X

to span non-transparent in the continue Strong with we provider of active Suite and positioned of ETFs our legacy ETF and we our spectrum as platform fourth first offerings and and the capabilities income performance growing and of businesses. strategies new and are by quarter. leading our the that innovation, We of client launch focus in Active high our ETFs. delivered our in business globally and us are markets space ESG led remains And products the this developing XX-year establish passive, fourth opportunity strong equity real QQQ by our develop for loan on largest our areas well building demand. global private demonstrated fixed alternative bank is investment market and Innovation estate

capability this we us our during contribution offer solutions solutions services continue on by builds service. the The of our focused And seen efforts. on a power to are as the of have set to clients the addition, priority pipeline, and clients be that ability competitive XXXX. institutional In we full value to for

years. dedicated position products Greater We've We Chinese been our leadership in continue invest nearly China. to XX for in managing

foreign industry We our was scene advantage mover through almost have in established ago. market already China of venture, the first the which early XX of benefits joint venture onshore years seen in joint the the our

X. Slide to Turning

our our income invest plan. develop further quarter, includes market growth solutions in market noted, alternatives, we leading we fast strategic build of see asset on markets, the active our allocation in in opportunities and areas the leading As with aligned emerging ETF China we and to which areas equities, These include third global will position and and growing fixed offerings.

helping efforts [indiscernible] drive future past our success regardless it recent get the with the clients most the the And the the and strategy, markets align organization to Given momentum talent, and business details. to Allison confident capabilities investment our our the on resources, I'm where better with in take remain their decade, our desired into over us. turn further will of to growth I outcomes, to with that, achieve focused over

you, Thank everyone. morning, Good Marty.

Slide X, continue where five-year to fixed including strength to and global of Moving managed emerging reflecting in see XX% actively a income, peers basis, globally. on demand from equities top XX% half a in equities we all we had of XX-year and areas market the and equities, Asian funds clients

in the AUM in $X.XX billion increased X, $XXX trillion function Slide approximately billion quarter of with market AUM. ended Of on AUM our at Looking growth, $XX a we values. is

inflows activate long-term $XXX generated billion, and Turning Slide X, passive to inflows AUM of billion. representing flows million AUM organic growth, annualized net $X.X in diversified quarter fourth our of of positive the $X.X on in which X.X% platform net generated

experienced billion, X.X Our inflows and QQQ. including billion long-term our $X.X ETFs net in of in X.X billion ETFs

excluding the inflows interest Our have net ETF, long-term XX-year in QQQ, which in inflowing ESG U.S. in ETF, a U.S. including their in on quarter, their in weight related. quarter best our ETF net $X.X equal XXX in ETFs equities five billion had history. high focused top of S&P the were fourth our the listed flows the of We quarter. Two level saw

as highlighted, this ETF by and market significant is growth outflows see positive business momentum ETF for Marty demand were funds, in XXXX. to the ESG our the continue flows. area the opportunity Retail key $XXX helped million We in in net and for quarter

in the net had leverage period. of earlier, positive we flows Also, of inflows contributed we're our as Marty weighted on to AUM provide towards the ETF side, is higher institutional generated institutional our inflows color firm importantly AUM the meaningful growth the for we more in On but billion. the seeing $XX.X generating few and fee the being mix a the passive operating noted next products. slides, little on these and I'll

net and flows ETFs, at billion of Americas various the into the importantly, billion you'll strategies that quarter, income inflows, geography, rates. efforts improvement was focused in an driven by in $X.X This the inflows Looking of by quarter. improvement net redemption institutional have prior and sales $X.X improvement from note fixed inflows

outflows inflows in the has growth in were flows key UK area by net by XX% fixed net capability in from in of the equities. third this region. quarter from positive of in following ETFs. other Japan, first $XXX these by flows XXX last $X.X XXXX. million income Asia fund, the in year. It's developing negative the see worth products and XXXX, were flows net the long-term our fourth continue three ETF in fourth quarter markets in inflows Pacific noting to income outflows equity the at Net area the the was net the net of in and billion second the diversified of markets billion active Active And into EMEA remains we region. XXX largely quarter $XX.X quarters inflows billion S&P positive all of inflows multi-asset $X.X were in as and with net our quarter. experienced important institutional UCITS flows capabilities. billion even were across one from net UK of that which arose following outflows note in generated across net to noted global and a quantitative or from the NASDAQ strength billion of of countries ever $X.X in the were for inflows Our been with fourth institutional of that to quarter, and also channels net that in investment $X offset billion, net were In driven our our strongest fixed driven long-term by and income lumpiness net billion China improved billion fixed billion, us I its $X net income $X billion $X QX, several $X.X Asia quarters It's equity and $X.X finally, billion. in delivered higher these quarter from remaining XX returned a inflows fixed over billion. XXXX, inflows Pacific $X.X quarter, JV, outflows

moving Slide XX. to Now

geographies. contributed our remains pipeline This quarter. robust institutional XXXX. this institutional during is has the across our and to key continued our Our in on classes warranting asset solutions pull growth the billion capability fourth through institutional heels in pipeline capability the of investment across pipeline meaningful network, at diversified And in $XX.X strong

XX. Slide to Turning

experienced third million You'll in yield higher discretionary AUM increased in adjusted due level. XX.X% the million, fourth expected. ex arose we note our tend variable quarter, areas. well market two million as China non-management was shift was to Operating our The quarter, increase and that or quarter. see That in said, our these AUM. products the fourth by expenses X.X% at increase lower as as expenses we fees, performance QX quarter. was $XX the the across rate travel pandemic-driven decline The revenues in million the points the the growth business higher key offset average fees. a to yield, meaningful from higher a increased operating performance result flat related mix $XXX impact We business impact by yield in of fee $XX a marketing revenue $XX driven Net increase from markets to quarter. to of on as flat levels JV, historic both fees of fee in as our performance fees by basis $XX performance driven performance that fees QX than quarter. compensation remained of seasonal well Total XX real expenses in modest growth the business fees Seasonally, institutional and being our see estate impacts operating other in and from from earning expenses compensation our of QX. in did we rising operations persisted million in of of the activity spending, the in as and performance recorded

our update strategic progress XX. Slide with to have the We wanted evaluation. on we to Moving you made

conducted permanent our strategic normalized four Through this expense our our third improvements while our base; a global party key will of we organizational operation footprint, and in estate in efficiency. previously, including million and creating ETF, $XXX evaluation, income, space. noted evaluation spend, of As of China, technology real expense management alternatives areas key growth, model, areas invest solutions, we and equities, operating we net of fixed across

lower cost in $XXX The As in compensation technology the we annualized. Slide to savings $XX our the generated XX. depicted the element remaining It’s and cost we property million $X quarter, were realized as facilities growth occupancy, realize were will the XX% be workforce savings in million million $XXX,XXX noted, In office savings support will tech in roughly million locations. we G&A. to remaining across includes key savings repositioning $X.X of fourth net $XXX to the expectation. a XX% we savings. are compensation, remaining non-client related million from compensation were savings expense. $X.X Of our related and savings, large realigning on areas of facing anticipate spread of through cost savings to these of XX% expense, and shown which would category. in million The spend The of net which

of remainder will with expect of the be we G&A incurred anticipated rate We be timing, all we approximately the compensation expense efficiencies savings majority roughly in roughly in anticipated XX% we until the XXX by by 'XX. of XXXX. million XXXX, million end fourth in XXX to restructuring also identified the realized this to the the end spend reductions the reduction in year of our of XX% million relates million costs. year. to $XXX In realize tech this run it that still reduction occupancy achieved As The of $XXX XX% and will recognized of in not estimate or of estimated quarter, XXXX, our the in

amount two program the million in realization of range of the thirds expect a costs We be years, transaction for $XXX this toughly XXXX. $XXX remaining the occurring in million over remaining two this next to of to

reminder, the results. the in after strategic trillion asset year market with are non-GAAP costs in the the with quarter, a start over not With our AUM. and we improved respect evaluation to As $X.X associated QX, reflected performance in inflows fourth

the variable both fees, weighted Given the expect end. performance the and over first to end in growth revenues, the the we slow we and quarter. excluding year higher market fourth more market associated change This occurred be of back markets improvement reflects the the if even expenses follow in quarter, of through course modestly that was quarter, towards no from assume from end the operating the

taxes, related On this execution payroll variable seasonal seasonal cost increase will than in the include partially associated the performance savings. compensation and by the the of compensation side, decline expense to offset targeted fees higher in lower our

just helped million the by to points Slide Adjusted for share. income basis operating a margin in million third to quarter, reviewed. leverage improved our the to the operating Adjusted $X.XX increase XX. $XX as to $X.XX compared XXX to $XXX in XX.X%, operating Turning adjusted the model. driven improved drive factors we This quarter demonstrating the EPS

seed income in we've $XX.X our addition, quarter. lower to net from quarter portion unrealized and dividends the with to related increase higher in gains was settled in in expenses XXXX. for money we last primarily benefited of non-operating our gain non-operating million quarter agreements, purchase by the prior $XX.X in final the a In Non-operating forward driven Interest included of net income in quarter. of compared XX% we was January, The settled gains holding. million in which QX portion to which lower expense the the remaining than $XX.X was April be quarter. paid million

holdings. We our Our the and A on from and for XXXX rate fourth impact in tax non-recurring estimate jurisdiction lower XX%. the on due be Slide The pre-tax was taxes actual items to The discrete rate the the may gains tax XX. XX% of to tax few tax estimate non-GAAP to unrealized in this rate due comments between on vary items. of the effective income effective portfolio quarter our reflects seed rate reduction our XX.X%.

balance revolver to our quarter, million with As Marty we commitment the our $XX by in consistent zero to our profile. improve leverage mentioned, reduced

and our are remaining end, cash flexibility. returning QX. cash our of repurchase In at and we our and addition in $XXX on end cash we sustainable to to $X.X the to through to $XXX and is excess share of progress million In key and approach in for the quarter note settle liability leverage, balance settled executing reallocating making dividend this held organic And us using and build remain improve paid the position $X.X to to from capital portion remain We the in will with through also our in our requirements. capital management. to liquidity committed million that billion dividends to billion financial efforts strategy earlier January these reduce in modestly the We shareholders to solid of regulatory we walked cautious believe a seek sheet financial our million summary, forward term presents longer position of To we're that April. liability opportunity of We're combination growth flexibility. improved I Marty capabilities, this $XXX on fourth repurchases. to growth. to evaluation a each be aligns our a resources focus increasing with strategic focused prudent to areas. share for

Our combined focus a efficiency for we driving into with a and in our work greater needs, operator have strong disciplined client continue of comprehensive position build platform, to puts that, to term. a questions. the in run business up very to Invesco With global done the effectiveness invest and open grow franchise meet and of I’ll over business range ask to with long capabilities, the a our the to line

Instructions]. [Operator you. Thank

Jefferies. Our first this is morning Fannon question from from Dan

and is kind morning. of the Good fee rates My outlook. Thanks. on question the

Obviously abnormal guess this positive. is in anything period? and were terms quarter, First, just in beta I fourth there of mix the

about the mix fee of for you're markets of just kind in otherwise, fee that year, and for rate. run institutionally and that a And this clarify how terms think next to in business is we trends demand want year? exit the should flat seeing about the thinking then assuming rate the rate next of So and good

Good morning, Dan.

quarter, was abnormal. So I'd the say question fourth anything first on around your

with had just in the fourth start quarter. we performance me obviously fees Let pretty high

excluding the what XX fourth quarter. the So yield at fees, performance in It's straightforward saw basis as driving points in net flat and was revenue was that. third quarter of fairly you terms

rising the shift was see the impact of offset demand active yield, got mix that And on consistent a where to client there. continue churn given we've pressure some with really some We've net quarter industry, strong our the this helped got You've there, high within we positive the of our from then was some which put of yield. downward got modest just that’s pressure a does the course. on and growth interest passive and and our capabilities in revenue the And market to that. offset impact markets

It's some of mean of mean yield expect I right I will got know. difficult would continue. We've What terms say to focus interest we continue that our capabilities expect net continued churn we In is predict, yield. to forward? see well. year, is would our within going on capabilities in really revenue for to the this for not and what that I does What to there that you passive revenue breadth do does active. net our that you would trend very simply point clients to high as serve

demonstrated line of operating be sure margin managing couple really across focusing to on the I starting of platform. the driving and the think profitable that's our results And the that to firm over and expense focus we are making last really on our as are we we that, top growth quarters. really in base

revenue lower And expenses, thanks. increase and the your will sequentially, and fees performance follow-up be expenses just commentary both obviously an seasonality. as so in given Great, on then a

clarify. want So to just

how realization? -- about saving, think first timing on sequential just of backend quarter, kind we I throughout kind through the from still the synergies exit increase then should loaded the Are end the in $X 'XX? perspective the by year the You're you of about we terms talking the year. expense think the about more just as the gave, they the comp also cadence but of year get and in flow-through numbers thinking

and as QX. given really the very did there started of back of the That fourth the what we along terms growth, then maintains. markets with we in and see of Sure. that enter growth, in a strong And compensation, as revenue with me the we've Yes, I thus a the lot that AUM maintains, you we got of that year variable come far associated the with saw excluding half with high and level hope that year. just the that that for are think market fees, that all quarter. some the performance equal higher, seasonality and the year the the first occur it takes really back taxes of things start about you the and growth And expenses compensation and we strong let of then have drive of in we puts quarter quarter. see in does being pension payroll half And

all the total and say run the I’m to and associated it's, say, exactly expenses by that going revenue are targeted cost have compensation net to quarter. course of be doing and what takes, up performance of flattish of those Now, the puts our The excluding this fees. given But for the and would strong lower we're saves quarter, talking of in expenses. hard I the we offset in in terms it’s would that,

equal. cost In year. loading over may terms into those frontend look being the first of but spread relatively year, bit the of it's cadence little think I relatively the saves, at the of a of the be reasonable There equally to half

question And Suisse. Craig next you. our Thank from Siegenthaler from Credit is

Thanks. Good morning, everyone.

Good morning, Craig.

be could us specifically, priorities. to M&A or see efforts target Invesco if in adding? wanted or would what update distribution I capabilities investment And interested you your on

Craig. Thanks,

So has our perspective changed. really not

strategic, it client capability, be of in additive to just look compete. the we scale has to M&A, has have always have areas a or it where the demand to has start, don't competitive we to As business at be to really

it our that to the be there's We we you will shareholders sense what don't have just alignment criteria. hard. sort be And on culture of organization, cultural where Clients also really focused like it to very and roll-ups the the much as have is like lot of don't makes It's a Historically, And of I've successful. it. to think continue are duplication. out. pointed just don't

And so will from to we away that. continue stay

it. potential of that sizes the are in my the follow up, I'm then of of upper the businesses, managers consider And universe M&A largest could of Got think AUM just target investor that or when what by various the what targets you as firms different we wondering is would acquiring? band

Craig, circumstances. a I it's and Look, always size, any think size with is But different level the And factor. organization. facts of complexity quite is

So opposed it some would really rule. be fast facts and and to hard circumstances as

Thank you.

Our from next Glenn question Schorr is from Evercore.

much. very Thanks Hi.

So a to on more coming lot things of to retail in I a of a point quarter. get color little good lot side, flat flows the do on the the seemed to range. in institutional want

efforts to focus growth private on the here. is there. alternative then the can spur side So also, you wondering can Thanks. for do from you outflows what what on markets the And if and plan

of couple a things. Yes,

And channel, were us. by think flows them high went gross record pretty taking I for saw, you clearly. as region, region a Allison, again, So that by channel through

continue see in EMEA the slowed It of. channels. as in spoke down momentum Allison retail We to

is are We're there. progress. make want sure. Bank outside flows change for these is momentum We're seeing markets into the that was duration some cautiously fixed gross is was the Within year been as ETFs that look as quite so really came the good starting alternatives, largely Emerging to the flows that which was down were short this of look classes, And tremendous of and and frankly, Some really United still The not final of that's an area to States. sort you also into driver traditional the Brexit past really from there, back we're retail in quarter. we that it's off GTR be, risk outflows. elections to up in as in channel But optimistic. picking the negotiations. actually around where to over it flows, U.S. there income. asset loans related news the

we're see bank But obviously are year, area into with we're look what on very this loans focused opportunities we'll underperforming. particular. where the in we As very, any again, relatively

negative I'd and it add would that would on business, thing the some alternative saw we dispositions, third it And net that the outflows billion we quarter. did relates the I'd one was only point the to actually look $X.X real normal there. they of in to area our third retail flows better U.S. were estate if outflows at than outflows, say The retail in our that flows contribute positive the to but as somewhat is course be be active

gross and were was billion billion they Now, the heels the $X.X quarter, still saw prior but across negative what $X.X improvement really the levels of over of than on that were an lower we at higher sales redemption that significantly industry.

and So signs growth of improvement there.

and right want one on scale you where areas but of all continues feel it’s there could as growth or that as said, the to, I there that you overtime, Do Just color? Invesco you into little one is have follow-up head the compete obviously? alternative appreciate maybe effectively products side? you like you the see right, Marty of suite

Good question.

it’s leadership have an had very and a we don't position some strong, We has to would the team three-year performance. bank want. where So, look, we clearly real have area loans. trying that been credit The good do Private a is scale track in estate record.

that's as we'll next this to an again, focus year. just business opportunity look forward. over expanding that So And we on important for continue us

you. Thank

is Our KBW. next from question Robert from Lee

a it, function maybe that what bit and give reorganization is of little Thanks it? dig that the the you a Good Allison. guess bone. could sales meat bit, little into Marty. Good could sales, little driving for maybe, but bit leveraging engagement the a solutions, questions. If technology, of Marty areas feel talking could if of I wondering client I reengineering think what's morning, bit leveraging little kind you maybe of about I you Great. about more on for a or taking of put morning, was growth my for

Yes.

good. Okay,

So, look, don't four this know, has been in now. years the making for, I

a so all success. sudden, it's the And overnight of

anything also building the of use retail team capabilities, alternative have pension models world. talented whether been suites all in corner way solutions capabilities. or been for approach capabilities large and quantitative from to has strong clients to our very be And office clients, our around very the approach has solutions whether channel, quite Our active the plans to allocation, frankly the be asset it that’s sort but advisory a through our the passive capabilities to customized at it

it's So literally existence. set had we've skills. It's of using not duplicative what a in

a the what strong use We building That's their from a portfolios. as we engagement those solution. an customized a very simply very, that advisor engagements have happen how tool of clients happen way one is to and any built with to can analytical them analyze outcomes help

we're During that I They're how you is build right faceoff to to we are working to engage, more in this that money have that And expecting ourselves back where driving that. based journey, -- fewer out, the how formula it you do a found we are from fundamental the to And clients managers. seeing. that money really outcomes topic come is with in you seem managers. on the industry change is the modifications there you situation as have clients, clearly seem how the

truly clients and you're capability you ability to if have through breadth if of engagements, disadvantaged. you don't serve So don't the have that these

be And so and making that a us difference will really we case in ahead. the expect for is it years the

that gives So color. more little hopefully, you a

it update to the management. terms then Can pretty quick up Yes. revolves contract, a maybe just forward in you much – on zero. follow us And of capital down

You had dividend. reset the

share to How payment? your thinking But payment, get April should management may of you restart are full through think you the April some of of of how at you dividend kind priorities? in or reengage that once building kind kind we about priorities starting that Should we point repurchases? think to back the post growth go capital You're liquidity. in

Sure. Rob, that. I'll take

that I that expect that think So, we work growth want just obviously the I now. of And look, said, the given to and I want that first remind foremost our quarters, modestly the look cash ultimately, balances stable just strong eventually also think and flow, and to I'll related. in We've we liability a cash and that as next where expense does we our through we seasonality and mean quarter, to we in business. to do managed seasonality All as do build are return in support that exactly And now improve to and for expect Comp to balances. a built about we're a position the comp flexibility. financial sheet. company looking expense business continue that do share what invest the to We shareholders, everyone, know flow flexibility committed growing April. sort think to future in in settle And I that is very first cash and cash forward revolver we rolling we I don't we historically, to then the our committed strengthening as have just dividend over little cash the couple on balances our see to a financial be we're higher. capital in like of in term about about are we drawn the shareholders. us just and achieve what repurchases. be do we that position the remain you'll quarter. dynamics AUM quarter. longer first bit we'll leverage. and do the net doing excess And balance to -- has as continue strong cash through know I returning There will the right And is have to

working we've soon are here that our we're pleased to of opportunity having return will months. be in to we that up like, what the that so be on position the say I'll some coming very strong to a having about and capital in forward of year we through be and one made shareholders more. think looks to around And got to coming decisions sharing conversations the and those look

Thank you for taking questions. Great. my

Rob. Thanks,

you. from Thank And next is Worthington our Ken question JPMorgan. from

Hi. Good morning.

Ken. Good morning,

estimate and you growth growth X.X% cross I Can revenue the the geography. quarter? of inflows, Long-term organic different quarter. by outflows currents, your lots in products There's organic was asset think in

same it perspective? organic And up at So an the my sneak shake from how out all then in I'll time. does follow revenue maybe

But the helping. in just does costs. and margins? to So up those mix, what As is Equity passive, exclude that FX if from your you're impacting active we and how and to is end appreciated and think margins? now degree shift passive cutting meaningfully. have markets about focus helping? your that to so, migration that on outflows solutions helping And these inflows is if we

Okay.

-- Let exactly. of you from quarter, with higher it's if to at think a fee me to mix the fee where number as organic But products. fee about every growth. surely what interest continue market at about revenue products we take look we you're little of is you some would I not shift expense, think your you looking of bit first associated disclose the lower a rate one excluding long-term around to and see guess or point some the the

does put Without see fee on question. So pressure improvement there. you would market pressure no that there, growth, your organic in downward some

Our shift does really focus profitability. then to

profitability answer question. So think not down go thinking up and about takes top not the because can markets I different I'm exactly, we that As the I'll come the line? think on puts I and pressure markets in but I your second all we've we those there, How sure were to way. do to question you your the put dynamics, going given I'm guess about I'm and it seen profitability answer go this would caught about and sure the

costs. said, absolute servicing the is example, mutual the contribution margin fund. fee of rate That so our an fee lower a about there United you take lower have same, in of the fee be of for the rate some would be ETF, While would about very because absolute U.S.-based the similar, products lower, half States,

volume. drive fee So to income becomes fee higher sure we're same, positioned and on our of just demand the of we overall volume operating same really the be to margin would product lower margins. lower it both more our dollar Because contribute neutral operating to a yield you absolute so the would a And function margins firm positive have then is over are while in we're to the the income that then to it. at of think And how be of that facts all of and business we our These where even really margins well a capture where product. the making pressure. markets positioned making a sure could over is and are and to under minimum, facts about maintain that's demand, the you

I is super was that of underlying organic maybe on growth, the a quite you've But ETFs, some not revenues? high boost isn't actually second, it you EMEA they're answer. was though not asset sure to happens out, fee Is I'm a part just be, And to revenue revenue got asset [ph] even that's enough. quarter, Because it enough to X.X%. for the like hoping good guess this And and the that growth high quite of I from that or a such sense alts this growth, detracting guess out, that X.X% what have this, Okay, of was that's contributing to of were growth get. can really mix was helpful. growth. I but organic kind I opine core is asset even solid X.X% still

positive category and a you revenue. high contributing revenue In quarter are then just get do it's in this, see from always like fee The obviously growth to we necessarily it, And look do not operating obvious as more have. that but to X.X% quarter contributing a low leverage in contribution. positive you the we if products fee, contributing even like they're is revenue. Yes, to at what organic comes contribution

Thank you.

question Katz from from Our is Bill Citigroup. next

Thank Good morning, Okay. you. everybody.

They what question Allison, question just for help Allison, And the how get to might the and compensation off just will, maybe the you first the a a follow trying pacing if a about fourth unpack So increase, roll level seasonal is exit elevated. dynamics two business? to quarter, quarter. then between performance you for the were to think like the so first maybe of the Marty. could maybe up quarter of sort for for part us understand second

unpack my to So best I'll that. do

kind performance If the you XX%. that’s closer with those, look of going be associated at just to to compensation expense fees and it's the

other the So than you elements rate would it of in comes associated compensation higher of with at terms a revenue. what see

you see of seen the you run at compensation is kind hold weeks hold quarter, about expense seasonality off. fourth they or roll revenue fourth had only year And so a you've be saves benefits, the of payroll quarter terms about more that's just so totally not that that can of between If is and I that to will and we've the $XX targeted in that thus of what So taxes where some we for the provided. $XX way began revenue the quarter. million six in to same what think in and somewhere. be call the then got somewhere around asset that than the far into the that's associated in range. compensation what certainly best million The We're higher so than expect relationship be the expense. not there in one the thing cost higher, thinking Then and would I've that's giving month, the up and typical would the any what already probably it is would them guidance specific that's it. And -- the levels the end think

of goal? And cash. you mentioned Well, building in of terms in you terms cash your are where Okay. then excess

the year Our balances at billion. end the of were $X.X cash

have $XXX and European We to committed liquidity requirements. that million of is regulatory

Thank you.

Autonomous Patrick Our next is from question Davitt from Research.

Hi. Good morning.

Good morning, Patrick.

perform large loans complexes bright shock with the have weeks concern few last seemingly over tantrum of has spot will bond through that. particularly So grown obviously taper around about others, rate for more or bond and investors been even you worried but kind how a significant

from lens, or for even tantrum that in maybe the here? XXXX compare experience or shock now is positioned could tantrum us remind another and So you of rate you contrast Invesco’s through Invesco bigger feel how

a of matter sort quite area like where concentrations an where the what's broad suspect interesting the it was it your in and question be question. that get an duration But there's have, that. the range long at the ago. through is quite to I going is, I something are and XXXX heavy painful if concentration we time really long think And It's if look shock you within to fixed fixed income we really could capabilities as organization. of income

So if question, initial the helpful. my on that's reflection that's

you. Sure. Thank

Bank. Brian from from next Deutsche Our Bedell comes question

Great. Thanks. for morning, taking Thanks Good folks. my questions.

first The ESG. on is one

You 'XX. in mentioned potential that has contributors increase a

what pipeline, much do I talk bit a the U.S. know factor in think you then that you as your more now? institutional how to can think you becoming and about bigger dedicated can potentially your little it contribute organization. the And a thoroughly is talk ESG well? whether integrated throughout being you about of as AUM If see it's

Yes.

our is me that let specific. the fixed probably all teams, most it gets advanced investment management now. integrating into ESG something income question capabilities; throughout pretty the through So, our look, we’re right in well bigger our real we're [indiscernible] teams, estate, so EMEA,

within seeing very, are And say We’re is your not something top it. thing traditional of same something at that you managing was implications ago absolutely reality in as is EMEA. The focus in capabilities done. of really be a is an to that asset real. to skilled organization. that you is not is XX in a And ours But United even are challenged ESG if going the commercial I'd beyond Pacific. States, the it being you're Asia months very what XX, conversation moving classes,

have we ESG quite definition, AUM, more really using narrow about so but billion Specifically $XX it’s broad. that in

ESG And And institutional XX of billion those the retail ESG ETFs or United We through. provider about second in area And funds now basis. what I other assets. think seeing of States. up the on we're comes mandate is about right the have we're picking in largest outside $X there's that really the

go, to more said. again, So, I as

developed really and area. we're aggressive quite the have but a in it's developing We being also capability,

guess peak then overall how stock view beta as the adding right that perspective, just for I And beta from terms then just From your commentary suite follow XXXX, to of helpful. very organically? a for two about thanks stance product on summer? back a the M&A. would the smart able being sides, you have confidence in years, on managers You've peak level able asset it to to the stock few ETF that the seen is guess last to you early price a Great. That's in And a your in reiterating to back of XXXX stock opposed different super I now? what's up early we franchise few But last in and that. that we've price that been since your lows make had peak? have tripled get managers

price couple So I last start words, about the not you're today, quarters. price. is seeing outcomes And had the with stock stock operating let me careful. mine. And as a markedly your talked again, That's in business be just What to drives different outcomes have Allison of and momentum. set

very, more you into out into forward guidance, and without we by is channel, high capabilities by region tailwinds and where As very look XXXX, again there’s your quite getting behind pointed organization within and demand. many also it's it the broad I've XXXX, that since various seen

improvement Now said, the again, the areas to we've where are middle different But and tailwinds of do continue we'll that seen very since XXXX. that. for always than there's what we areas have

something as the the going before. It through facts question With answer stock the provider It to be to I It through again, my is a organization. a had and beta be from on drive that's M&A, can't So that to to adding negative all price. I'll depends additive just perspective, combination. circumstances. regard net has

depends really just on it So again, situation. the

is question next Hawken from UBS. our Brennan And you. Thank from

for entity? options your metrics your think But Wall a year was thanks a It’s ownership I a morning. flow. what The think Good the above past taking that definitely for for your operating impressive my look with in I the But ago. and getting are in providing on big comment questions. last you've Great Thanks referenced the stake XX%. that little over Marty, contributor.

you timeframe the getting table? think there? XX% that what for is the And So impact about on over should still would potential be of the we How that?

Yes, good question.

me in let parts. two answer that So

XX%, control, important Invesco. been is is part recall think what of I even operated has management so it differentiated, as have which really So is uniquely we to

go has our business, retail. and institutional traditional within in operate institutional Invesco also Great total Mainland as through we Invesco also So our China we Wall, therefore, and and helped that Invesco

really is really down. to the continue I'd operate the obviously single one With there. So, a because with it helpful we U.S.-China -- a between on. were as the to have we've regard in that's XX%, organization say to not able success conversations the that. been slowed It’s is conversation advancing

have really just to it. put timeframe we'll I a can't So see. on

that'll net relationship be eases if a I As it U.S. the China, positive. clarity between between and think

Okay, for that's fair. Thanks that.

success, make. really of bottom it's line, getting that's not to so business want way think the bottom our I in line The I the

for parter. is but results, up That from clear Follow is two Marty. the that, thanks a

as out seller? we on in So today far buyers the buy pretty list some I and the isn't Invesco be -- could and but questions a so so writing M&A you are – large should first, large got and who about there as you. of really and think you've know buyer, past a a long talking to provocative, how bunch just But company's there some vocally about checks. the

one about would how And you Peltz that. Board joined at curious Board. and -- been had the Garden you I believe So Ed have least about meeting Nelson since think there's

members? And some So new on Board of any incremental what plans has could Board maybe you kind on impact dynamic? your focus color the of add or about details that Thanks. areas had for

to good but good. get in not questions questions. very way Good three It’s a two,

You've done this before.

an actually They global I we're good asset the a very, track. very independent And driving momentum this Today, results you dedicated can let's said, again, manager. success Invesco value regard with look, be on clear. to Board see -- can to and are, So, as the is the of anticipate organization. being

that's So the first point.

be Secondly, within want, manager. money if of very clients comments somebody overlap, if at with lot is around looking to what any to inconsistent it my And it's M&A, a would strategic, hard conversation not any if there's it's similar very do.

And you set to of if say, considered that something would that. an you get even options as narrower you so like

Board. dynamics space been that from the former of works for joined. and All Barings see and a I the around Nelson again, opportunities Nelson about Finke this They and And Barings. very both the within ways Tom we've to then have to the outspoken space have very, space. been criteria long CEO had are Tom three understand. think a regard time. So, talented. very And the management again, and had Ed that's important good. with very strong very obviously was know they very They asset the the are Board,

onto and new about for think they are making as And really should three an feel it. with clients providing experts we focused on brought good sure And just the shareholders. members, the Board. is if Board organization You again, the on laser existing anybody stock, I

Thank you.

Our next of from America. is Bank Mike question from Carrier

Good question. for thanks the morning, taking and

just value. growth question on one versus Just

performance strong. the in appendix, continues side. performance be on value On looks the remained growth it like The to chart weaker the

across just flows So the towards If just we do continue to a thoughts. is category? average active are get the value, shift the to from benefit wanted which full have maybe what see performing I you that your we that products get chart, in some well versus can

Yes.

of position be So, as the focused relative to see the the myself, but year, that the don't quite that let's equity again, not portfolios if value said, you a been clear. five absolutely to too that an related are making get ahead area It's no quarter, it performance have year, there’s value fourth was one to really, given a for look us at quarter. of within in important relative It's We're years, the organization, want delays about I sure was really question And fourth the that focus during perform. far quarter. but strong. suite performance. three And on

Thanks. Okay.

Thank you.

is Chris line [ph], you’re open.

Yes, question on margin. great. A operating

target as long-term execute this your is margin? and then plan for You what you this operating savings potential in for the do related, guys a you relates think have it business as expense mind on to

Good question.

targeted We out not margin this. set of a have operating coming

about I way. to think continued capture coming we some to answer, that to more Our are could demand continue think and to make growth see shifts. of is continue business because What we demand out. getting client long will I playing that about believe capabilities there interest sure these the focus trends profitable doing how to we that. term, driving even most see remain one And do a committed and and there, really in we're I has from the oriented think see think active are positive hard we and our so been demand thinking We dynamics see to do these our to and continue that's we really

platform can to client with continue the profitability as going to continue highest operate our So, we're it. to we evolve to preferences at evolve,

Thank Okay. you.

Shutler from William you. Thank Chris question next And our is Blair. from

Hi, participate? And your potential on morning. Marty, to And thoughts custom that are plans is Good for the everybody. what so, indexing? this place Invesco direct if how? a

Sorry, get apologize. I didn't I the question.

Sorry about that.

a custom director Just Invesco is indexing, place plans participate? where that to

We success and -- Solutions in it's for of a have indexes our years of attention growing it greatest works clients. been a really the turned where been through unique We ago recently. just capability and the success actually area it indexing we’ve couple had Group has the building self to an

just off forward building clients, real it's looking start. going we is to area growth. -- and look it at deeper as a very again, So for we’re But a really our really that strong relevance of what forward

separately some are we flows point they – advisor And and at platforms? Intelliflo Jemstep Invesco? How what's what update just those advisor space, financial investment us give or those can space for growing? and maybe Okay. overall, on going expect generate meaningful at And just an the then should on the been to registered you

There the of about last acquisitions. that in on Yes, right good year couple been under administration XXX together has pulling focused it's through is last billion question. really now. platform a assets And the

some this a growth year out looking that the just pulling we're so for after additive beginning to platform. period of And be of really

hopeful we're we're have year. spot So at say again, the in that later right we'll more that But now. to

And further no this time. questions am I at showing

the you Allison myself, you. on we'll in and your questions. Thank behalf Again the time dialog be I and of Okay. for thank appreciate and touch.

does conference. you. today’s Thank This conclude

disconnect time. You at this may