Invesco Faces Revenue Setback, Despite Earnings Surprise Invesco Faces Revenue Setback, Despite Earnings Surprise

Updated On: January 23, 2024 9:14 am

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Invesco (NYSE:IVZ) experienced a 4.5% slide in Tuesday’s premarket trading after net revenue unexpectedly fell in the last quarter of 2023, despite an increase in net long-term inflows and market gains bolstering assets under management.

Earnings Beat, Revenue Miss

The adjusted EPS for Q4 came in at $0.47, surpassing the consensus of $0.40. This figure represents a rise from $0.35 in Q3 and $0.39 in Q4 2022.

Net long-term inflows in Q4 amounted to $6.7B, up from $2.6B in the previous quarter. Notably, retail net long-term inflows were $4.6B, while institutional net long-term inflows were $2.1B.

However, the company’s net revenue of $1.05B fell short of the $1.12B consensus, marking a decline from $1.10B in Q3 and $1.11B in Q4 2022.

Challenges in Operating Revenue and Expenses

The total operating revenue of $1.41B slipped from $1.44B in the previous quarter and $1.44B in the year-ago period. Meanwhile, adjusted operating expenses of $771M declined from $789M in the previous quarter but edged up from $769M in the year-ago period.

Assets Under Management and Impact of Non-Cash Impairment

The ending assets under management stood at $1.59T, marking an increase of 6.6% from $1.49T at Sept. 30, 2023. Notably, net market gains in Q4 increased AUM by $86.9B, with foreign exchange rate movements adding $11.0B. However, inflows of $3.1B in non-management fee-earning products were offset by $18.1B of outflows in money market funds during the quarter.

In a notable setback, the company recorded a $1.25B non-cash impairment of indefinite-lived intangible assets in Q4, relating to prior acquisitions of management contracts of U.S. retail mutual funds. Additionally, Invesco’s bottom line also included $22M of organizational change expense during the quarter.