Invesco Ltd

Previous wording

The table below summarizes returns based on price appreciation/(depreciation) of several major market indices for the three and six months ended June 30, 2024 and 2023:

Current wording

The table below summarizes returns based on price appreciation/(depreciation) of several major market indices for the three and nine months ended September 30, 2024 and 2023:

Previous wording

We had $16.7 billion of net long-term inflows for the quarter, primarily driven by Exchange-traded funds (ETFs) and Index, APAC Managed, Private Markets, and Fundamental Fixed Income, driving total AUM to a record $1.7 trillion. Our ending AUM grew 12% year-over-year.

Current wording

We had $16.5 billion of net long-term inflows for the quarter, primarily driven by Exchange-traded funds (ETFs) and Index, Fundamental Fixed Income, and Multi-Asset/Other, driving total AUM to a record $1.8 trillion, an increase of 4.7% from the prior quarter.

Previous wording

We remain highly focused on our capital priorities, investing in our key capabilities, efficiently allocating resources, and simplifying and streamlining the organization to better position the company for greater scale, performance and improved profitability. During the quarter, adjusted operating margin improved and we continued to deliver on our commitment to improve our leverage profile and maintain a strong balance sheet. We believe the progress we have made to build financial flexibility has Invesco well-positioned to navigate various market conditions and deliver long-term growth. We remain committed to returning capital to shareholders longer term through a combination of modestly increasing dividends and share repurchases. We plan to begin executing share buybacks in the third quarter.

Current wording

We remain highly focused on our capital priorities, investing in our key capabilities, efficiently allocating resources, and simplifying and streamlining the organization to better position the company for greater scale, performance and improved profitability. We are delivering on our commitment to improve our leverage profile and maintain a strong balance sheet. We ended the quarter with cash and cash equivalents of over $1 billion and a zero balance on our credit agreement. We believe the progress we have made to build financial flexibility has Invesco well-positioned to navigate various market conditions and deliver long-term growth. We remain committed to returning capital to shareholders longer term through a combination of modestly increasing dividends and share repurchases. During the third quarter of 2024, the company repurchased 1.5 million common shares for $25.0 million in the open market, and we plan to continue common share repurchases in the fourth quarter.

Previous wording

•Results of Operations (three and six months ended June 30, 2024 compared tothree and six months ended June 30, 2023);

Current wording

•Results of Operations (three and nine months ended September 30, 2024 compared tothree and nine months ended September 30, 2023);

Previous wording

AUM measured in the one, three and five year quartile rankings represents 40%, 40% and 40% of total Invesco AUM, respectively, and AUM measured versus benchmark on a one, three and five year basis represents 51%, 50%, and 47% of total Invesco AUM as of 6/30/2024. Peer group ranking are sourced from a widely-used third party ranking agency in each fund’s market (Morningstar, IA, Lipper, eVestment, Mercer, Galaxy, SITCA, Value Research) and asset-weighted in USD. Rankings are as of prior quarter-end for most institutional products and prior month-end for Australian retail funds due to their late release by third parties. Rankings are calculated against all funds in each peer group. Rankings for the primary share class of the most representative fund in each composite are applied to all products within each composite. Performance assumes the reinvestment of dividends. Past performance is not indicative of future results and may not reflect an investor’s experience.

Current wording

AUM measured in the one, three and five year quartile rankings represents 39%, 38% and 38% of total Invesco AUM, respectively, and AUM measured versus benchmark on a one, three and five year basis represents 50%, 49%, and 46% of total Invesco AUM as of 9/30/2024. Peer group ranking are sourced from a widely-used third party ranking agency in each fund’s market (Morningstar, IA, Lipper, eVestment, Mercer, Galaxy, SITCA, Value Research) and asset-weighted in USD. Rankings are as of prior quarter-end for most institutional products and prior month-end for Australian retail funds due to their late release by third parties. Rankings are calculated against all funds in each peer group. Rankings for the primary share class of the most representative fund in each composite are applied to all products within each composite. Performance assumes the reinvestment of dividends. Past performance is not indicative of future results and may not reflect an investor’s experience.

Previous wording

(1)U.S. GAAP Gross revenue yield is not considered a meaningful effective fee rate measure. Gross revenue yield on AUM is equal to U.S. GAAP annualized total Operating revenues divided by average AUM, excluding Invesco Great Wall Fund Management Company Limited (Invesco Great Wall or IGW) AUM. The average AUM for IGW in the three and six months ended June 30, 2024 was $87.4 billion and $85.6 billion (three and six months ended June 30, 2023: $89.4 billion and $90.2 billion). It is appropriate to exclude the average AUM of IGW as the revenues resulting from these AUM are not presented in our operating revenues. This ratio is not a good measure because the numerator of the U.S. GAAP Gross revenue yield excludes the management fees earned from CIP; however, the denominator of the measure includes the AUM of these investment products. Net revenue yield metrics include the Net revenues and Average AUM of IGW and CIP. See “Schedule of Non-GAAP Information” for a reconciliation of Operating revenues to Net revenues.

Current wording

(1)U.S. GAAP Gross revenue yield on AUM is equal to U.S. GAAP annualized total Operating revenues divided by average AUM, excluding Invesco Great Wall Fund Management Company Limited (Invesco Great Wall or IGW) AUM. The average AUM for IGW in the three and nine months ended September 30, 2024 was $90.0 billion and $87.0 billion (three and nine months ended September 30, 2023: $86.1 billion and $88.9 billion). It is appropriate to exclude the average AUM of IGW as the revenues resulting from these AUM are not presented in our operating revenues. The U.S. GAAP Gross revenue yield is not a good measure because the numerator excludes the management fees earned from CIP; however, the denominator of the measure includes the AUM of these investment products. Net revenue yield metrics include the Net revenues and Average AUM of IGW and CIP. See “Schedule of Non-GAAP Information” for a reconciliation of Operating revenues to Net revenues.

Previous wording

Market gains and losses include the net change in AUM resulting from changes in market values of the underlying securities from period to period. The table in the “Executive Overview” section of this Management’s Discussion and Analysis summarizes returns based on price appreciation/(depreciation) of several major market indices for the three and six months ended June 30, 2024 and 2023.

Current wording

Market gains and losses include the net change in AUM resulting from changes in market values of the underlying securities from period to period. The table in the “Executive Overview” section of this Management’s Discussion and Analysis summarizes returns based on price appreciation/(depreciation) of several major market indices for the three and nine months ended September 30, 2024 and 2023.

Previous wording

During the three and six months ended June 30, 2024, we experienced a decrease in AUM of $3.9 billion and $12.1 billion due to changes in foreign exchange rates. In the three and six months ended June 30, 2023, AUM decreased by $6.8 billion and $4.9 billion, due to foreign exchange rate changes.

Current wording

During the three and nine months ended September 30, 2024, we experienced an increase in AUM of $16.3 billion and $4.2 billion, respectively, due to changes in foreign exchange rates. In the three and nine months ended September 30, 2023, AUM decreased by $6.5 billion and $11.4 billion, respectively, due to foreign exchange rate changes.

Previous wording

Results of Operations for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023

Current wording

Results of Operations for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023

Previous wording

Our revenues are directly influenced by the level and composition of our AUM. Therefore, movements in global capital market levels, net inflows (or outflows), and changes in the mix of investment products between asset classes and geographies may materially affect our revenues from period to period. See the company’s disclosures regarding the changes in AUM during the three and six months ended June 30, 2024 and June 30, 2023 in the “Assets Under Management” section above for additional information.

Current wording

Our revenues are directly influenced by the level and composition of our AUM. Therefore, movements in global capital market levels, net inflows (or outflows), and changes in the mix of investment products between asset classes and geographies may materially affect our revenues from period to period. See the company’s disclosures regarding the changes in AUM during the three and nine months ended September 30, 2024 and September 30, 2023 in the “Assets Under Management” section above for additional information.

Previous wording

Passive AUM generally earn a lower effective fee rate than Active AUM, and therefore, changes in the mix of AUM between Active and Passive have an impact on revenues and net revenue yield. Average AUM were $1,669.3 billion for the three months ended June 30, 2024 as compared to $1,494.9 billion for the three months ended June 30, 2023. The impact of the increase in AUM on our revenues was partially offset by the shift in AUM toward lower yield passive products, such as ETFs. As a result, net revenue yield excluding performance fees and QQQ declined to 30.4 basis points (bps) for the three months ended June 30, 2024 from 32.5 bps for the three months ended June 30, 2023.

Current wording

Passive AUM generally earn a lower effective fee rate than Active AUM, and therefore, changes in the mix of AUM between Active and Passive have an impact on revenues and net revenue yield. Average AUM were $1,742.0 billion for the three months ended September 30, 2024 as compared to $1,528.7 billion for the three months ended September 30, 2023. The impact of the increase in AUM on our revenues was partially offset by the shift in AUM toward lower yield passive products, such as ETFs. As a result, net revenue yield excluding performance fees and QQQ declined to 30.3 basis points (bps) for the three months ended September 30, 2024 from 32.9 bps for the three months ended September 30, 2023.

Previous wording

Average AUM were $1,641.2 billion for the six months ended June 30, 2024 as compared to $1,478.9 billion for the six months ended June 30, 2023. The impact of the increase in AUM on our revenues was partially offset by the shift in AUM toward lower yield passive products, such as ETFs. As a result, net revenue yield excluding performance fees and QQQ declined to 30.5 bps for the six months ended June 30, 2024 from 32.6 bps for the six months ended June 30, 2023.

Current wording

Average AUM were $1,674.8 billion for the nine months ended September 30, 2024 as compared to $1,495.5 billion for the nine months ended September 30, 2023. The impact of the increase in AUM on our revenues was partially offset by the shift in AUM toward lower yield passive products, such as ETFs. As a result, net revenue yield excluding performance fees and QQQ declined to 30.4 bps for the nine months ended September 30, 2024 from 32.7 bps for the nine months ended September 30, 2023.

Previous wording

Investment management fees were $1,065.8 million for three months ended June 30, 2024 as compared to $1,033.5 million for three months ended June 30, 2023, as a result of higher average AUM partially offset by the shift in AUM toward lower yield products. See discussion above on how AUM changes impact our Investment management fees.

Current wording

Investment management fees were $1,100.5 million for the three months ended September 30, 2024 as compared to $1,041.3 million for the three months ended September 30, 2023, as a result of higher average AUM partially offset by the shift in AUM toward lower yield products. See discussion above on how AUM changes impact our Investment management fees.

Previous wording

Investment management fees were $2,114.5 million for six months ended June 30, 2024 as compared to $2,061.4 million for six months ended June 30, 2023, as a result of higher average AUM partially offset by the shift in AUM toward lower yield products. See discussion above on how AUM changes impact our Investment management fees.

Current wording

Investment management fees were $3,215.0 million for nine months ended September 30, 2024 as compared to $3,102.7 million for nine months ended September 30, 2023, as a result of higher average AUM partially offset by the shift in AUM toward lower yield products. See discussion above on how AUM changes impact our Investment management fees.

Previous wording

In the three months ended June 30, 2024, Service and distribution fees were $361.6 million as compared to $342.3 million for the three months ended June 30, 2023. The increase was primarily driven by higher distribution fees of $23.6 million resulting from higher AUM to which the fees apply.

Current wording

In the three months ended September 30, 2024, Service and distribution fees were $360.3 million as compared to $353.5 million for the three months ended September 30, 2023. The increase was primarily driven by higher distribution fees resulting from higher AUM to which the fees apply.

Previous wording

In the six months ended June 30, 2024, Service and distribution fees were $738.6 million as compared to $676.5 million for the six months ended June 30, 2023. The increase was primarily driven by higher distribution fees of $46.9 million and administrative fees of $13.8 million resulting from higher fund-related service fees and higher AUM to which the fees apply.

Current wording

In the nine months ended September 30, 2024, Service and distribution fees were $1,098.9 million as compared to $1,030.0 million for the nine months ended September 30, 2023. The increase was primarily driven by higher distribution fees of $58.2 million resulting from higher AUM to which the fees apply and administrative fees of $9.2 million primarily resulting from higher fund-related service fees.

Previous wording

Performance fees were $8.7 million and $9.5 million for the three and six months ended June 30, 2024, respectively, and were primarily generated from private markets real estate products.

Current wording

Performance fees were $2.8 million and $12.3 million for the three and nine months ended September 30, 2024, respectively, and were primarily generated from private markets products.

Previous wording

Performance fees were $19.6 million and $25.2 million for the three and six months ended June 30, 2023, respectively, and were primarily generated from private markets real estate products.

Current wording

Performance fees were $2.0 million and $27.2 million for the three and nine months ended September 30, 2023, respectively, and were primarily generated from private markets products.

Previous wording

In the three months ended June 30, 2024, Other revenues were $47.2 million as compared to $47.4 million for the three months ended June 30, 2023.

Current wording

In the three months ended September 30, 2024, Other revenues were $51.8 million as compared to $45.2 million for the three months ended September 30, 2023. The increase in Other revenues was primarily driven by higher transaction fees.

Previous wording

In the six months ended June 30, 2024, Other revenues were $96.0 million as compared to $97.9 million for the six months ended June 30, 2023.

Current wording

In the nine months ended September 30, 2024, Other revenues were $147.8 million as compared to $143.1 million for the nine months ended September 30, 2023. The increase in Other revenues was primarily driven by higher transaction fees.

Previous wording

The company’s most significant joint venture is our 49% investment in IGW. The company reflects 100% of IGW's results in its Net revenues and Adjusted operating expenses because it is important to evaluate the contribution that IGW is making to the business. The company’s non-GAAP operating results reflect the economics of these holdings on a basis consistent with the underlying AUM and flows. Adjusted net income is reduced by the amount of earnings attributable to the 51% noncontrolling interests. See “Schedule of Non-GAAP Information” for additional disclosures regarding the use of Net revenues.

Current wording

The company’s most significant joint venture is our investment in IGW. The company reflects 100% of IGW's results in its Net revenues and Adjusted operating expenses because it is important to evaluate the contribution that IGW is making to the business. The company’s non-GAAP operating results reflect the economics of these holdings on a basis consistent with the underlying AUM and flows. Adjusted net income attributable to Invesco Ltd. is reduced by the amount of earnings attributable to the noncontrolling interests. See “Schedule of Non-GAAP Information” for additional disclosures regarding the use of Net revenues.

Previous wording

Net revenues from IGW were $160.8 million and average AUM was $85.6 billion for the six months ended June 30, 2024 (Net revenues were $198.1 million and average AUM was $90.2 billion for the six months ended June 30, 2023). The decrease in IGW revenues is primarily driven by the implementation of the regulatory mandated fee reductions in China, lower average AUM and the shift in AUM toward lower yield products, partially offset by higher performance fees.

Current wording

Net revenues from IGW were $76.9 million and average AUM was $90.0 billion for the three months ended September 30, 2024 (Net revenues were $90.7 million and average AUM was $86.1 billion for the three months ended September 30, 2023). The decrease in IGW revenues was primarily driven by the shift in AUM toward lower yield products.

Previous wording

Net revenues from IGW were $86.1 million and average AUM was $87.4 billion for the three months ended June 30, 2024 (Net revenues were $97.6 million and average AUM was $89.4 billion for the three months ended June 30, 2023). The decrease in IGW revenues is primarily driven by the implementation of the regulatory mandated fee reductions in China and the shift in AUM toward lower yield products, partially offset by higher performance fees.

Current wording

Net revenues from IGW were $237.7 million and average AUM was $87.0 billion for the nine months ended September 30, 2024 (Net revenues were $288.8 million and average AUM was $88.9 billion for the nine months ended September 30, 2023). The decrease in IGW revenues was primarily driven by the regulatory mandated fee reductions in China and the shift in AUM toward lower yield products.

Previous wording

During the three months ended June 30, 2024, Operating expenses increased $37.5 million compared to the three months ended June 30, 2023.

Current wording

During the nine months ended September 30, 2024, Operating expenses increased $291.6 million compared to the nine months ended September 30, 2023.

Previous wording

Third-party distribution, service and advisory expenses were $495.4 million for the three months ended June 30, 2024 as compared to $462.5 million for the three months ended June 30, 2023. The increase was due to an increase in pass-through Service and distribution costs resulting from higher AUM.

Current wording

Third-party distribution, service and advisory expenses were $499.6 million for the three months ended September 30, 2024 as compared to $448.2 million for the three months ended September 30, 2023. The increase was due to an increase in pass-through Service and distribution costs resulting from higher AUM.

Previous wording

Third-party distribution, service and advisory expenses were $999.4 million for the six months ended June 30, 2024 as compared to $917.6 million for the six months ended June 30, 2023. The increase was due to an increase in pass-through Service and distribution costs resulting from higher fund costs and higher AUM.

Current wording

Third-party distribution, service and advisory expenses were $1,499.0 million for the nine months ended September 30, 2024 as compared to $1,365.8 million for the nine months ended September 30, 2023. The increase was due to an increase in pass-through Service and distribution costs resulting from higher fund costs and higher AUM.

Previous wording

Employee compensation was $925.0 million for the six months ended June 30, 2024 as compared to $938.5 million for the six months ended June 30, 2023. This decrease was primarily due to lower costs related to executive retirements and organizational changes of $25.8 million during the six months ended June 30, 2024, partially offset by an increase of $12.3 million in expense related to the mark-to-market on deferred compensation liabilities and staff costs.

Current wording

Employee compensation was $1,550.4 million for the nine months ended September 30, 2024 as compared to $1,417.0 million for the nine months ended September 30, 2023. The increase was primarily due to the previously noted acceleration of expense for currently outstanding long-term awards of $147.6 million and an increase of $50.0 million in expense related to the mark-to-market on deferred compensation liabilities. The increase was partially offset by lower costs related to executive retirements and organizational changes of $61.8 million during the nine months ended September 30, 2024.

Previous wording

Headcount at June 30, 2024 was 8,536 (June 30, 2023: 8,621).

Current wording

Headcount at September 30, 2024 was 8,524 (September 30, 2023: 8,603).

Previous wording

Property, office and technology costs were $234.0 million for the six months ended June 30, 2024 as compared to $223.2 million for the six months ended June 30, 2023. The increase was primarily driven by higher technology costs.

Current wording

Property, office and technology costs were $119.0 million for the three months ended September 30, 2024 as compared to $111.1 million for the three months ended September 30, 2023. The increase was primarily due to higher software costs.

Previous wording

Property, office and technology costs were $116.4 million for the three months ended June 30, 2024 as compared to $112.7 million for the three months ended June 30, 2023.

Current wording

Property, office and technology costs were $353.0 million for the nine months ended September 30, 2024 as compared to $334.3 million for the nine months ended September 30, 2023. The increase was primarily due to higher software costs.

Previous wording

General and administrative expenses were $318.9 million for the six months ended June 30, 2024 as compared to $256.9 million for the six months ended June 30, 2023. The increase was primarily due to the accrual of a $50.0 million liability in the second quarter of 2024 in connection with a previously disclosed SEC investigation into electronic business communications recordkeeping requirements and a separate regulatory matter. In addition, the expense for the six months ended June 30, 2024 was lower due to$14.8 million of indirect tax refunds.

Current wording

General and administrative expenses were $459.7 million for the nine months ended September 30, 2024 as compared to $402.9 million for the nine months ended September 30, 2023. The increase was primarily due to a $50.0 million liability recorded in the second quarter of 2024 related to regulatory matters and $14.8 million of indirect tax refunds received during the nine months ended September 30, 2023. The increase was partially offset by a lower professional fees of $11.5 million.

Previous wording

Transaction, integration and restructuring charges incurred during the six months ended June 30, 2023 were primarily comprised of compensation-related restructuring costs relating to our strategic evaluation which we completed in the first quarter of 2023. With the completion of strategic initiatives, any costs related to on-going projects are classified in the income statement based on the nature of the expense.

Current wording

Transaction, integration and restructuring charges incurred during the nine months ended September 30, 2023 were primarily comprised of compensation-related restructuring costs relating to our strategic evaluation which we completed in the first quarter of 2023. With the completion of strategic initiatives, any costs related to on-going projects are classified in the income statement based on the nature of the expense.

Previous wording

Equity in earnings of unconsolidated affiliates decreased to $20.8 million for the six months ended June 30, 2024 as compared to $45.3 million for the six months ended June 30, 2023. The decrease was primarily driven by losses on our private markets investments and lower earnings from our joint venture investment in IGW as discussed above.

Current wording

Equity in earnings of unconsolidated affiliates decreased to $2.1 million for the three months ended September 30, 2024 as compared to $16.9 million for the three months ended September 30, 2023. The decrease was primarily driven by losses on our private markets investments and lower earnings from our joint venture investment in IGW as discussed above.

Previous wording

Equity in earnings of unconsolidated affiliates decreased to $13.9 million for the three months ended June 30, 2024 as compared to $19.2 million for the three months ended June 30, 2023. The decrease was primarily driven by lower earnings from our joint venture investment in IGW as discussed above.

Current wording

Equity in earnings of unconsolidated affiliates decreased to $22.9 million for the nine months ended September 30, 2024 as compared to $62.2 million for the nine months ended September 30, 2023. The decrease was primarily driven by lower earnings from our joint venture investment in IGW as discussed above and losses on our private markets investments.

Previous wording

Interest and dividend income was $23.4 million for the six months ended June 30, 2024 as compared to $15.7 million for the six months ended June 30, 2023. The increase was primarily due to higher interest income earned from Cash and cash equivalents and higher dividend income earned on our private markets investments.

Current wording

Interest and dividend income was $34.3 million for the nine months ended September 30, 2024 as compared to $26.5 million for the nine months ended September 30, 2023. The increase was primarily due to higher interest income earned from Cash and cash equivalents and higher dividend income earned on our private markets investments.

Previous wording

Interest expense was $16.3 million for the three months ended June 30, 2024 as compared to $18.4 million for the three months ended June 30, 2023 as a result of the decrease in outstanding debt.

Current wording

Interest expense was $13.4 million for the three months ended September 30, 2024 as compared to $17.3 million for the three months ended September 30, 2023 as a result of the decrease in outstanding debt.

Previous wording

Interest expense was $32.2 million for the six months ended June 30, 2024 as compared to $36.4 million for the six months ended June 30, 2023 as a result of the decrease in outstanding debt.

Current wording

Interest expense was $45.6 million for the nine months ended September 30, 2024 as compared to $53.7 million for the nine months ended September 30, 2023 as a result of the decrease in outstanding debt.

Previous wording

Other gains/(losses), net was a net gain of $3.6 million for the three months ended June 30, 2024 as compared to a net gain of $20.9 million for the three months ended June 30, 2023. The net gains for the three months ended June 30, 2024 and June 30, 2023 included mark-to-market net gains on investments and instruments held for our deferred compensation plans and on seed capital investments.

Current wording

Other gains/(losses), net was a net gain of $28.3 million for the three months ended September 30, 2024 as compared to a net loss of $23.3 million for the three months ended September 30, 2023. The net gains for the three months ended September 30, 2024 included net market gains on deferred compensation related investments, other hedging instruments, and seed capital investments.

Previous wording

Other gains/(losses), net was a net gain of $39.5 million for the six months ended June 30, 2024 as compared to a net gain of $48.3 million for the six months ended June 30, 2023. The net gains for the six months ended June 30, 2024 and June 30, 2023 included mark-to-market net gains on investments and instruments held for our deferred compensation plans and on seed capital investments.

Current wording

Other gains/(losses), net was a net gain of $67.8 million for the nine months ended September 30, 2024 as compared to a net gain of $25.0 million for the nine months ended September 30, 2023. The net gains for the nine months ended September 30, 2024 included net market gains on deferred compensation related investments, other hedging instruments, and seed capital investments.

Previous wording

For the three months ended June 30, 2024, Other income/(expense) of CIP, net was net income of $40.9 million (three months ended June 30, 2023: net expense of $2.7 million). Interest and dividend income of CIP increased $6.5 million to $170.2 million (three months ended June 30, 2023: $163.7 million). Interest expense of CIP increased $10.0 million to $119.7 million (three months ended June 30, 2023: $109.7 million). Unrealized gains/(losses) of CIP were net losses of $9.6 million (three months ended June 30, 2023: net losses of $56.7 million).

Current wording

For the three months ended September 30, 2024, Other income/(expense) of CIP, net was net income of $16.7 million (three months ended September 30, 2023: net income of $15.2 million). Interest and dividend income of CIP decreased $36.3 million to $144.9 million (three months ended September 30, 2023: $181.2 million). Interest expense of CIP decreased $0.1 million to $118.0 million (three months ended September 30, 2023: $118.1 million). Unrealized gains/(losses) of CIP were net losses of $10.2 million (three months ended September 30, 2023: net losses of $47.9 million).