Invesco (NYSE: IVZ) lifts adjusted operating income 38.5% and borrows to buy back preferred

What happened

Invesco Ltd. (NYSE: IVZ) borrowed $1.5 billion to repurchase an equal amount of Series A Preferred Stock from MassMutual on Oct. 26.

A five-year floating-rate bank term loan paid for it, the company said in its Oct. 27 third-quarter earnings release. Total buybacks of the MassMutual preferred now reach $3 billion over 18 months. That leaves $1 billion outstanding.

CEO Andrew Schlossberg said the step "ultimately enables reduced leverage, increases our balance sheet flexibility, and enhances earnings available to common shareholders." That is management's expectation. It comes after a quarter in which adjusted profit rose and GAAP earnings per share did not.

Key numbers

Metric	Latest	Change	Source
Series A Preferred Stock repurchased from MassMutual (Oct. 26, 2026)	$1.5 billion		SEC 8-K earnings release
Adjusted operating income	$562.3 million	from $406.1 million, +38.5%	SEC 8-K earnings release
Adjusted operating margin	40.7%	from 34.2%, +6.5 percentage points	Calculated from SEC 8-K
Net long-term inflows	$35.1 billion	from $28.9 billion, +21.5%	Calculated from SEC 8-K
Ending assets under management	$2.54 trillion	from $2.12 trillion, +19.4%	SEC 8-K earnings release
Diluted EPS (GAAP)	$0.65	from $0.66, -1.5%	SEC 8-K earnings release

Read more: Invesco (IVZ) company research

Adjusted profit and margins

Adjusted operating income, a non-GAAP measure, rose $156.2 million, or 38.5%, to $562.3 million from the third quarter of 2025. It also rose $63.6 million from the second quarter.

Adjusted operating margin reached 40.7%. That is up 320 basis points from the second quarter and up from 34.2% a year earlier. GAAP operating income was $436.5 million, up 61.1% from a year earlier. GAAP operating margin was 23.3%, up 340 basis points from the second quarter.

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Flows and assets

Clients kept adding money, but more slowly than in the second quarter. Net long-term inflows were $35.1 billion, against $45.1 billion in the second quarter and $28.9 billion in the third quarter of 2025. Annualized long-term organic growth was 6.3%, versus 8.5% and 7.9% in those periods.

Ending assets under management were $2,537.8 billion, up 19.4% from a year earlier. Net market losses were $26.4 billion in the quarter.

Inflows were concentrated. ETFs and Index drew $28.5 billion and QQQ $6.7 billion. Fundamental Fixed Income lost $2.6 billion and Fundamental Equities lost $1.9 billion. Retail clients added $41.7 billion. Institutional clients had net long-term outflows of $6.6 billion.

Why GAAP earnings lagged

Per-share results did not follow the adjusted gains. Net income attributable to Invesco was $294.5 million, down 14.7% from $345.3 million in the second quarter. Diluted EPS was $0.65 against $0.76. Adjusted diluted EPS edged up to $0.72 from $0.71.

Other gains and losses swung from a $105.8 million gain in the second quarter to a net loss of $34.2 million in the third. The release ties the third-quarter loss to market value changes in deferred compensation and other investments. The second quarter also carried items from the sale of Canadian fund management agreements to CI Global Asset Management.

Why it matters

OptimistFi has argued that Invesco works only if client assets and fees hold up while scale economics improve. The quarter supports that view. It was the 13th straight quarter of net long-term inflows. Net revenues rose 4.0% from the second quarter and adjusted operating expenses fell $11.0 million.

QQQ is a large part of the fee story. Investment management fees rose $327.5 million from a year earlier, mainly on QQQ management fees after its conversion to an open-end fund ETF and higher average AUM. Service and distribution fees fell $87.5 million as QQQ's pass-through revenue ended. Average QQQ AUM was $480.3 billion, up 32.5%.

Net debt fell to $315.8 million at Sept. 30 from $708.6 million at June 30. The company also bought back 2.1 million common shares for $65 million. The debt figure predates the Oct. 26 repurchase. The new floating-rate loan means interest cost can move with rates. Interest expense was already $20.3 million in the quarter.

Declared dividends on the preferred stock cost $37.0 million this quarter, down from $44.4 million a year earlier. Retiring more of it can raise earnings available to common holders, but only if loan costs stay below that burden.

What's next

Invesco will pay a preferred dividend of $14.75 per share on Dec. 1 for the period from Sept. 1 through Nov. 30. The common dividend of $0.215 per share is payable Dec. 2 to holders of record on Nov. 13.

The next quarterly report is the first to cover a period after the repurchase. Two things will show whether the swap lifts earnings for common holders: interest expense against the $20.3 million reported here, and net income attributable to Invesco against adjusted income. A further gap between GAAP and adjusted results would weaken the case.

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