Andrew Schlossberg
President and Chief Executive Officer at Invesco
Thanks a lot, Greg, and good morning to everyone. I'm pleased to be speaking with you today. During the 4th-quarter and throughout 2024, we continue to make meaningful progress in executing our strategic priorities and leveraging our competitive advantages to improve on several key performance drivers. Amid a backdrop of volatile markets across the world, mixed economic signals and geopolitical risks, our focus remains steadfast. This enabled us to deliver for clients and shareholders and meaningfully improve our operating results. I want to thank my colleagues around the world for their focus and teamwork throughout the year. But before we get into the specifics of the 4th-quarter, we thought it would be helpful to look at the whole of 2024 and the progress made against the eight key financial measures that are noted on Slide 4 of our presentation. The combination of strong long-term net inflows of $65 billion or a 5% organic growth rate, higher revenues and disciplined expense management while reinvesting into the business drove an increase in operating income to $1.4 billion. We generated positive operating leverage of over 100 basis-points and improved our operating margins to over 31% for the year and 34% for the 4th-quarter, marking good sequential momentum throughout 2024. While client demand and net flows remained more narrowly focused in the aggregate, we continued to gain market-share and revenue growth in key high-demand strategic capabilities, including our global ETF, fixed-income and SMA product ranges, all of which are highly scalable. We saw momentum build throughout the year for private and alternative credit strategies, both for institutional and wealth management clients. Geographically, our net long-term flows remain positive across all three of our regions with a notable pickup through the second-half of the year in both our Asia-Pacific and EMEA markets, specifically in Asia-Pacific, we generated 10% organic growth, marking its best year since 2021. Throughout 2024, we remain highly focused on retaining and selectively growing our fundamental equity investment strategies against the backdrop of outflows in the industry and for Invesco. This remains a key focus for the firm. As we stressed throughout 2024, strengthening our balance sheet continues to be a priority. Through disciplined execution, we made strong progress and improved the financial flexibility of the firm. During the year, we reduced our debt, we improved our operating leverage and ended the year with a net cash position of nearly $100 million. Additionally, after commencing a more consistent share buyback program in the second-half of the year, we returned 54% of earnings to common shareholders through buybacks and dividends in 2024, which was an increase from the previous year. Our success in 2024 gives us conviction in our focused strategic priorities, our execution mindset and our ability to continue to deliver enhanced and consistent operating performance and returns for our shareholders. Now turning now to Slide 5 and focusing on the 4th-quarter, growth continues to be led by our highly innovative ETF and index platform, which had near historic organic long-term flows of $30 billion, which is a 25% annualized organic growth rate. Importantly, we continue to see our flow 3TFs broaden by asset classes and factors across our clients in all three regions. Growth in the US market continued to be led by our S&P 500 equal strategy. Our equity momentum strategies, which accounted for nearly $5 billion of the net flows and our innovation suite, which is headlined by QQM, which garnered $3 million of net inflows. This fund, which was launched just over four years ago, had one of its best quarters on record and has grown to nearly $40 billion in assets today. We also saw strong ETF growth from the EMEA region with nearly $11 billion of net inflows on a source basis with our locally listed S&P 500 topping the list. We also continue to innovate at-scale. In the 4th-quarter, we launched a new ETF that we customized in partnership with a finished pension insurer to meet its climate-focused investment objectives. This ETF began trading with nearly $2.5 billion in assets and set a new milestone as the largest ETF launch on record. Our ETF platform finished the quarter with record AUM and revenues. Revenue growth remained strong, up 7% from the 3rd-quarter and 31% from the 4th-quarter last year. We remain very well-positioned to continue to gain market-share and use this scale platform for profitable growth. Shifting to fundamental fixed-income. After a strong 3rd-quarter, we saw modest net long-term outflows in the 4th-quarter, primarily driven by stable value, which continues to be out-of-favor in the current rate environment as money market yields are paying a premium to stable value. Excluding this specific US defined contribution product, our fundamental fixed-income strategies continue to see solid flow growth of $1.5 billion in the quarter. Within the fundamental fixed-income category, flow growth was led by our municipal bond strategies and driven by our fast-growing SMA platform, which reached $28 billion in AUM or 33% organic growth rate. Additionally, revenue generated from fundamental fixed-income strategies grew by 9% in the 4th-quarter as compared with the same quarter in '23. It's important to note that our large and diverse fixed-income product-line, which totaled over $600 billion at year end, spans our geographic footprint and encompasses more than just our fundamental fixed-income capability that's expressed on this slide. Looking at this more holistic view of our fixed-income product set, which also includes fixed-income ETFs, our China JV, private credit strategies and global liquidity, we generated 8% AUM growth and net long-term inflows of nearly $27 billion in 2024. Our fixed-income capabilities have strong performance and are well-positioned to meet client needs across the credit and duration spectrum, geographic preferences, active and passive exposures in public and private markets. We have plenty of reasons to be optimistic about our ability to capture flows as money increasingly rotates into these asset classes. Shifting now to private markets, which in aggregate drove long-term net inflows of nearly $1 billion in the quarter. Within the category, our private credit capabilities reported net inflows of $3.5 billion or 31% annualized organic growth rate. Growth was driven by bank loans and CLOs across several fund structures includes -- including our industry-leading senior loan ETF. In-direct real-estate, we also continue to see flows into, which is our real-estate debt strategy targeting the wealth management channel. Launched only in 2023, this fund has doubled in size over the past two quarters and now stands at nearly $2.5 billion in AUM. I'll also note that our real-estate team is well-positioned in the institutional markets with over $5 billion of dry powder to capitalize on emerging opportunities. Moving on to Asia-Pacific, on a managed basis, in Asia, we saw a rebound this quarter with net long-term inflows of $3.5 billion, led by positive flows from India and $2.5 billion of net inflows into our China JV. Our China growth was driven by equities, particularly ETFs, which are becoming a fast-growing part of our China business and where we see strong demand continuing. These flows were augmented by net inflows into fixed-income. We had six new products launched in our China JV this quarter, including three ETF products. At a macro-level in China, we are encouraged by the government's recent focus on economic stimulus, but overall, market sentiment has remained relatively weak and volatility remains high. Looking more broadly at Asia-Pacific as a region on a client source basis, net inflows were even stronger at $7.5 billion for the quarter, which is a 13% annualized organic growth rate. This broader flow strength in the region highlights our success in leveraging our global product suite and our investment capabilities to meet demand across this important growth region. We had good inflows in Southeast Asia, driven by ETFs, along with continued strong inflows in Japan through our global equity and income strategy, which had $1.5 billion in net inflows and continues to be one of the top-selling active retail equity funds in the growing Japanese market. Turning to our multi-asset-related capabilities, we saw net long-term outflows of $1.5 billion, driven by global asset allocation, particularly in our balanced-risk allocation strategy. Finally, the relative pressure on fundamental equity flows has continued. However, as I pointed out previously, we have seen some moderation over-time in the global, international and emerging market segments. Net outflows in these strategies have been in the $2 billion per quarter range. Outflows in our emerging market strategies have been partially offset by the continued strength of global equity and income that I noted earlier, as well as net inflows in small-cap equities. While asset flows in our fundamental equity capabilities remain below our long-term expectations, market growth has aided revenue, resulting in a 10% increase in net revenues this quarter compared with the 4th-quarter of 2023. Our team continues to focus on driving high-quality alpha, upgrading our talent bench and continuing to strengthen our risk management tools. Regardless of client demand, our focus remains on improving investment performance and gaining market-share in key fundamental equity categories in which we compete. Now moving on to Slide 6, we provide an alternative aggregation of our AUM and flows to provide additional context for our business results. I've covered most of these key highlights underlying these charts, but I'll point out that the diversity of our assets and our flows across geography, channel and investment style provide us the balance and to weather any market condition and our ability to meet a range of client needs, which is an important part of our ongoing positive organic flow growth story. Moving on to Slide 7, which shows our overall investment performance relative to benchmarks and peers as well as our performance in key capabilities where information is readily comparable and more meaningful to drive results. Investment performance is key to winning and maintaining market-share despite overall market demand. Achieving first quartile investment performance remains a top priority and we're making progress on this front. Overall, nearly half of our funds are performing in the top-quartile of peers across the one, three and five-year time horizons. Further, two-thirds of our AUM is beating its respective benchmark over all measurement periods. We continue to have strong fixed-income performance with approximately 40% of our funds in the top-quartile on a three and five-year basis. We are acutely focused on improving fundamental equity performance and we're making progress here too. We have continued to improve the percentage of AUM in the top-quartile of peers across each timeline shown with a third or more now hitting that target. With that, I'm going to turn the call over to Allison to discuss our financial results for the quarter, and I look-forward to your questions.
