Welcome to Franklin Resources' earnings conference call for the quarter ending June 30th, 2026. Hello, my name is Maria and I'll be your call operator today. As a reminder, this conference is being recorded and at this time all participants are in a listen-only mode. I would now like to turn the conference over to your host, Selene Oh, Head of Investor Relations for Franklin Resources. You may begin. Thank you for joining us today to discuss our quarterly results. Statements made on this conference call regarding Franklin Resources, Inc., which are not historical facts or forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from any future results expressed or implied by such forward-looking statements. These and other risks, uncertainties and other important factors are described in more detail in Franklin's recent filings with the Securities and Exchange Commission, including in the risk factors and the MD&A sections of Franklin's most recent Form 10-K and 10-Q filings. Now I'd like to turn the call over to Jenny Johnson, our Chief Executive Officer. Thank you, Selene. Welcome everyone, thank you for joining us today to review Franklin Templeton's third fiscal quarter results. I'm joined today by Matt Nicholls, our Co-President and CFO, and Daniel Gamba, our Co-President and Chief Commercial Officer. We'll answer your questions momentarily, First I'd like to highlight key results and themes shaping our business. This was another strong quarter for Franklin Templeton that demonstrated our strategy is working. We delivered another quarter of positive long-term net inflows with positive flows across every asset class and every geography. We also reached new highs in assets under management across many of our key growth businesses, including alternatives, ETFs, retail SMAs, Canvas, and our institutional pipeline. Together, these results reflect the strength of our global platform and the momentum we're building across the business. Today we are ahead of our five-year plan, a testament to disciplined execution. We have broadened our capabilities across public and private markets, deepened client relationships and expanded the ways clients access our investment expertise. These investments are creating multiple sources of organic growth and positioning us well for the future. At the center of our strategy is one Franklin Templeton. Increasingly, clients are turning to us not just as an asset manager, but as a trusted partner that combines investment expertise, innovation and global scale to help them navigate complex markets and achieve their long-term objectives. We continue to simplify our go-to-market approach to better serve clients and capture opportunities across the business. The results we reported today reflect strong execution in the quarter, with $18.4 billion in long-term net inflows, bringing fiscal year-to-date long-term net inflows to $63.3 billion. This was another consecutive quarter of positive net flows with positive net flows across every asset class and geography. Long-term inflows reached a record $122 billion and assets under management grew to a record $1.8 trillion. Each of our key growth areas, including alternatives and private markets, ETFs including fundamental active ETFs, retail SMAs and Canvas, multi-asset solutions and our international franchise contributed meaningfully to the quarter. That broad-based performance reflects the investments we've made over the past several years to build a more diversified business. The strength of our business today is translating into future opportunities. Our institutional pipeline of won but unfunded mandates reached a record $28.6 billion, increasing more than $8 billion from last quarter. Institutional clients continue to seek strategic partners that can deliver integrated solutions across public and private markets rather than individual products. That plays directly to the strengths of our platform. One of the most encouraging developments this quarter was the continued strengthening of our public markets franchise, with growth broadening across asset classes and investment capabilities. Equity returned to positive net flows of $2 billion, reflecting strong demand across U.S. large cap value, U.S. large cap core, international equity, infrastructure and systematic strategies. Our global fixed income platform generated $2.6 billion of net inflows supported by broad-based demand across enhanced liquidity, municipals, multi-sector, stable value as well as highly customized institutional mandates. Excluding Western Asset, Franklin Templeton Fixed Income delivered its tenth consecutive quarter of positive net flows with $3.5 billion of net flows while Western continued to stabilize. We're also seeing clients think differently about credit. Rather than viewing public and private markets separately, they're looking for integrated solutions. Franklin Templeton Fixed Income $520 billion platform together with our private credit capabilities of more than $100 billion gives us more than $620 billion in AUM across the full credit spectrum. That breadth positions us well as clients increasingly seek fewer partners that can provide solutions across public and private credit. We won a multi-asset credit mandate from a public plan and are participating in various RFPs. This quarter generated $4.7 billion of positive net flows led by Canvas, Franklin Income Fund, and Franklin Templeton Investment Solutions. As mentioned earlier, these results reinforce that our public markets franchise is broadening the sources of our organic growth with clients increasingly relying on Franklin Templeton for active strategies, outcome-oriented solutions, and customized portfolios. Private markets remain one of the industry's most compelling long-term growth opportunities. We believe Franklin Templeton is uniquely positioned as a leading partner in this space. We've built one of the industry's largest and most diversified private markets platforms spanning secondary private equity, private credit, real estate, and venture capital. Alternative AUM reached a record $294 billion during the quarter after $3 billion of realizations and distributions. We raised $11.8 billion across our alternatives platform during the quarter, including $10.3 billion in private markets, bringing fiscal year-to-date fundraising to $33 billion, already exceeding our original full-year target with one quarter remaining. Fundraising remained diversified across strategies and client channels, reflecting the breadth of our platform and continued demand from both institutional and wealth clients. As private markets become more accessible, we're also seeing continued growth in the wealth management channel. Our Evergreen platform across secondary private equity, private credit, and real estate grew to $8.9 billion in AUM, reflecting increasing adoption by individual investors. Wealth management accounted for approximately 20% of our private markets fundraising year-to-date across Evergreen and drawdown vehicles. Demonstrating the progress we're making in bringing institutional-quality private market capabilities to a broader range of investors. We believe expanding access to private markets will be one of the industry's most significant long-term growth opportunities, and Franklin Templeton's longstanding advisor relationships position us well to capitalize on that trend. More broadly, clients increasingly want choice, not only in what they invest in, but how they access investment capabilities. Because preferences vary across client segments, distribution channels, and geographies we offer a broad range of investment vehicles to meet those evolving needs. That strategy continues to gain momentum with record AUM across our ETF, retail SMA, and Canvas businesses. Our ETF franchise reached a record $75.6 billion in AUM with $7.1 billion of net inflows during the quarter. ETFs have become an increasingly important way clients access our investment capabilities, and we continue to expand our offering by bringing more of our highest conviction active strategies into the ETF wrapper. Active ETFs account for 61% of ETF net flows, reflecting both the strength of our investment platform and continued demand for differentiated active strategies. Demand for personalized investing continued to grow. Our retail SMA business reached a record $187.6 billion in AUM with $4.4 billion of net inflows, while Canvas, our custom portfolio solutions platform, grew to a record $30.3 billion in AUM with $3.7 billion of net inflows. During the quarter, we also launched our preferred partner program extending Canvas's tax overlay capabilities to strategic partners. With clients in over 150 countries, or about 80% of the world, and on-the-ground presence in over 30 countries, our international business continues to be an important differentiator for Franklin Templeton. International AUM reached approximately $525 billion with positive long-term net flows in every region. Innovation also remains central to how we continue to evolve our business. We're investing in new capabilities, technologies, and distribution channels that expand client access and strengthen our competitive position. Digital assets are a good example. Digital asset AUM ended the quarter at $3.2 billion, including $2.4 billion in tokenized funds and approximately $600 million in crypto ETFs. During the quarter, we completed our acquisition of 250 Digital and launched Franklin Crypto, expanding capabilities across the digital asset ecosystem. We also announced a partnership with MoonPay and will collaborate with Payward, the parent of Kraken, to expand access to tokenized investment products and bring traditional financial assets on chain. These initiatives reflect our belief that blockchain will become an increasingly important part of financial markets. Franklin Templeton intends to be at the forefront of the evolution. Strong investment performance remains fundamental to earning our clients' trust and supporting long-term growth. More than half of our mutual fund and ETF AUM outperformed peers over the three, five, and 10-year periods, while nearly half is rated four or five stars by Morningstar. Our strategy composites also delivered strong long-term results with 55% or more of AUM outperforming benchmarks over the three and five-year periods, and 70% over 10 years. Consistent performance across market cycles continues to strengthen our ability to win and retain clients. Turning briefly to our financial results. Adjusted operating income increased to $508.9 million, up 7% from the prior quarter and 35% from a year ago. The improvement reflects higher average AUM, disciplined expense management, and the continued execution of our efficiency initiatives, demonstrating the operating leverage of our diversified business model. As we look ahead, we're confident in the direction of the business. The investments we made over the past several years have created a broader, more diversified Franklin Templeton, and we believe that positions us well to continue serving clients and delivering long-term growth. We remain disciplined in managing expenses while continuing to invest strategically in the capabilities, while maintaining financial flexibility to drive long-term growth and return capital to shareholders. This quarter, we returned $521.5 million to shareholders, including $348.1 million in share repurchases. In the spirit of one Franklin Templeton, as announced today in our earnings press release, our parent company will officially change its corporate name from Franklin Resources, Inc. to Franklin Templeton, Inc. on August 17th, 2026. This change reflects the continued evolution of our firm as a unified global organization and aligns our corporate name with the Franklin Templeton brand. This is a corporate name change only and will not affect the company's corporate or capital structure, domicile, outstanding shares, CUSIP number, or the voting or other rights of its stockholders. The company's common stock will continue to be traded on the New York Stock Exchange under the ticker symbol BEN. Aligning our legal corporate name with our global brand reinforces our commitment to one Franklin Templeton, one organization, one brand, and one consistent experience for clients, investors, partners, and employees around the world. Finally, I'd like to thank our employees around the world. Their dedication and commitment to our clients are what make these results possible. Now, I will open up the call for your questions. Operator? Thank you. If you would like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate that your line is in the question queue. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. We request that you limit yourself to one question to allow for additional participants on the call this morning. Our first question is from Bill Katz with TD Cowen. Please proceed with your question. Great. Thank you very much for taking the questions, or question, I should say. Jenny, you laid out very strong growth at the beginning of the year for private markets and that you've already exceeded your year-to-date target with one quarter to go. Can you unpack where you're seeing the strength and where you might be in terms of Lexington 11 and the outlook for that as well? Thank you. Sure. Thanks for the question, Bill. At the beginning of the year, we had a target of $25 billion-$30 billion as far as the raise in private markets. As you kind of pointed out, we're now at $33 billion, and we expect to end the year at about $40 billion. Lexington's flagship fund, by September, they're very much on track with their fundraising expectations. By September, they should exceed $10 billion. Of what we've raised so far, let me talk about this quarter. This quarter, we did $10.3 billion. Lexington is about 40% of that. However, that 40% is in four strategies. Their flagship fund, their middle market fund, their continuation vehicle, and the perpetual all raised and contributed to that. In addition to that, of the 10.3, every single one of our private market managers contributed. It's secondaries, it's real estate, it's private credit. All three of the kind of private credit managers that are under BSP contributed to that, as well as venture. Actually, it's 30 different strategies that were all part of that 10.3. What makes us really excited about it is that this isn't a one-off kind of just the Lexington flagship. This is really a diverse fundraise, and we're continuing to see momentum across the board. One area that has kind of come back a bit this year is real estate, which was really out of favor, and we're starting to see some good traction there. Our next question comes from Alex Blostein with Goldman Sachs. Please proceed with your question. Hi, good morning. I wanted to ask you guys around fixed income strategy broadly. You've made some changes, kind of trying to bring the liquid and private pieces together. Given the convergence in this kind of part of the market, can you just talk through your new go-to-market approach? How are you thinking about the opportunity in fixed income broadly, and how much that could accelerate growth for Franklin as a whole between liquid and private side of the house? Yeah. Thanks for that question, Alex. I'll start, and then I'll have Daniel add onto it a bit. Look, we think that any fixed income manager of the future is going to have to have visibility both on the public and private side. If you don't have some way to sort of have insights into the private markets and you're a traditional fixed income manager, we think you're managing money with pretty big blinders on. We're doing a lot. We, as you know, have already integrated Brandywine and Putnam into the Franklin Fixed Income. Great traction there. We've had 10 consecutive quarters of positive flows and have been working on bringing Western in. A lot of the work on Western was around the back office and integration in areas like client service, institutional client service, and on the institutional sales side. On the investment side, Mike Buchanan, the CIO of Western, is now reporting into Sonal. The key is not to confuse the independence of an investment team with the ability to have greater access to resources. For example, the work we're doing in AI, it opens up a lot more data available to the analyst to be able to leverage, to be able to pick up the phone and talk to a sector analyst in another area. We have the private markets team today. They'll work together, they'll talk about macro. I think as we look forward, we think it's going to be more and more important that they continue to get closer and closer. We're a $620 billion fixed income manager. About $100 billion of it is private markets. We really want to present the clients much more of a look of one big fixed income manager. As you know, we hired an origination team. We think they're going to be important. Any fixed income manager of the future is going to have to be able to have some of their own sourcing. We think that's going to be an important part of the future of fixed income. Obviously, the teams will be able to choose whether they want to opt into certain deals or not. As we look at product development in the future, and maybe I'll ask Daniel to talk about this a little bit, it is clear that you're going to see more and more fixed income that incorporates both public and private. We think a much better way to manage that is kind of under one umbrella versus just independent sleeves. Daniel, you want to add anything to that? Of course. Alex, thanks for the question. I'll add three quick things. Number one is the reaction to the Western Asset settlement, if you want, has been positive from clients. The client service teams have conducted outreach to the distribution partners and institutional clients. The main questions were stability of the investment team, no changes to the investment philosophy. It's been quite positive, and we're excited about the re-engagement process that we're actually doing as we speak, which I think it has upside, especially on the institutional side, given the strength of Western Asset clients and relationships over the years. Two other points. One area of focus, as mentioned by Jenny, is multi-asset credit, and that's been where we develop solutions by not only combining sleeves, because I think a lot of what we've seen in the market is sleeves. People want co-PMs to actually work together to bring the capabilities across the spectrum of credit. We just won a multi-asset credit mandate from a public pension in the U.S., but we are also actively in several conversations on RFPs and advanced conversations across multi-asset credit. We're very excited about what's happening in multi-asset credit. Last point, new products. We just launched our target date. We repositioned one of them, which is called Retirement Advantage Plus, to include private markets between 2%-8%, private real estate and private credit. It's having initial good looks from clients. We're also in the process of launching an infrastructure product that also combines public and private. Private market partners, but also some ClearBridge and some other areas that we are also doing to combine. This is an area that you're going to hear more from us because it's a key differentiator given that we have our capabilities insight and the investors are starting to gather insights among one another. It's an area of future development, Alex. All right. Thanks so much. Our next question comes from Dan Fannon with Jefferies. Please proceed with your question. Great. Thanks. Wanted to expand on the $11.8 billion in fundraising. How much of that is actually in fee-paying AUM? What's the average fee rate of the kind of assets you're raising across, I think you said 40 different strategies. Just kind of blended average of that fee rate would be helpful. 30+ strategies. It's a little over 30. Across our private markets platform, about 80% is fee generating. That kind of gives you the number, and it varies a bit. I don't have the blended number. I don't know, Matt, I don't know what we provide there on the blended number. Do you have that? The blended number is about 65 basis points. Yeah. Blended number. It ranges between 40 basis points and over 100 basis points, plus performance fees. Okay. Thank you. Our next question comes from Glenn Schorr with Evercore ISI. Please proceed with your question. Hi. Thanks very much. On Canvas, I'm interested, if you look at the flows in the quarter relative to overall AUM, that's an enormous growth rate. You did have some white label wins. I'm curious if you can parse some of that out, more talk big picture of what kind of growth you're expecting. Are there other white label opportunities in the pipeline? Maybe sidebar of, in terms of strategies that you deploy, how much of it touch on the area that seemed to draw some Treasury comments during the quarter. I appreciate it. Thanks. Since we acquired Canvas, they've gone from $2 billion- $30 billion. Just a tremendous growth rate. We think this is just still early. If you think about what is Canvas? Many of these tax-optimized platforms were developed by tax people, they have a fair bit of manual labor to them, that limits some of the flexibility. Canvas was developed by quant managers, they were very tech-focused. There are some features in Canvas that other platforms can't do. For example, the managed options strategy allows them to handle concentrated stock positions and help diversify the portfolios tax efficiently. They can take in-kind transfers in. Those are pretty unique features about Canvas. The way we look at it is every time we sign up a new RIA, a new wire house platform, any new platform, that just opens up and widens the funnel of what's going to come in. Occasionally you'll have a one-off that will be a switch in, more importantly, it just opens up the funnel that people have selected that as their platform to leverage, and you'll just continue to see flows. Now, the future of Canvas and what gets us really exciting is being able to What started out as more of a direct indexing platform is really a tax overlay on active strategies. We think that as our SMA business, today we're $187 billion in SMA. We're a large SMA provider. What really gets exciting is when you can add the capabilities of Canvas as a tax overlay on SMA platforms on the active strategies. In fact, our preferred partners program, we've been selected by some firms who manage active strategies. They selected Canvas to be the overlay on their strategies. That's kind of a white labeled version. Again, it's because it's a really excellent technology. Daniel, you want to add anything to that? I would only add that this quarter we continue to onboard new partners. That's a big driver of where we are. We added 26 new partners, which is still increased. Total number of partners that we have now is 220 partners. That's a big driver of the growth. I will also highlight the strength of the product is actually what's driving a lot of the success. We have more frequent rebalancings and also ability to receive in-kind holdings. As you see, the driving of people moving money from commission-based into fee-based, this is a big transition tool that some of our partners are starting to use. You saw it last quarter. Actually, I will say in Q2. We're excited about the pipeline. The pipeline's looking strong. Thanks, Daniel. Thanks, Jenny. Our next question comes from Patrick Davitt with Autonomous Research. Please proceed with your question. Hey, good morning, everyone. Couple of guidance cleanups. Sorry if I missed it in the release, could you give the scale of the catch-up fees and management fees? Then on the expense guide, just confirming that we should add some variable expense to that based on whatever revenue growth we are assuming for 4Q. Thank you. Morning, Patrick. First of all, for the quarter that we're reporting here, the catch-up fees were $14 million. We expect it to probably be about the same in the fourth quarter. In terms of a guide, I'll quickly run through it. We expect the effective fee rate to be roughly the same as what it was this quarter we're reporting today in the mid to high 37s. Again, very similar to the quarter we're reporting today. Compensation, we expect to be $850 million. This is at a $50 million performance fee level at a 55% payout. IS&T, we expect to be at $165 million. This includes investments in AI, data, and security. Occupancy, we expect to be $70 million, consistent with the previous quarters. G&A, we expect to be $200 million. The $200 million includes elevated fundraising and advertising that we also talked about last quarter. We expect the tax rate to be between 25% and 27%, both for the fourth quarter and for the fiscal year as a whole. In terms of the full guidance for 2026, of course, you can add the numbers I just went through to the three quarters that we reported already. As outlined on page 14 of the IR deck, this assumes flat markets from now and excludes performance fees. It's inclusive of our savings that we've also presented in previous quarters. We expect expenses to be about 3%-3.5% above full year 2025. This modest increase is driven by increased markets to date, higher sales, higher fundraising to date, and strong performance. Inclusive of the performance fee guide I just mentioned, total expenses would be about 2%-2.5% higher versus 2025. Importantly, though, as it relates to the margin, taken in conjunction with revenue increase to date and revenue as expected for the rest of the year, we again have moved further ahead on our margin expansion targets. Specifically, we expect to reach very close to 30%, if not at 30%, for our fiscal fourth quarter, and at least in the mid 27s, maybe a little bit better than the mid 27s for the full year 2026, along with a declining compensation ratio in 2026. This, as you know, is ahead of plan, we expect to reach at least 30%, probably 30%+ margin later in 2027. Specifically in 2027, we would expect the full year margin to be between something like 29% and 30%. In terms of the EFR for the full year, we expect it to remain stable at 37.7%-37.8%, something like that in the high 37s. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. Our next question comes from Ben Budish with Barclays. Please proceed with your question. Hi. Good morning. Was maybe going to follow on Patrick's question there. I think you kind of answered some of the questions around what spending might look like in fiscal 2027. Maybe on the fundraising side for the alts, which is probably the most controllable, at least where you have the most visibility into your plans. Maybe give us a little bit of a sense for what you expect to have in the market. I don't know if it's too early to give your full year fundraising expectations, but what does the product pipeline look like? Are there any implications for the EFR? I think the forward commentary was quite helpful, but it seems like if you keep fundraising at this level, I guess depending on what happens with markets, that could continue to be constructive for that as well. Any additional color there would be very helpful. Thank you. Yeah. We'll give you really at the next quarter, kind of the projections for 2027 as far as the alts fundraising. Just kind of looking at the list of things that we're fundraising there, I think we'll have most of the same things in the market next year that we have in the market right now. We certainly hope to continue to keep the momentum. I would say that so far we're at 20% in the wealth channel. I think we have a real advantage in alternatives in the wealth channel because alternatives sold in the wealth channel, I describe it as hand-to-hand combat. You not only have to get on the platform, but you have to educate advisor by advisor. Our coverage gives us an advantage there. We've always said that our goal is to be 20%-30% of it in the wealth channel. We're at 20% now, we hope to continue to grow that as well. We will provide a 2027 guidance at the end of next quarter. As I said, for this coming quarter, we expect to end the year at about $40 billion. Same thing on expense guidance. I already mentioned it a little bit from where we expect margin to be because we're very focused on margin and making sure that we get the margin uplift that we presented. For 2027, I just touched on that slightly, but we'll give more details, as Jenny mentioned, in the next quarter as we talk about the fourth quarter or as we present the fourth quarter and then going into 2027. In terms of the EFR, though, as we run our analysis on our expectations, we do expect that to remain stable in the mid 37s. All right. Thank you. I will get— I was going to just add some color on the alternatives in wealth because I think it's worthwhile this quarter. We had $3 billion fundraising the wealth channel for the quarter across really evergreen and drawdown strategies, which fiscal year to date, $6.6 billion, which that's the 20% that Jenny was talking about. The other part that is worthwhile mentioning is international. We continue to have international growth. 29% of the sales are coming internationally from Europe, Middle East about 18%, and APAC about 11%, driven by new markets signing up to our evergreen program, as well as in some cases, some institutional sales in Asia especially, I will say. A lot of the institutional sales coming from Asia. We're also starting to broaden across different structures. We have a great diversified platform that is helping with real estate debt. It's starting to have some good momentum. CP RECs having good momentum beyond, of course, Flex. We're also going forward, we are driving some innovation in this space. We announced a model portfolios with Cornerstone, which is also helping us to deliver SMA style model portfolios with a single ticker. We're also looking at demand from clients on infrastructure and venture and growth. Those are also areas where we see demand going forward, which is going to continue to strengthen our presence in wealth on alternatives. Okay, great. Thank you for all the extra color. Our next question comes from Michael Cyprys, Morgan Stanley. Please proceed with your question. Hi, good morning. Thanks for taking the question. Over the last year, you've rolled out a number of AI initiatives across investments, distribution operations, including a partnership with Microsoft. I was just hoping we could follow up on that. As you look across your efforts today, where are you seeing some of the highest return on investment? Where is adoption or the impact maybe been a little slower than you initially thought? As you look out over the next couple of years, which workflows or functions do you think could be most likely fundamentally redesigned that could have the most meaningful impact on your business from AI? Thank you. Thanks for the question, Michael. I'm going to start with the Intelligence Hub which was the partnership we did with Microsoft because it was very early on, and we've now, after a couple of years, are actually starting to get real metrics around it. Again, this was a simple problem. How do you ensure that your salespeople are seeing the right clients and having the right conversations, being as efficient as they can? It's actually quite a complicated technical solution because it requires you to have agents that talk to each other, and that's why Microsoft was excited about it. We've rolled it out. We have seen that in the territories, which it's pretty broadly rolled out now, a 25% increase in the number of clients that they're able to visit or contact, and about a little over 11% uplift in sales. We would expect that to continue. That's a fairly mature AI project which as you know, we think that the sales lift will continue to increase. In the investment side, our approach has been very much like let's let our teams build. We've got over 1,000 agents working on different investment teams. We have multiple partners, not only Microsoft and Amazon, but like Wand and OpenAI, Fluent UI, Grommet. They approach it in different things. We've been really trying to encourage our investment people to just go out and build agents, get comfortable with it. Over time, I think what will happen is you'll start to look at it because every time you build an agent and it runs, it costs you money. You'll start to look at it and say, "Well, okay, how effective are these things?" Today, it's all about efficiencies in the research analysts' models, so therefore they get more time and hopefully gain more insights. We have a couple of our PMs and research folks who are particularly focused on the AI. We've funded three strategies, I'll describe it at a very high level, which is essentially to say one of the strategies uses AI for the research function. The second strategy, think of it as using AI for the portfolio construction function, and you're trying to get learnings from those. The third is a kind of fully on AI investment strategy. Our goal, we don't care whether these are ever commercial or not. Our goal is what will we learn in the process there? We think of that as like an R&D sandbox from our investment teams. With respect to operations and technology, we track how much code is written by AI, so that is one measurement that can be good or bad. Within our operations group, we have multiple different ways in which, whether it is RFP processing, where we are trying to create efficiencies in our marketing group. You are doing due diligence and RFPs there that you are trying to make more efficient. We kind of put that bucket in cost savings. We are still building those out, and we have multiple. Every department we have a measurement of, okay, what are the initiatives that you are doing and what are you putting as a target for cost savings or increased productivity, volume increase across the company? We are tracking those. Yeah, we have. Great, thanks. I would say, Michael, we have a lot of T- tables. On the left side, it is how much we are spending on AI and why we are doing it, and on the right side, it is going to say what we are going to get out of it in long term, both production and efficiency. So far, we are focused on production and effectiveness, but longer term, we certainly expect to get meaningful efficiencies, and that including the function. Jenny mentioned a lot of the front office and how we are utilizing it to be more effective there. It is also across HR, finance, IS&T itself. Risk management is another very important area internally where AI is being used very effectively already. We have got a number of terrific opportunities, and it is costing a lot, but I think we are going to get our money back and some in the outer months and years. The honest- Right. Yeah. Sure. The challenge with AI is you want to get your workforce to be comfortable using it, so you have to be careful about being too constricting on their use of it. On the other hand, it can get really expensive if people just start to write agents that are going to run. We're trying to balance that right now. Great. Thanks so much for all the color on that. If I could just ask a follow-up question, just on tokenization. You've been an early mover with tokenized money funds, and you're having some early success there, and you've described wallets as becoming perhaps the next distribution channel for investment products. How do you think about the economics of that channel versus traditional wealth platforms, and does it ultimately expand the addressable market or maybe just shift where assets are held? More broadly, if you could talk about your wallet strategy, how that might evolve over the coming years. Sure. The reality is this is just a programming language that has some real efficiencies in it. We happen to know because when the SEC approved five years ago our tokenized money market fund, they required us to parallel process. We were astonished by how much more cost-effective it was. I won't go through all that detail here, but in an industry where there's constantly pressure to reduce costs and products, we think that ultimately, honestly, financial services will be run on the rails of blockchain. However, it threatens a lot of business models, that's going to be slower to roll out. You can't sell a tokenized product unless somebody has a wallet. A wallet is simply a crypto kind of receiver of the token. When we look at the distribution, our focus is sort of three areas in digital assets. One is distribution, second is product capabilities, and the third is how should we think about the underlying infrastructure that we built to support things like the BENJI Money Market Fund? On the distribution side, honestly, we're focused much more today on the entities that already have a wallet infrastructure. Those are, if you just take the top five crypto exchanges, they have 1 billion wallets out there. The partnerships that we've done with MoonPay and Payward, which is the parent to Kraken, they want to take BENJI and integrate it, because if you have a stablecoin, you don't earn anything. People want to flip their money into earning yield. The only way they could do that if they're in the wallet infrastructure is to have a tokenized money market fund. We're focused on that. They also want to offer their clients traditional investment products. We now have tokenized money market fund-- sorry, tokenized ETFs, our traditional ETFs. We look at it as just another distribution channel. We're also having conversations with a lot of the traditional distributors whose clients are saying, "Yeah, I want to be able to hold some of my crypto assets in with my traditional products." They're looking at building the wallet infrastructure. Nothing that you build in the tokenization world can be sold unless you have a wallet infrastructure. The traditional players just don't have a lot of that today. With respect to product capabilities, I mentioned the tokenized ETF, we closed on 250 Digital, which is really, think of it as like a venture firm for digital assets. We have now had conversations with a lot of institutions that want to invest, want exposure to that space, weren't comfortable with a small shop. Now that they're with Franklin Templeton, they're now talking to us about much more meaningful investments there. This underlying infrastructure that we built, both the wallet as well as the shareholder record-keeping system, we're trying to think through that. Is that something that we should commercialize or how should we think through it? Those are the types of things we're thinking about today in the digital asset space. Great. Thanks for all the color. Our next question comes from Alex Blostein with Goldman Sachs. Please proceed with your question. Hi. Thank you for taking the follow-up. Couple of things I was hoping just clean up. One, Matt, on the margins, when you talk about 2027, I believe your standard methodology, you don't assume market returns. When you talk about 29%-30% for 2027, exiting kind of north of 30, I just want to make sure that assumes flat markets from here. That's right. Yes. Yep. Okay. That's great. The second, I don't think anybody asked about the capital return and the buyback, pretty clearly a meaningful step up in share repurchases this quarter. Maybe it's worthwhile just kind of fleshing out how you're thinking about buybacks from here and the capital management approach. Yeah. Thanks, Alex, for the question. I'll make a couple of comments and maybe Jenny may want to add in some things on some of the strategic work. Look, number one, capital management as a whole, we're very focused on organic growth. As you know, as you grow the private markets business in particular, it's the same with the public markets business on a lesser scale. In the private markets, you need to use your balance sheet to co-invest alongside your strategies. Number one, we have $3 billion now of our own balance sheet invested in funds. About $1.75 billion of that is private markets, $1.25 billion is public markets, and we see that growing into 2027. Number two, we're always focused on making sure that we're in a position where we can continue to increase our dividend. That's always a high priority and we're going to continue to do that. Three is we'll always repurchase our employee grants, make sure that our share count remains at least even. Four, as you alluded to, opportunistic share repurchases. In previous course, in particular over the last couple of years, whether it's being strategically active or working through the Western matter that's now behind us. In negotiating the resolution there, those things take quite a long time, they can black you out of the market away from usual blackout periods. Now we have a lot more clear air, let's call it, intra-quarter where we're not naturally blacked out around earnings, we're able to be more opportunistic in repurchasing our shares. That includes the past quarter as a very good example where we repurchased $350 million of shares. This did include an opportunistic or episodic, let's call it, repurchase from Great-West Lifeco. When Great-West Lifeco and Franklin announced the transaction where we acquired Putnam Investments and entered into a strategic dialogue relationship with them. They announced a 4.9% long-term lockup strategic investment in Franklin in exchange for the Putnam acquisition, they made very clear to their investors their intention to sell the amount above the 4.9%, and that's what we did in the quarter. They sold just over 1% of our outstanding shares, and we repurchased that from them. That's one of the examples of why we were so high this particular quarter. Fifthly is acquisitions. We talked a lot about this. Frankly, it's a high bar because notwithstanding our improved share price, we still believe there's a lot of opportunity in buying back our shares. It's strategically very active in the sector. We will only pursue areas where we are convinced that we can't grow fast enough organically ourselves. There are areas where we need to be relevant. To be relevant, if it involves acquiring something to accelerate our growth in that area, we'll look very closely at it. We've already announced we're very interested in globalizing real estate. We're interested in areas involving distribution and partnerships, and all those sorts of things either involve acquisitions or investments in different companies that offer distribution opportunities for us. Then lastly is debt service. We spent quite a bit of time over the last two years, in particular, de-levering our balance sheet. We've got some outstanding on our revolver. We're thinking about accessing the long-term debt markets. We may do that in the short term, let's say here, and refinance the revolver and then reload some cash on the balance sheet that we paid down so we can accelerate various things in our strategic plan. That's really the overview on capital management. Alex, don't know whether, Jenny, you want to add anything to that. Nope, I think you did a great job. Thanks. Thanks, Alex. All right. Thanks, Matt. Our next question comes from Bill Katz with TD Cowen. Please proceed with your question. Okay, great. Thank you. I was very keen on that margin update as well. The broader question on that is you do seem to be running ahead of your five-year plan. Two things. One is you mentioned possibly doing an investor day. I was wondering if you can give us an update on potential timing of that. Then as you think structurally around the margin, what do you think is the endpoint opportunity for the industry? When I look at it, you're scaling, you're growing rapidly, you're leveraging AI, and you're mixing your business to more scalable, lucrative businesses. Is 30%+ the endpoint, or is that just a stop along the route? Thank you. I would say 30% is a stop along the route. The question is how quickly can you get there? This is always a business where there is pressure for what are you paying distribution fees and others. Those are the realities of the business. I think our view is that we should be able to expand the margin over time above the 30%. Honestly, Bill, I don't think any of us fully know what the AI impact is. Anytime there's new technology, the first thing everybody does is they make more efficient what you do today. It's only when you get it in the hands of your teams over a period of a couple of years, do people start to see sort of the new opportunities. I don't know that any of us fully know the end state of what that looks like. We are very optimistic where we're seeing it and using it, and excited about its ability to be able to expand the margin. Matt, I'm sure you want to add some things. The only thing I'll add, it's always a good opportunity to remind everybody just how much we've invested in our business. We often say that investment management, it's a capital-light business in terms of regulatory capital. It's no longer really a capital-light business in terms of what you need to invest to be a winner and relevant in the most important things for our clients. I would say that where we've invested heavily in the last several years around ETFs, Canvas, alternative assets, the wealth channel, these are quite significant numbers, and we're just getting to the point where we're realizing the potential of those things and getting margin uplift on those things. I think as Jenny mentioned, 30%-35%, I think, is the industry zone. Importantly, that includes where we've invested in the business, and there is some upside in that based on scaling what we've invested in. The scaling is really important. As you know, some of those things have lower effective fee rates, but once they scale, they have really positive impact to the operating margin of the corporate. We've been very focused on that. In terms of the Investor Day, yeah, I think we feel like we're getting ready for an Investor Day. It'll likely be sometime either later this calendar year or early next calendar year as we get ourselves organized around it. I think we have enough key areas to talk about in terms of our progress as a company. There's been a lot of transformational work that's happened, that now we have the outputs from those things and proof points and things like that we'd like to demonstrate more holistically. Yeah, I think we're planning to do one. We don't know exactly when it's going to be later this year, calendar-wise, or early next year. Thank you for taking the extra questions. Thanks, Bill. Our next question comes from Patrick Davitt with Autonomous Research. Please proceed with your question. Hey, thanks for the follow-up. Jenny, you mentioned the distribution expense pressure. There's news this month that Merrill Lynch is planning to make some fairly dramatic increases in revenue sharing platform fees. It seems to be across a lot of product wrappers. That came after the Schwab news earlier this year on ETFs. Just wanted to get your updated thoughts on the risk that that is becoming a bigger trend and that you could see incremental net revenue or expense headwinds from that shift. Yeah, look, rev share type programs have been around for a very, very long time. It is the nature of the business. What has changed a bit is the vehicles. What has changed is that honestly the influence of the end advisor. You even have larger RIAs starting to talk about wanting to have some sort of share. I think it's a natural evolution of the business and where a firm can influence distribution, then there's usually conversations kind of around it, and where they can't, you'll push back. I don't really look at it as obviously if you're these platforms and there's more growth in SMAs than ETFs, there's going to look for some amount of platform fee. The realities of the products is that can't possibly be as high as it had been in some of the traditional just because the distribution fees have adjusted. Look, we just kind of look at it as business as usual, honestly. Thank you. This concludes today's Q&A session. I would now like to hand the call back over to Jenny Johnson, Franklin's CEO, for final comments. Well, thank you everybody for participating in today's call, we remain deeply grateful to our employees around the world for their ongoing dedication and commitment to serving our clients. We look forward to speaking with all of you again next quarter. Thanks, everybody. Thank you. This concludes today's conference call. You may now disconnect.