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What’s behind the Rise in Invesco’s Total Operating Expenses?

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Components

The components of Invesco’s (IVZ) total operating expenses are general and administrative expenses, employee compensation, marketing, third-party distribution, service, advisory, property, office, and technology.

The company has seen a YoY rise in employee compensation expenses from $345.1 million in 3Q16 to $393.1 million in 3Q17, which is mainly because of the rise in variable compensation. The rise in new employees on the back of the Source acquisition and the rise in the benefits costs are also the main reasons for the YoY rise. However, the effect of foreign exchange rate movements and the rise in staff severance costs have also led to the YoY rise of employee compensation expenses.

Marketing, general, and administrative expenses

Invesco saw a YoY rise in marketing expenses from $26.4 million in 3Q16 to $29.5 million in 3Q17, implying an 11.7% increase. However, foreign exchange rate movements contributed $0.2 million to this YoY rise.

Invesco’s general and administrative costs rose from $83.5 million in 3Q16 to $86.6 million in 3Q17, which reflects a rise in certain costs like legal, audit, professional services, and consulting. However, the effect related to foreign exchange rate movements and the rise in the fund expenses have also contributed to the rise.

Invesco has a market capitalization of $14.5 billion. On the other hand, peers (XLF) like SEI Investments (SEIC), Legg Mason (LM), and PNC Financial Services (PNC) have a market capitalization of $10.8 billion, $3.6 billion, and $63.3 billion, respectively.

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