What Could Impact Invesco’s Operating Revenues Moving Forward?



Operating revenues

Invesco Limited (IVZ) generates operating revenues from service and distribution fees, performance fees, investment management fees, and other revenues. The company saw a rise in its investment management fees from $3.7 billion in 2016 to $4.1 billion in 2017, implying a 9.4% increase. 

The primary reason for this increase is the upward momentum in its average assets under management (or AUM). Because the company’s AUM was negatively impacted in 1Q18 due to the market’s weaker performance, its investment management fees could experience the same impact. However, the foreign exchange rate fluctuations negatively impacted Invesco’s investment management fees in 2017.

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Service and distribution fees

Invesco garnered service and distribution fees of $852.8 million in 2017 compared to $823.6 million in 2016. This trend implies a rise of 3.5% on the back of favorable momentum in its administration fees, distribution fees, and redemption fees. In 2017, foreign exchange rate fluctuations positively impacted Invesco’s service and distribution fees.

Invesco generated performance fees of $113.3 million in 2017, compared to $44.3 million in 2016. The company’s other revenues totaled $67.6 million in 2017 while they were $93.4 million in 2016.

Invesco’s enterprise-value-to-revenue ratio is ~3.6x on an LTM (last-12-months) basis. Among its peers (XLF), BlackRock (BLK), T. Rowe Price Group (TROW), and SEI Investments (SEIC) have enterprise-value-to-revenue ratios of 6.8x, 5.3x, and ~7.2, respectively, on an LTM basis.

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