Invesco swung to $0.76 GAAP EPS from a year-ago loss as QQQ's conversion to a fee-earning ETF and 24.8% higher average AUM lifted adjusted operating margin to 37.5%, with record net long-term inflows of $45.1B.
Revenue
$1.8B
+20.5% YoY
Net income
$345M
Diluted EPS
$0.76
Operating margin
19.9%
Overview
Invesco, the fund company behind the Invesco QQQ ETF that tracks the Nasdaq-100, earned $345.3 million for common shareholders in the second quarter of 2026 ($0.76 per diluted share). A year earlier it reported a loss of $12.5 million (-$0.03). Most of that swing comes from how the two quarters are built, not from a doubling of the business. Q2 2025 carried a $159.3 million one-time "cost of preferred share repurchase". Q2 2026 is the second full quarter in which QQQ's management fees appear in Invesco's revenue.
Invesco makes money by charging a small annual fee on assets under management (AUM), the total value of client money it runs. That makes AUM the main thing to watch. Average AUM was $2,368.8 billion, up 24.8%, and quarter-end AUM reached $2,470.3 billion (+23.4%). Rising markets did most of the work: $256.8 billion of the quarter's $310.8 billion AUM increase came from market gains (the Nasdaq-100 rose 27.5% in the quarter). Clients also added a record $45.1 billion of net long-term inflows, meaning new money into long-term funds minus withdrawals, not counting money-market cash.
Key metrics
Metric
Q2 2026
Q2 2025
YoY Change
Operating revenues (GAAP)
$1,825.6M
$1,515.5M
+20.5%
Net revenues (company's adjusted measure)
$1,329.1M
$1,104.6M
+20.3%
Operating margin (GAAP)
19.9%
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n/m = not meaningful (you can't calculate a percentage change from a loss). "Net revenues" takes out the fees Invesco just passes on to the brokers and platforms that distribute its funds, and adds back its Chinese joint venture in full. "Adjusted" figures also leave out items such as intangible amortization, swings in deferred-compensation values, and one-offs. The reconciliations are in the 10-Q.
What changed: QQQ now pays Invesco a fee
QQQ, the $490.1 billion Nasdaq-100 fund, was converted to an open-end fund ETF on December 20, 2025. Before that, Invesco sponsored QQQ but earned no management fee on it. The 10-Q counts it as "non-management fee earning AUM," and the service revenue Invesco booked from it was a pass-through. Now it earns a real fee. The filing shows the change in three places:
Investment management fees rose to $1,461.8M from $1,100.9M (+32.8%), "primarily driven by QQQ's investment management fees following its conversion... and higher average AUM."
Service and distribution fees fell to $309.9M from $363.8M, "primarily due to the elimination of QQQ's pass-through service revenues."
Costs moved as well. Third-party distribution, service and advisory costs rose to $627.1M from $500.7M because of "third-party costs for QQQ." Marketing rose to $36.7M from $23.1M on "higher advertising costs for QQQ."
QQQ now also counts in the flow figures. It took in $13.8 billion of net long-term inflows this quarter. Leave QQQ out and net long-term inflows were about $31.3 billion, still double the $15.6 billion of a year ago.
Where the money came in, and where it left
Investment capability
Q2 2026 net long-term flows
Q2 2025 net long-term flows
Ending AUM (Jun 30, 2026)
ETFs and Index (ex QQQ)
+$30.1B
+$12.6B
$753.5B
QQQ
+$13.8B
n/a (not fee-earning)
$490.1B
China JV (Invesco Great Wall)
+$6.9B
+$4.6B
$163.2B
Private Markets
+$1.9B
-$2.3B
$135.5B
Fundamental Fixed Income
+$0.4B
+$2.8B
$315.5B
Multi-Asset/Other
-$0.3B
+$1.5B
$79.9B
Fundamental Equities
-$7.7B
-$3.6B
$318.1B
The flows are lopsided. Retail clients added $47.3 billion, while institutional clients (pension funds, insurers and similar) withdrew a net $2.2 billion, compared with an inflow of $6.5 billion a year ago. Fundamental Equities is Invesco's traditional actively managed stock-picking business, a type of fund that usually charges more than an index fund. Its outflows doubled to $7.7 billion, even though rising markets lifted its AUM. Clients are moving toward ETFs and index funds, which earn lower fees.
Money-market funds took in another $16.9 billion. The company reports this separately because clients park cash there short-term.
The Chinese joint venture, Invesco Great Wall, grew quickly. Its net revenues rose to $121.8M from $79.2M (+53.8%) on average AUM of $155.2 billion, up from $99.7 billion. Because Invesco doesn't fully own the venture, only its share reaches GAAP profit, through "equity in earnings of unconsolidated affiliates." That line rose to $35.1M from $25.0M.
The fee rate keeps slipping
The net revenue yield is the average fee Invesco keeps per dollar managed, measured in basis points (1 bp = 0.01%). It fell to 22.4 bps from 23.2 bps. In other words, Invesco kept about $2.24 a year for every $1,000 it managed, down from $2.32.
The two numbers aren't calculated the same way. The 2025 figure counted QQQ's assets but none of its fees. The 2026 figure counts both. Adding QQQ's fees should have pushed the 2026 number up, yet it still fell. The filing's explanation is a mix shift: client demand has moved toward "products that have lower net revenue yields." Invesco is growing fastest in its cheapest products, so revenue grows more slowly than assets. Net revenues rose 20.3%, while average AUM rose 24.8%.
Margins: operating leverage, helped by comparisons
Operating leverage means revenue grew faster than costs, so more of each extra dollar of revenue became profit. Net revenues rose $224.5M. Adjusted operating income rose $154.3M to $498.7M, and the adjusted operating margin, the share of net revenue left after running the business, widened to 37.5% from 31.2%. Some cost lines actually fell:
Employee compensation rose only 7.1%, to $546.7M. Variable pay rose $43.0M with revenue, but salaries fell $12.4M because of fourth-quarter 2025 divestitures (the intelliflo sale and the sale of 60% of the India business). Q2 2025 had also included $16.9M of severance. Headcount fell to 7,405 from 8,407.
Property, office and technology costs fell to $109.3M from $118.2M, mainly because Q2 2025 included an $8.0M software write-off.
General and administrative costs fell to $133.5M from $139.2M, helped by an $11.7M net benefit from selling the management contracts for 98 Canadian funds to CI Global Asset Management on June 1, 2026. That sale also took $11.0 billion out of AUM.
On a GAAP basis, operating margin rose to 19.9% from 14.1%.
Why GAAP EPS is above adjusted EPS this quarter
GAAP EPS of $0.76 is higher than adjusted EPS of $0.71. The gap comes from items management treats as non-recurring. Deferred-compensation investments gained $26.8M net, which Invesco excludes because it hedges those liabilities. The Canadian sale added the $11.7M benefit. A lower tax rate also helped: the effective rate was 25.6%, down from 28.1%, due to a favorable discrete tax benefit tied to the Canadian gain and the resolution of certain tax matters. Adjusted EPS is the better measure of what the business earns in a normal quarter.
Preferred stock: the Q2 2025 loss, and what it saves now
In Q2 2025 Invesco repurchased $1.0 billion of the Series A preferred stock held by MassMutual. Preferred stock is a bond-like security that pays a fixed dividend (5.9% a year here) ahead of common shareholders. The $159.3M cost of that repurchase was charged against common shareholders' earnings. It explains why the year-ago quarter showed a GAAP loss: about $0.35 a share on 455.2 million diluted shares.
The benefit shows up now. Preferred dividends fell to $37.0M from $56.6M, and 2.5 million preferred shares ($2.5 billion of liquidation value) remain outstanding. That saves $19.6M a quarter, or roughly 4 cents per share, which is part of why adjusted EPS nearly doubled. Common share count didn't help much: diluted shares averaged 454.4 million, compared with 455.2 million. Invesco bought back 1.9 million shares for $50.0M in the quarter, but the diluted share count barely moved.
Balance sheet and capital returns
Debt reduced by $342.7M in the quarter. Total debt is $1,624.0M, including $736.0M drawn on the revolving credit line. The $500.0M of senior notes that matured in January 2026 were repaid. Interest expense still rose to $23.6M from $20.7M because of heavier use of the revolver.
Dividend: $0.215 per common share declared on July 28, 2026, payable September 2, plus the $14.75-per-share preferred dividend. $1,142.2M remains under the buyback authorization.
Takeaway: The QQQ conversion changed what Invesco earns. The company now collects a fee on a $490 billion fund that used to pay it nothing, and that, plus a 25% rise in average AUM, lifted adjusted operating margin to 37.5%. The cost is a lower average fee rate: flows are going into ETFs, index funds and QQQ, while active stock funds are losing money. That leaves Invesco's revenue more tied to market levels, especially the Nasdaq-100, than it used to be.
Outlook
The 10-Q gives no numerical guidance for revenue, margin or earnings. Management describes its capital priorities as "reinvestment in the business, maintaining a strong balance sheet and returning capital to shareholders... through a combination of share repurchases and modestly increasing dividends." Its actions this quarter match that: more debt repayment than buybacks.
Our view is that the year-over-year comparisons get harder from here. Q1 2026 already included QQQ fees, so from Q1 2027 the growth rates will reflect underlying growth only. The preferred-dividend saving and the 2025 severance and write-off costs also stop flattering comparisons once they are a year old. Beyond that, the main swing factor is market levels. QQQ alone gained $103.8 billion of AUM from market moves this quarter, so a Nasdaq drawdown would hit revenue quickly. Two things to watch for the underlying trend: whether Fundamental Equities outflows (-$7.7B this quarter) slow, and whether the fee rate stabilizes near 22 bps or keeps falling.
Source: Invesco Ltd. Form 10-Q for the quarter ended June 30, 2026, filed August 4, 2026. Adjusted figures are the company's non-GAAP measures as reconciled in the filing.