T. Rowe Price (NASDAQ: TROW ) just announced its Q2-2025 earnings on August 1st, and as always, the investor community kept their eyes fixed on whether this was the time outflows turned positive. Just to get it out there right off the bat; it Early 30s 'buy and hold' investor trying to achieve financial freedom to the greatest extent possible. Main focus within dividend growth investing & value. I've been investing for 10+ years and worked across several industries including finance, logistics, oil and phar ...

Core Insights - T. Rowe Price Group, Inc. (TROW) reported second-quarter 2025 adjusted earnings per share (EPS) of $2.24, exceeding the Zacks Consensus Estimate of $2.15, but reflecting a year-over-year decline of approximately 1% [1][10] - The company's net income attributable on a GAAP basis was $505.2 million, representing a 4.5% increase from the prior-year quarter, surpassing the estimate of $431.9 million [2] - TROW's total assets under management (AUM) increased by 6.9% year over year to $1.68 trillion, driven by net market appreciation of $125.4 billion, although partially offset by net cash outflows of $14.9 billion [5][10] Financial Performance - Net revenues for TROW fell slightly year over year to $1.72 billion, missing the Zacks Consensus Estimate of $1.74 billion [3][10] - Investment advisory fees decreased marginally to $1.57 billion, which was above the estimate of $1.54 billion [3] - Total operating expenses rose by 6.5% to $1.25 billion, exceeding the estimate of $1.17 billion, while adjusted operating expenses were $1.15 billion, up 3.7% [4][10] Liquidity and Capital Distribution - As of June 30, 2025, TROW had cash and cash equivalents of $3.06 billion, an increase from $2.65 billion as of December 31, 2024, indicating a strong liquidity position [6] - The company distributed a total of $395 million to shareholders through common stock dividends and share repurchases in the second quarter [7] Strategic Outlook - TROW's solid AUM balance, expanding distribution reach, and diversification efforts through acquisitions are expected to support future top-line growth [8] - However, concerns remain regarding elevated expenses and reliance on investment advisory fees, alongside a challenging operating environment [8]

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited consolidated financial statements for T. Rowe Price Group, Inc. for the quarter ended June 30, 2025 [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements show total assets grew to **$14.34 billion** by June 2025, with Q2 net income at **$505.2 million** Financial Metric (in millions) | Financial Metric | 6/30/2025 | 12/31/2024 | | :--- | :--- | :--- | | **Total Assets** | $14,342.2 M | $13,472.0 M | | **Total Liabilities** | $2,529.3 M | $2,021.9 M | | **Total Stockholders' Equity** | $10,560.5 M | $10,345.4 M | Income Statement (in millions) | Income Statement (in millions) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Revenues** | $1,723.3 | $1,733.3 | $3,487.2 | $3,483.5 | | **Net Operating Income** | $478.3 | $564.7 | $1,074.6 | $1,151.3 | | **Net Income Attributable to T. Rowe** | $505.2 | $483.4 | $995.7 | $1,057.2 | | **Diluted EPS** | $2.24 | $2.11 | $4.38 | $4.60 | Cash Flows (YTD, in millions) | Cash Flows (YTD, in millions) | 6/30/2025 | 6/30/2024 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $1,162.8 | $1,315.0 | | **Net Cash used in Investing Activities** | $(56.8) | $(93.4) | | **Net Cash used in Financing Activities** | $(687.3) | $(575.5) | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes detail accounting policies, revenue breakdowns, investment holdings, and significant commitments for future product launches Revenue & AUM (Six months ended 6/30/2025) | Revenue & AUM (Six months ended 6/30/2025) | Amount | | :--- | :--- | | **Total Investment Advisory Fees** | $3,166.0 M | | Equity Fees | $1,882.8 M | | Fixed Income Fees | $209.1 M | | Multi-Asset Fees | $910.6 M | | Alternatives Fees | $163.5 M | | **Average AUM** | $1,604.5 B | - The company's investment portfolio, excluding consolidated products, totaled **$3.36 billion** at June 30, 2025, up from **$3.00 billion** at year-end 2024, with key components including investments for deferred compensation hedges (**$1.05 billion**) and discretionary investments (**$719.0 million**)[33](index=33&type=chunk) - As of June 30, 2025, the company has **$261.0 million** of unrecognized compensation expense related to stock-based awards, expected to be recognized over remaining vesting periods through 2030[57](index=57&type=chunk)[58](index=58&type=chunk) - The company has committed **$330 million** for investment in future OHA product launches through 2026, with a contingent consideration of up to **$900 million** related to the OHA acquisition potentially payable in 2026-2027, though its fair value was zero as of June 30, 2025[72](index=72&type=chunk)[73](index=73&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses the company's performance amid a challenging industry environment, highlighting AUM growth, revenue changes, and operating margin compression [Market Trends and Assets Under Management (AUM)](index=22&type=section&id=Market%20Trends%20and%20AUM) Major U.S. and international stock markets rose in Q2 2025, driving AUM growth to **$1.677 trillion** despite net cash outflows - Major U.S. stock market indexes rose in Q2 2025, with the S&P 500 Index up **10.9%** and the NASDAQ Composite Index up **17.8%** for the quarter[84](index=84&type=chunk)[88](index=88&type=chunk) AUM Change Q2 2025 (in billions) | AUM Change Q2 2025 (in billions) | Equity | Fixed Income | Multi-asset | Alternatives | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | **Beginning AUM** | $773.4 | $195.7 | $544.4 | $52.8 | $1,566.3 | | **Net Cash Flows** | $(18.1) | $1.2 | $0.9 | $1.1 | $(14.9) | | **Market Appreciation & Income** | $83.2 | $3.4 | $38.0 | $0.8 | $125.4 | | **Ending AUM** | $838.5 | $200.3 | $583.3 | $54.7 | $1,676.8 | [Investment Performance](index=25&type=section&id=Investment%20Performance) The company's long-term investment performance remains solid with **62%** of U.S. funds outperforming over 10 years, though short-term results are mixed % of U.S. Funds Outperforming Morningstar Median | % of U.S. Funds Outperforming Morningstar Median | 1 year | 3 years | 5 years | 10 years | | :--- | :--- | :--- | :--- | :--- | | **All Funds** | 35% | 54% | 50% | 62% | % of Composites Outperforming Benchmarks | % of Composites Outperforming Benchmarks | 1 year | 3 years | 5 years | 10 years | | :--- | :--- | :--- | :--- | :--- | | **All Composites** | 33% | 42% | 41% | 60% | - As of June 30, 2025, **47.2%** of the firm's rated U.S. mutual funds received an overall Morningstar rating of 4 or 5 stars, compared to **32.5%** for the broader Morningstar fund population[102](index=102&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Q2 2025 net revenues decreased **0.6%** to **$1.72 billion**, while operating expenses rose **6.5%**, compressing the GAAP operating margin to **27.8%** Financial Results (in millions, except EPS) | Financial Results (in millions, except EPS) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Net Revenues** | $1,723.3 | $1,733.3 | (0.6)% | | **Operating Expenses (GAAP)** | $1,245.0 | $1,168.6 | 6.5% | | **Net Operating Income (GAAP)** | $478.3 | $564.7 | (15.3)% | | **Diluted EPS (GAAP)** | $2.24 | $2.11 | 6.2% | - The average annualized effective fee rate (excluding performance fees) declined to **39.6 basis points** in Q2 2025 from **41.1 basis points** in Q2 2024, attributed to market movements and client flows shifting AUM toward lower-fee products[104](index=104&type=chunk)[118](index=118&type=chunk) - Technology, occupancy, and facility costs rose **11.5%** YoY to **$179.4 million** in Q2 2025, driven by higher technology costs and expenses related to the new corporate headquarters occupied in March 2025[124](index=124&type=chunk)[129](index=129&type=chunk) [Capital Resources and Liquidity](index=39&type=section&id=Capital%20Resources%20and%20Liquidity) The company maintains a strong liquidity position with **$3.8 billion** in cash and discretionary investments, returning **$901.0 million** to stockholders in H1 2025 Liquidity (in millions) | Liquidity (in millions) | 6/30/2025 | 12/31/2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $3,058.9 | $2,649.8 | | **Discretionary investments** | $749.6 | $457.1 | | **Total cash and discretionary investments** | $3,808.5 | $3,106.9 | - In the first half of 2025, the company repurchased **3.4 million** shares for **$326.1 million** and paid **$574.9 million** in dividends, totaling **$901.0 million** returned to stockholders[153](index=153&type=chunk)[154](index=154&type=chunk) - Anticipated capital expenditures for the full year 2025 are approximately **$282 million**, with over **80%** designated for technology initiatives[155](index=155&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) There have been no material changes in the company's market risks from those previously disclosed in its 2024 Form 10-K Annual Report - There has been no material change in the company's market risks from those provided in the Form 10-K Annual Report for 2024[170](index=170&type=chunk) [Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of June 30, 2025[171](index=171&type=chunk) - There were no changes in internal control over financial reporting during Q2 2025 that have materially affected or are likely to materially affect such controls[172](index=172&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings.) Information on legal proceedings is referenced in the Commitments and Contingencies footnote, with management assessing a remote likelihood of material adverse outcomes - Information on legal proceedings is located in the Commitments and Contingencies footnote (Note 11) of the financial statements[174](index=174&type=chunk)[74](index=74&type=chunk) - Management believes the likelihood of a material adverse effect from pending ordinary course of business claims is remote[74](index=74&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors.) There have been no material changes to the company's risk factors from those previously disclosed in its 2024 Form 10-K Annual Report - There have been no material changes in the risk factors from those provided in the Form 10-K Annual Report for 2024[175](index=175&type=chunk) [Share Repurchases](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The company repurchased **1,230,409** shares at an average price of **$89.76** in Q2 2025, with **15.0 million** shares remaining under authorization Share Repurchase Activity (Q2 2025) | Month (2025) | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | April | 754,746 | $87.22 | | May | 261,218 | $93.63 | | June | 214,445 | $94.00 | | **Total Q2** | **1,230,409** | **$89.76** | - As of June 30, 2025, the maximum number of shares that may yet be purchased under the company's authorized programs is **15,025,865**[176](index=176&type=chunk)[178](index=178&type=chunk) [Exhibits](index=46&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed as part of the Form 10-Q report, including required certifications by executive officers and XBRL financial statements - The filing includes required certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31(i).1 and 31(i).2) and Section 1350 Certifications (Exhibit 32)[182](index=182&type=chunk)

Company Performance - T. Rowe Price reported quarterly earnings of $2.24 per share, exceeding the Zacks Consensus Estimate of $2.15 per share, but down from $2.26 per share a year ago, representing an earnings surprise of +4.19% [1] - The company posted revenues of $1.72 billion for the quarter ended June 2025, missing the Zacks Consensus Estimate by 0.72%, and down from $1.73 billion year-over-year [2] - T. Rowe has surpassed consensus EPS estimates three times over the last four quarters but has not beaten consensus revenue estimates during the same period [2] Stock Outlook - T. Rowe shares have declined approximately 10.3% since the beginning of the year, contrasting with the S&P 500's gain of 7.8% [3] - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $2.30 for the coming quarter and $8.93 for the current fiscal year, with revenues expected to be $1.8 billion and $7.12 billion respectively [7] Industry Context - The Financial - Investment Management industry, to which T. Rowe belongs, is currently ranked in the top 19% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - The adjusted diluted earnings per share for Q2 2025 was $2.24, consistent with Q1 2025's $2.23 and slightly down from Q2 2024's $2.26 [15] - The company reported $14.9 billion in net outflows, similar to the previous quarter, primarily driven by U.S. equities [15][16] - Adjusted net revenue for Q2 2025 was $1.76 billion, flat compared to Q2 2024 and down marginally from Q1 2025 [20] - Adjusted operating expenses for Q2 2025 were slightly over $1.1 billion, up 1% from Q1 2025 and up 3.7% from Q2 2024 [20][21] Business Line Data and Key Metrics Changes - Positive net flows were observed across fixed income, multi-asset, and alternatives, with $2.5 billion in net flows into ETFs [16][11] - The target date suite surpassed $520 billion in assets under management, maintaining top quartile performance over three, five, and ten-year periods [11][12] - Fixed income performance remained strong, with a majority of funds beating peer group medians across all time horizons [10] Market Data and Key Metrics Changes - The company experienced a challenging quarter due to equity market volatility, with average equity AUM down 5% and overall average AUM down 2% from Q1 2025 [19] - The ETF franchise reached $16.2 billion in AUM as of June 30, with 11 ETFs scaling over $500 million [12] - The retirement solutions segment saw inflows of $1.7 billion in the second quarter, marking the sixth consecutive quarter of positive net flows in fixed income [49] Company Strategy and Development Direction - The company is focused on reducing expense growth while investing in capabilities and client reach, aiming for efficiency to fund future investments [6][21] - There is a strong emphasis on enhancing retirement solutions and exploring the integration of private assets into defined contribution plans [27][29] - The company is expanding its ETF product line and private market alternatives, with plans to launch additional diversified equity ETFs [12][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged short-term headwinds but expressed confidence in the company's positioning to capitalize on future opportunities [6] - The company is optimistic about the potential for private investments in defined contribution plans, pending regulatory clarity [29] - Management expects outflows to continue in the second half of the year but anticipates lower levels than the first half [49] Other Important Information - The company has implemented a multi-year plan to align expense growth with anticipated revenue growth, targeting low single-digit growth in non-market driven expenses [21] - The balance sheet remains strong with $3.8 billion in cash and discretionary investments, and the company returned over $395 million to shareholders in 2025 [22][23] Q&A Session Summary Question: Update on the 401(k) business and potential for private markets - Management emphasized a client-first approach and the potential for integrating private assets into retirement solutions, with ongoing evaluations of product design and commercial viability [27][29] Question: Insights on expense initiatives and technology advancements - Management discussed a multi-year plan focused on efficiency and leveraging technology, including AI, to drive productivity and cost savings [35][36] Question: Analysis of retirement channel flows and fee rates - Management noted that the majority of flows in defined contribution have shifted towards target date funds, with less churn in retirement accounts compared to standalone strategies [50][51] Question: Impact of model delivery on AUM and growth pipeline - Management explained the decision to include model delivery assets in AUM, highlighting the growth potential and the importance of delivering value to clients [79][81] Question: Opportunities in blockchain and tokenization - Management expressed interest in digital asset investing and the potential for active management to play a role as the regulatory landscape evolves [75][76]

Financial Data and Key Metrics Changes - The adjusted diluted earnings per share for Q2 2025 was $2.24, consistent with Q1 2025's $2.23 and slightly down from Q2 2024's $2.26 [15] - The company reported $14.9 billion in net outflows, similar to the previous quarter, primarily driven by U.S. equities [15][16] - Adjusted net revenue for Q2 2025 was $1.76 billion, flat compared to Q2 2024 and down marginally from Q1 2025 [19] - Adjusted operating expenses for Q2 2025 were just over $1.1 billion, up 1% from Q1 2025 and up 3.7% from Q2 2024 [20] Business Line Data and Key Metrics Changes - Positive net flows were observed across fixed income, multi-asset, and alternatives, with $2.5 billion in net flows into ETFs [16][11] - The target date suite surpassed $520 billion in assets under management, maintaining top quartile performance over three, five, and ten-year periods [11] - Fixed income performance remained strong, with a majority of funds beating peer group medians across all time horizons [9] Market Data and Key Metrics Changes - The company experienced a challenging quarter due to equity market volatility, with average equity AUM down 5% and overall average AUM down 2% from Q1 2025 [18] - The ETF franchise reached $16.2 billion in AUM as of June 30, 2025, with significant inflows in the first half of the year [12] Company Strategy and Development Direction - The company is focused on reducing expense growth while investing in capabilities and client reach, aiming for efficiency to fund future investments [6][21] - There is a strong emphasis on expanding the ETF business and enhancing retirement solutions, with plans to integrate private assets into defined contribution plans [28][31] - The company is evaluating its global real estate footprint to optimize space usage and control occupancy expenses [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged short-term headwinds but expressed confidence in the company's positioning to capitalize on future opportunities [6] - The outlook for the second half of the year suggests lower outflows compared to the first half, with expectations of continued growth in retirement solutions and fixed income [49] Other Important Information - The company returned over $395 million to shareholders in 2025, including $286 million for dividends and $109 million in share buybacks [22] - The company is actively exploring partnerships and acquisitions to enhance capabilities and reach new clients, particularly in the retirement space [86][89] Q&A Session Summary Question: Update on the 401(k) business and potential for private markets - Management emphasized a client-first approach and the potential for integrating private assets into retirement solutions, awaiting regulatory clarity [28][30] Question: Insights on expense initiatives and technology advancements - Management discussed a multi-year plan to drive efficiencies and the potential of AI to enhance productivity and investment solutions [35][39] Question: Analysis of equity outflows and retirement channel performance - Management noted elevated outflows in equity but highlighted strong inflows in retirement date funds and fixed income, indicating progress beneath the surface [48][50] Question: Impact of growing ETF pipeline and potential cannibalization - Management indicated that growth in ETFs is a mix of new investors and some cannibalization from legacy funds, with a focus on reaching new clients [65][70] Question: Opportunities in blockchain and tokenization - Management expressed interest in digital asset investing and the potential for active management to play a role as regulatory clarity improves [72][76] Question: Model delivery and its impact on AUM - Management explained the decision to include model delivery in AUM, highlighting its growth and the importance of delivering value to clients [77][81]

Q2 2025 Earnings Release Supplement T. Rowe Price Group, Inc. August 1, 2025 A copy of this presentation, which includes additional information, is available at investors.troweprice.com. Data as of June 30, 2025, unless otherwise noted. All figures are USD, unless otherwise noted. Forward-Looking Statement This presentation, and other statements that T. Rowe Price may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to T. Rowe Pric ...

NEWS RELEASE 1 ▪ Quarter-end assets under management (AUM) of $1.68 trillion ▪ Net client outflows of $14.9 billion ▪ Diluted earnings per common share (EPS) of $2.24; Adjusted diluted EPS of $2.24 ▪ Returned $395 million to stockholders from the recurring quarterly dividend and stock repurchases Assets Under Management During Q2 2025, assets under management (AUM) increased $110.5 billion to $1.68 trillion. The components of the change in AUM, by asset class, are shown in the table below. | | | | | | Three ...

Analysts forecast 'Net revenues- Investment advisory fees' to reach $1.56 billion. The estimate indicates a change of -1.8% from the prior-year quarter. The consensus estimate for 'Net revenues- Investment Advisory Fees- Alternatives' stands at $79.68 million. The estimate indicates a year-over-year change of -13.1%. Wall Street analysts forecast that T. Rowe Price (TROW) will report quarterly earnings of $2.11 per share in its upcoming release, pointing to a year-over-year decline of 6.6%. It is anticipate ...

Core Viewpoint - T. Rowe Price (TROW) is anticipated to report a year-over-year decline in earnings due to lower revenues, with the consensus estimate indicating a potential impact on its near-term stock price [1][3]. Earnings Expectations - The upcoming earnings report is expected to show quarterly earnings of $2.10 per share, reflecting a year-over-year decrease of 7.1%, and revenues are projected to be $1.71 billion, down 1.4% from the previous year [3]. - A positive movement in stock price may occur if the actual earnings exceed expectations, while a miss could lead to a decline [2]. Estimate Revisions - The consensus EPS estimate has been revised 9.62% higher in the last 30 days, indicating a collective reassessment by analysts [4]. - The Most Accurate Estimate for T. Rowe is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +0.99%, suggesting a bullish outlook from analysts [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive Earnings ESP reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy) [10]. - T. Rowe currently holds a Zacks Rank of 1, enhancing the likelihood of beating the consensus EPS estimate [12]. Historical Performance - In the last reported quarter, T. Rowe exceeded the expected earnings of $2.09 per share by delivering $2.23, resulting in a surprise of +6.70% [13]. - Over the past four quarters, T. Rowe has beaten consensus EPS estimates three times [14]. Industry Context - In the broader financial services sector, Blue Owl Capital Inc. is expected to report earnings of $0.21 per share, reflecting a year-over-year increase of 10.5%, with revenues projected to rise by 22.5% [18][19]. - Blue Owl Capital's Earnings ESP is -0.82%, combined with a Zacks Rank of 3 (Hold), making it challenging to predict an earnings beat [20].