T. Rowe Price Q4 Earnings Miss on Higher Expenses Y/Y, Stock Down 1.8%

Core Viewpoint - T. Rowe Price Group, Inc. (TROW) reported lower-than-expected results for the fourth quarter of 2024, with adjusted earnings per share of $2.12, missing the consensus estimate of $2.23, despite a year-over-year increase of 23.3% [1][3] Financial Performance - Fourth-quarter net revenues increased by 11.1% year over year to $1.82 billion, but fell short of the Zacks Consensus Estimate of $1.88 billion [4] - For the full year 2024, net revenues reached $7.09 billion, up 9.8% year over year, yet also missed the consensus estimate of $7.16 billion [4] - Investment advisory fees rose by 16.1% year over year to $1.67 billion, aligning with estimates [4] - Net income attributable to T. Rowe Price on a GAAP basis was $439.9 million, showing a slight year-over-year increase [2] Expenses and Income - Total operating expenses increased marginally to $1.26 billion in the fourth quarter, slightly below the estimate of $1.33 billion [5] - Capital allocation-based income significantly declined to negative $5.2 million from $40.2 million in the prior year quarter, primarily due to lower market returns [5] Assets Under Management (AUM) - As of December 31, 2024, total AUM grew by 11.2% year over year to $1.61 trillion, although the projection was $1.71 billion [6] - The fourth quarter saw net market appreciation and income of $5.9 billion, but net cash outflows amounted to $8.2 billion [6] Liquidity and Capital Distribution - T. Rowe Price had a strong liquidity position with cash and cash equivalents of $2.65 billion as of December 31, 2024, up from $2.07 billion a year earlier, enabling continued investment [6] - The company distributed a total of $355 million to shareholders through dividends and share repurchases in the fourth 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 [9]