T. Rowe Price Q3 Earnings Beat on Higher AUM & Revenues, Stock Up

Core Insights - T. Rowe Price Group, Inc. (TROW) reported better-than-expected quarterly results, with shares rising 1.8% in pre-market trading. The adjusted earnings per share (EPS) for Q3 2025 was $2.81, exceeding the Zacks Consensus Estimate of $2.55, and reflecting a year-over-year increase of 9.3% [1][10]. Financial Performance - Net income attributable to T. Rowe Price on a GAAP basis was $646.1 million, a 7.1% increase from the prior-year quarter, surpassing the estimate of $471.9 million [2]. - Net revenues rose 6% year over year to $1.89 billion, exceeding the Zacks Consensus Estimate of $1.85 billion [3]. - Investment advisory fees increased by 4.4% to $1.7 billion, above the estimate of $1.59 billion, while capital allocation-based income surged to $42 million from $4.6 million in the prior-year quarter, significantly exceeding the estimate of $0.1 million [3]. Expense Management - Total operating expenses increased by 6.7% to $1.25 billion, higher than the estimate of $1.2 billion. Adjusted operating expenses were $1.13 billion, reflecting a 3.2% increase [4]. Assets Under Management (AUM) - As of September 30, 2025, total AUM grew by 8.6% year over year to $1.77 trillion, surpassing the projection of $1.68 trillion. This growth was driven by net market appreciation and income of $89.1 billion, partially offset by net cash outflows of $7.9 billion [5]. - The company maintained a strong liquidity position, with cash and cash equivalents of $3.63 billion as of September 30, 2025, up from $2.65 billion as of December 31, 2024 [6]. Capital Distribution - T. Rowe Price distributed a total of $442 million to shareholders through common stock dividends and share repurchases in the third quarter [7]. Strategic Outlook - The company's solid AUM balance, expanding distribution reach, and efforts to diversify through acquisitions and product enhancements are expected to support top-line growth. However, concerns remain regarding elevated expenses and reliance on investment advisory fees [8].