PRICE T ROWE GROUP INC
For the period ended Jun 30, 2024. Filed Jul 26, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 26, 2024
TROW$108.41-0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-26.
0001113169-24-000013
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-26.
0001113169-24-000019
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 123 previous paragraphs and 133 current paragraphs.
61 unchanged; 51 reworded; 16 added; 11 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 18 previous and 20 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
U.S. stocks were mixed in the second quarter amid strength in large, high-growth companies, especially technology-oriented companies expected to benefit from artificial intelligence (AI) developments. In contrast, stocks of smaller companies, which tend to be more sensitive than large-caps to the economy and interest rate movements, were hurt by diminished expectations for Federal (“Fed”) Reserve rate cuts this year stemming from persistent inflation.
Current report
Developed non-U.S. equity markets generally underperformed large-cap U.S. stocks in dollar terms. In Europe, equity markets were mixed, with French shares falling about 7%. Developed Asian markets were mostly positive in dollar terms. Shares in Singapore led the region with a 9% gain, but Japanese stocks fell 4%.
Current report
Emerging equity markets outperformed stocks in developed markets in U.S. dollar terms. Equities in the emerging Europe, Middle East, and Africa (EMEA) region were mostly positive. Turkish shares rose more than 21%, as S&P Global Ratings upgraded its sovereign credit rating. Emerging Asian markets were widely mixed in dollar terms, but Latin American markets were mostly negative, as regional heavyweights Mexico and Brazil tumbled 16% and 12%, respectively.
Current report
U.S. bond index returns were mostly positive in the second quarter of 2024. U.S. Treasury bill yields were little changed as the Fed kept the fed funds target rate in the 5.25% to 5.50% range, but intermediate- and long-term
Current report
Treasury yields increased and bond prices eased as Fed rate cut expectations for 2024 continued to wane. The 10-year U.S. Treasury note yield increased from 4.20% to 4.36% during the quarter.
Current report
Bonds in developed non-U.S. markets produced negative returns in U.S. dollar terms. In Europe, official short-term interest rates in England were unchanged, while the European Central Bank reduced its key policy rate by 25 basis points in early June. However, bond yields in several European countries rose late in the quarter amid political uncertainty in France. In Japan, short-term rates were unchanged, and the yen fell 6% versus the dollar to 38-year lows by the end of June, while the 10-year Japanese government bond yield rose above 1.00% for the first time in more than a decade. In the emerging markets universe, dollar-denominated bonds were flat, but they outperformed local currency bonds in dollar terms, as most developing markets currencies depreciated versus the U.S. dollar.
Current report
In comparison to the second quarter of 2023, the increases in U.S. GAAP and non-GAAP operating expenses were primarily driven by higher compensation and related benefits, including the interim bonus accrual, along with higher distribution and servicing costs and advertising and promotion costs. The U.S. GAAP operating expense increase was also impacted by intangible amortization and impairments and the remeasurement of contingent consideration liability.
Current report
Diluted earnings per share was $2.11 for the second quarter of 2024 compared to $2.06 for the second quarter of 2023. The increase was primarily driven by higher operating income offset slightly by lower non-operating income compared to the 2023 period.
Current report
Results Overview - Year-to-Date ended June 30, 2024
Current report
Operating expenses were $2,332.2 million in the six months ended June 30, 2024 compared with $2,130.1 million in the 2023 period. On a non-GAAP basis, our operating expenses for the six months ended June 30, 2024 increased 6.3% to $2,177.2 million compared to the 2023 period.
Current report
On a non-GAAP basis, adjusted diluted earnings per share was $4.64 for the six months ended June 30, 2024 as compared to $3.71 for the 2023 period. The 25.1% increase was driven by higher operating income and a lower effective tax rate.
Current report
The average annualized effective fee rate earned for the three- and six-month periods ended June 30, 2024 declined from the comparable 2023 periods due to client flows and transfers creating a mix shift in assets under management toward lower fee products and asset classes. The 2024 year-to-date annualized effective fee rate was also favorably impacted by about 0.3 basis points in higher performance based fees within equity and alternative products compared to the 2023 year-to-date period.
Current report
Capital allocation-based income in the second quarter of 2024 increased net revenues by $0.1 million compared to an increase in net revenues of $38.7 million in the 2023 period. For the six months ended June 30, 2024, capital allocation-based income increased net revenues by $47.2 million compared to $55.6 million for the 2023 period. The change in accrued carried interest in the second quarter of 2024 declined $24.0 million compared to the 2023 period due to lower overall market returns and relative performance. For the six months ended June 30, 2024, the change in accrued carried interest increased $6.3 million compared to the 2023 period due to higher overall market returns and relative performance.
Current report
Distribution and servicing costs were $87.7 million for the second quarter of 2024, an increase of $19.9 million, or 29.5%, from $67.8 million recognized in the 2023 quarter. For the six months ended June 30, 2024, these costs were $169.7 million, an increase of 21.8% over $139.3 million recognized in the comparable 2023 period. The increases in both periods were primarily driven by higher average assets under management distributed through intermediaries.
Current report
Advertising and promotion costs were $33.3 million in the second quarter of 2024, an increase of $10.4 million, or 45.4%, compared to the $22.9 million recognized in the 2023 quarter. For the six months ended June 30, 2024, these costs were $58.6 million, an increase of $9.9 million, or 20.3%, compared to the 2023 period. The increases for both periods were primarily driven by higher media spend and increased investment in our brand.
Current report
Technology, occupancy, and facility costs were $160.7 million in the second quarter of 2024, an increase of $6.2 million, or 4.0%, compared to the $154.7 million recognized in the 2023 quarter. For the six months ended June
Removed paragraphs (11)
Previous report
U.S. stocks produced strong first-quarter gains that lifted several broad indexes to all-time highs. The market was driven by investors’ optimism about the corporate profit potential stemming from advances in artificial intelligence (AI). Investors were also encouraged by the outcome of the Federal Reserve’s most recent monetary policy meeting. Although the central bank kept short-term interest rates steady throughout the quarter, policymakers in March maintained their December 2023 projections for three quarter-point interest rate cuts by the end of 2024 despite recent upticks in inflation readings.
Previous report
Developed non-U.S. equity markets appreciated in U.S. dollar terms, but total returns to U.S. investors were hurt by a stronger dollar versus other major currencies. In Europe, equity markets were mostly positive, as investors hoped that easing inflation pressures would enable major central banks to begin reducing short-term interest rates later this year. Asian markets were widely mixed: Japanese shares led the region with a gain exceeding 11%, while Hong Kong stocks dropped almost 12%.
Previous report
Emerging equity markets generally rose but trailed stocks in developed markets in dollar terms. In Europe, Turkish shares advanced as investors were encouraged that the central bank continued to raise interest rates to fight elevated inflation. In Asia, several markets produced gains, but Chinese stocks fell slightly, as the property market remained in distress. In Latin America, a few markets rose sharply, but stocks in regional heavyweight Brazil fell 7%.
Previous report
Global bond returns were mixed in U.S. dollar terms in the first quarter of 2024. In the U.S., Treasury bill yields increased, even though the fed funds target rate remained in the 5.25% to 5.50% range. Yields of Treasuries with intermediate- and long-term maturities rose to a greater degree due in part to some recent upticks in inflation readings. The 10-year U.S. Treasury note yield increased from 3.88% to 4.20% during the quarter.
Previous report
Bonds in developed non-U.S. markets declined in dollar terms. In Europe, longer-term bond yields generally increased while major European currencies weakened versus the dollar. While the European Central Bank and the Bank of England held short-term interest rates steady, Switzerland’s central bank surprised investors in March with a quarter-point rate cut. In Japan, long-term government bond yields increased and the yen fell to 34-year lows versus the dollar, even though the Bank of Japan decided in March to lift its benchmark interest rate out of negative territory. Emerging markets bonds were mixed: Dollar-denominated issues produced gains, but bonds denominated in local currencies declined, as many developing markets currencies depreciated versus the U.S. dollar.
Previous report
$326B for 3 years, $326B for 5 years, and $323B for 10 years.
Previous report
(1) n/m - The percentage change is not meaningful.
Previous report
Our investment advisory average annualized effective fee rate of 42.1 bps in the first quarter of 2024 declined compared with 42.7 basis points earned in the 2023 quarter and 42.2 basis points earned during the fourth quarter of 2023. In comparison to the first quarter of 2023, net outflows and client transfers over the past year drove a mix shift in assets under management toward lower fee vehicles leading to an unfavorable impact on the annualized effective fee rate. These unfavorable impacts were slightly offset by strong market returns over the last year and $17.6 million in performance-based fees earned predominantly on certain U.S. equity strategies in the 2024 quarter.
Previous report
Capital allocation-based income in the first quarter of 2024 increased net revenues by $47.1 million. The first quarter of 2024 amount represents an increase of $59.5 million in accrued carried interest from investments in affiliated investment funds, partially offset by $12.4 million in non-cash acquisition-related amortization. Comparatively, capital allocation-based income in the first quarter of 2023 increased net revenues by $16.9 million, which consists of an increase in accrued carried interest from investments in affiliated investment funds of $29.2 million, partially offset by $12.3 million in non-cash amortization. The increase in accrued carried interest in the 2024 quarter compared to the 2023 quarter was largely driven by stronger relative performance.
Previous report
Distribution and servicing costs were $81.9 million for the first quarter of 2024, an increase of $10.4 million, or 14.5%, from the $71.5 million recognized in the 2023 quarter. The increase from 2023 was primarily driven by higher costs incurred to distribute products through U.S. intermediaries and higher average assets under management.
Previous report
The first quarter of 2024 U.S. GAAP and non-GAAP effective tax rates decreased compared to the first quarter of 2023 due to lower valuation allowances recognized. In the first quarter of 2023, valuation allowances were recognized against cumulative UK-based deferred tax assets. The 2024 rate was also favorably impacted by changes in state income apportionment rules in certain jurisdictions.
Reworded paragraphs (51)
Previous wording
Returns of several major equity market indexes were as follows for the three months ended:
Current wording
Returns of several major equity market indexes were as follows:
Previous wording
In the U.S. investment-grade bond universe, sector performance was mixed. Mortgage-backed and Treasury securities performed worst. Corporate bonds held up somewhat better but still posted mild losses. Asset-backed securities rose slightly, while non-agency commercial mortgage-backed securities produced a solid gain. Tax-free municipal bonds held up slightly better than the broad taxable bond market. High yield corporate bonds produced gains and outperformed the broad investment-grade market.
Current wording
In the U.S. investment-grade bond universe, sector performance was mostly positive. Asset-backed securities and non-agency commercial mortgage-backed securities performed best. Treasuries and mortgage-backed securities rose marginally, while corporate bonds edged lower. Tax-free municipal bonds performed mostly in line with the broad taxable bond market. High yield corporate bonds outperformed investment-grade issues.
Previous wording
Returns for several major bond market indexes were as follows for the three months ended:
Current wording
Returns for several major bond market indexes were as follows:
Previous wording
Assets under management ended the first quarter of 2024 at $1,542.2 billion, an increase of $97.7 billion from December 31, 2023. The increase in assets under management during the first quarter of 2024 was driven by market appreciation and income, net of distributions not reinvested, of $105.7 billion, offset by net cash outflows of $8.0 billion.
Current wording
Assets under management ended the second quarter of 2024 at $1,569.1 billion, an increase of $26.9 billion from March 31, 2024. The increase in assets under management during the second quarter of 2024 was driven by market appreciation and income, net of distributions not reinvested, of $30.6 billion, offset by net cash outflows of $3.7 billion.
Previous wording
The following tables detail changes in our assets under management, by asset class, during the first quarter of 2024:
Current wording
The following tables detail changes in our assets under management, by asset class, during the three- and six-month periods ended June 30, 2024:
Previous wording
(2) The alternatives asset class includes strategies authorized to invest more than 50% of its holdings in private credit, leveraged loans, mezzanine, real assets/CRE, structured products, stressed / distressed, non-investment grade CLOs, special situations, or have absolute return as its investment objective. Generally, only those strategies with longer than daily liquidity are included. Unfunded capital commitments as of March 31, 2024 were $12.0 billion and are not reflected in fee basis AUM above.
Current wording
(2) The alternatives asset class includes strategies authorized to invest more than 50% of its holdings in private credit, leveraged loans, mezzanine, real assets/CRE, structured products, stressed / distressed, non-investment grade CLOs, special situations, or have absolute return as its investment objective. Generally, only those strategies with longer than daily liquidity are included. Unfunded capital commitments were $11.3 billion at June 30, 2024, $12.0 billion at March 31, 2024, and $11.6 billion at December 31, 2023, and are not reflected in fee basis AUM above.
Previous wording
(3)Includes net distributions not reinvested for the first quarter of 2024 of $0.2 billion.
Current wording
(3)Includes net distributions not reinvested for the three- and six-month periods ended June 30, 2024 of $0.7 billion and $0.9 billion, respectively.
Previous wording
Investment advisory clients outside the United States account for 8.5% of our assets under management at March 31, 2024 and 8.6% at December 31, 2023.
Current wording
Investment advisory clients outside the United States account for 8.6% of our assets under management at June 30, 2024, 8.5% at March 31, 2024, and 8.6% at December 31, 2023.
Previous wording
Assets under management in our target date retirement products, which are included in the multi-asset totals shown above, were $443.0 billion at March 31, 2024, compared with $408.4 billion at December 31, 2023. Net flows into these portfolios were $6.8 billion in the first quarter of 2024.
Current wording
Assets under management in our target date retirement products, which are included in the multi-asset totals shown above, were $452.6 billion at June 30, 2024, $443.0 billion at March 31, 2024, and $408.4 billion at December 31, 2023. Net flows into these portfolios were $3.7 billion and $10.5 billion in the three- and six-month periods ended June 30, 2024.
Previous wording
We also provide strategic investment advice solutions for certain portfolios. These advice solutions, which the vast majority is overseen by our multi-asset division, may include strategic asset allocation, and in certain portfolios, asset selection and/or tactical asset allocation overlays. We also offer advice solutions through retail separately managed accounts and separately managed accounts model delivery. As of March 31, 2024, total assets in these solutions were $537 billion, of which $525 billion are included in our reported assets under management in the tables above.
Current wording
We also provide strategic investment advice solutions for certain portfolios. These advice solutions, primarily overseen by our multi-asset division, may include strategic asset allocation, and in certain portfolios, asset selection and/or tactical asset allocation overlays. We also offer advice solutions through retail separately managed accounts and separately managed accounts model delivery. As of June 30, 2024, total assets in these solutions were $549 billion, of which $534 billion are included in our reported assets under management in the tables above.
Previous wording
We provide participant accounting and plan administration for retirement plans that invest in the firm's U.S. mutual funds, collective investment trusts and funds outside of the firm's complex. As of March 31, 2024, our assets under administration were $266 billion, of which nearly $156 billion are assets we manage.
Current wording
We provide participant accounting and plan administration for retirement plans that invest in the firm's U.S. mutual funds, collective investment trusts and funds outside of the firm's complex. As of June 30, 2024, our assets under administration were $273 billion, of which nearly $157 billion are assets we manage.
Previous wording
As of March 31, 2024, 69 of 130 (53.1%) of the firm's rated U.S. mutual funds (across primary share classes) received an overall rating of 4 or 5 stars. By comparison, 32.5% of Morningstar's fund population is given a rating of 4 or 5 stars(5). In addition, 65%(6) of AUM in the firm's rated U.S. mutual funds (across primary share classes) ended March 31, 2024 with an overall rating of 4 or 5 stars.
Current wording
As of June 30, 2024, 65 of 130 (50.0%) of the firm's rated U.S. mutual funds (across primary share classes) received an overall rating of 4 or 5 stars. By comparison, 32.5% of Morningstar's fund population is given a rating of 4 or 5 stars(5). In addition, 65%(6) of AUM in the firm's rated U.S. mutual funds (across primary share classes) ended June 30, 2024 with an overall rating of 4 or 5 stars.
Previous wording
(1)The investment performance reflects that of T. Rowe Price sponsored mutual funds and composites AUM and not of OHA’s products.
Current wording
(1)The investment performance reflects that of T. Rowe Price sponsored mutual funds, ETFs and composites AUM and not of OHA’s products.
Previous wording
(3) Source: Morningstar. Primary share class only. Excludes money market mutual funds, funds with an operating history of less than one year, T. Rowe Price passive funds, and T. Rowe Price funds that are clones of other funds. The top chart reflects the percentage of T. Rowe Price funds with 1-, 3-, 5-, and 10-year track record that are outperforming the Morningstar category median. The bottom chart reflects the percentage of T. Rowe Price funds AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $327B for 1 year,
Current wording
(3) Source: Morningstar. Primary share class only. Excludes money market mutual funds, funds with an operating history of less than one year, T. Rowe Price passive funds, and T. Rowe Price funds that are clones of other funds. The top chart reflects the percentage of T. Rowe Price funds with 1-, 3-, 5-, and 10-year track record that are outperforming the Morningstar category median. The bottom chart reflects the percentage of T. Rowe Price funds AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $326B for 1 year, $323B for 3 years, $323B for 5 years, and $322B for 10 years.
Previous wording
(4) Passive Peer Median was created by T. Rowe Price using data from Morningstar. Primary share class only. Excludes money market mutual funds, funds with an operating history of less than one year, funds with fewer than three peers, T. Rowe Price passive funds, and T. Rowe Price funds that are clones of other funds. This analysis compares T. Rowe Price active funds to the applicable universe of passive/index open-end funds and ETFs of peer firms. The top chart reflects the percentage of T. Rowe Price funds with 1-, 3-, 5-, and 10-year track record that are outperforming the passive peer universe. The bottom chart reflects the percentage of T. Rowe Price funds AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $310B for 1 year, $310B for 3 years, $273B for 5 years, and $265B for 10 years.
Current wording
(4) Passive Peer Median was created by T. Rowe Price using data from Morningstar. Primary share class only. Excludes money market mutual funds, funds with an operating history of less than one year, funds with fewer than three peers, T. Rowe Price passive funds, and T. Rowe Price funds that are clones of other funds. This analysis compares T. Rowe Price active funds to the applicable universe of passive/index open-end funds and ETFs of peer firms. The top chart reflects the percentage of T. Rowe Price funds with 1-, 3-, 5-, and 10-year track record that are outperforming the passive peer universe. The bottom chart reflects the percentage of T. Rowe Price funds AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $309B for 1 year, $306B for 3 years, $269B for 5 years, and $261B for 10 years.
Previous wording
(5)Composite net returns are calculated using the highest applicable separate account fee schedule. Excludes money market composites. All composites compared with the official GIPS composite primary benchmark. The top chart reflects the percentage of T. Rowe Price composites with 1-, 3-, 5-, and 10-year track record that are outperforming their benchmarks. The bottom chart reflects the percentage of T. Rowe Price composite AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $1,377B for 1 year, $1,372B for 3 years, $1,365B for 5 years, and $1,317B for 10 years.
Current wording
(5)Composite net returns are calculated using the highest applicable separate account fee schedule. Excludes money market composites. All composites compared with the official GIPS composite primary benchmark. The top chart reflects the percentage of T. Rowe Price composites with 1-, 3-, 5-, and 10-year track record that are outperforming their benchmarks. The bottom chart reflects the percentage of T. Rowe Price composite AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $1,401B for 1 year, $1,396B for 3 years, $1,389B for 5 years, and $1,340B for 10 years.
Previous wording
The following table and discussion sets forth information regarding our consolidated financial results for the first quarter of 2024 and 2023 on a U.S. GAAP basis and a non-GAAP basis. The non-GAAP basis adjusts for the impact of our consolidated sponsored investment products, the impact of market movements on the supplemental savings plan liability and related economic hedges, investment income related to certain other investments, acquisition-related amortization and costs, impairment charges, and certain nonrecurring charges and gains.
Current wording
The following table and discussion sets forth information regarding our consolidated financial results for the three- and six-month periods ended June 30, 2024 and 2023 on a U.S. GAAP basis and a non-GAAP basis. The non-GAAP basis adjusts for the impact of our consolidated sponsored investment products, the impact of market movements on the supplemental savings plan liability and related economic hedge, investment income related to certain other investments, acquisition-related amortization and costs, impairment charges, and certain nonrecurring charges and gains.
Previous wording
Net revenues consist of investment advisory revenues; administrative, distribution, and servicing fees; and capital allocation-based income. Approximately 90% of our net revenues are related to investment advisory fees. Total net revenues were $1,750.2 million in the first quarter of 2024, a 13.8% increase compared with $1,537.6 million in the first quarter of 2023. The increase was primarily driven by an 11.7% increase in investment advisory fee revenue as higher overall markets increased average assets under management by 12.2% and a $30.2 million increase in accrued carried interest from investments in affiliated funds.
Current wording
Net revenues consist of investment advisory revenues; administrative, distribution, and servicing fees; and capital allocation-based income. Approximately 90% of our net revenues are related to investment advisory fees. Total net revenues were $1,733.3 million in the second quarter of 2024, a 7.6% increase compared with $1,610.2 million in the second quarter of 2023. The increase was primarily driven by an 10.8% increase in investment advisory fee revenue as higher overall markets increased average assets under management by 13.0%, partially offset by a $38.6 million decrease in capital allocation-based income (change in accrued carried interest) earned from investments in certain affiliated funds.
Previous wording
Investment advisory fees are generally earned based on the value and composition of our assets under management, which change based on fluctuations in financial markets and net cash flows. As our average assets under management increase or decrease in a given period, the level of our investment advisory fee revenue for that same period generally fluctuates in a similar manner. Our annualized effective fee rates can be impacted by market or cash flow related shifts among asset classes, vehicles, price changes in existing products, and asset level changes in products with tiered-fee structures.
Current wording
Investment advisory fees are generally earned based on the value and composition of our assets under management, which change based on fluctuations in financial markets and net cash flows. As our average assets under management increase or decrease in a given period, the level of our investment advisory fee revenue for that same period generally fluctuates in a similar manner. Our annualized effective fee rates can be impacted by market or cash flow related shifts among asset classes, and products, including those with tiered-fee structures, along with price changes we make in existing products.
Previous wording
Operating expenses on a U.S. GAAP basis were $1,163.6 million in the first quarter of 2024, a 10.5% increase over the comparable 2023 period. On a non-GAAP basis, operating expenses were $1,071.4 million, a 4.8% increase over the comparable 2023 period.
Current wording
Operating expenses on a U.S. GAAP basis were $1,168.6 million in the second quarter of 2024, a 8.5% increase over the comparable 2023 period. On a non-GAAP basis, operating expenses were $1,105.8 million, a 7.8% increase over the comparable 2023 period.
Previous wording
Operating margin in the first quarter of 2024 was 33.5% on a U.S. GAAP basis, compared to 31.5% earned in the 2023 quarter. The increase in our U.S. GAAP operating margin for the first quarter of 2024 compared to the 2023 period was driven by net revenue growth outpacing operating expense growth.
Current wording
Operating margin in the second quarter of 2024 was 32.6% on a U.S. GAAP basis, compared to 33.1% earned in the second quarter of 2023. The decrease in our U.S. GAAP operating margin for the second quarter of 2024 compared to the 2023 period was driven by operating expense growth outpacing net revenue growth primarily due to acquisition-related amortization and impairments along with changes in the supplemental savings plan liability.
Previous wording
On a non-GAAP basis, diluted earnings per share was $2.38 for the first quarter of 2024 as compared to $1.69 for the first quarter of 2023. The increase was primarily due to higher adjusted operating income and a lower effective tax rate compared to the 2023 period.
Current wording
On a non-GAAP basis, diluted earnings per share was $2.26 for the second quarter of 2024 as compared to $2.02 for the second quarter of 2023. The increase was primarily due to higher adjusted operating income compared to the 2023 period.
Previous wording
In comparison to the first quarter of 2023, about 45% of the increase in U.S. GAAP operating expenses were driven by the remeasurement of the contingent consideration liability, as the 2023 quarter reflected a $49.6 million reduction in the liability compared to no change in the first quarter of 2024. Also contributing to the increase in U.S. GAAP operating expenses and the primary drivers of the increase in non-GAAP operating expenses over the prior year were higher compensation and related benefits along with higher accrued carried interest related compensation.
Current wording
In comparison to the six months ended June 30, 2023, more than a third of the increase in U.S. GAAP operating expenses was driven by the remeasurement of the contingent consideration liability, as the 2023 period reflected a $72.8 million reduction in the liability compared to no change in the 2024 period. Also contributing to the increase in U.S. GAAP operating expenses and the primary drivers of non-GAAP operating expenses were higher compensation and related benefits, including the interim bonus accrual; salaries and benefits along with distribution and servicing costs, and advertising and promotion costs.
Previous wording
Diluted earnings per share was $2.49 for the first quarter of 2024 as compared to $1.83 for the first quarter of 2023. The increase was primarily driven by higher operating income, higher net investment gains, and a lower effective tax rate compared to the 2023 period.
Current wording
Diluted earnings per share was $4.60 for the six months ended June 30, 2024 compared to $3.89 for the six months ended June 30, 2023. The 18.3% increase was driven by higher operating income, a lower effective tax rate, and higher net investment gains in the six months ended June 30, 2024, as compared to the comparable 2023 period
Previous wording
Investment advisory fees in the first quarter of 2024 increased 11.7% over the comparable 2023 quarter as average assets under management increased $161.5 billion or 12.2%, to $1,484.4 billion.
Current wording
Investment advisory fees in the second quarter of 2024 increased 10.8% over the comparable 2023 quarter as average assets under management increased $176.6 billion or 13.0%, to $1,534.0 billion. For the six months ended June 30, 2024, investment advisory revenues increased 11.2% over the comparable 2023 period as average assets under management increased $169.0 billion, or 12.6%, to $1,509.2 billion.
Previous wording
Administrative, distribution, and servicing fees in the first quarter of 2024 were $149.1 million, an increase of $20.2 million, or 15.7%, from the comparable 2023 quarter. The increase in the first quarter of 2024 is primarily driven by higher fees related to transfer agent services provided to the T. Rowe Price mutual funds.
Current wording
Administrative, distribution, and servicing fees in the second quarter of 2024 were $147.6 million, an increase of $6.9 million, or 4.9%, from the comparable 2023 quarter. For the six months ended June 30, 2024, these fees were $296.7 million, an increase of $27.1 million, or 10.1%, from the 2023 period. The increases for both periods were primarily due to higher retail transfer agent servicing activities provided to the T. Rowe Price mutual funds and higher average assets on which we earn administrative revenue for non-discretionary advisory services.
Previous wording
sponsored investment products. The corresponding expenses recognized by these products, and consolidated in our financial statements, were also eliminated from operating expenses. For the first quarter, we eliminated net revenue of $1.2 million in 2024 and $0.6 million in 2023.
Current wording
sponsored investment products. The corresponding expenses recognized by these products, and consolidated in our financial statements, were also eliminated from operating expenses. For the second quarter, we eliminated net revenue of $0.5 million in 2024 and $0.3 million in 2023. For the six months ended June 30, we eliminated net revenue of $1.7 million in 2024 and $0.9 million in 2023.
Previous wording
(1) The impact of the market on the supplemental savings plan liability drives the expense recognized each period.
Current wording
(2)The impact of the market on the supplemental savings plan liability drives the expense recognized each period.
Previous wording
Compensation, benefits, and related costs were $629.3 million in the first quarter of 2024, an increase of $36.0 million, or 6.1%, compared to the 2023 quarter. The increase was primarily due to a higher interim bonus accrual and higher salaries and related benefits, primarily due to base salary increases in January 2024. These increases were partially offset by higher labor capitalization in the first quarter of 2024.
Current wording
Compensation, benefits, and related costs were $635.8 million in the second quarter of 2024, an increase of $44.8 million, or 7.6%, compared to the 2023 quarter. For the six months ended June 30, 2024, these costs were $1,265.1 million, an increase of $80.8 million, or 6.8%, compared to the 2023 period. The increase in both periods were primarily due to a higher interim bonus accrual, and higher salaries and related benefits, as base salary modestly increased in January 2024. These increases were partially offset by higher labor capitalization compared to the 2023 periods.
Previous wording
The firm employed 7,878 associates at March 31, 2024, a decrease of 0.4% from the end of 2023, and an increase of 0.5% from March 31, 2023.
Current wording
The firm employed 7,929 associates at June 30, 2024, an increase of 0.3% from the end of 2023 and June 30, 2023.
Previous wording
The costs in this expense category primarily include amounts paid to third-party intermediaries that source the assets of certain share classes of our U.S. mutual funds and our international products, such as our Japanese ITMs and SICAVs. These costs were offset entirely by the distribution revenue we earn and report in net revenues: 12b-1 revenue is recognized in administrative, distribution, and servicing fees for the Advisor and R share classes of the U.S. mutual funds and investment advisory fee revenue for our international products.
Current wording
The costs in this expense category primarily include amounts paid to third-party intermediaries that source the assets of certain share classes of our U.S. mutual funds, ETFs and our international products, such as our Japanese ITMs and SICAVs. These costs were offset entirely by the distribution revenue we earn and report in net revenues: 12b-1 revenue is recognized in administrative, distribution, and servicing fees for the Advisor and R share classes of the U.S. mutual funds and investment advisory fee revenue for our international products.
Previous wording
Technology, occupancy, and facility costs were $149.9 million in the first quarter of 2024, an increase of $3.3 million, or 2.3%, compared to the $146.6 million recognized in the 2023 quarter. The increase was primarily related to higher costs from the firm's ongoing investment in its technology capabilities, including depreciation and hosted solution licenses, slightly offset by a non-recurring cost benefit realized in the first quarter of 2024 related to the firm's new UK facility.
Current wording
30, 2024, these costs were $310.8 million, an increase of $9.5 million, or 3.2%, compared with the 2023 period. The increases in both periods were primarily related to higher costs from the firm's ongoing investment in its technology capabilities, including hosted solution licenses and depreciation. These increases were partially offset by lower office facility costs related to double rent incurred in the 2023 period until we occupied our new UK facility in the second half of 2023, and a non-recurring cost benefit related to the UK facility in the first quarter of 2024.
Previous wording
General, administrative, and other expenses were $92.6 million in the first quarter of 2024, a decrease of $14.9 million, or 13.9%, compared to the $107.5 million recognized in the 2023 quarter. The decrease was primarily due to lower research fee expense as the firm changed its approach to paying for research, consistent with regulations and general industry practice.
Current wording
General, administrative, and other expenses were $108.7 million in the second quarter of 2024, an increase of $8.7 million, or 8.7%, compared to the $100.0 million recognized in the 2023 quarter. The increase was primarily due to higher professional fees and travel and entertainment. These increases were partially offset by lower research fee expense as the firm changed its approach to paying for research, consistent with regulations and general industry practice.
Previous wording
Change in fair value of contingent consideration. The contingent consideration represents the earnout arrangement related to our acquisition of OHA in which additional purchase price may be due upon satisfying or exceeding certain defined revenue targets. Every reporting period, we record the potential amount due under this arrangement at fair value. During the first quarter of 2024, there was no change in the fair value of the contingent consideration liability. During the first quarter of 2023, the liability was reduced by $49.6 million.
Current wording
Change in fair value of contingent consideration. The contingent consideration represents the earnout arrangement related to our acquisition of OHA in which additional purchase price may be due upon satisfying or exceeding certain defined revenue targets. Every reporting period, we record the potential amount due under this arrangement at fair value. In 2024, there was no change in the fair value of the contingent consideration liability. In the three- and six-month periods ended June 30, 2023, we recognized reductions in the fair value of the contingent consideration liability of $23.2 million and $72.8 million, respectively. Challenging market conditions have reduced revenue expectations used in the fair value determinations.
Previous wording
Acquisition-related amortization and impairment costs. As part of the purchase accounting for our acquisitions, we identified and separately recognized at fair value certain intangible assets. During the first quarter of 2024 and 2023, we recognized $29.9 million and $26.0 million, respectively, in amortization related to the definite-lived intangible assets. Immaterial impairment costs were recognized during the first quarter of 2024 and 2023. Should conditions that led us to recognize the impairment charges deteriorate, additional impairments may be recognized in future periods.
Current wording
Acquisition-related amortization and impairment costs. As part of the purchase accounting for our acquisitions, we identified and separately recognized at fair value certain intangible assets. During the three- and six-month periods ended June 30, 2024, we recognized $43.9 million and $73.8 million, respectively, in amortization and impairments related to the definite and indefinite-lived intangible assets. In the second quarter of 2024, we also recognized impairments charges totaling $18.0 million on definite and indefinite-lived intangible assets. During the three- and six-month periods ended June 30, 2023, we recognized $28.6 million and $54.6 million, respectively, in amortization. No impairment costs were recognized during the 2023 periods. Should conditions that led us to recognize the impairment charges deteriorate, additional impairments may be recognized in future periods.
Previous wording
Non-operating income for the first quarter of 2024 was $188.9 million compared to $135.4 million in the 2023 quarter. The following table details the components of non-operating income for both the first quarter of 2024 and 2023.
Current wording
Non-operating income for the second quarter of 2024 was $80.3 million compared to $106.2 million in the 2023 quarter. The following table details the components of non-operating income for both the three- and six-month periods ended June 30, 2024 and 2023.
Previous wording
The investment gains recognized by our investment portfolio during the first quarter of 2024 and 2023 were primarily due to strong market returns over both periods.
Current wording
The investment gains recognized by our investment portfolio during the three- and six-month periods ended June 30, 2024 and 2023 were primarily due to strong market returns over both periods.
Previous wording
The following table reconciles the statutory federal income tax rate to our effective tax rate on a U.S. GAAP basis for both the three months ended March 31, 2024 and 2023:
Current wording
The GAAP effective tax rate for Q2 2024 and Q2 2023 was 24.8%. These quarterly rates were the result of an overall year-to-date rate of 24.1% for 2024 and 26.7% for 2023. The following table reconciles the statutory federal income tax rate to our effective tax rate on a U.S. GAAP basis for the six months ended June 30, 2024 and 2023:
Previous wording
The non-GAAP effective tax rate primarily adjusts for the impact of the consolidated investment products, including the net income attributable to the redeemable non-controlling interests. Our non-GAAP effective tax rate was 23.9% in the first quarter of 2024 compared with 30.3% in first quarter of 2023.
Current wording
The non-GAAP effective tax rate primarily adjusts for the impact of the consolidated investment products, including the net income attributable to the redeemable non-controlling interests. Our non-GAAP effective tax rate was 24.6% in the second quarter of 2024 compared with 25.8% in second quarter of 2023. Our non-GAAP effective tax rate was 24.3% for the six months ended June 30, 2024 compared to 27.9% for the 2023 period. The year-to-date 2024 U.S. GAAP and non-GAAP effective tax rates decreased compared to 2023 rates due to lower valuation allowances recognized. In the first half of 2023, we recognized a full valuation allowance against all UK-based deferred tax assets recorded at the time.
Previous wording
We currently estimate that our effective tax rate for the full year 2024, on a U.S. GAAP basis, will be in the range of 23% to 27%. On a non-GAAP basis, the range is 23% to 26%.
Current wording
We currently estimate that our effective tax rate for the full year 2024, on a U.S. GAAP basis, will be in the range of 23.5% to 26.5%. On a non-GAAP basis, the range is 23.5% to 25.5%.
Showing the first 40 of 51 pairs. Open the source sections for the rest.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
For the six months ended June 30, 2024, the increase in assets under management was driven by market appreciation, net of distributions not reinvested, of $136.3 billion, offset by net cash outflows of $11.7 billion.
Current report — wording carried from elsewhere
Net revenues consist of investment advisory revenues; administrative, distribution, and servicing fees; and capital allocation-based income. Approximately 90% of our net revenues for the six months ended June 30, 2024 are related to investment advisory fees. Total net revenues were $3,483.5 million in the six months ended June 30, 2024, a 10.7% increase compared with $3,147.8 million in the 2023 period. The increase was primarily driven by a 11.2% increase in investment advisory fee revenue as average assets under management increased by 12.6%.
Current report — wording carried from elsewhere
Operating margin in the six months ended June 30, 2024 was 33.1%, compared to 32.3% earned in the 2023 period. The increase in our operating margin for the six months ended June 30, 2024 compared to the 2023 period was primarily driven by net revenue growth outpacing operating expense growth.
Current report — wording carried from elsewhere
For the six months ended June 30, 2024, these costs were $201.3 million, a decrease of $6.2 million, or 3.0%, compared with the 2023 period. The decrease was primarily due to lower research fee expense as the firm changed its approach to paying for research, consistent with regulations and general industry practice. This decrease was partially offset by higher professional fees and information services.
Current report — wording carried from elsewhere
The following schedules reconcile certain U.S. GAAP financial measures for the six months ended June 30, 2024 and 2023.