PRICE T ROWE GROUP INC
For the period ended Mar 31, 2025. Filed May 2, 2025.
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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.
Mar 31, 2025 · Filed May 2, 2025
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 2024-09-30; filed 2024-11-01.
0001113169-24-000030
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-02.
0001113169-25-000015
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 132 previous paragraphs and 126 current paragraphs.
42 unchanged; 63 reworded; 21 added; 23 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 20 previous and 18 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 (21)
Current report
Major stock indexes declined in the first quarter of 2025. Early optimism about the incoming Trump administration’s likely business-friendly policies faded amid concerns that President Trump’s tariffs on imports from major trading partners would lead to higher prices of goods sold in the U.S. and contribute to inflation pressures. Investors were also concerned that some weaker-than-expected economic data and reports from various retailers warning about slowing sales or decreased consumer spending would translate into slower economic growth, if not a recession. As the quarter ended, investors were bracing for President Trump to impose “reciprocal” tariffs in early April on countries that already have tariffs or other trade barriers on imports from the U.S.
Current report
Developed non-U.S. equity markets strongly outperformed U.S. shares in U.S. dollar terms. In Europe, equity markets were mostly positive in dollar terms, helped by expectations for eurozone spending on defense and infrastructure to increase, particularly in Germany. Developed Asian markets were mixed in dollar terms, with Japanese stocks adding only about 0.5%.
Current report
Emerging equity markets rose but trailed stocks in developed non-U.S. markets in U.S. dollar terms. In emerging Asia, markets were mostly negative in dollar terms, but Chinese shares were lifted in part by hopes that fiscal and monetary stimulus would lead to increased consumption and stronger economic growth. In Latin America and in the emerging Europe, Middle East, and Africa (EMEA) region, markets were mostly positive in dollar terms.
Current report
Global bond returns were mostly positive in the first quarter of 2025. In the U.S., Treasury bill yields were little changed as the Federal Reserve held short-term interest rates steady due to inflation remaining above its 2% long-term goal. Intermediate- and long-term U.S. Treasury yields declined, however, amid concerns about slowing economic growth. The 10-year U.S. Treasury note yield decreased from 4.58% to 4.23% in the first quarter.
Current report
Bonds in developed non-U.S. markets produced positive returns in U.S. dollar terms; returns to U.S. investors were enhanced by stronger non-U.S. currencies versus the dollar. In Europe, longer-term bond yields increased in various countries, particularly in March, in response to the German government’s plans to ramp up infrastructure and defense spending. The European Central Bank reduced interest rates twice during the quarter, while the Bank of England reduced its benchmark interest rate once. In Japan, long-term government bond yields rose steadily for most of the quarter, to levels unseen in about 16 years, in anticipation of tighter monetary policy later this year. However, yields retraced some of their increase in late March amid concerns that economic growth will slow in response to U.S. tariffs on Japanese automobiles and other exports. Emerging markets bonds produced positive returns in U.S. dollar terms. Bonds denominated in local currencies generally outperformed dollar-denominated bonds in U.S. dollar terms, as most developing markets currencies appreciated versus the dollar.
Current report
ASSETS UNDER MANAGEMENT.
Current report
(1)n/m - the percentage change is not meaningful.
Current report
(2)In the first quarter of 2024, performance-based advisory fees were included in investment advisory fees.
Current report
(4)See the reconciliation to the comparable U.S. GAAP measures at the end of the Results of Operations section of this Management’s Discussion and Analysis.
Current report
In comparison to the first quarter of 2024, higher costs across compensation and related benefits and other expense categories were nearly offset by the change in the market-related impacts on the deferred compensation liabilities. As noted above, we remove the market-related impacts on the deferred compensation liabilities in our non-GAAP operating expenses measures as the liabilities are economically hedged.
Current report
Diluted earnings per share was $2.15 for the first quarter of 2025 compared to $2.49 for the first quarter of 2024. The decrease was primarily driven by lower investment gains compared to the 2024 period.
Current report
(1)n/m - the percentage change is not meaningful.
Current report
(2)In the first quarter of 2024, performance-based advisory fees were included in investment advisory fees.
Current report
Performance-based advisory fees in the first quarter of 2025 were in equity and alternative strategies, while they were primarily equity in the 2024 period.
Current report
Capital allocation-based income decreased net revenues by $1.2 million in the first quarter of 2025 compared with an increase in net revenue of $47.1 million in the 2024 quarter. The decrease over prior year was largely driven by a decline in the accrued carried interest allocation from investments in affiliated investment funds compared with the 2024 period. The decline was due to lower overall market returns. The firm realized carried interest of $43.1 million in the first quarter of 2025 compared to $52.7 million in the 2024 period.
Current report
Administrative, distribution, services, and other fees in the first quarter of 2025 were $156.3 million, an increase of $7.2 million, or 4.8%, from the comparable 2024 quarter. The increase in the first quarter was primarily due to higher reimbursable costs associated with the firm's U.S. mutual funds, and non-discretionary advisory services. The reimbursable costs from the firm’s U.S. mutual funds are offset by expenses recognized in product and recordkeeping costs.
Current report
(1)n/m - The percentage change is not meaningful.
Current report
Compensation, benefits, and related costs were $657.9 million in the first quarter of 2025, an increase of $28.6 million, or 4.5%, compared to the 2024 quarter. The increase was primarily due to higher salaries, employee benefits, and a higher interim bonus accrual. We award base salary increases in January of each year.
Current report
Product and recordkeeping related costs were $83.8 million in the first quarter of 2025, an increase of $8.8 million, or 11.7%, compared to $75.0 million in the 2024 quarter. The increase was primarily due to higher reimbursable costs associated with the firm's U.S. mutual funds which is offset by the expected reimbursement recognized in administrative, distribution, services and other fee revenue.
Current report
General, administrative, and other expenses were $103.3 million in the first quarter of 2025, an increase of $10.7 million, or 11.6%, compared to $92.6 million recognized in the 2024 quarter. The increase was primarily due to higher professional fees and information services.
Current report
(1)See the reconciliation to the comparable U.S. GAAP measures at the end of the Results of Operations section of this Management's Discussion and Analysis.
Removed paragraphs (23)
Previous report
Major U.S. stock market indexes rose in the third quarter of 2024. Shares were supported by generally favorable corporate earnings and expectations that a softening labor market and easing inflation pressures would enable the Federal Reserve to begin reducing short-term interest rates. Volatility increased considerably at times, but the market finished the quarter on a positive note, as Fed Chair Jerome Powell declared in late August at the central bank’s annual economic symposium that “the time has come” for policymakers to adjust short-term rates. On September 18, the central bank reduced the fed funds target rate by 50 basis points—which was more than some investors expected—and Fed officials noted the potential for “additional adjustments” as they “carefully assess incoming data, the evolving outlook, and the balance of risks.”
Previous report
Developed non-U.S. equity markets generally outperformed large-cap U.S. stocks in U.S. dollar terms, as a weaker dollar versus major non-U.S. currencies lifted overseas returns in dollar terms. In Europe, equity markets were mostly positive. Several markets produced double-digit gains, while UK shares climbed about 8%. Developed Asian markets were broadly positive. Hong Kong shares surged more than 24%, lifted in part by Chinese stimulus measures intended to bolster the Chinese economy.
Previous report
Emerging equity markets outperformed stocks in developed non-U.S. markets in dollar terms. Emerging Asian markets were mostly positive; a few rose more than 20%. Chinese shares surged more than 23%, while the A shares market climbed more than 21%, thanks to brisk gains in September stemming from new Chinese economic stimulus measures. Markets in Latin America and in the emerging Europe, Middle East, and Africa (EMEA) region were largely positive in dollar terms.
Previous report
Global bond returns were broadly positive in the third quarter of 2024. In the U.S., Treasury bill yields and shorter-term bond yields declined as the Fed reduced the fed funds target rate to the 4.75% to 5.00% range and signaled the potential for more rate cuts. Longer-term U.S. Treasury yields fell to a lesser degree. The 10-year U.S. Treasury note yield declined from 4.36% to 3.81% during the quarter.
Previous report
Bonds in developed non-U.S. markets produced positive returns in dollar terms. Bond prices rose and yields declined in many European countries, as central banks in the UK and the eurozone reduced short-term interest rates, and a weaker dollar versus various currencies lifted overseas returns in dollar terms. In Japan, the central bank unexpectedly increased its benchmark interest rate in late July, resulting in a significant strengthening of the yen versus the dollar. In the emerging markets fixed income universe, local currency bonds outperformed dollar-denominated bonds in U.S. dollar terms, as the dollar weakened versus many developing markets currencies.
Previous report
ASSETS UNDER MANAGEMENT.(1)
Previous report
For the nine months ended September 30, 2024, the increase in assets under management was driven by market appreciation, net of distributions not reinvested, of $210.3 billion, offset by net cash outflows of $23.9 billion.
Previous report
In comparison to the third quarter of 2023, about 70% of the increase in U.S. GAAP operating expenses was due to a market-related increase of $43.4 million in the supplemental savings liability in the third quarter of 2024, compared to a decrease of $14.2 million in the supplemental savings liability in the 2023 period.
Previous report
Also contributing to the increase in U.S. GAAP operating expenses and the primary drivers of the increase in non-GAAP operating expenses were higher general, administrative and other costs due to a $20 million cost recovery recognized in Q3 2023 that didn't recur in Q3 2024, higher distribution and servicing costs on higher average assets under management distributed through intermediaries, and higher compensation and related benefits. These increases were partially offset by lower accrued carried interest-related compensation.
Previous report
Diluted earnings per share was $2.64 for the third quarter of 2024 compared to $1.97 for the third 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.
Previous report
Results Overview - Year-to-Date ended September 30, 2024
Previous report
Operating expenses were $3,504.2 million in the nine months ended September 30, 2024 compared with $3,219.5 million in the 2023 period. On a non-GAAP basis, our operating expenses for the nine months ended September 30, 2024 increased 5.3% to $3,276.2 million compared to the 2023 period.
Previous report
In comparison to the nine months ended September 30, 2023, about 40% of the increase in U.S. GAAP operating expenses was driven by the change in remeasurement of the contingent consideration liability, as the 2023 period reflected a $72.8 million reduction in the liability compared to a $13.4M reduction in the 2024 period. Additionally, a market-related increase in the supplemental savings plan liability, and higher amortization and impairments related to acquisition-related intangibles, were also primary contributors to the increase in U.S. GAAP operating expenses.
Previous report
Also contributing to the increase in U.S. GAAP operating expenses and the primary drivers of the increase in non-GAAP operating expenses were higher compensation and related benefits, including the interim bonus accrual, salaries and benefits, distribution and servicing costs, and general, administrative and other costs.
Previous report
Diluted earnings per share was $7.23 for the nine months ended September 30, 2024 compared to $5.86 for the nine months ended September 30, 2023. The 23.4% increase was driven by higher net investment gains, higher operating income, and a lower effective tax rate in the nine months ended September 30, 2024, as compared to the comparable 2023 period.
Previous report
On a non-GAAP basis, adjusted diluted earnings per share was $7.21 for the nine months ended September 30, 2024 as compared to $5.88 for the 2023 period. The 22.6% increase was primarily due to higher adjusted operating income and a lower effective tax rate.
Previous report
Capital allocation-based income includes the change in accrued carried interest along with acquisition-related amortization and impairments. In the third quarter of 2024, the change in accrued carried interest increased net revenues by $35.1 million compared to $91.9 million in the 2023 period. For the nine months ended September 30, 2024, the change in accrued carried interest increased net revenues by $51.8 million compared to $121.7 million for the 2023 period. The decrease in the change in accrued carried interest for both periods was due to lower relative performance. We also recognized higher acquisition-related amortization and impairment changes in the 2024 periods.
Previous report
Administrative, distribution, and servicing fees in the third quarter of 2024 were $148.1 million, an increase of $7.4 million, or 5.3%, from the comparable 2023 quarter. For the nine months ended September 30, 2024, these fees were $444.8 million, an increase of $34.5 million, or 8.4%, from the 2023 period. The increases for both periods were primarily due to higher average assets on which we earn administrative revenue for non-discretionary advisory services. For the nine months ended September 30, 2024, higher retail transfer agent servicing activities provided to the T. Rowe Price mutual funds also contributed to the increase.
Previous report
(2)The impact of the market on the supplemental savings plan liability drives the expense recognized each period.
Previous report
Compensation, benefits, and related costs were $632.9 million in the third quarter of 2024, an increase of $15.9 million, or 2.6%, compared to the 2023 quarter. For the nine months ended September 30, 2024, these costs were $1,898.0 million, an increase of $96.7 million, or 5.4%, compared to the 2023 period. The increases 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 and we increased our headcount. These increases were partially offset by higher labor capitalization and lower stock-based compensation compared to the 2023 periods. The 2023 periods included severance costs related to the July 2023 workforce action.
Previous report
Advertising and promotion costs were $20.8 million in the third quarter of 2024, a decrease of $0.3 million, or 1.4%, compared to the $21.1 million recognized in the 2023 quarter. For the nine months ended September 30, 2024, these costs were $79.4 million, an increase of $9.6 million, or 13.8%, compared to the 2023 period. For the nine months ended September 30, 2024, the increase was primarily driven by higher media spend and increased investment in our brand.
Previous report
General, administrative, and other expenses were $104.2 million in the third quarter of 2024, an increase of $18.5 million, or 21.6%, compared to the $85.7 million recognized in the 2023 quarter. For the nine months ended September 30, 2024, these costs were $305.5 million, an increase of $12.3 million, or 4.2%, compared with the 2023 period. The increases in both periods were primarily due to a cost recovery recognized in 2023 that didn't recur in 2024, higher professional fees, and higher 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 report
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. For the three months ended September 30, 2024, we recognized a $13.4 million reduction in the liability in 2024 compared to no change in the 2023 period. During the nine months ended September 30, 2024 and 2023, we recognized reductions of the contingent consideration liability of $13.4 million and $72.8 million, respectively. Challenging market conditions have reduced revenue expectations below the defined revenue targets resulting in a reduction of the contingent consideration liability to zero as of September 30, 2024.
Reworded paragraphs (63)
Previous wording
Our revenues and net income are derived primarily from investment advisory services provided to individual and institutional investors in a broad range of investment solutions across equity, fixed income, multi-asset, and alternative capabilities. We also provide certain investment advisory clients with related administrative services, including distribution, mutual fund transfer agent, accounting, and shareholder services; participant recordkeeping and transfer agent services for defined contribution retirement plans; brokerage; trust services; and non-discretionary advisory services through model delivery.
Current wording
Our revenues and net income are derived primarily from investment advisory services provided to individual and institutional investors in a broad range of investment solutions across equity, fixed income, multi-asset, and alternatives capabilities. We also provide certain investment advisory clients with related administrative services, including distribution, mutual fund transfer agent, accounting, and shareholder services; participant recordkeeping and transfer agent services for defined contribution retirement plans; brokerage; trust services; and non-discretionary advisory services.
Previous wording
Investment advisory revenues depend largely on the total value and composition of assets under our management. Accordingly, fluctuations in financial markets and in the composition of assets under management affect our revenues and results of operations.
Current wording
Investment advisory fees depend largely on the total value and composition of assets under our management. Accordingly, fluctuations in financial markets and in the composition of assets under management affect our revenues and results of operations.
Previous wording
We incur significant expenditures to develop new products and services and improve and expand our capabilities and distribution channels in order to attract new investment advisory clients and additional investments from our existing clients. These efforts often involve costs that precede any future revenues that we may recognize from an increase to our assets under management.
Current wording
We incur significant expenditures to develop new products and services and improve and expand our capabilities and distribution channels in order to attract new clients and additional investments from our existing clients. These efforts often involve costs that precede any future revenues we may recognize from an increase to our assets under management.
Previous wording
The investment management industry has been evolving and industry participants are facing several challenging trends including passive investments taking market share from traditional active strategies; continued downward fee pressure; demand for new investment vehicles to meet client needs; and an ever-changing regulatory landscape. In this regard, we have ample liquidity and resources that allow us to take advantage of attractive growth opportunities. We are investing in key capabilities, including investment professionals, distribution professionals, technologies, and new product offerings in order to provide our clients with strong investment management expertise and service.
Current wording
The investment management industry has been evolving and industry participants are facing challenging trends including passive investments taking market share from traditional active strategies; continued downward fee pressure; demand for new investment vehicles to meet client needs; and an ever-changing regulatory landscape. In this regard, we have ample liquidity and resources that allow us to take advantage of attractive growth opportunities. We are investing in key capabilities, including investment professionals, distribution professionals, technologies, and new product offerings in order to provide our clients with strong investment management expertise and service.
Previous wording
In the U.S. investment-grade universe, sector performance was broadly positive. Corporate bonds and mortgage-backed securities fared best. Treasuries and non-agency commercial mortgage-backed securities also did well. Asset-backed securities underperformed, but still produced solid gains. Tax-free municipal bonds lagged the broad taxable bond market, as municipal bond yields generally did not fall as much as comparable Treasury yields. High yield corporate bonds performed mostly in line with the investment-grade market.
Current wording
In the U.S. investment-grade universe, sector performance was broadly positive. Mortgage-backed and Treasury securities performed best, but corporate bonds and non-agency commercial mortgage-backed securities also did well. Asset-backed securities lagged with milder gains. Tax-free municipal bonds trailed the broad taxable bond market, as intermediate-term yields fell less than comparable Treasury yields, and as long-term muni yields increased during the quarter. High yield corporate bonds produced modest gains but underperformed investment-grade bonds.
Previous wording
Assets under management ended the third quarter of 2024 at $1,630.9 billion, an increase of $61.8 billion from June 30, 2024. The increase in assets under management during the third quarter of 2024 was driven by market appreciation and income, net of distributions not reinvested, of $74.0 billion, offset by net cash outflows of $12.2 billion.
Current wording
Assets under management ended the first quarter of 2025 at $1,566.3 billion, a decrease of $40.3 billion from December 31, 2024. The decrease in assets under management during the first quarter of 2025 was driven by market depreciation of $31.7 billion and net cash outflows of $8.6 billion.
Previous wording
The following tables detail changes in our assets under management, by asset class, during the three- and nine-month periods ended September 30, 2024:
Current wording
The following table details changes in our assets under management, by asset class, during the first quarter of 2025:
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 were $14.5 billion at September 30, 2024, $11.3 billion at June 30, 2024, and $11.6 billion at December 31, 2023, 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, business development companies, or that have absolute return as its investment objective. Generally, only those strategies with longer than daily liquidity are included. Unfunded capital commitments were $17.1 billion at March 31, 2025 and are not reflected in fee basis AUM above.
Previous wording
(3)Includes net distributions not reinvested for the three- and nine-month periods ended September 30, 2024 of $0.2 billion and $1.1 billion, respectively.
Current wording
(3)Includes net distributions not reinvested for the first quarter of 2025 of $0.5 billion.
Previous wording
Investment advisory clients outside the United States account for 8.6% of our assets under management at September 30, 2024, June 30, 2024, and December 31, 2023.
Current wording
Investment advisory clients outside the United States account for 8.7% of our assets under management at March 31, 2025 and 8.8% at December 31, 2024.
Previous wording
Assets under management in our target date retirement products, which are included in the multi-asset totals shown above, were $482.1 billion at September 30, 2024, $452.6 billion at June 30, 2024, and $408.4 billion at December 31, 2023. Net flows into these portfolios were $3.6 billion and $14.1 billion in the three- and nine-month periods ended September 30, 2024.
Current wording
Assets under management in our target date retirement portfolios, which are included in the multi-asset totals shown above, were $484.2 billion at March 31, 2025, compared with $475.6 billion at December 31, 2024. Net flows into these portfolios were $6.3 billion in the first quarter of 2025.
Previous 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 September 30, 2024, total assets in these solutions were $582 billion, of which $567 billion are included in our reported assets under management in the tables above.
Current wording
We also provide strategic investment advice solutions to 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 March 31, 2025, total assets in these solutions were $566 billion, of which $551 billion are included in our reported assets under management in the table above.
Previous wording
We provide participant accounting and plan administration for retirement plans that primarily invest in the firm's U.S. mutual funds, collective investment trusts and funds outside of the firm's complex. As of September 30, 2024, our assets under administration were $286 billion, of which nearly $163 billion are assets we manage.
Current wording
We provide participant accounting and plan administration for retirement plans that primarily invest in the firm's U.S. mutual funds, collective investment trusts and funds outside of the firm's complex. As of March 31, 2025, our assets under administration were $280 billion, of which $158 billion are assets we manage.
Previous wording
As of September 30, 2024, 69 of 142 (48.6%) 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, 67%(6) of AUM in the firm's rated U.S. mutual funds (across primary share classes) ended September 30, 2024 with an overall rating of 4 or 5 stars.
Current wording
As of March 31, 2025, 83 of 142 (58.5%) 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(6). In addition, 66%(6) of AUM in the firm's rated U.S. mutual funds (across primary share classes) ended March 31, 2025 with an overall rating of 4 or 5 stars.
Previous wording
(1)The investment performance reflects that of T. Rowe Price sponsored mutual funds, ETFs and composites AUM and not of OHA’s products.
Current wording
(1)The investment performance reflects that of T. Rowe Price U.S. mutual funds and composites AUM.
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 $332B for 1 year, $329B for 3 years, $328B for 5 years, and $327B for 10 years.
Current wording
(3) Source: Morningstar. Primary share class only. Excludes money market mutual funds, U.S. mutual funds with an operating history of less than one year, T. Rowe Price passive funds, and T. Rowe Price U.S. mutual funds that are clones of other funds. The top chart reflects the percentage of T. Rowe Price U.S. mutual funds with 1 year, 3 year, 5 year, and 10 year track record that are outperforming the Morningstar category median. The bottom chart reflects the percentage of T. Rowe Price U.S. mutual funds AUM that has outperformed for the time periods indicated. Total U.S. Mutual Fund AUM included for this analysis includes $307B for 1 year, $300B for 3 years, $299B for 5 years, and $298B 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 $315B for 1 year, $312B for 3 years, $272B for 5 years, and $267B 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, mutual funds with an operating history of less than one year, mutual funds with fewer than three peers, T. Rowe Price passive mutual funds, and T. Rowe Price mutual funds that are clones of other funds. This analysis compares T. Rowe Price active funds with the applicable universe of passive/index open-end funds and ETFs of peer firms. The top chart reflects the percentage of T. Rowe Price mutual funds with 1 year, 3 year, 5 year, and 10 year track record that are outperforming the passive peer universe. The bottom chart reflects the percentage of T. Rowe Price mutual funds AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $290B for 1 year, $284B for 3 years, $245B for 5 years, and $237B 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 $1,457B for 1 year, $1,452B for 3 years, $1,444B for 5 years, and $1,392B 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 to official GIPS composite primary benchmark. The top chart reflects the percentage of T. Rowe Price composites with 1 year, 3 year, 5 year, 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 $1,391B for 1 year, $1,385B for 3 years, $1,380B for 5 years, and $1,338B for 10 years.
Previous wording
The following table and discussion sets forth information regarding our consolidated financial results for the three- and nine-month periods ended September 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.
Current wording
The following table and discussion sets forth information regarding our consolidated financial results for the first quarter of 2025 and 2024 on a U.S. GAAP basis and a non-GAAP basis. The non-GAAP basis adjusts for the impact of our consolidated investment products, the impact of market movements on the deferred compensation liabilities and related economic hedges, investment income related to certain other investments, acquisition-related amortization and costs, impairment charges, and certain nonrecurring charges and gains, if any.
Previous wording
(2)Capital allocation-based income represents the change in accrued carried interest.
Current wording
(3)Capital allocation-based income represents the change in accrued carried interest.
Previous wording
Net revenues consist of investment advisory revenues; administrative, distribution, and servicing fees; and capital allocation-based income. More than 90% of our net revenues are related to investment advisory fees. Total net revenues were $1,785.6 million in the third quarter of 2024, a 6.9% increase over $1,670.7 million in the third quarter of 2023. The increase was primarily driven by an 11.5% increase in investment advisory fee revenue as higher overall markets increased average assets under management by 14.1%. This increase was partially offset by a $61.5 million decrease in capital allocation-based income (change in accrued carried interest) earned from investments in certain affiliated funds.
Current wording
Net revenues consist of investment advisory revenues; performance-based advisory fees; administrative, distribution, services, and other fees; and capital allocation-based income. More than 90% of our net revenues are related to investment advisory fees. Total net revenues were $1,763.9 million in the first quarter of 2025, a 0.8% increase compared to $1,750.2 million in the 2024 quarter. The increase was primarily driven by a 4.0% increase in investment advisory fee revenue as average assets under management increased 9.2%. This increase was nearly offset by a $48.3 million decline in capital allocation-based income (change in accrued carried interest) earned from certain affiliated funds.
Previous wording
Operating expenses on a U.S. GAAP basis were $1,172.0 million in the third quarter of 2024, a 7.6% increase over the comparable 2023 period. On a non-GAAP basis, operating expenses were $1,099.0 million, a 3.6% increase over the comparable 2023 period.
Current wording
Operating expenses on a U.S. GAAP basis were $1,167.6 million in the first quarter of 2025, a 0.3% increase over the comparable 2024 period. On a non-GAAP basis, operating expenses were $1,135.1 million, a 5.9% increase over the comparable 2024 period.
Previous wording
Operating margin in the third quarter of 2024 was 34.4% on a U.S. GAAP basis, compared to 34.8% earned in the third quarter of 2023. The decrease in our U.S. GAAP operating margin for the third quarter of 2024 compared to the 2023 period was driven by operating expense growth outpacing net revenue growth primarily due to changes in the supplemental savings plan liability and lower capital allocation-based income.
Current wording
Operating margin in the first quarter of 2025 was 33.8% on a U.S. GAAP basis, compared to 33.5% earned in the first quarter of 2024. The increase in our U.S. GAAP operating margin for the first quarter of 2025 compared to the 2024 period was driven by net revenue growth outpacing operating expense growth primarily due to higher investment advisory fee revenue and market-related reductions in deferred compensation liabilities.
Previous wording
On a non-GAAP basis, diluted earnings per share was $2.57 for the third quarter of 2024 as compared to $2.17 for the third quarter of 2023. The increase was primarily due to higher adjusted operating income, higher adjusted net investment gains, and a lower effective tax rate compared to the 2023 period.
Current wording
On a non-GAAP basis, diluted earnings per share was $2.23 for the first quarter of 2025 as compared to $2.38 for the first quarter of 2024. The decrease was primarily due to lower adjusted operating income and a higher adjusted effective tax rate compared to the 2024 period.
Previous wording
Investment advisory fees in the third quarter of 2024 increased 11.5% over the comparable 2023 quarter as average assets under management increased $195.9 billion or 14.1%, to $1,589.5 billion. For the nine months ended September 30, 2024, investment advisory revenues increased 11.3% over the comparable 2023 period as average assets under management increased $178.0 billion, or 13.1%, to $1,536.2 billion. Investment advisory fees includes performance fees of $5.6 million and $40.0 million for the three- and nine-month periods ended September 30, 2024, respectively, compared to $2.1 million and $13.0 million in the same respective 2023 periods. Performance fees earned in 2024 and 2023 were primarily from equity and alternative products.
Current wording
Investment advisory fees in the first quarter of 2025 increased 4.0% over the comparable 2024 quarter as average assets under management increased $135.9 billion, or 9.2%, to $1,620.3 billion.
Previous wording
The average annualized effective fee rate earned for the three- and nine-month periods ended September 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 favorably impacted by higher performance based fees of about 0.2 basis points.
Current wording
The average annualized effective fee rate earned for the first quarter of 2025 declined from the comparable 2024 period as client flows and transfers led to a mix shift in assets under management toward lower fee asset classes and products.
Previous wording
A portion of the capital allocation-based income was passed through to certain associates as compensation and the related expense was recognized in compensation and related costs with the unpaid amount reported as non-controlling interest on the unaudited condensed consolidated balance sheet.
Current wording
A portion of the capital allocation-based income is passed through to certain associates as compensation and the related expense recognized in compensation and related costs with the unpaid amount reported as non-controlling interest on the unaudited consolidated balance sheets.
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 third quarter, we eliminated net revenue of $1.3 million in 2024 and $0.7 million in 2023. For the nine months ended September 30, we eliminated net revenue of $3.0 million in 2024 and $1.6 million in 2023.
Current wording
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 $1.4 million in 2025 and $1.2 million in 2024.
Previous wording
(3)See the reconciliation to the comparable U.S. GAAP measures at the end of the Results of Operations section of this Management’s Discussion and Analysis.
Current wording
(2) See the reconciliation to the comparable U.S. GAAP measures at the end of the Results of Operations section of this Management’s Discussion and Analysis.
Previous wording
The firm employed 8,104 associates at September 30, 2024, an increase of 2.5% from the end of 2023 and an increase of 3.3% from September 30, 2023.
Current wording
The firm employed 8,084 associates at March 31, 2025, a decrease of 0.9% from the end of 2024, and an increase of 2.6% from March 31, 2024.
Previous wording
Distribution and servicing costs were $91.6 million for the third quarter of 2024, an increase of $16.7 million, or 22.3%, from $74.9 million recognized in the 2023 quarter. For the nine months ended September 30, 2024, these costs were $261.2 million, an increase of 21.9%, from $214.2 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 wording
Distribution and servicing costs were $93.6 million in the first quarter of 2025, an increase of $11.7 million, or 14.3%, compared to $81.9 million recognized in the 2024 quarter. The increase was primarily driven by higher average assets under management distributed through intermediaries.
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, 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 and ETFs.
Current wording
The costs in this expense category 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 are offset entirely by the distribution revenue we earn and report in net revenues: 12b-1 revenue is recognized in administrative, distribution, services, and other fees for the Advisor and R share classes of the U.S. mutual funds and investment advisory fee revenue for our international products and ETFs.
Previous wording
Technology, occupancy, and facility costs were $164.0 million in the third quarter of 2024, an increase of $4.3 million, or 2.7%, compared to the $159.7 million recognized in the 2023 quarter. For the nine months ended September 30, 2024, these costs were $474.8 million, an increase of $13.8 million, or 3.0%, 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, primarily hosted solution licenses. Specific to the nine months ended comparison, these increases were offset by lower office facility costs, as the 2023 period included the rent cost of two UK facilities until we occupied our new building in the second half of 2023, and the first quarter of 2024 included a non-recurring cost benefit related to the UK facility.
Current wording
Technology, occupancy, and facility costs were $167.6 million in the first quarter of 2025, an increase of $17.7 million, or 11.8%, compared to $149.9 million recognized in the 2024 quarter. The increase was primarily due to higher costs from the firm's ongoing investment in its technology capabilities, primarily hosted solutions and depreciation. Additionally, the 2024 quarter included a non-recurring cost benefit related to the firm's UK facility. We began occupying our new corporate headquarters in March.
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 three- and nine-month periods ended September 30, 2024, we recognized $51.5 million and $125.3 million, respectively, in amortization and impairments related to the definite and indefinite-lived intangible assets. These amounts include impairment charges of $25.6 million and $59.7 million, respectively, recognized on certain definite and indefinite-lived intangibles as reduced growth expectations reduced their fair value. For the comparable 2023 periods, amortization and impairment costs were of $38.5 million and $93.1 million, respectively. Should conditions that led us to recognize the impairment charges deteriorate further, additional impairments may be recognized in future periods.
Current wording
Acquisition-related amortization and impairment costs primarily relate to the indefinite- and definite-lived intangible assets identified and separately recognized, at fair value, on acquisition date. In the first quarter of 2025, we recognized acquisition-related amortization and impairment costs of $28.7 million, a decrease of $1.2 million, or 4.0%, compared to $29.9 million recognized in the 2024 period. The decrease was primarily driven by lower impairment charges related to certain definite-lived intangible assets. Should conditions that led us to recognize the impairment charges deteriorate further, additional impairments may be recognized in future periods.
Previous wording
Non-operating income for the third quarter of 2024 was $212.5 million compared to $2.8 million in the 2023 quarter. The following table details the components of non-operating income for both the three- and nine-month periods ended September 30, 2024 and 2023.
Current wording
Non-operating income for the first quarter of 2025 was $70.7 million compared to $188.9 million in the 2024 quarter. The following table details the components of non-operating income for both the first quarter of 2025 and 2024.
Previous wording
Higher investment gains earned by our investment portfolio during the three- and nine-month periods ended September 30, 2024 compared to the 2023 periods were primarily due to overall stronger market returns and higher dividend income over both periods.
Current wording
Lower investment gains earned by our investment portfolio during the first quarter of 2025 compared to the 2024 periods were primarily due to lower overall market returns.
Previous wording
sponsored investment products and not just the net investment income related to our ownership interest in the products. The table below shows the impact that the consolidated sponsored investment products had on the individual lines of our unaudited condensed consolidated statements of income and the portion attributable to our interest:
Current wording
The table above shows the net investment income of the underlying portfolios of the consolidated investment products, not just the income from our ownership share. The table below displays how consolidated investment products affected the individual lines of our unaudited consolidated income statements and the portion attributable to our interest.
Previous wording
The GAAP effective tax rate for the third quarter of 2024 was 22.5% compared with 24.8% in the third quarter of 2023. These quarterly rates were the result of an overall year-to-date rate of 23.5% for 2024 and 26.1% 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 nine months ended September 30, 2024 and 2023:
Current wording
The GAAP effective tax rate for the first quarter of 2025 was 24.3% compared with 23.5% in the first quarter of 2024. The following table reconciles the statutory federal income tax rate to our effective tax rate on a U.S. GAAP basis for the three months ended March 31, 2025 and 2024:
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 23.8% in the third quarter of 2024 compared with 24.8% in the third quarter of 2023. Our non-GAAP effective tax rate was 24.1% for the nine months ended September 30, 2024 compared to 26.8% for the 2023 period. The year-to-date 2024 U.S. GAAP and non-GAAP effective tax rates decreased compared to 2023 rates primarily due to lower valuation allowances recognized. In the first nine months of 2023, we recognized a full valuation allowance against all UK-based deferred tax assets recorded at the time.
Current wording
The adjusted 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 adjusted effective tax rate for the first quarter was 24.7% in 2025 compared with 23.9% in 2024. The increase in both the U.S. GAAP and adjusted effective tax rates was primarily due to higher state taxes in the 2025 quarter.
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 23.5% to 26.5%. On a non-GAAP basis, the range is 23.5% to 25.5%.
Current wording
We currently estimate that our effective tax rate for the full year 2025, on a U.S. GAAP basis, will be in the range of 23.5% to 27.5%. On an adjusted basis, the range is 24.0% to 27.0%.
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Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Net revenues consist of investment advisory revenues; administrative, distribution, and servicing fees; and capital allocation-based income. More than 90% of our net revenues for the nine months ended September 30, 2024 are related to investment advisory fees. Total net revenues were $5,269.1 million in the nine months ended September 30, 2024, a 9.4% increase over $4,818.5 million in the 2023 period. The increase was primarily driven by a 11.3% increase in investment advisory fee revenue as average assets under management increased by 13.1%, partially offset by a $69.9 million decrease in capital allocation-based income (change in accrued carried interest) earned from investments in certain affiliated funds.
Previous report — wording carried elsewhere
Operating margin in the nine months ended September 30, 2024 was 33.5% on a U.S. GAAP basis, compared to 33.2% earned in the 2023 period. The increase in our U.S. GAAP operating margin for the nine months ended September 30, 2024 compared to the 2023 period was primarily driven by net revenue growth outpacing operating expense growth.
Previous report — wording carried elsewhere
The table above includes the net investment income of the underlying portfolios included in the consolidated
Previous report — wording carried elsewhere
The following schedules reconcile certain U.S. GAAP financial measures for the nine months ended September 30, 2024 and 2023.