PRICE T ROWE GROUP INC
For the period ended Jun 30, 2026. Filed Jul 31, 2026.
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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.
Jun 30, 2026 · Filed Jul 31, 2026
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 2026-03-31; filed 2026-04-30.
0001628280-26-028712
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-31.
0001628280-26-051335
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 131 previous paragraphs and 140 current paragraphs.
68 unchanged; 52 reworded; 18 added; 11 removed; 0 previous and 2 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 (18)
Current report
Global equity markets generated strong gains during the second quarter of 2026, recovering sharply from first-quarter volatility as geopolitical tensions eased, corporate earnings remained resilient, and investor enthusiasm surrounding AI and semiconductor-related companies continued to support risk assets. The quarter began with a broad rally after a series of Middle East ceasefire agreements reduced concerns about global energy and shipping disruptions, and oil prices declined from earlier highs as diplomatic progress continued through June.
Current report
U.S. equities advanced broadly, although market leadership varied by capitalization, investment style, and sector. Small-cap shares outperformed mid- and large-cap shares, and growth stocks outperformed value stocks across market capitalizations. Within the S&P 500 Index, information technology led sector gains, while industrials and business services, consumer discretionary, financials, health care, real estate, and communication services advanced but generally lagged the broader index. Energy declined sharply, and utilities recorded a slight loss.
Current report
International equity markets produced strong gains during the second quarter of 2026 despite periods of volatility related to geopolitical developments, trade negotiations, and evolving monetary policy expectations. Developed markets benefited from improving Middle East conditions, declining energy prices, stronger investor risk appetite, and continued enthusiasm surrounding AI and semiconductor-related companies. Emerging market equities also generated robust returns, supported by renewed capital flows into higher-risk markets and lower oil prices, which particularly benefited many energy-importing economies. Performance varied across regions, with Taiwan benefiting from continued semiconductor demand, Chinese equities supported by stronger-than-expected economic growth, targeted policy measures, and investor sentiment improving following the summit in Beijing despite the absence of a comprehensive trade agreement.
Current report
Global fixed income markets generated positive returns during the second quarter of 2026, although performance was volatile as investors weighed improving geopolitical conditions against persistent inflation pressures and a shifting monetary policy outlook. Easing tensions in the Middle East, lower oil prices, and several cooler-than-expected inflation readings supported bond prices early in the quarter, while subsequent moves in oil prices, stronger economic data, and evolving Federal Reserve communication periodically reshaped expectations for monetary policy.
Current report
The Federal Reserve maintained the federal funds target range at 3.50% to 3.75% at both its April and June meetings. Policy messaging evolved during the quarter including eliminating forward guidance language and announcing a review of the Federal Reserve’s policy framework and communications practices.
Current report
In the U.S. investment-grade bond universe, sector performance was positive in absolute terms. Corporate bonds performed best, followed by asset-backed securities, with non-agency commercial mortgage-backed securities, mortgage-backed securities, and U.S. Treasuries also recording gains. The U.S. dollar ultimately strengthened after a weak April as persistent inflation, more hawkish Federal Reserve communications, and residual geopolitical uncertainty supported renewed demand for the dollar.
Current report
International and emerging market bonds also produced positive second-quarter returns. Developed market sovereign yields moved unevenly as initial optimism surrounding the Middle East ceasefire later gave way to renewed inflation and monetary policy concerns before stabilizing as energy prices declined. Emerging market bonds advanced across both hard currency and local currency sectors, supported by improving geopolitical conditions, tighter sovereign credit spreads, and resilient demand for risk assets, though local currency gains moderated late in the quarter as the U.S. dollar strengthened.
Current report
For the six months ended June 30, 2026, the increase in assets under management was primarily driven by market appreciation, net of distributions not reinvested, of $138.0 billion, offset by net cash outflows of $20.2 billion.
Current report
Compared to the second quarter of 2025, about 50% of the increase in U.S. GAAP operating expenses during the second quarter of 2025 was due to higher compensation expense related to deferred compensation liabilities, as stronger markets increased the investment values the liabilities are indexed against. Additionally, higher compensation and related benefits, distribution and servicing costs, technology, occupancy and facilities costs, and general, administrative, and other costs also contributed to the increase in U.S. GAAP operating expenses and were the main drivers of the increase in adjusted operating expenses compared to the 2025 period. The market-related impacts on the deferred compensation liabilities are not included in our adjusted operating expenses as these liabilities are economically hedged which is reflected in non-operating income (loss). See the GAAP to non-GAAP reconciliation at the end of the Results of Operations section of this Management's Discussion and Analysis.
Current report
Diluted earnings per share was $2.88 for the second quarter of 2026 compared to $2.24 for the second quarter of 2025. The increase was primarily driven by higher net investment gains and higher operating income compared to the 2025 period.
Current report
Results Overview - Year-to-Date ended June 30, 2026
Current report
Net revenues consist of investment advisory revenues; performance-based advisory fees; capital allocation-based income; and administrative, distribution, servicing, and other fees. More than 90% of our net revenues for the six months ended June 30, 2026 were related to investment advisory fees. Total net revenues were $3,764.4 million in the six months ended June 30, 2026, a 7.9% increase over $3,487.2 million in the 2025 period. The increase was primarily driven by an 8.3% increase in investment advisory fee revenue as average assets under management increased by 12.6%.
Current report
Operating expenses were $2,543.4 million in the six months ended June 30, 2026 compared with $2,412.6 million in the 2025 period. On a non-GAAP basis, adjusted operating expenses for the six months ended June 30, 2026 increased 3.3% to $2,358.4 million compared to the 2025 period.
Current report
On a non-GAAP basis, adjusted diluted earnings per share was $5.09 for the six months ended June 30, 2026 as compared to $4.47 for the 2025 period. The increase was primarily due to higher adjusted operating income and lower weighted average shares outstanding.
Current report
Investment advisory fees in the second quarter of 2026 increased 11.3% over the comparable 2025 quarter as average assets under management increased $248.9 billion or 15.7%, to $1,837.7 billion. For the six months ended June 30, 2026, investment advisory revenues increased 8.3% over the comparable 2025 period as average assets under management increased $202.4 billion, or 12.6%, to $1,806.9 billion.
Current report
Compensation, benefits, and related costs were $675.9 million for the second quarter of 2026, an increase of $27.1 million, or 4.2%, compared to the 2025 quarter. For the six months ended June 30, 2026, these costs were $1,331.0 million, an increase of $24.3 million, or 1.9%, compared to the 2025 period. The increases in both periods were primarily due to a higher interim bonus accrual partially offset by lower salaries and related benefits.
Current report
Advertising and promotion costs were $20.3 million in the second quarter of 2026, a decrease of $9.6 million, or 32.1%, compared to the $29.9 million recognized in the 2025 quarter. For the six months ended June 30, 2026, these costs were $38.7 million, a decrease of $17.3 million, or 30.9%, compared to $56.0 million recognized in the 2025 period. The decreases in both periods were primarily due to lower media spend and agency costs.
Current report
General, administrative, and other expenses were $104.9 million in the second quarter of 2026, an increase of $11.0 million, or 11.7%, compared to the $93.9 million recognized in the 2025 quarter. For the six months ended June 30, 2026, these costs were $197.3 million, an increase of $13.7 million, or 7.5%, compared with $183.6 million recognized in the 2025 period. The increase was primarily due to higher travel costs and certain non-recurring administrative costs.
Removed paragraphs (11)
Previous report
Global financial markets experienced increased volatility during the first quarter of 2026. In the U.S., equity markets produced mixed results during the quarter. Equity prices advanced early in the quarter amid solid corporate earnings and generally favorable economic data. Later in the quarter, heightened geopolitical tensions disrupted global energy supply conditions, leading to a sharp increase in oil prices and a corresponding reassessment of inflation risks. This shift contributed to increased market volatility and downward pressure on equity valuations, particularly toward the end of the quarter.
Previous report
Performance varied across market capitalizations and investment styles. Small- and mid-capitalization stocks outperformed large-cap stocks, and value-oriented equities outperformed growth equities across capitalization ranges. Energy stocks significantly outperformed amid higher commodity prices along with materials and utilities. In contrast, consumer discretionary, financials, information technology, and communication services underperformed.
Previous report
Developed international and emerging equity markets were modestly negative for the quarter. Early gains were offset by late-quarter declines as higher energy costs weighed on growth expectations, particularly in regions dependent on imported energy.
Previous report
Global bond returns were modestly negative in the first quarter of 2026. In the U.S., fixed income markets were relatively flat during the quarter. Earlier gains were reversed later in the period as rising energy prices contributed to upward pressure on inflation expectations. Heightened geopolitical uncertainty increased interest rate volatility and complicated expectations regarding the duration of restrictive monetary policy. The Federal Reserve maintained its policy rate during the quarter, reflecting a continued data-dependent stance amid evolving economic and geopolitical conditions.
Previous report
Mortgage-backed and asset-backed securities outperformed, while corporate bonds underperformed as credit spreads widened later in the quarter. Treasury securities posted modest losses. The U.S. dollar weakened early in the quarter amid shifting global capital flows before strengthening later as risk aversion increased.
Previous report
International fixed income markets posted negative returns for the quarter, driven primarily by rising sovereign yields late in the period. Earlier gains supported by easing inflation trends were offset as geopolitical developments led to sharp increases in energy prices and a broad reassessment of inflation outlooks and anticipated central bank policy actions across major regions.
Previous report
Emerging market bonds also declined during the quarter. Hard-currency sovereign bonds were negatively affected by widening credit spreads as investors reassessed sovereign credit risk amid tighter global financial conditions. Local-currency emerging market debt experienced additional pressure from rising domestic yields and currency depreciation later in the period, reflecting increased risk aversion and U.S. dollar strength. Earlier supportive conditions for emerging market fixed income were outweighed as geopolitical risks intensified toward quarter-end.
Previous report
Investment advisory fees in the first quarter of 2026 increased 5.3% over the comparable 2025 quarter as average assets under management increased $155.5 billion, or 9.6%, to $1,775.8 billion.
Previous report
Compensation, benefits, and related costs were $655.1 million for the first quarter of 2026, a decrease of $2.8 million, or 0.4%, compared to the 2025 quarter. The decrease was primarily due to lower salaries and related benefits, partially offset by higher long-term incentive compensation.
Previous report
Advertising and promotion costs were $18.4 million in the first quarter of 2026, a decrease of $7.7 million, or 29.5%, compared to the $26.1 million recognized in the 2025 quarter. The decrease was primarily due to timing of media spend and events.
Previous report
General, administrative, and other expenses were $92.4 million in the first quarter of 2026, an increase of $2.7 million, or 3.0%, compared to the $89.7 million recognized in the 2025 quarter. The increase was primarily due to higher external research and other general and administrative costs.
Reworded paragraphs (52)
Previous wording
The investment management industry is evolving, facing challenging trends such as passive strategies 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. Furthermore, we have developed a broad and ongoing plan to align our expense growth with anticipated revenue growth. As a result, we have initiated certain actions to reduce expense growth, realign resources, and invest in existing and future capabilities, while also helping to offset ongoing inflationary pressures on compensation and contractual spending. These investments include hiring investment and distribution professionals, adopting new technologies, and offering new products to provide our clients with strong investment management expertise and services.
Current wording
The investment management industry is evolving, facing challenging trends such as passive strategies 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. Furthermore, we developed a broad and ongoing plan to align our expense growth with anticipated revenue growth. As a result, we have taken actions to reduce expense growth, realign resources, and invest in existing and future capabilities, while also helping to offset ongoing inflationary pressures on compensation and contractual spending. These investments include hiring investment and distribution professionals, adopting new technologies, and offering new products to provide our clients with strong investment management expertise and services.
Previous wording
Assets under management ended the first quarter of 2026 at $1,709.7 billion, a decrease of $65.9 billion from December 31, 2025. The decrease was driven by market depreciation of $52.2 billion and net cash outflows of $13.7 billion.
Current wording
Assets under management ended the second quarter of 2026 at $1,893.4 billion, an increase of $183.7 billion from March 31, 2026. The increase was driven by market appreciation, net of distributions not reinvested, of $190.2 billion, offset by net cash outflows of $6.5 billion.
Previous wording
The following table details changes in our assets under management, by asset class, during the first quarter of 2026:
Current wording
The following table details changes in our assets under management, by asset class, during the three- and six-month periods ended June 30, 2026:
Previous wording
(3) 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, private equity, or have absolute return as its investment objective. Generally, only those strategies with longer than daily liquidity are included. Unfunded capital commitments were $20.9 billion at March 31, 2026 and $21.6 billion at December 31, 2025 and are not reflected in fee basis AUM above.
Current wording
(3) 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, private equity, or have absolute return as its investment objective. Generally, only those strategies with longer than daily liquidity are included. Unfunded capital commitments were $21.0 billion at June 30, 2026, $20.9 billion at March 31, 2026, and $21.6 billion at December 31, 2025, and are not reflected in fee basis AUM above.
Previous wording
(4)Includes net distributions not reinvested for the first quarter of 2026 of $0.6.
Current wording
(4)Includes net distributions not reinvested for the three- and six-month periods ended June 30, 2026 of $0.6 billion and $1.2 billion, respectively.
Previous wording
Investment advisory clients outside the United States account for 8.6% of our assets under management at March 31, 2026 and 8.8% at December 31, 2025.
Current wording
Investors domiciled outside the United States account for 9.1% of our assets under management at June 30, 2026, 8.6% at March 31, 2026, and 8.8% at December 31, 2025.
Previous wording
Assets under management in our target date retirement products, which are included in the multi-asset totals shown above, were $561.3 billion at March 31, 2026, compared with $561.4 billion at December 31, 2025. Net flows into these portfolios were $4.9 billion in the first quarter of 2026.
Current wording
Assets under management in our target date retirement products, which are included in the multi-asset totals shown above, were $622.0 billion at June 30, 2026, $561.3 billion at March 31, 2026, and $561.4 billion at December 31, 2025. Net flows into these portfolios were $1.7 billion and $6.6 billion in the three- and six-month periods ended June 30, 2026, respectively.
Previous wording
Our multi-asset investment division provides advisory solutions that include investment insights, strategic asset allocation design, tactical asset allocation recommendations, and portfolio rebalancing services. The assets in these solutions, predominantly in the United States, were $27.8 billion at March 31, 2026 and December 31, 2025.
Current wording
Our multi-asset investment division provides advisory solutions that include investment insights, strategic asset allocation design, tactical asset allocation recommendations, and portfolio rebalancing services. The assets in these solutions, predominantly in the United States, were $31.1 billion at June 30, 2026 and $27.8 billion at March 31, 2026.
Previous wording
We provide participant accounting and plan administration for defined contribution retirement plans that primarily invest in our U.S. mutual funds, collective investment trusts and funds managed outside of our complex. As of March 31, 2026, our assets under administration were $314 billion, of which $176 billion are assets we manage.
Current wording
We provide participant accounting and plan administration for defined contribution retirement plans that primarily invest in our U.S. mutual funds, collective investment trusts and funds managed outside of our complex. As of June 30, 2026, our assets under administration were $349 billion, of which $192 billion were assets we managed.
Previous wording
As of March 31, 2026, 68 of 140 (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(6). In addition, 61.0%(6) of AUM in the firm's rated U.S. mutual funds (across primary share classes) ended March 31, 2026 with an overall rating of 4 or 5 stars.
Current wording
As of June 30, 2026, 64 of 142 (45.1%) 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(6). In addition, 57.0%(6) of AUM in the firm's rated U.S. mutual funds (across primary share classes) ended June 30, 2026 with an overall rating of 4 or 5 stars.
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 year, 3 year, 5 year, and 10 year track record that outperformed 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 $306B for 1 year, $294B for 3 years, $293B for 5 years, and $292B for 10 years.
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 year, 3 year, 5 year, and 10 year track record that outperformed 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, $331B for 3 years, $315B for 5 years, and $314B 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 a retail fund.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 funds with 1 year, 3 year, 5 year, and 10 year track record that outperformed 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 $293B for 1 year, $244B for 3 years, $239B for 5 years, and $231B 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 a retail fund.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 funds with 1 year, 3 year, 5 year, and 10 year track record that outperformed 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 $314B for 1 year, $273B for 3 years, $257B for 5 years, and $250B 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 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 $1,501B for 1 year, $1,494B for 3 years, $1,487B for 5 years, and $1,453B 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 $1,661B for 1 year, $1,661B for 3 years, $1,645B for 5 years, and $1,604B for 10 years.
Previous wording
The following table and discussion sets forth information regarding our consolidated financial results for the first quarter of 2026 and 2025 on a U.S. GAAP 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, including the restructuring charges.
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, 2026 and 2025 on a U.S. GAAP 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 non-recurring charges and gains, including the restructuring charges.
Previous wording
Net revenues consist of investment advisory revenues; performance-based advisory fees; administrative, distribution, servicing, 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 $1,857.0 million in the first quarter of 2026, a 5.3% increase over $1,763.9 million in the first quarter of 2025. The increase was primarily driven by a 5.3% increase in investment advisory fee revenue as higher overall markets increased average assets under management by 9.6% and a $29.3 million increase 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; capital allocation-based income; and administrative, distribution, servicing, and other fees. More than 90% of our net revenues are related to investment advisory fees. Total net revenues were $1,907.4 million in the second quarter of 2026, a 10.7% increase over $1,723.3 million in the second quarter of 2025. The increase was primarily driven by an 11.3% increase in investment advisory fee revenue as higher overall markets increased average assets under management by 15.7%.
Previous wording
Operating expenses on a U.S. GAAP basis were $1,176.5 million in the first quarter of 2026, a 0.8% increase over the comparable 2025 period. On a non-GAAP basis, adjusted operating expenses were $1,155.2 million, a 1.8% increase over the comparable 2025 period.
Current wording
Operating expenses on a U.S. GAAP basis were $1,366.9 million in the second quarter of 2026, a 9.8% increase over the comparable 2025 period. On a non-GAAP basis, adjusted operating expenses were $1,203.2 million, a 4.9% increase over the comparable 2025 period.
Previous wording
Operating margin in the first quarter of 2026 was 36.6% on a U.S. GAAP basis, compared to 33.8% earned in the first quarter of 2025. The increase in our operating margin for the first quarter of 2026 compared to the 2025 period was driven by net revenue growth outpacing operating expense growth primarily due to higher investment advisory fees.
Current wording
Operating margin in the second quarter of 2026 was 28.3% on a U.S. GAAP basis, compared to 27.8% earned in the second quarter of 2025. The increase in our operating margin for the second quarter of 2026 compared to the 2025 period was driven by net revenue growth outpacing operating expense growth primarily due to higher investment advisory fees.
Previous wording
On a non-GAAP basis, diluted earnings per share was $2.52 for the first quarter of 2026 compared to $2.23 for the first quarter of 2025. The increase was primarily due to higher adjusted operating income and lower weighted average shares outstanding compared to the 2025 period.
Current wording
On a non-GAAP basis, adjusted diluted earnings per share was $2.57 for the second quarter of 2026 compared to $2.24 for the second quarter of 2025. The increase was primarily due to higher adjusted operating income compared to the 2025 period.
Previous wording
Compared to the first quarter of 2025, the increase in U.S. GAAP and adjusted operating expenses was driven by higher technology, occupancy, and facilities costs. Also, U.S. GAAP expenses were impacted by lower mark-to-market related to our deferred compensation liabilities and lower acquisition-related amortization costs, partially offset by the restructuring charge. These costs are not included in our non-GAAP operating expenses. See the GAAP to non-GAAP reconciliation at the end of the Results of Operations section of this Management's Discussion and Analysis.
Current wording
Compared to the six months ended June 30, 2025, the primarily drivers of the increase in U.S. GAAP and non-GAAP operating expenses during the six months ended June 30, 2026 were higher technology and facility costs, compensation and related benefits costs, and distribution and servicing costs partially offset by lower advertising and promotion costs. The increase in U.S. GAAP operating expenses was also impacted by higher compensation expense related to the deferred compensation liabilities driven by stronger markets and the restructuring charge recognized in the second quarter of 2026. These costs are not included in our adjusted operating expenses. See the GAAP to non-GAAP reconciliation at the end of the Results of Operations section of this Management's Discussion and Analysis.
Previous wording
Diluted earnings per share was $2.23 for the first quarter of 2026 compared to $2.15 for the first quarter of 2025. The increase was primarily driven by a lower tax rate and lower weighted average shares outstanding compared to the 2025 period.
Current wording
Diluted earnings per share was $5.10 for the six months ended June 30, 2026 compared to $4.38 for the six months ended June 30, 2025. The increase was driven by higher operating income, lower weighted average shares outstanding, and higher net investment gains compared to the 2025 period.
Previous wording
The average annualized effective fee rate earned for the first quarter of 2026 declined from the comparable 2025 period due to client flows and transfers creating a mix shift in assets under management toward lower fee products and asset classes.
Current wording
The average annualized effective fee rate earned for the three- and six-month periods ended June 30, 2026 declined from the comparable 2025 periods due to client flows and transfers creating a mix shift in assets under management toward lower fee products and asset classes partially offset by market appreciation.
Previous wording
Performance-based advisory fees in the first quarter of 2026 were primarily earned from alternative strategies, whereas in the 2025 comparative period fees were earned across equity and alternative strategies.
Current wording
Performance-based advisory fees in the second quarter of 2026 and 2025 were primarily earned from alternative strategies. For the six months ended June 30, 2026, fees were primarily earned from alternative strategies, while for the comparable period of 2025, they were earned on both alternative and equity strategies.
Previous wording
Capital allocation-based income includes the change in accrued carried interest along with acquisition-related amortization and impairments. For the 2026 quarter, accrued carried interest increased net revenues by $31.3 million, compared to $9.2 million in 2025, reflecting relative investment performance. The decrease in acquisition-related amortization and impairments from the comparable 2025 period primarily reflects amortization and impairments recognized over time, which reduced the remaining carrying value of the acquired-assets. We realized carried interest of $41.0 million in the first quarter of 2026 compared to $43.1 million in the 2025 period.
Current wording
Capital allocation-based income includes the change in accrued carried interest along with acquisition-related amortization and impairments. In the second quarter of 2026, accrued carried interest increased net revenues by $15.2 million, compared to $36.5 million in the 2025 period, reflecting weaker relative investment performance in credit strategies. Capital allocation-based income for the second quarter of 2026 also includes carried interest earned on our late stage venture fund. For the six months ended June 30, 2026, accrued carried interest increased net revenues by $46.5 million compared to $45.7 million for the 2025 period. The decrease in acquisition-related amortization and impairments from the comparable 2025 periods was due to impairments recognized in the 2025 periods that did not recur. We realized carried interest of $8.2 million and $49.2 million in the three- and six-month periods ended June 30, 2026, respectively, compared to $10.9 million and $54.0 million in the 2025 periods, respectively.
Previous wording
Administrative, distribution, servicing, and other fees in the first quarter of 2026 were $138.4 million, a decrease of $17.9 million, or 11.5%, from the comparable 2025 quarter. The decrease primarily reflects the reporting change implemented in Q3 2025, in which revenue earned from managed account - model delivery assets and certain other advisory services began being reported within investment advisory fees, as well as the timing of cost reimbursements from the U.S. mutual funds.
Current wording
Administrative, distribution, servicing, and other fees in the second quarter of 2026 were $144.2 million, a decrease of $5.5 million, or 3.7%, from the comparable 2025 quarter. For the six months ended June 30, 2026, these fees were $282.6 million, a decrease of $23.4 million, or 7.6%, from the 2025 period. The decreases primarily reflect the reporting change implemented in the third quarter of 2025, in which revenue earned from managed account - model delivery assets and certain other advisory services began being reported within investment advisory fees, along with lower recordkeeping fees. For the quarterly comparison, these decreases were partially offset by the timing of cost reimbursements from our U.S. mutual funds.
Previous 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 $1.1 million in 2026 and $1.4 million in 2025.
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 second quarter, we eliminated net revenue of $1.6 million in 2026 and $1.4 million in 2025. For the six months ended June 30, we eliminated net revenue of $2.7 million in 2026 and $2.8 million in 2025.
Previous wording
(2)Capital allocation-based income compensation represents the change in accrued carried interest compensation along with acquisition-related, non-cash amortization and impairments.
Current wording
(2)Capital allocation-based income compensation represents the compensation related to the change in accrued carried interest along with acquisition-related, non-cash amortization and impairments.
Previous wording
(3) In Q1 2026, we began reporting technology-related professional fees and servicing costs from general, administrative, and other costs to technology, occupancy, and facilities costs to better align with the nature of the expenses following the outsourcing and expansion of our technology capabilities through trusted vendor partnerships. Prior periods were recast to reflect this change. The amount reclassified for the first quarter of 2025 was $13.6M.
Current wording
(3) In Q1 2026, we implemented a reporting change the moved technology-related professional fees and servicing costs from general, administrative, and other costs to technology, occupancy, and facilities costs to better align with the nature of the expenses following the outsourcing and expansion of our technology capabilities through trusted vendor partnerships. Prior periods were recast to reflect this change. The amounts reclassified for the three- and six-month periods ended June 30, 2025 were $15.5 million and $29.1 million.
Previous wording
The firm employed 7,507 associates at March 31, 2026, a decrease of 3.4% from the end of 2025 and a decrease of 7.1% from March 31, 2025. The average associate headcount for the first quarter of 2026 was 7,617, a decrease of 6.0% compared to the 2025 period.
Current wording
The average associate headcount for the second quarter of 2026 was 7,535, a decrease of 6.6% compared to the 2025 period. For the six months ended June 30, 2026, average associate headcount was 7,582, a decrease of 6.3% compared to the 2025 period.The firm employed 7,544 associates at June 30, 2026, a decrease of 2.9% from the end of 2025.
Previous wording
Distribution and servicing costs were $99.3 million for the first quarter of 2026, an increase of $5.7 million, or 6.1%, from $93.6 million recognized in the 2025 quarter. The increase was primarily driven by higher average assets under management distributed through intermediaries.
Current wording
Distribution and servicing costs were $106.1 million for the second quarter of 2026, an increase of $13.6 million, or 14.7%, from $92.5 million recognized in the 2025 quarter. For the six months ended June 30, 2026, these costs were $205.4 million, an increase of 10.4%, from $186.1 million recognized in the comparable 2025 period. The increases in both periods were primarily driven by higher average assets under management distributed through intermediaries.
Previous 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 investment advisory revenue we earn from these products, or in the case of the Advisor and R share classes of the U.S. mutual funds, are recognized in administrative, distribution, servicing, and other fees.
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 certain international products, such as our Japanese ITMs and SICAVs. These costs are offset entirely by the investment advisory revenue we earn from these products, or in the case of the Advisor and R share classes of the U.S. mutual funds, 12(b)-(1) fees recognized in administrative, distribution, servicing, and other fees.
Previous wording
Product and recordkeeping related costs were $74.3 million in the first quarter of 2026, a decrease of $9.5 million, or 11.3%, compared to the 2025 quarter. The decrease was primarily due to the timing of costs reimbursed by our U.S. mutual funds. The offsetting reimbursement is recognized in administrative, distribution, servicing, and other fees revenue.
Current wording
Product and recordkeeping related costs were $83.1 million in the second quarter of 2026, an increase of $8.3 million, or 11.1%, compared to the $74.8 million recognized in the 2025 quarter. For the six months ended June 30, 2026, these costs were $157.4 million, a decrease of $1.2 million, or 0.8%, compared to $158.6 million recognized in the 2025 period. The increase for the second quarter of 2026 over the comparable 2025 period was primarily due to the timing of costs reimbursed by our U.S. mutual funds. The offsetting reimbursement is recognized in administrative, distribution, servicing, and other fees revenue.
Previous wording
Technology, occupancy, and facility costs were $204.4 million in the first quarter of 2026, an increase of $23.2 million, or 12.8%, compared to the $181.2 million recognized in the 2025 quarter. The increase from the 2025 quarter was primarily due to higher technology costs, including cloud services, depreciation, and our decision in the prior year to outsource certain technology capabilities.
Current wording
Technology, occupancy, and facility costs were $205.9 million in the second quarter of 2026, an increase of $10.9 million, or 5.6%, compared to the $195.0 million recognized in the 2025 quarter. For the six months ended June 30, 2026, these costs were $410.3 million, an increase of $34.1 million, or 9.1%, compared with $376.2 million recognized in the 2025 period. The increases in both periods were primarily due to higher technology costs, including, hosted solutions, cloud services,and depreciation, and our decision in the prior year to outsource certain technology capabilities which were partially offset by a reduction in compensation expenses.
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 2026, we recognized $18.0 million in amortization and impairments compared to $28.7 million in the 2025 period. The decrease primarily reflects amortization and impairments recognized over time, which reduced the remaining carrying value of the related definite-lived intangibles.
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, 2026, we recognized $16.5 million and $34.5 million, respectively, in amortization and impairments compared to $31.2 million and $59.9 million, respectively, in the comparable 2025 periods. The decreases primarily reflect amortization and impairments recognized over time, which reduced the remaining carrying value of the related definite-lived intangibles as well as impairments recognized in 2025 that did not recur in the 2026 period.
Previous wording
Restructuring charge of $10.0 million in the first quarter of 2026 relates to actions taken under our previously announced broad and ongoing expense management program, which is designed to reduce expense growth and realign resources to support investment in existing and future capabilities. The charge reflects compensation‑related costs, primarily severance.
Current wording
Restructuring charge of $6.7 million and $16.7 million for the three- and six-month periods ended June 30, 2026, respectively, relates to actions taken under our previously announced broad and ongoing expense management program, which is designed to reduce expense growth and realign resources to support investment in existing and future capabilities. The charge reflects compensation‑related costs, primarily severance.
Previous wording
The following table details the components of non-operating income (loss) for both the first quarter of 2026 and 2025.
Current wording
The following table details the components of non-operating income (loss) for both the three- and six-month periods ended June 30, 2026 and 2025.
Previous wording
On an adjusted basis, non-operating income (loss) consists of investment gains/losses generated from our cash and discretionary investment portfolio. Lower investment gains earned by our investment portfolio during the first quarter of 2026 compared to the 2025 period was primarily due to overall lower market returns, partially offset by higher dividend income from higher cash and investment balances.
Current wording
On a non-GAAP basis, adjusted non-operating income (loss) consists of investment gains/losses generated from our cash and discretionary investment portfolio. Lower investment gains during the three- and six-month periods ended June 30, 2026 compared to the 2025 period was primarily due to portfolio rebalancing resulting in less equity exposure in discretionary investments partially offset by higher dividend income from higher cash and discretionary investment balances.
Previous wording
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, 2026 and 2025:
Current wording
The GAAP effective tax rate for the second quarter of 2026 was 23.5% compared with 22.1% in the second quarter of 2025. These quarterly rates were the result of an overall year-to-date rate of 23.5% for 2026 and 23.1% for 2025. 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, 2026 and 2025:
Previous wording
(1)Net income attributable to redeemable non-controlling interests represents the portion of earnings held in our consolidated investment products that are not taxable to the us despite being included in pre-tax income.
Current wording
(1)Net income attributable to redeemable non-controlling interests represents the portion of earnings held in our consolidated investment products that are not taxable to us despite being included in pre-tax income.
Previous wording
The adjusted effective tax rate primarily adjusts for the impact of the consolidated investment products, including the net income attributable to redeemable non-controlling interests. Our adjusted effective tax rate was 23.7% in the first quarter of 2026 compared with 24.7% in 2025. The decrease in both the U.S. GAAP and adjusted effective tax rate is primarily due to lower state taxes resulting from prior period settlements and the reversal of certain deferred tax asset valuation allowances. The impact of these decreases on the U.S. GAAP effective tax rate were partially offset by a lower impact related to the net income attributable to redeemable noncontrolling interests.
Current wording
The adjusted effective tax rate primarily adjusts for the impact of the consolidated investment products, including the net income attributable to redeemable non-controlling interests. The adjusted effective tax rate for the six months ended June 30, 2026 remained consistent with the 2025 period. The increase in the U.S. GAAP effective tax rate was primarily related to the net income attributable to redeemable non-controlling interests which is not taxable to the firm.
Previous wording
(1) These non-GAAP adjustments remove the impact of acquisition-related amortization of intangible assets, the recurring fair value remeasurements of the contingent consideration liability, if any, amortization of acquired investment and non-controlling interest basis differences and amortization of compensation-related arrangements. We believe adjusting for these charges helps the reader's ability to understand our core operating results and increases comparability period to period.
Current wording
(1) These non-GAAP adjustments remove the impact of acquisition-related amortization of intangible assets, amortization of acquired investment and non-controlling interest basis differences and amortization of compensation-related arrangements. We believe adjusting for these charges helps the reader's ability to understand our core operating results and increases comparability period to period.
Showing the first 40 of 52 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Operating margin in the six months ended June 30, 2026 was 32.4% on a U.S. GAAP basis, compared to 30.8% earned in the 2025 period. The increase in our U.S. GAAP operating margin for the six months ended June 30, 2026 compared to the 2025 period was primarily driven by net revenue growth outpacing operating expense growth.
Current report — wording carried from elsewhere
The following schedules reconcile certain U.S. GAAP financial measures to non-GAAP financial measures for the six months ended June 30, 2026 and 2025.