01—Abstract
Summary
Summary of the 10-Q filed August 1, 2025. Cited figures are marked; the original filing is the authoritative source.
T.
Rowe Price Group, Inc. reported net revenues of $1,723.3 milliona for the second quarter of 2025, a 0.6% decrease from $1,733.3 million in the 2024 quarter, primarily driven by lower performance-based advisory fees. U.S. GAAP operating expenses rose 6.5% to $1,245.0 million, largely due to a $66.3 million increase in deferred compensation liabilities from higher markets, and U.S. GAAP operating margin fell to 27.8% from 32.6%. Net income attributable to T.
Rowe Price Group was $505.2 millionb, or $2.24 diluted earnings per share, up from $2.11 a year earlier, driven by higher investment gains and a lower effective tax rate. On a non-GAAP basis, diluted EPS was $2.24 versus $2.26 in the prior-year quarter. Assets under management ended the quarter at $1,676.8 billion, up $110.5 billion from March 31, 2025, with market appreciation of $125.4 billion offsetting net cash outflows of $14.9 billion.
For the six months, net revenues were $3,487.2 millionc, up 0.1%, while investment advisory fees rose 2.0% as average AUM increased 6.3%. Investment advisory fee rates declined, with the annualized effective fee rate without performance-based fees at 39.6 basis points for the quarter versus 41.1 a year earlier, as assets shifted toward lower-fee asset classes. The balance sheet remained strong, with cash and cash equivalents of $3,058.9 million at June 30, 2025, up from $2,649.8 million at year-end 2024.
During the first half, the company returned $901.0 milliond to stockholders through $574.9 million of dividends and $326.1 million of share repurchases, and it raised its quarterly dividend 2.4% to $1.27 per share. The company's full-year 2025 effective tax rate is estimated at 23.5% to 27.5% on a U.S. GAAP basis.
02—Key points
Key Highlights
- Q2 2025 net revenues were $1,723.3 million, down 0.6% from $1,733.3 million in Q2 2024, mainly due to lower performance-based advisory fees.
- U.S. GAAP operating expenses increased 6.5% to $1,245.0 million, with over 65% of the increase attributable to higher deferred compensation liabilities from market gains.
- U.S. GAAP operating margin for Q2 2025 was 27.8%, compared with 32.6% in Q2 2024.
- Diluted EPS was $2.24 for Q2 2025 versus $2.11 a year earlier; non-GAAP diluted EPS was $2.24 versus $2.26.
- Ending AUM reached $1,676.8 billion, up $110.5 billion for the quarter, driven by $125.4 billion of market appreciation partly offset by $14.9 billion of net outflows.
- Average fee rate without performance-based fees declined to 39.6 basis points from 41.1 basis points, as assets shifted toward lower-fee products.
- The company returned $901.0 million to stockholders in the first half of 2025 and raised its quarterly dividend 2.4% to $1.27 per share.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed August 1, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $1.72B$1.73B | −0.6% |
| Operating Expenses | $1.25B$1.17B | +6.5% |
| Operating Income | $478.30M$564.70M | −15.3% |
| Net Income | $505.20M$483.40M | +4.5% |
| EPS (Basic) | $2.24$2.11 | +6.2% |
| EPS (Diluted) | $2.24$2.11 | +6.2% |
| Shares Outstanding (Basic) | 220.20M223.00M | −1.3% |
| Shares Outstanding (Diluted) | 220.40M223.50M | −1.4% |
05—Questions
Frequently Asked Questions
Why did U.S. GAAP operating expenses rise faster than revenue in the second quarter?
The filing attributes over 65% of the 6.5% increase in U.S. GAAP operating expenses to higher deferred compensation liabilities resulting from market gains. Higher compensation, technology, occupancy, and facility costs also contributed. These deferred compensation effects are economically hedged and are excluded from non-GAAP operating expenses.
Why did earnings per share increase even though operating income declined?
Diluted EPS rose to $2.24 from $2.11 mainly because of higher investment gains, which were $165.9 million versus $78.0 million a year earlier. A lower effective tax rate and fewer weighted-average shares outstanding also contributed, partly offset by lower operating income.
What drove the change in assets under management this quarter?
Assets under management increased $110.5 billion to $1,676.8 billion. Market appreciation and income contributed $125.4 billion, while net cash outflows were $14.9 billion. Equity assets accounted for the largest market gain at $83.2 billion.
How is the company returning capital to shareholders?
In the first half of 2025, the company paid $574.9 million in dividends and repurchased 3.4 million shares for $326.1 million, at an average price of $97.30 per share. The quarterly dividend was increased 2.4% to $1.27 per share, and the board has 15,025,865 shares remaining under its December 2024 authorization as of June 30, 2025.
What is the company's expected effective tax rate for 2025?
The company estimates its full-year 2025 effective tax rate on a U.S. GAAP basis will be in the range of 23.5% to 27.5%. On an adjusted basis, the estimated range is 24.0% to 27.0%. The filing notes that the rate may fluctuate with stock-based compensation tax benefits and valuation allowance changes.
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