What drove the increase in assets under management this quarter?

AUM rose $110.5 billion to $1.68 trillion. Net market appreciation and income contributed $125.4 billion, which more than offset net client outflows of $14.9 billion. Equity AUM increased $65.1 billion, and multi-asset AUM increased $38.9 billion.

Why did the effective fee rate decline?

The company said the decline in the effective fee rate excluding performance-based fees, to 39.6 basis points from 41.1 basis points a year earlier, was driven by market movements and client flows and transfers, which shifted AUM toward lower-fee asset classes and products.

How did expenses change, and what is management doing about them?

U.S. GAAP operating expenses increased 6.5% year over year to $1,245.0 million, driven by higher technology, occupancy and facility costs and higher compensation. Management said it has a broad plan to reduce expense growth over time while continuing to invest in capabilities and client reach.

What were the main non-operating drivers this quarter?

Non-operating income on a U.S. GAAP basis was $235.5 million, compared with $80.3 million a year earlier. The increase reflected net gains on investments of $165.9 million, including $70.5 million from investments used to hedge deferred compensation liabilities, and net gains on consolidated investment products of $78.6 million.

TROW 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed August 1, 2025. Cited figures are marked; the original filing is the authoritative source.

T.

Rowe Price Group, Inc. reported second-quarter 2025 results on August 1, 2025, per an earnings release attached as Exhibit 99.1. Quarter-end assets under management were $1.68 trillion^a, up $110.5 billion during the quarter, driven by $125.4 billion of net market appreciation and income, partly offset by net client outflows of $14.9 billion. Diluted EPS was $2.24, matching adjusted diluted EPS of $2.24, versus $2.11 a year earlier on a U.S. GAAP basis, and the firm returned $395 million to stockholders through dividends and stock repurchases.

Net revenues were $1.72 billion^b, down 0.6% from the prior-year quarter, while operating expenses rose 6.5% to $1.245 billion on a U.S. GAAP basis and 3.7% to $1.147 billion on an adjusted basis. Management said it has a broad plan to reduce expense growth over time while continuing to invest. The effective fee rate excluding performance-based fees fell to 39.6 basis points from 41.1 basis points a year earlier, which the company attributed to market movements, client flows and a shift toward lower-fee asset classes.

Non-operating income rose to $235.5 million^c from $80.3 million, largely from investment gains. The filing also gives the full-year 2025 effective tax rate estimate of 23.5% to 27.5% on a U.S. GAAP basis and 24.0% to 27.0% on an adjusted basis. The results are unaudited, and the company stated it expected to file its Form 10-Q for the quarter later the same day.

02—Key points

Key Highlights

Quarter-end AUM of $1.68 trillion, up $110.5 billion in the quarter, with net client outflows of $14.9 billion.
Diluted EPS of $2.24 on both a U.S. GAAP and adjusted basis, compared with $2.11 U.S. GAAP diluted EPS in Q2 2024.
Net revenues of $1,723.3 million, down 0.6% year over year, while U.S. GAAP operating expenses rose 6.5% to $1,245.0 million.
Adjusted net operating income of $614.4 million, down 6.2% from $654.9 million in Q2 2024.
Investment advisory annualized effective fee rate, excluding performance-based fees, declined to 39.6 basis points from 41.1 basis points a year earlier.
Capital returned to stockholders totaled $395 million through the recurring quarterly dividend and stock repurchases.
Full-year 2025 effective tax rate guidance of 23.5% to 27.5% on a U.S. GAAP basis and 24.0% to 27.0% on an adjusted basis.

03—Questions

Frequently Asked Questions

What drove the increase in assets under management this quarter?
AUM rose $110.5 billion to $1.68 trillion. Net market appreciation and income contributed $125.4 billion, which more than offset net client outflows of $14.9 billion. Equity AUM increased $65.1 billion, and multi-asset AUM increased $38.9 billion.
Why did the effective fee rate decline?
The company said the decline in the effective fee rate excluding performance-based fees, to 39.6 basis points from 41.1 basis points a year earlier, was driven by market movements and client flows and transfers, which shifted AUM toward lower-fee asset classes and products.
How did expenses change, and what is management doing about them?
U.S. GAAP operating expenses increased 6.5% year over year to $1,245.0 million, driven by higher technology, occupancy and facility costs and higher compensation. Management said it has a broad plan to reduce expense growth over time while continuing to invest in capabilities and client reach.
What were the main non-operating drivers this quarter?
Non-operating income on a U.S. GAAP basis was $235.5 million, compared with $80.3 million a year earlier. The increase reflected net gains on investments of $165.9 million, including $70.5 million from investments used to hedge deferred compensation liabilities, and net gains on consolidated investment products of $78.6 million.
What is the outlook for the 2025 tax rate?
The firm estimates its full-year 2025 effective tax rate will be in the range of 23.5% to 27.5% on a U.S. GAAP basis and 24.0% to 27.0% on an adjusted basis. The year-to-date U.S. GAAP effective rate was 23.1%, reflecting a valuation allowance reversal.

04—Continue

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