T. Rowe Price Group Inc
Q2 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +3.54%.
Did TROW Beat Earnings? Q2 2025 Results
T. Rowe Price delivered a mixed but ultimately earnings-positive second quarter, posting adjusted diluted EPS of $2.24 that cleared the $2.13 consensus estimate by 4.94%, even as revenue came in just shy of expectations. Net revenues of $1.72 billion slipped 0.6% year-over-year and missed the $1.75 billion consensus by 1.37%, weighed down by fee rate compression as the firm's annualized effective advisory fee rate fell to 39.6 basis points from 41.1 bps a year ago, a reflection of client flows migrating toward lower-fee products. A significant surge in non-operating income, rising to $235.50 million from $80.30 million in the prior-year period, provided crucial lift to the bottom line, helping offset a 6.5% rise in GAAP operating expenses tied partly to the firm's new headquarters. AUM climbed 6.9% year-over-year to $1.68 trillion, and subsequent data showing assets approaching $1.70 trillion in July signals some continued momentum. Looking ahead, T. Rowe Price projects its full-year 2025 effective tax rate at 23.5% to 27.5% on a GAAP basis while pursuing ongoing expense discipline to fund longer-term investment.
- Net market appreciation of $125.4 billion during Q2 2025 drove AUM growth to $1.68 trillion
- Fee rate compression to 39.6 bps from 41.1 bps YoY driven by asset mix shift toward lower-fee products
- Net client outflows of $14.9 billion in Q2 2025
- Strong non-operating income of $235.5 million driven by investment gains
- Technology, occupancy, and facility costs increased 11.5% YoY from new corporate headquarters depreciation and higher hosted solutions costs
- Market-related deferred compensation liability changes of $66.3 million increased operating expenses
“We are building momentum for the long-term—growing our ETF business, leveraging partnerships to extend our reach, and expanding our leadership in retirement. We have developed a broad and ongoing plan to reduce our expense growth over time while continuing to invest in capabilities and client reach. We believe that our plan will drive efficiency to fund investment in the future of the business. While we acknowledge the short-term headwinds, we are confident we are positioned to take advantage of the opportunities ahead.”
T. Rowe Price CEO, on the earnings call
Forward Guidance & Outlook
T. Rowe Price estimates its effective tax rate for full year 2025 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 firm has developed a broad and ongoing plan to reduce expense growth over time while continuing to invest in capabilities and client reach, aiming to drive efficiency to fund future business investment.
TROW YoY Financials
TROW Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.