T. Rowe Price Group (TROW) Q3 2025 earnings summary

Executive summary

• End-of-period assets under management (AUM) reached a record $1.77 trillion as of September 30, 2025, up $90.4 billion from Q2 2025, driven by strong equity market returns, product innovation, and inclusion of managed account-model assets.

• Net client outflows totaled $7.9 billion in Q3 2025, mainly in U.S. equities, partially offset by strong market appreciation.

• Diluted EPS for Q3 2025 was $2.87 (GAAP) and $2.81 (adjusted), up from Q3 2024, with net income rising to $646.1 million.

• Strategic collaboration with Goldman Sachs announced, focusing on co-branded target date series, model portfolios, and multi-asset solutions, with launches expected through 2026.

• Returned $442 million to shareholders via dividends and stock repurchases in Q3 2025.

Financial highlights

• Net revenues for Q3 2025 rose 6.0% year-over-year to $1.89 billion, driven by higher investment advisory fees and capital allocation-based income.

• Adjusted operating expenses for Q3 2025 were $1.13 billion, up 3.2% year-over-year, with a $28.5 million restructuring charge related to severance and expense realignment.

• Operating margin for Q3 2025 was 34.0% (GAAP) and 40.9% (adjusted).

• Investment advisory annualized effective fee rate declined to 39.1 bps from 40.7 bps year-over-year, reflecting asset mix shift to lower-fee products.

• Target date franchise saw $2.6 billion in net inflows; ETF products had nearly $2 billion in net inflows.

Outlook and guidance

• Q4 flows expected to be weaker due to higher equity redemptions and softer institutional pipeline; positives include strong gross sales in target date, global fixed income, ETFs, and alternatives.

• Full-year 2025 effective tax rate expected between 23.0% and 26.0% (GAAP), and 23.5% to 25.5% (adjusted).

• Expense management program aims to keep controllable expense growth in low single digits for 2026 and 2027.

• 2025 adjusted operating expenses (excl. carried interest) expected to rise 2%-4% over 2024.

• Capital expenditures for 2025 are expected to be about $275 million, with over 80% allocated to technology initiatives.