What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-14 compared with 2024-02-16 · 385 added, 400 removed, 534 unchanged (60% of the section changed)

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trust services;

and non-discretionary advisory services through model delivery.

Investment advisory revenues depend largely on the total value and composition of assets under our management.

and non-discretionary advisory services.

Investment advisory fees depend largely on the total value and composition of assets under our management.

Accordingly, fluctuations in financial markets and in the composition of assets under management affect our revenues and results of operations.

We incur significant expenditures to develop new products and services and improve and expand our capabilities and distribution channels in order to attract new investment advisory clients and additional investments from our existing clients.

These efforts often involve costs that precede any future revenues that we may recognize from an increase to our assets under management.

The investment management industry has been evolving and industry participants are facing several challenging trends including passive investments taking market share from traditional active strategies;

We incur significant expenditures to develop new products and services and improve and expand our capabilities and distribution channels in order to attract new clients and additional investments from our existing clients.

These efforts often involve costs that precede any future revenues we may recognize from an increase to our assets under management.

The investment management industry has been evolving and industry participants are facing challenging trends including passive investments taking market share from traditional active strategies;

continued downward fee pressure;

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We are investing in key capabilities, including investment professionals, distribution professionals, technologies, and new product offerings in order to provide our clients with strong investment management expertise and service.

On December 29, 2021, we completed our acquisition of Oak Hill Advisors, L.P., a leading alternative credit manager, and other entities that had common ownership (collectively, OHA).

We acquired 100% of the equity interests of Oak Hill Advisors, L.P., 100% of the equity interests in entities that make co-investments in certain affiliated private investment funds (the "co-investment entities") and a majority of the equity interests in entities that have interests in general partners of affiliated private investment funds and are entitled to a disproportionate allocation of income (the "carried interest entities").

The acquisition accelerates our expansion into alternatives investment markets and complements our existing global platform and ongoing strategic initiatives in our core investments and distribution capabilities.

Alternative credit strategies continue to be in demand from investors across the globe seeking attractive yields and risk-adjusted returns.

MARKET TRENDS.

stock indexes produced strong gains in 2023.

Due in part to generally favorable corporate earnings, a resilient economy, and increased investor interest in artificial intelligence, equities were led by a relatively small group of high-growth, technology-oriented mega-cap companies.

The market overcame bearish factors such as regional bank turmoil in the spring;

uncertainty about Congress and President Biden agreeing to raise the debt ceiling;

geopolitical tensions;

and a sluggish Chinese economic recovery amid property sector distress.

Arguably the most significant factor affecting the U.S.

economy and the financial markets throughout the year was rising interest rates in response to elevated inflation.

The Federal Reserve raised short-term interest rates four times through the end of July, lifting the fed funds target rate to the 5.25% to 5.50% range.

Long-term U.S.

Treasury yields climbed for much of the year, peaking in October, before falling sharply in response to weaker-than-expected inflation and labor market data.

Equities rallied through year-end, as Fed officials projected at their mid-December policy meeting that there could be three quarter-point rate cuts in 2024.

stocks produced strong gains for the second consecutive year in 2024, and various equity indexes reached new all-time highs during the year.

The equity market was buoyed by generally favorable corporate earnings and by continuing interest in companies expected to benefit from AI developments.

Although inflation remained above the Federal Reserve’s long-term 2% target, the central bank shifted its focus toward the moderating labor market in the second half of the year and began reducing interest rates starting in September.

In the final months of the year, equity investors generally welcomed not only looser monetary policy, but also diminished political uncertainty following U.S.

elections in early November.

Market volatility increased, however, as investors curtailed their expectations for short-term interest rate cuts in 2025.

Developed non-U.S.

equity markets produced strong gains in U.S.

dollar terms;

returns to U.S.

investors were lifted by a weaker dollar versus major European currencies.

In Europe, equity markets advanced broadly.

UK shares gained about 14% but lagged various markets in the European Union.

In developed Asia, equities in Japan led the region with a gain of about 21%, helped by the continuation of a highly stimulative monetary policy.

Hong Kong stocks declined nearly 15%, hurt in part by Chinese economic and property market weakness.

Emerging equity markets produced solid gains but underperformed stocks in developed markets in U.S.

equity markets were mostly positive in 2024, helped by looser monetary policies from various central banks around the world.

However, returns to U.S.

investors were hurt by a stronger dollar versus major non-U.S.

In Europe, equity markets were widely mixed in U.S.

dollar terms, whereas developed Asian markets were mostly positive.

Emerging equity markets generally appreciated and outperformed stocks in developed non-U.S.

markets in U.S.

dollar terms.

Most markets in Latin America produced very strong returns.

In the emerging Europe, Middle East, and Africa

(EMEA) region, market performance was largely positive.

In emerging Asia, several markets rose sharply, but Chinese shares tumbled more than 11%.

Emerging Asian markets were mostly positive in dollar terms, though South Korean stocks fell sharply due in large part to late-year political turmoil.

Equities in the emerging Europe, Middle East, and Africa (EMEA) region were also mostly positive.

In Latin America, stocks in regional heavyweights Brazil and Mexico fell sharply, though some smaller markets produced positive returns.

Returns of several major equity market indexes for 2024 are as follows:

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(1) Returns exclude dividends

Global bond returns produced positive returns in U.S.

dollar terms in 2023, thanks to a late-year drop in longer-term interest rates in many countries.

In the U.S., Treasury bill yields rose as the Federal Reserve lifted the fed funds target rate to the 5.25% to 5.50% range by the end of July and kept the target range steady through the end of the year.

Global bond returns were mostly positive in 2024, as many central banks around the world reduced short-term interest rates due to easing inflation pressures.

In the U.S., Treasury bill yields declined as the Federal Reserve reduced the federal funds target rate by 100 basis points (1.00%) in three steps starting in mid-September.

Intermediate- and long-term U.S.

Treasury yields climbed to multi-year highs by late October.

The 10-year U.S.

Treasury note yield reached the 5.00% level for the first time in about 16 years.

Yields plunged in the last two months of the year, however, amid signs of disinflation, labor market softening, and expectations for Fed rate cuts in 2024.

Treasury yields fluctuated throughout the year, but ultimately increased for the year amid expectations for fewer interest rate cuts in 2025 due to inflation remaining above the Federal Reserve’s 2% long-term goal.

The 10-year U.S.

Treasury note yield started and ended the year at 3.88%.

investment-grade bond universe, sector performance was broadly positive.

Corporate bonds produced very strong gains.

Mortgage-backed, commercial mortgage-backed, and asset-backed securities performed in line with the broad market index.

Treasury securities trailed with milder gains.

Tax-free municipal bonds outpaced the broad taxable bond market.

High yield corporate bonds, which are less sensitive to interest rate movements and more sensitive to credit-related trends, strongly outperformed higher-quality bonds.

Treasury note yield was 4.58% at December 31, 2024 compared to 3.88% at December 31, 2023 .

investment-grade universe, sector performance was broadly positive.

Non-agency commercial mortgage-backed securities and asset-backed securities produced solid gains.

Corporate bonds rose to a lesser degree.

Mortgage-backed securities performed in line with the broad investment-grade market.

Treasuries lagged with slight positive returns.

Tax-free municipal bonds slightly trailed the broad taxable bond market.

High yield corporate bonds produced solid gains and strongly outperformed the investment-grade bond market.

Bonds in developed non-U.S.

markets produced positive returns in U.S.

dollar terms, helped by a weaker dollar versus major European currencies.

In Europe, long-term government bond yields climbed as major central banks raised short-term rates for most of the year.

Long-term yields retreated with U.S.

Treasury yields in the fourth quarter as inflation pressures eased and the major central banks kept short-term rates steady.

In Japan, long-term Japanese government bond (JGB) yields were fairly steady in the first half of the year but climbed from July through late October.

During that timeframe, the Bank of Japan (BoJ) increased the flexibility of its yield curve control policy, and the 10-year JGB yield approached 1.00%—its highest level in more than a decade.

Yields retreated in November and December.

Emerging markets bonds produced strong returns in dollar terms.

Bonds denominated in local currencies fared better than dollar-denominated issues, as most emerging markets currencies strengthened versus the U.S.

markets produced negative returns in U.S.

dollar terms due to weaker currencies versus the dollar and rising bond yields in some countries.

Easing inflation pressures enabled central banks in Europe and the UK to reduce interest rates a few times.

In Japan, longer-term interest rates rose as the Bank of Japan increased short-term rates in March, ending a multi-year period of negative interest rates.

The Bank of Japan also unexpectedly raised rates at the end of July.

In the emerging markets fixed income universe, dollar-denominated bonds produced gains in U.S.

dollar terms, but local currency bonds produced negative returns, as most developing markets currencies declined versus the dollar.

Returns of several major bond market indexes for 2024 are as follows:

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Assets under management ended 2024 at $1,606.6 billion, an increase of $162.1 billion from the end of 2023.

This increase was primarily driven by net market appreciation and income, net of distributions not reinvested, of $251.6 billion, offset by net cash outflows of $81.8 billion.

This increase was driven by net market appreciation and income, net of distributions not reinvested, of $205.3 billion, offset by net cash outflows of $43.2 billion.

The following table details changes in our assets under management by asset class during the last three years:

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$ 992.7 $ 175.7 $ 477.7 $ 41.7 $ 1,687.8

Net cash flows prior to manager-driven distributions (72.7) 4.1 4.9 4.6 (59.1)

Manager-driven distributions — — — (2.6) (2.6)

Net cash flows (72.7) 4.1 4.9 2.0 (61.7)

(44.6) 1.2 14.9 — (28.5)

Net market appreciation (depreciation) and income (3)

(255.8) (12.8) (82.5) (0.3) (351.4)

Acquired assets under management — 5.2 — 41.7 46.9

Change during the period (328.5) (8.7) (77.6) 1.7 (413.1)

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664.2 167.0 400.1 43.4 1,274.7

Net cash flows prior to manager-driven distributions (85.4) (6.8) 9.1 3.9 (79.2)

Manager-driven distributions — — — (2.6) (2.6)

Net cash flows (85.4) (6.8) 9.1 1.3 (81.8)

(72.7) 4.1 4.9 2.0 (61.7)

Net market appreciation (depreciation) and income (3)

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743.6 170.0 483.0 47.9 1,444.5

Net cash flows prior to manager-driven distributions (52.0) 12.6 (6.5) 6.4 (39.5)

Manager-driven distributions — — — (3.7) (3.7)

Net cash flows (52.0) 12.6 (6.5) 2.7 (43.2)

(85.4) (6.8) 9.1 1.3 (81.8)

Net market appreciation (depreciation) and income (3)

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Generally, only those strategies with longer than daily liquidity are included.

Unfunded capital commitments of $11.6 billion at December 31, 2023 and $10.6 billion at December 31, 2022 and are not reflected in AUM above.

(3) Alternatives net cash flows include outflows of $2.6 billion in 2023 and $2.6 billion in 2022 that represent investment manager-driven distributions.

Unfunded capital commitments of $16.2 billion at December 31, 2024, $11.6 billion at December 31, 2023, and $10.5 billion at December 31, 2022 are not reflected in AUM above.

(3) Reflects net distributions not reinvested of $5.9 billion in 2024, $2.9 billion in 2023, and $3.3 billion in 2022.

Investment advisory clients outside the U.S.

accounted for 8.6% of our assets under management at December 31, 2023 and 9.1% at December 31, 2022.

Assets under management in our target date retirement products, which are included in the multi-asset column shown above, were $408.4 billion at December 31, 2023, compared with $334.2 billion at December 31, 2022, and $391.1 billion at December 31, 2021.

Net inflows into these products were $13.1 billion in 2023, $11.3 billion in 2022, and $11.3 billion in 2021.

Our net cash outflows in 2023 were driven primarily by our growth-oriented equity strategies sourced from Americas financial intermediaries and institutional clients.

accounted for 8.8% of our assets under management at December 31, 2024, 8.6% at December 31, 2023, and 9.1% at December 31, 2022.

The following table details our assets under management and net flows in our target date retirement products, which are included in the multi-asset column shown above:

(in billions) 2024 2023 2022

Assets under management $ 475.6 $ 408.4 $ 334.2

Net cash flows $ 16.3 $ 13.1 $ 11.3

Our net cash outflows in 2024 were driven primarily by growth-oriented equity strategies and a multi-asset sub-advised variable annuity outflow.

These outflows were partially offset by net cash inflows in our target date retirement products, fixed income and alternative strategies.

Financial intermediaries were the main sources of net outflows in 2024.

Geographically, while the EMEA and APAC regions experienced net inflows, these were outweighed by outflows in the Americas.

For 2023, net outflows were driven primarily by our growth-oriented equity strategies sourced from Americas financial intermediaries and institutional clients.

These outflows were partially offset by net cash inflows in our multi-asset strategies, predominately our target date retirement products, and alternative strategies.

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These outflows were partially offset by net cash inflows in our international fixed income, multi-asset, and alternative strategies.

From a geographical perspective, the Americas and EMEA regions experienced net outflows predominantly in equity in both regions, while APAC had positive net flows.

Net cash flows for 2021 reflect net outflows from domestic equity as well as domestic fixed income.

These outflows also reflect the redemption of about $2.5 billion from fixed income to fund the cash portion of our OHA acquisition.

These outflows were partially offset by cash inflows in our multi-asset franchise and international fixed income.

From a geographical perspective, the Americas and EMEA regions experienced net outflows predominantly in equity in both regions, while APAC had net inflows.

From a geographical perspective, the Americas and EMEA regions experienced net outflows predominantly in equities, while APAC had positive net flows.

We provide strategic investment advice solutions for certain portfolios.

These advice solutions, which the vast

majority is overseen by our multi-asset division, may include strategic asset allocation, and in certain portfolios,

asset selection and/or tactical asset allocation overlays.

We also offer advice solutions through retail separately

managed accounts and separately managed accounts model delivery.

As of December 31, 2023, total assets in

these solutions were $499 billion, of which $487 billion are included in our reported assets under management in the tables above.

We provide participant accounting and plan administration for defined contribution retirement plans that invest in the firm's U.S.

These advice solutions, the vast majority of which are overseen by our multi-asset division, may include strategic asset allocation, and in certain portfolios, asset selection and/or tactical asset allocation overlays.

We also offer advice solutions through retail separately managed accounts and separately managed accounts model delivery.

As of December 31, 2024, total assets in these solutions were $557 billion, of which $542 billion are reported in assets under management in the tables above.

We provide participant accounting and plan administration for defined contribution retirement plans that primarily invest in the firm's U.S.

mutual funds, collective investment trusts and funds managed outside of the firm's complex.

As of December 31, 2023, our assets under administration were $245 billion, of which nearly $146 billion were assets we manage.

As of December 31, 2024, our assets under administration were $282 billion, of which $159 billion were assets we manage.

INVESTMENT PERFORMANCE (1) .

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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 rate of 4 or 5 stars (6) .

By comparison, 32.5% of Morningstar's fund population is given a rating of 4 or 5 stars (6) .

In addition, 63.0% (6) of AUM in our rated U.S.

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GAAP basis and a non-GAAP basis.

The non-GAAP basis adjusts for the impact of our consolidated sponsored investment products, the impact of market movements on the supplemental savings plan liability and related economic hedges, investment income related to certain other investments, acquisition-related amortization and costs, impairment charges, and certain nonrecurring charges and gains, if any.

We completed the acquisition of OHA on December 29, 2021.

As a result, our results of operations for 2021 does not include any financial results of OHA.

2023 compared with 2022 2022 compared with 2021

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, if any.

2024 compared to 2023 2023 compared to 2022

(in millions, except per-share data) 2024 2023 2022 Change % Change (1)

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Investment advisory fees (2)

$ 6,399.7 $ 5,709.5 $ 5,962.7 $ 690.2 12.1 % $ (253.2) (4.2) %

Performance-based advisory fees (2)

$ 59.3 $ 38.2 $ 6.4 $ 21.1 55.2 % $ 31.8 n/m

Capital allocation-based income (3)

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Net operating income $ 2,333.3 $ 1,986.2 $ 2,373.7 $ 347.1 17.5 % $ (387.5) (16.3) %

Non-operating income $ 504.1 $ (425.5) $ 284.6 $ 929.6 n/m $ (710.1) n/m

Net income attributable to

Non-operating income $ 486.3 $ 504.1 $ (425.5) $ (17.8) (3.5) % $ 929.6 n/m

Net income to T.

Rowe Price Group $ 2,100.1 $ 1,788.7 $ 1,557.9 $ 311.4 17.4 % $ 230.8 14.8 %

Diluted earnings per common share $ 9.15 $ 7.76 $ 6.70 $ 1.39 17.9 % $ 1.06 15.8 %

Weighted average common shares outstanding assuming dilution 224.8 227.1 228.8 (2.3) (1.0) % (1.7) (0.7) %

Adjusted basis (4)

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Net operating income $ 2,685.9 $ 2,263.2 $ 2,500.5 $ 422.7 18.7 % $ (237.3) (9.5) %

Non-operating income (loss) $ 140.8 $ (24.4) $ 28.7 $ 165.2 n/m $ (53.1) n/m

Net income attributable to

Non-operating income (loss) $ 148.7 $ 140.8 $ (24.4) $ 7.9 5.6 % $ 165.2 n/m

Net income to T.

Rowe Price Group $ 2,139.5 $ 1,750.1 $ 1,864.8 $ 389.4 22.3 % $ (114.7) (6.2) %

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Average AUM $ 1,561.9 $ 1,362.3 $ 1,398.4 $ 199.6 14.7 % $ (36.1) (2.6) %

$ 1,362.3 $ 1,398.4 $ 1,599.3 $ (36.1) (2.6) % $ (200.9) (12.6) %

Ending AUM $ 1,606.6 $ 1,444.5 $ 1,274.7 $ 162.1 11.2 % $ 169.8 13.3 %

Annualized Effective Fee Rate (in bps) 42.2 42.7 44.4 (0.5) n/m (1.7) n/m

Investment advisory annualized effective fee rate (EFR) (in bps)

EFR without performance-based fees 41.0 41.9 42.6 (0.9) (2.1) % (0.7) (1.6) %

EFR with performance-based fees 41.4 42.2 42.7 (0.8) (1.9) % (0.5) (1.2) %

(1) The percentage change is not meaningful (n/m).

(2) Performance-based advisory fees were previously included in investment advisory fees.

Prior periods were recast to reflect this change.

(3) Capital allocation-based income represents the change in accrued carried interest.

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GAAP measures at the end of the Results of Operations section of this Management's Discussion and Analysis.

(4) Average assets under management for 2021 does not include the impact of the fee-basis assets under management acquired in the OHA acquisition.

Results Overview - 2023 as compared to 2022

Investment advisory revenues.

Results Overview - 2024 compared to 2023

Investment advisory fees are earned based on the value and composition of our assets under management, which change based on fluctuations in financial markets, investment performance, and net cash flows.

As our average assets under management increase or decrease in a given period, the level of our investment advisory fees for that same period generally fluctuate in a similar manner.

Our annualized effective fee rates can be impacted by market or cash flow related shifts among asset and share classes, shifts among vehicles, price changes in existing products, and asset level changes in products with tiered-fee structures.

Investment advisory fees earned in 2024 increased 12.1% compared to 2023 as average assets under management increased $199.6 billion, or 14.7%, to $1,561.9 billion.

The average annualized effective fee rate, excluding performance-based advisory fees, earned on our assets under management was 41.0 basis points in 2024, compared to 41.9 basis points earned in 2023.

Our effective fee rate has declined largely due to a mix shift in assets toward lower fee products and asset classes from client flows and transfers, partially offset by higher market returns.

The average annualized fee rate, excluding performance-based fees, was 40.5 basis points for the fourth quarter of 2024.

Operating expenses were $4,760.3 million in 2024, an increase of 6.4% compared to 2023.

The increase was primarily driven by higher compensation costs, distribution and servicing costs, and advertising and promotion costs.

Additionally, 2023 included a $82.4 million reduction in operating expenses related to the remeasurement of the contingent consideration liability compared to a $13.4 million reduction in 2024.

On a non-GAAP basis, operating expenses were $4,498.8 million, an increase of 5.6% compared to 2023.

The increase in our non-GAAP operating expenses was primarily driven by higher costs across compensation and benefits, distribution and servicing, advertising, professional fees, and a non-recurring recovery of general and administrative costs recognized in 2023.

These increases were partially offset by lower external research fees, lower accrued carried interest compensation, and higher capitalized labor.

In 2024, the firm changed its approach to paying for external research, consistent with regulations and general industry practice.

We currently estimate our 2025 non-GAAP operating expenses, excluding non-GAAP accrued carried interest compensation, will grow in the range of 4%-6% from the 2024 amount of $4,456.3 million.

We could elect to adjust our expense growth should unforeseen circumstances arise, including significant market movements.

Operating margin was 32.9% in 2024 compared to 30.7% in 2023.

The increase is primarily driven by net revenue growth outpacing operating expense growth primarily due to higher average assets under management.

Diluted earnings per share was $9.15 in 2024 compared to $7.76 in 2023.

The increase in GAAP basis diluted earnings per share was primarily due to higher operating income and a lower effective tax rate.

On a non-GAAP basis, diluted earnings per share was $9.33 in 2024 compared to $7.59 in 2023.

The increase was primarily due to higher operating income and a lower effective tax rate.

See our non-GAAP reconciliations later in this Management's Discussion and Analysis section.

Results Overview - 2023 compared to 2022

Investment advisory fees are earned based on the value and composition of our assets under management, which change based on fluctuations in financial markets and net cash flows.

As our average assets under management increase or decrease in a given period, the level of our investment advisory fee revenue for that same period generally fluctuates in a similar manner.

As our average assets under management increase or decrease in a given period, the level of our investment advisory fees for that same period generally fluctuates in a similar manner.

Our annualized effective fee rates can be impacted by market or cash flow related shifts among asset and share classes, price changes in existing products, and asset level changes in products with tiered-fee structures.

Investment advisory revenues earned in 2023 decreased 3.7% over the comparable 2022 period as average assets under our management decreased $36.1 billion, or 2.6%, to $1,362.3 billion.

The average annualized effective fee rate earned on our assets under management was 42.2 basis points in 2023, compared with 42.7 basis points earned in 2022.

Our effective fee rate has declined largely due to a mix shift toward lower fee asset classes and vehicles as a result of net equity outflows, partially offset by higher market

returns and higher performance-based fees during the same period.

Investment advisory fees earned in 2023 decreased 3.7% over the comparable 2022 period as average assets under our management decreased $36.1 billion, or 2.6%, to $1,362.3 billion.

The average annualized effective fee rate earned on our assets under management was 41.9 basis points in 2023, compared to 42.6 basis points earned in 2022.

Our effective fee rate has declined largely due to a mix shift toward lower fee asset classes and vehicles as a result of net equity outflows, partially offset by higher market returns.

The average annualized fee rate earned on our assets under management was 41.5 basis points for the fourth quarter of 2023.

Operating expenses.

Operating expenses were $4,474.3 million in 2023, an increase of 8.7% over the comparable 2022 period.

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These increases were offset in part by higher capitalized labor, lower stock-based compensation, and a non-recurring recovery of general and administrative costs incurred in 2022.

We currently estimate our 2024 non-GAAP operating expenses, excluding non-GAAP accrued carried interest compensation, will grow in the range of 3%-5% from the comparable 2023 amount of $4,190.7 million.

We could elect to adjust our expense growth should unforeseen circumstances arise, including significant market movements.

Operating margin.

Our operating margin in 2023 was 30.7%, compared with 36.6% in 2022.

The decrease in our operating margin in 2023 compared with 2022 is primarily driven by a decrease in investment advisory revenue as a result of lower average assets under management and higher operating expenses.

Operating margin was 30.7% in 2023, compared to 36.6% in 2022.

The decrease in our operating margin in 2023 compared to 2022 is primarily driven by a decrease in investment advisory fees as a result of lower average assets under management and higher operating expenses.

Diluted earnings per share.

Diluted earnings per share was $7.76 in 2023 as compared to $6.70 in 2022.

On a non-GAAP basis, diluted earnings per share was $7.59 in 2023 as compared to $8.02 in 2022.

The increase in 2023 GAAP basis diluted earnings per share from 2022 was primarily due to net investment income in 2023 as compared to net investment losses in 2022.

Diluted earnings per share was $7.76 in 2023 compared to $6.70 in 2022.

The increase in 2023 GAAP basis diluted earnings per share from 2022 was primarily due to net investment income in 2023 compared to net investment losses in 2022.

These increases were partially offset by lower operating income and a higher effective tax rate.

For non-GAAP diluted earnings per share, the decrease in 2023 was primarily due to lower operating income and a higher effective tax rate.

These decreases were offset by net investment income earned on our cash and discretionary investment portfolio in 2023 as compared to net investment losses in 2022.

See our non-GAAP reconciliations later in this Management's Discussion and Analysis section.

Results Overview - 2022 as compared to 2021

Investment advisory revenues.

Investment advisory fees are earned based on the value and composition of our assets under management, which change based on fluctuations in financial markets and net cash flows.

As our average assets under management increase or decrease in a given period, the level of our investment advisory fee revenue for that same period generally fluctuates in a similar manner.

Investment advisory revenues earned in 2022 decreased 15.9% over the comparable 2021 period as average assets under our management decreased $200.9 billion, or 12.6%, to $1,398.4 billion.

For the first half of 2022, we voluntarily waived $9.3 million, or less than 0.2%, of our investment advisory fees from certain of our money market mutual funds, trusts, and other investment portfolios in order to maintain a positive yield for investors.

No money market fees were waived in the second half of 2022.

The average annualized effective fee rate earned on our assets under management was 42.7 basis points in 2022, compared with 44.4 basis points earned in 2021.

Our effective fee rate has declined largely due to a mix shift toward lower fee asset classes and vehicles as a result of market declines and net flows, partially offset by a reduction in money market fee waivers and a higher-than-average effective fee rate earned on our alternative asset class.

The average annualized fee rate earned on our assets under management was 42.3 basis points for the fourth quarter of 2022.

Operating expenses.

Operating expenses were $4,114.7 million in 2022, an increase of 3.9% over the comparable 2021 period.

Our operating expenses for 2022 include impairment charges of $175.1 million related to certain investment management contract intangible assets whose assessed fair value has declined below their respective carrying values.

On a non-GAAP basis, operating expenses were $4,087.8 million, a 6.4% increase over the comparable 2021 period.

Our operating expenses for 2022 also include OHA's operating expenses, which primarily impact compensation expense;

technology, occupancy, and facility costs;

and general, administrative and other costs.

The increase in our non-GAAP operating expenses was primarily attributable to the addition of OHA operating expenses;

salaries and benefits;

severance and other costs associated with the fourth quarter of 2022 workforce reduction action;

higher costs related to the ongoing investment in the firm's technology capabilities;

higher recordkeeping expenses due to the expanded relationship with FIS;

and information services and travel-related costs.

These increases were offset in part by lower distribution and servicing costs and lower bonuses.

Operating margin.

Our operating margin in 2022 was 36.6%, compared with 48.4% in 2021.

The decrease in our operating margin in 2022 compared with 2021 is primarily driven by a decrease in investment advisory revenue as a result of lower average assets under management and higher operating expenses.

Diluted earnings per share.

Diluted earnings per share was $6.70 in 2022 as compared to $13.12 in 2021.

On a non-GAAP basis, diluted earnings per share was $8.02 in 2022 as compared to $12.75 for 2021.

The decrease in both 2022 GAAP and non-GAAP diluted earnings per share compared to 2021 was primarily driven by lower operating income, net investment losses in 2022 as compared to net investment gains in 2021, and a higher effective tax rate.

These decreases were partially offset by lower weighted average outstanding shares.

Impairment charges recorded in the fourth quarter of 2022 also impacted the lower operating income that drove the GAAP diluted earnings per share decrease.

On a non-GAAP basis, diluted earnings per share was $7.59 in 2023 compared to $8.02 in 2022.

The decrease in 2023 was primarily due to lower operating income and a higher effective tax rate.

These decreases were offset by net investment income earned on our cash and discretionary investment portfolio in 2023 compared to net investment losses in 2022.

See our non-GAAP reconciliations later in this Management's Discussion and Analysis section.

2023 compared with 2022 2022 compared with 2021

2024 compared to 2023 2023 compared to 2022

(in millions) 2024 2023 2022 $ Change % Change (1)

4 unchanged sentences

Multi-asset 1,814.1 1,583.4 1,508.9 230.7 14.6 % 74.5 4.9 %

Alternatives 317.3 273.1 — 44.2 16.2 % 273.1 n/m

Alternatives 310.2 283.4 269.1 26.8 9.5 % 14.3 5.3 %

6,399.7 5,709.5 5,962.7 690.2 12.1 % (253.2) (4.2) %

Performance-based advisory fees (2)

59.3 38.2 6.4 21.1 55.2 % 31.8 n/m

Capital allocation-based income 46.6 161.9 (54.3) (115.3) n/m 216.2 n/m

8 unchanged sentences

Multi-asset 529.0 442.3 418.7 86.7 19.6 % 23.6 5.6 %

Alternatives 45.5 42.7 — 2.8 6.6 % 42.7 n/m

Alternatives 50.0 45.5 42.7 4.5 9.9 % 2.8 6.6 %

Average AUM $ 1,561.9 $ 1,362.3 $ 1,398.4 $ 199.6 14.7 % $ (36.1) (2.6) %

1 unchanged sentence

(1) n/m - the percentage change is not meaningful.

(2) Performance-based advisory fees were previously included in investment advisory fees.

Prior periods were recast to reflect this change.

Investment advisory fees.

The relationship between the change in average assets under management and the change in investment advisory fee revenue for 2023, 2022 and 2021 are presented above.

The relationship between the change in average assets under management and the change in investment advisory fees for 2024, 2023 and 2022 are presented above.

In 2024, the increase in investment advisory fees was due to higher average AUM as stronger market returns and appreciation were offset by net outflows over the last two years.

In 2023, the decline in overall advisory revenues was driven by lower average AUM and a mix shift toward lower fee asset classes and vehicles.

A lower starting AUM and net outflows in 2023 were the primary drivers of a lower average AUM in 2023.

These impacts were partially offset by stronger overall market returns in 2023 and $38.3 million of performance-based fees primarily earned on alternative strategy accounts in 2023 compared to an insignificant amount of performance-based fees in 2022.

In 2022, volatile markets and net outflows, overall, shifted the asset strategy and share class mix toward lower fee strategies and classes.

These drivers were offset in part by a reduction in money market fee waivers and higher-than-average fee rates earned on our alternative asset class.

Administrative, distribution, and servicing fees in 2023 were $550.9 million, a decrease of $22.7 million from 2022.

The decrease is primarily driven by lower transfer agent servicing activities provided to the T.

These impacts were partially offset by stronger overall market returns in 2023.

Performance-based advisory fees in each period were primarily related to alternative strategies.

Capital allocation-based income increased net revenues by $46.6 million.

The 2024 amount includes an increase of $134.1 million in accrued carried interest from investments in affiliated investment funds, partially offset by $87.5 million of non-cash amortization and impairments related to acquisition-date asset basis differences.

Impairments recognized in 2024 were $36.6 million, and should market and performance conditions deteriorate, additional impairments may be recognized in future periods.

The firm realized carried interest of $139.6 million compared to $109.8 million in the 2023 period.

For 2023, capital allocation-based income increased net revenues by $161.9 million.

This amount includes an increase of $223.2 million in accrued carried interest, partially offset by $61.3 million of non-cash amortization and impairments related to the difference in the acquisition closing date fair value and the carrying value on the date they were acquired.

A portion of the capital allocation-based income is passed through as compensation and recognized in compensation and related costs, with the unpaid amount reported as non-controlling interest on the consolidated balance sheet.

In 2024, the compensation expense was $5.4 million, consisting of $42.5 million related to the accrued carried interest offset in part by $37.1 million in amortization and impairment charges.

For 2023, we recognized compensation expense of $44.6 million, consisting of $70.0 million in compensation expense related to the accrued carried interest offset in part by $25.4 million in amortization and impairment charges.

Administrative, distribution, and servicing fees in 2024 were $588.0 million, an increase of $37.1 million compared to 2023.

The increase was primarily driven by higher average assets on which we earn non-discretionary advisory services revenue and higher transfer agent servicing activities provided to the T.

Rowe Price mutual funds.

For 2023, the decrease was primarily driven by lower transfer agent servicing activities provided to the T.

Rowe Price mutual funds, and lower 12b-1 revenue earned from the Advisor and R share classes of the U.S.

mutual funds as a result of lower average assets under management in these share classes.

The decrease in 12b-1 revenue is offset entirely by a decrease in the costs paid to third-party intermediaries that source these assets and is reported in distribution and servicing expense.

For 2022, lower 12b-1 revenue earned in 2022 primarily on the Advisor and R share classes of the U.S.

mutual funds as a result of lower assets under management in these share classes was offset by higher trustee services revenue and transfer agent servicing activities provided to our U.S.

mutual funds for retail shareholders.

Capital allocation-based income increased net revenues by $161.9 million.

The 2023 amount includes an increase of $223.2 million in accrued carried interest from investments in affiliated investment funds, partially offset by $61.3 million of non-cash amortization and impairments associated with the difference between the assets' fair value and carrying value on the date they were acquired.

The firm realized carried interest of $109.8 million compared with $87.7 million in the 2022 period.

We recognized corresponding compensation expense of $44.6 million related to total capital allocation-based income, consisting of $70.0 million related to the accrued carried interest offset in part by $25.4 million in amortization and impairment charges.

While impairments recognized in 2023 were immaterial, should market and performance conditions deteriorate, additional impairments may be recognized in future periods.

Comparatively, capital allocation-based income reduced net revenues by $54.3 million for 2022.

This amount includes an increase of $43.7 million in accrued carried interest that was completely offset by $98.0 million of non-cash amortization and impairments, consisting of $53.0 million of non-cash amortization associated with the difference in the acquisition closing date fair value and the carrying value of investments acquired as part of the OHA acquisition (basis difference), and $45.0 million of impairment charges due to reduced incentive fee growth expectations for certain investments in affiliated investment funds that earn capital allocation-based income, which we determined were other-than-temporarily impaired in 2022, and a higher discount rate.

We recognized a corresponding net reduction in compensation expense of $22.9 million related to the total capital allocation-based income that is attributable to the non-controlling interests.

This $22.9 million reduction includes $40.5 million related to the amortization and impairment charges offset in part by $17.6 million in compensation expense related to the accrued carried interest.

Net revenues are presented after the elimination of $2.1 million for 2023, $2.0 million for 2022, and $5.5 million for 2021, earned from our consolidated sponsored investment products.

The corresponding expenses recognized by these consolidated products were also eliminated from operating expenses.

The decrease in 12b-1 revenue was offset entirely by a decrease in the costs paid to third-party intermediaries that source these assets and is reported in distribution and servicing expense.

Net revenues are presented after the elimination of $3.6 million for 2024, $2.1 million for 2023, and $2.0 million for 2022, earned from our consolidated investment products.

The corresponding expenses recognized by these consolidated investment products were also eliminated from operating expenses.

Operating expenses

2023 compared with 2022 2022 compared with 2021

2024 compared to 2023 2023 compared to 2022

(in millions) 2024 2023 2022 $ Change % Change $ Change % Change

Compensation and related costs, excluding acquisition-related retention agreements, capital allocation-based income compensation, and supplemental savings plan $ 2,450.7 $ 2,405.8 $ 2,300.0 $ 44.9 1.9 % $ 105.8 4.6 %

Acquisition-related retention agreements 55.0 70.2 — (15.2) n/m 70.2 n/m

Compensation, benefits, and related costs $ 2,603.4 $ 2,450.7 $ 2,405.8 $ 152.7 6.2 % $ 44.9 1.9 %

Acquisition-related retention agreements 44.8 55.0 70.2 (10.2) (18.5) % (15.2) (21.7) %

Capital allocation-based income compensation 5.4 44.6 (22.9) (39.2) n/m 67.5 n/m

Supplemental savings plan 123.2 (132.3) 83.0 255.5 n/m (215.3) n/m

Deferred compensation liabilities 104.3 123.2 (132.3) (18.9) (15.3) % 255.5 n/m

Compensation and related costs 2,757.9 2,673.5 2,320.8 84.4 3.2 % 352.7 15.2 %

4 unchanged sentences

General, administrative, and other 433.8 421.3 412.2 12.5 3.0 % 9.1 2.2 %

Change in fair value of contingent consideration (82.4) (161.2) — 78.8 n/m (161.2) n/m

Acquisition-related amortization and impairment costs 134.2 283.5 — (149.3) n/m 283.5 n/m

Change in fair value of contingent consideration (13.4) (82.4) (161.2) 69.0 (83.7) % 78.8 (48.9) %

Acquisition-related amortization and impairment costs 156.7 134.2 283.5 22.5 16.8 % (149.3) (52.7) %

Total operating expenses $ 4,760.3 $ 4,474.3 $ 4,114.7 $ 286.0 6.4 % $ 359.6 8.7 %

Compensation and related costs, excluding non-cash amortization of certain acquisition-related retention agreements, capital allocation-based income compensation, and supplemental savings plan were $2,450.7 million, an increase $44.9 million, or 1.9%, compared with 2022.

The increase in 2023 was driven by $99.1 million in higher salaries and related benefits as a result of base salary increases in January 2023 and July 2022.

These increases were offset by higher capitalized labor, lower non-cash stock-based compensation, and lower other employee-related costs.

Total adjusted operating expenses (1)

$ 4,498.8 $ 4,260.7 $ 4,087.8 $ 238.1 5.6 % $ 172.9 4.2 %

(1) See the reconciliation to the comparable U.S.

GAAP measures at the end of the Results of Operations section of this Management's Discussion and Analysis.

Compensation, benefits and related costs were $2,603.4 million, an increase of $152.7 million, or 6.2%, compared to 2023.

The increase was driven by a higher bonus pool on an increase in revenue and higher salaries and related benefits partially offset by higher capitalized labor and lower other employee related costs.

The firm employed 8,158 associates at December 31, 2024, an increase of 3.2% from the end of 2023.

For 2022, compensation and related costs, excluding non-cash amortization of certain acquisition-related retention agreements, capital allocation-based income compensation, and supplemental savings plan, increased $105.8 million, or 4.6%, as compared with 2021.

The 2022 period includes OHA's compensation and related costs.

Contributing to the increase was $131.7 million associated with an increase in base salaries and related benefits from higher average headcount and base salary increases in January and July 2022, and a total of $10.8 million in additional costs associated with non-cash stock-based compensation expense.

These increases in compensation and related costs were offset in part by a decline in bonuses of $48.6 million.

Distribution and servicing costs were $289.9 million for 2023, a decrease of $11.6 million, or 3.8%, compared to $301.5 million in 2022.

For 2023, compensation, benefits and related costs were $2,450.7 million, an increase of $44.9 million, or 1.9%, compared to 2022.

The increase was driven by $99.1 million in higher salaries and related benefits as a result of base salary increases in January 2023 and July 2022.

These increases were offset by higher capitalized labor, lower non-cash stock-based compensation, and lower other employee-related costs.

Distribution and servicing costs were $354.1 million for 2024, an increase of $64.2 million, or 22.1%, compared to $289.9 million in 2023.

The increase was primarily driven by higher average assets under management distributed through intermediaries.

For 2023, distribution and services costs were $289.9 million, a decrease of $11.6 million, or 3.8%, compared to 2022.

The decrease was primarily driven by lower average assets under management in certain share classes of the U.S.

2 unchanged sentences

intermediaries as the average assets under management in these products were higher.

For 2022, distribution and services costs were $301.5 million, a decrease of $72.4 million, or 19.4%, compared to $373.9 million for 2021.

The decrease was primarily driven by lower average assets under management in certain share classes of the U.S.

mutual funds that earn 12b-1 fees.

Additionally, lower average assets under management in our international products, including our Japanese Investment Trusts (ITMs) and certain SICAV share classes, contributed to lower distribution costs.

Distribution and servicing costs paid to third-party intermediaries that source the assets of certain share classes of our U.S.

mutual funds and our international products, such as our Japanese ITMs and SICAVs, are recognized in this expense category.

Both of these costs are offset entirely by the revenue we earn and report in net revenues:

12b-1 revenue recognized in administrative, distribution, and servicing fees for the U.S.

mutual funds and investment advisory fee revenue for our international products.

Advertising and promotion costs were $114.2 million for 2023, an increase of $16.9 million, or 17.4%, compared with 2022.

The costs in this expense category primarily 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 were offset entirely by the distribution revenue we earn and report in net revenues:

12b-1 revenue is recognized in administrative, distribution, and servicing fees for the Advisor and R share classes of the U.S.

mutual funds and investment advisory fees for our international products.

Advertising and promotion costs were $129.6 million for 2024, an increase of $15.4 million, or 13.5%, compared to 2023.

The increase was primarily driven by higher media advertising.

For 2023, advertising and promotion costs were $114.2 million, an increase of $16.9 million, or 17.4%, compared to 2022.

The increase was primarily driven by higher media advertising and agency costs in 2023.

For 2022, advertising and promotion costs were $97.3 million, a decrease of $2.9 million, or 2.9%, compared with 2021.

The decrease was primarily driven by a decrease in media advertising spend during 2022, partially offset by higher promotion-related costs.

Product and recordkeeping related costs were $291.0 million for 2023, a decrease of $9.1 million, or 3.0%, compared with 2022.

Product and recordkeeping related costs were $297.5 million for 2024, an increase of $6.5 million, or 2.2%, compared to 2023.

The increase was primarily driven by higher product related costs to be reimbursed from our sponsored investment products partially offset by lower recordkeeping related costs.

For 2023, product and recordkeeping related costs were $291.0 million for 2023, a decrease of $9.1 million, or 3.0%, compared to 2022.

The decrease was driven by lower recordkeeping related costs.

Product and recordkeeping related costs were $300.1 million for 2022, an increase of $63.8 million, or 27.0%, compared with 2021.

Approximately 86% of the increase in 2022 was driven by the recordkeeping costs incurred as part of our expanded relationship with Fidelity National Information Services, Inc.

("FIS") that began in August 2021.

These costs incurred were partially offset by a reduction in compensation expenses as a result of the approximately 800 associates who transitioned to FIS in August 2021.

Technology, occupancy, and facility costs were $632.6 million for 2023, $560.5 million for 2022, and $484.9 million for 2021.

The increases over the last two years were primarily due to ongoing investment in our technology capabilities, including depreciation and hosting solution licenses, and increased office facility costs, mainly related to rent expense associated with a new London office that we began leasing in the second half of 2022 and occupied in September 2023.

General, administrative, and other costs were $421.3 million for 2023, $412.2 million for 2022, and $383.6 million for 2021.

The increase in 2023 compared to 2022 was primarily due to higher professional fees and travel costs.

Partially offsetting these increases was a recovery of $20.8 million in nonrecurring costs that were incurred in 2022.

The increase in 2022 as compared to 2021 was primarily due to higher net business-related expenses, including higher travel and information services as well as certain nonrecurring costs incurred during 2022.

Partially offsetting this increase were the absence of transaction costs incurred to complete the acquisition of OHA in December 2021 and lower professional and legal fees.

Technology, occupancy, and facility costs were $644.1 million for 2024, an increase of $11.5 million or 1.8%, compared to 2023.

The increase was due to ongoing investment in our technology capabilities, primarily hosted solutions, partially offset by lower facility costs as 2023 included the rent cost of two London facilities until we occupied our new building in September 2023.

For 2023, technology, occupancy, and facility costs were $632.6 million, an increase of $72.1 million or 12.9%, compared to 2022.

The increase was primarily due to ongoing investment in our technology capabilities, including depreciation and hosting solution licenses, and increased office facility costs, mainly related to rent expense associated with a new London office that we began leasing in the second half of 2022 and occupied in September 2023.

General, administrative, and other costs were $433.8 million for 2024, an increase of $12.5 million or 3.0%, compared to 2023.

The increase was primarily due to a cost recovery recognized in 2023 that did not recur in 2024, higher professional fees and travel costs.

These increases were partially offset by lower external research fees and other general and administrative costs.

In 2024, the firm changed its approach to paying for external research, consistent with regulations and general industry practice.

For 2023, general, administrative, and other costs were $421.3 million, an increase of $9.1 million or 2.2% compared to 2022.

The increase was primarily due to higher professional fees and travel costs, partially offset by a $20.8 million recovery of nonrecurring costs that were incurred in 2022.

Change in fair value of contingent consideration.

1 unchanged sentence

Each reporting period, we record the fair value of the contingent consideration due under this arrangement.

We recognized a reduction in the fair value of the contingent consideration liability of $82.4 million in 2023 and $161.2 million in 2022 as challenging market conditions reduced revenue expectations and increased the discount rates used in the fair value determinations.

Acquisition-related amortization and impairment costs primarily relate to the indefinite- and definite-lived intangible assets identified and separately recognized, at fair value, as part of the purchase accounting of the 2021 acquisition of OHA.

In 2023, we recognized acquisition-related amortization and impairment costs of $134.2 million, a decrease of $149.3 million or 52.7%, compared with 2022.

The decrease from 2022 was primarily driven by an insignificant amount of impairment charges for certain intangibles compared to $175.1 million in 2022.

The impairment charges for both periods were the result of reduced growth expectations for both investment management and incentive fees.

Specific to 2022, the impairment charges were also impacted by a higher discount rate compared to when the acquisition closed in 2021.

Reduced revenue expectations have resulted in a reduction in the fair value of the contingent consideration liability of $13.4 million in 2024, $82.4 million in 2023, and $161.2 million in 2022.

The fair value of the contingent consideration liability as of December 31, 2024 is zero.

In 2024, we recognized acquisition-related amortization and impairment costs of $156.7 million, an increase of $22.5 million or 16.8%, compared to 2023.

The increase was primarily driven by impairment charges related to the trade name intangible asset.

For 2023, we recognized acquisition-related amortization and impairment costs of $134.2 million, a decrease of $149.3 million, compared to 2022.

The decrease was primarily driven by an insignificant amount of impairment charges in 2023 for certain intangibles compared to $175.1 million in 2022.

The impairment charges for both periods were the result of reduced growth expectations for both investment management and incentive fees and higher discount rate compared to when the acquisition closed in 2021.

The remaining weighted average amortization period for our definite-lived intangible assets is 3.7 years.

Should conditions that led us to recognize these impairment charges deteriorate, additional impairments may be recognized in future periods.

Should conditions that led us to recognize these impairment charges worsen, additional impairments may be recognized in future periods.

Non-operating income (loss)

Non-operating investment income was $504.1 million in 2023 compared to a non-operating loss of $425.5 million in 2022 and non-operating income of $284.6 million in 2021.

Non-operating investment activity for the years ended December 31, 2023, 2022 and 2021 comprised the following:

2023 compared with 2022 2022 compared with 2021

Non-operating income was $486.3 million in 2024 compared to $504.1 million in 2023 and a non-operating loss of $425.5 million in 2022.

Non-operating activity for the years ended December 31, 2024, 2023 and 2022 are as follows:

2024 compared to 2023 2023 compared to 2022

(in millions) 2024 2023 2022 $ Change $ Change

7 unchanged sentences

Market related gains (losses) and equity in earnings (losses) 62.0 50.3 (60.1) 11.7 110.4

Total seed capital investments 64.4 52.1 (59.3) 12.3 111.4

Total cash, discretionary, and seed investments 207.8 185.7 (83.7) 22.1 269.4

Net gains recognized upon deconsolidation (0.4) — 3.0 (0.4) (3.0)

Investments used to hedge the supplemental savings plan liability 123.6 (139.4) 83.0 263.0 (222.4)

Total net gains (losses) from non-consolidated sponsored investment products 309.3 (220.1) 156.6 529.4 (376.7)

Investments used to hedge the deferred compensation liabilities 96.4 123.6 (139.4) (27.2) 263.0

Total net gains (losses) from non-consolidated investment products 303.8 309.3 (220.1) (5.5) 529.4

Other investment income 59.4 45.9 15.4 13.5 30.5

Net gains (losses) on investments 363.2 355.2 (204.7) 8.0 559.9

Net gains (losses) on consolidated sponsored investment portfolios 164.6 (203.5) 74.7 368.1 (278.2)

Net gains (losses) on consolidated investment portfolios 130.3 164.6 (203.5) (34.3) 368.1

Other losses, including foreign currency losses (7.2) (15.7) (17.3) 8.5 1.6

Non-operating income (loss) $ 486.3 $ 504.1 $ (425.5) $ (17.8) $ 929.6

In 2023, stronger market returns contributed to the increased valuation and gains of our investment portfolio, while higher interest rates increased dividend income earned on our cash equivalents.

Adjusted non-operating income (loss) (1)

$ 148.7 $ 140.8 $ (24.4) $ 7.9 $ 165.2

(1) See the reconciliation to the comparable U.S.

GAAP measures at the end of the Results of Operations section of this Management's Discussion and Analysis.

In 2024 and 2023, strong market returns contributed to the increased valuation and gains of our investment portfolio, along with higher cash balances and interest rates increased dividend income.

In 2022, our overall investment portfolio valuations were negatively impacted by market declines caused by the continued elevated inflation, supply chain disruptions, and a more aggressive pace of Federal Reserve interest rate increases.

The impact of consolidating certain sponsored investment products on the individual lines of our consolidated statements of income for 2023, 2022, and 2021 is as follows:

2023 compared with 2022 2022 compared with 2021

The impact of consolidating investment products on the individual lines of our consolidated statements of income for 2024, 2023, and 2022 is as follows:

2024 compared to 2023 2023 compared to 2022

(in millions) 2024 2023 2022 $ Change $ Change

Operating expenses reflected in net operating income $ (9.8) $ (11.1) $ (8.2) $ 1.3 $ (2.9)

Net investment income reflected in non-operating income 164.6 (203.5) 74.7 368.1 (278.2)

Net investment income (loss) reflected in non-operating income 130.3 164.6 (203.5) (34.3) 368.1

Impact on income before taxes $ 120.5 $ 153.5 $ (211.7) $ (33.0) $ 365.2

Net income attributable to our interest in the consolidated T.

Rowe Price investment products $ 106.5 $ (103.4) $ 46.9 $ 209.9 $ (150.3)

Net income attributable to redeemable non-controlling interests (unrelated third-party investors) 47.0 (108.3) 15.6 155.3 (123.9)

Net income (loss) attributable to our interest in the consolidated investment products $ 84.8 $ 106.5 $ (103.4) $ (21.7) $ 209.9

Net income (loss) attributable to redeemable non-controlling interests (unrelated third-party investors) 35.7 47.0 (108.3) (11.3) 155.3

Impact on income before taxes $ 120.5 $ 153.5 $ (211.7) $ (33.0) $ 365.2

13 unchanged sentences

(2) Net income attributable to redeemable non-controlling interests represents the portion of earnings held in the firm's consolidated investment products, which are not taxable to the firm despite being included in pre-tax income.

Our effective tax rate for 2023 was 26.3%, compared with 25.6% for 2022 and 22.4% for 2021.

The increase in our effective tax rate in 2023 from 2022 was primarily due to an increase in the valuation allowances recorded mainly against UK-based deferred tax assets, including net operating losses, and a decrease in discrete tax benefits associated with option exercises and restricted stock vests.

Our effective tax rate for 2024 was 24.3%, compared to 26.3% for 2023 and 25.6% for 2022.

The decrease in our effective tax rate in 2024 from 2023 was primarily due to lower valuation allowances recognized in 2024.

These favorable impacts were slightly offset by higher state taxes.

For 2023, the increase in our effective tax rate from 2022 was primarily due to an increase in the valuation allowances recorded mainly against UK-based deferred tax assets, including net operating losses, and a decrease in discrete tax benefits associated with option exercises and restricted stock vests.

These unfavorable impacts were partially offset by a favorable impact of net gains attributable to redeemable non-controlling interests held in our consolidated investment products and state tax liability settlements.

For 2022, the increase in our effective tax rate from 2021 was primarily due to the unfavorable impact of net losses attributable to redeemable non-controlling interests held in our consolidated investment products and a reduction in the discrete tax benefits associated with option exercises and restricted stock vests.

Furthermore, our effective tax rate was unfavorably impacted by a valuation allowance recorded to recognize only the portion of UK-based deferred tax assets that are more likely than not to be realized.

These unfavorable impacts were partially offset by the favorable impacts of the reduction of the effective state tax rate due to the full phase-in of the 2018 Maryland state tax legislation and the remeasurement of the contingent consideration liability.

The non-GAAP tax rate primarily adjusts for the impact of the consolidated investment products, including the net income attributable to the redeemable non-controlling interests.

Our non-GAAP effective tax rates for 2023, 2022 and 2021 were 27.2% , 24.7%, 22.5%, r espectively.

The non-GAAP tax rate primarily adjusts for the impact of the consolidated investment products, including net income attributable to redeemable non-controlling interests.

Our non-GAAP effective tax rates were 24.5% for 2024 , 27.2% for 2023, and 24.7% for 2022 .

Our effective tax rate will continue to experience volatility in future periods due to, among other things, the impact on the stock-based compensation tax benefits recognized from market fluctuations in our stock price and timing of option exercises, changes in the mix of our earnings among countries with differing tax laws, and changes in the valuation allowance of foreign-based deferred tax assets.

1 unchanged sentence

We intend to continue maintaining a full valuation allowance on these and future deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances.

GAAP effective tax rate will also be impacted by changes in the proportion of net income that is attributable to our redeemable non-controlling interests and non-controlling interests reflected in permanent equity as well as the remeasurement of the contingent consideration liability.

GAAP effective tax rate is also impacted by changes in the proportion of net income that is attributable to our redeemable non-controlling interests, non-controlling interests reflected in permanent equity and the remeasurement of the contingent consideration liability.

We currently estimate our effective tax rates for the full-year 2025 will be in the range of 23.0% to 27.0% on a GAAP basis, and 23.0% to 26.0% on a non-GAAP basis.

This range reflects lower expected valuation allowances related to our foreign based deferred tax assets and a lower state rate associated with changes in income apportionment rules in certain jurisdictions.

The Organization of Economic Co-operation and Development has issued Pillar Two Model Rules (Pillar Two) introducing a global 15% minimum tax effective January 1, 2024 within certain countries in which we operate.

Our preliminary determination is that the Pillar Two implementation is unlikely to have a material impact on the company's future consolidated results of operations, cash flows, and overall financial position.

We will continue to monitor and evaluate the impacts of enacted and pending Pillar Two legislation on our operations.

For countries that have adopted Pillar Two in 2024, it did not have a material impact on the company's consolidated results of operations, cash flows, and overall financial position.

We will continue to monitor and evaluate the impacts of future Pillar Two legislation proposed or enacted in jurisdictions that have not yet adopted the rules.

NON-GAAP INFORMATION AND RECONCILIATION.

5 unchanged sentences

GAAP financial measures for each of the last three years.

(in millions) Operating expenses Net operating income Non-operating income (loss) Provision (benefit) for income taxes (6)

(in millions, except per-share amount) Operating expenses Net operating income Non-operating income (loss) Provision (benefit) for income taxes (6)

Net income attributable to T.

Rowe Price Group Diluted earnings per share (7)

GAAP Basis $ 4,474.3 $ 1,986.2 $ 504.1 $ 654.6 $ 1,788.7 $ 7.76

Rowe Price Group, Inc.

Diluted earnings per share (7)

GAAP Basis (FS line item) $ 4,760.3 $ 2,333.3 $ 486.3 $ 683.8 $ 2,100.1 $ 9.15

Non-GAAP adjustments:

9 unchanged sentences

Total acquisition-related (151.0) 238.5 — 51.0 187.5 0.82

Supplemental savings plan liability (3) (Compensation and related costs)

Deferred compensation liabilities (3) (Compensation and related costs)

(104.3) 104.3 (96.4) 1.7 6.2 0.03

Consolidated T.

investment products (4)

Consolidated investment products (4)

(6.2) 9.8 (130.3) (17.5) (67.3) (0.29)

2 unchanged sentences

Adjusted Non-GAAP Basis $ 4,498.8 $ 2,685.9 $ 148.7 $ 695.1 $ 2,139.5 $ 9.33

Operating expenses Net operating income Non-operating income (loss) Provision (benefit) for income taxes (6)

(in millions, except per-share amount) Operating expenses Net operating income Non-operating income (loss) Provision (benefit) for income taxes (6)

Net income attributable to T.

Rowe Price Diluted earnings per share (7)

Rowe Price Group, Inc.

Diluted earnings per share (7)

GAAP Basis (FS line item) $ 4,474.3 $ 1,986.2 $ 504.1 $ 654.6 $ 1,788.7 $ 7.76

9 unchanged sentences

(134.2) 134.2 — 28.8 105.4 0.46

Transaction costs (2) (General, admin and other)

(0.9) 0.9 — 0.2 0.7 0.01

Total acquisition-related (81.4) 142.7 — 36.9 105.8 0.46

Supplemental savings plan liability (3) (Compensation and related costs)

Deferred compensation liabilities (3) (Compensation and related costs)

(123.2) 123.2 (123.6) 0.5 (0.9) —

Consolidated T.

Rowe Price investment products (4)

Consolidated investment products (4)

(9.0) 11.1 (164.6) (22.3) (84.2) (0.37)

2 unchanged sentences

Adjusted Non-GAAP Basis $ 4,260.7 $ 2,263.2 $ 140.8 $ 653.9 $ 1,750.1 $ 7.59

(in millions) Operating expenses Net operating income Non-operating income Provision (benefit) for income taxes (6)

(in millions, except per-share amount) Operating expenses Net operating income Non-operating income (loss) Provision (benefit) for income taxes (6)

Net income attributable to T.

Rowe Price Group Diluted earnings per share (7)

Rowe Price Group, Inc.

Diluted earnings per share (7)

GAAP Basis (FS line item) $ 4,114.7 $ 2,373.7 $ (425.5) $ 498.6 $ 1,557.9 $ 6.70

Non-GAAP adjustments:

Acquisition-related transaction costs (2) (General, admin and other)

Acquisition-related:

Investment and NCI amortization and impairments (1) (Capital allocation-based income and Compensation and related costs)

40.5 57.5 — 15.5 42.0 0.18

Supplemental savings plan liability (3) (Compensation and related costs)

Acquisition-related retention arrangements (1) (Compensation and related costs)

(70.2) 70.2 — 18.9 51.3 0.22

Consolidated T.

Rowe Price investment products (4)

Contingent consideration (1)

161.2 (161.2) — (43.3) (117.9) (0.52)

Intangible assets amortization and impairments (1)

(283.5) 283.5 — 76.2 207.3 0.89

Transaction costs (2) (General, administrative and other)

(0.9) 0.9 — 0.2 0.7 0.01

Total acquisition-related (152.9) — 250.9 — — — 67.5 — 183.4 — 0.78

Deferred compensation liabilities (3) (Compensation and related costs)

132.3 (132.3) 139.4 1.9 5.2 0.02

Consolidated investment products (4)

(6.3) 8.2 203.5 27.8 75.6 0.33

Other non-operating income (5)

2 unchanged sentences

(1) These non-GAAP adjustments remove the impact of acquisition-related amortization and costs, including amortization of intangible assets, the recurring fair value remeasurements of the contingent consideration liability, 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 to increase comparability period to period.

We believe adjusting for these charges helps the reader's ability to understand our core operating results and increases comparability period to period.

(2) This non-GAAP adjustment removes acquisition-related transactions costs.

We believe adjusting for these charges helps the reader's ability to understand our core operating results and to increase comparability period to period.

(3) This non-GAAP adjustment removes the compensation expense impact from market valuation changes in the supplemental savings plan liability and the related net gains (losses) on investments designated as an economic hedge against the related liability.

Amounts deferred under the supplemental savings plan are adjusted for appreciation (depreciation) of hypothetical investments chosen by participants.

Rowe Price investment products to economically hedge the exposure to these market movements.

We believe it is useful to offset the non-operating investment income (loss) recognized on the

economic hedges against the related compensation expense and remove the net impact to help the reader's ability to understand our core operating results and to increase comparability period to period.

(4) These non-GAAP adjustments remove the impact the consolidated sponsored investment products have on our U.S.

We believe adjusting for these charges helps the reader's ability to understand our core operating results and increases comparability period to period.

(3) This non-GAAP adjustment removes the compensation expense impact from market valuation changes in the deferred compensation liabilities, which include the supplemental savings plan and, beginning in the fourth quarter of 2024, restricted fund units, and the related net gains (losses) on investments designated as economic hedges against the related liabilities.

The liabilities are adjusted for appreciation (depreciation) of hypothetical investments chosen by participants.

We use investment products to economically hedge the market risk associated with the supplemental savings plan liability and the expected settlement value of unvested restricted fund units.

We believe it is useful to offset the non-operating investment income (loss) recognized on the economic hedges against the related compensation expense and remove the net impact to help the reader's ability to understand the firm's core operating results and to increase comparability period to period.

(4) This non-GAAP adjustment removes the impact the consolidated investment products have on our U.S.

GAAP consolidated statements of income.

Specifically, we add back the operating expenses and subtract the investment income of the consolidated sponsored investment products.

The adjustment to operating expenses represents the operating expenses of the consolidated products, net of the elimination of related management and administrative fees.

Specifically, we add back the operating expenses and subtract the investment income of the consolidated investment products.

The adjustment to operating expenses represents the operating expenses of the consolidated investment products, net of the elimination of related investment advisory and administrative fees.

The adjustment to net income attributable to T.

Rowe Price represents the net income of the consolidated products, net of redeemable non-controlling interests.

We believe the consolidated sponsored investment products may impact the reader’s ability to understand our core operating results.

(5) This non-GAAP adjustment represents the other non-operating income (loss) and the net gains (losses) earned on our investment portfolio that are not designated as economic hedges of the supplemental savings plan liability and that are not part of the cash and discretionary investment portfolio.

We retain in our non-GAAP measures the investment gains recognized on the cash and discretionary investments as these assets and related income (loss) are considered part of our core operations.

We believe adjusting for the remaining non-operating income (loss) helps the reader’s ability to understand our core operating results and increases comparability to prior years.

Additionally, we do not emphasize the impact of this portion of non-operating income (loss) when managing and evaluating our performance.

Rowe Price Group, Inc.

represents the net income of the consolidated investment products, net of redeemable non-controlling interests.

We believe adjusting for the impact of the consolidated investment products helps the reader’s ability to understand our core operating results and increases comparability period to period.

(5) This non-GAAP adjustment represents non-operating income (loss) and the net gains (losses) earned on the firm's investment portfolio that are not designated as economic hedges of the deferred compensation liabilities and that are not part of the cash and discretionary investment portfolio.

We retain in our non-GAAP measures the investment gains recognized on the cash and discretionary investments as these assets and related income (loss) are considered part of the firm's core operations.

We believe adjusting for the remaining non-operating income (loss) helps the reader’s ability to understand the firm's core operating results and increases comparability period to period.

Additionally, we do not emphasize the impact of this portion of non-operating income (loss) when managing and evaluating the firm's performance.

(6) The income tax impacts were calculated in order to achieve an overall non-GAAP effective tax rate of 24.5% for 2024, 27.2% for 2023 and 24.7% for 2022.

10 unchanged sentences

Rowe Price Group, Inc.

increased from $8.8 billion to $9.5 billion.

Tangible book value increased to $6.5 billion at December 31, 2023 from $5.8 billion at December 31, 2022.

increased from $9.5 billion to $10.3 billion, and tangible book value increased to $7.5 billion at December 31, 2024 from $6.5 billion at December 31, 2023.

Sources of Liquidity

6 unchanged sentences

Redeemable seed capital investments 1,262.3 1,370.9

Investments used to hedge the supplemental savings plan liability 894.6 760.7

Investments used to hedge the deferred compensation liabilities 1,110.9 894.6

Total cash and investments in T.

2 unchanged sentences

Of our cash and cash equivalents, $653.9 million at December 31, 2024, and $699.0 million at December 31, 2023 were held by our subsidiaries located outside the U.S.

Our cash and discretionary investment portfolio experienced market gains of $140.8 million in 2023 compared to market losses of $24.4 million in 2022.

Our cash and discretionary investment portfolio experienced market gains of $148.7 million in 2024 and $140.8 million in 2023.

Given the availability of our financial resources and cash expected to be generated through future operations, we do not maintain an available external source of additional liquidity.

1 unchanged sentence

The cash and investment presentation on the consolidated balance sheet is based on how we account for the cash or investment.

The following table details how our investment interests relate to where they are presented in the consolidated balance sheet as of December 31, 2023.

(in millions) Cash and cash equivalents Investments Net assets of consolidated sponsored investment products (1)

The following table details how our interests in cash and investments relate to where they are presented in the consolidated balance sheet as of December 31, 2024.

(in millions) Cash and cash equivalents Investments Net assets of consolidated investment products (1)

Cash and discretionary investments $ 2,649.8 $ 319.6 $ 137.5 $ 3,106.9

Seed capital investments — 391.6 870.7 1,262.3

Investments used to hedge the supplemental savings plan liability — 827.6 67.0 894.6

Investments used to hedge the deferred compensation liabilities — 1,081.2 29.7 1,110.9

Total cash and investments in T.

Rowe Price products attributable to T.

Rowe Price 2,066.6 1,418.2 1,311.0 4,795.8

Rowe Price Group, Inc.

2,649.8 1,792.4 1,037.9 5,480.1

Investments in affiliated private investment funds (2)

3 unchanged sentences

Total cash and investments attributable to T.

Rowe Price 2,066.6 2,554.7 1,311.0 5,932.3

Rowe Price Group, Inc.

2,649.8 3,000.5 1,037.9 6,688.2

Redeemable non-controlling interests — — 944.0 944.0

2 unchanged sentences

$ 2,649.8 $ 3,000.5 $ 1,981.9 $ 7,632.2

(1) The c onsolidated T.

Rowe Price investment products are generally those products we provided seed capital at the time of their formation and we have a controlling interest.

The $1,311.0 million represents the total value at December 31, 2023 of our interest in the consolidated T.

Rowe Price investment products.

The total net assets of the T.

Rowe Price investment products at December 31, 2023 of $1,905.1 million includes assets of $1,959.3 million, less liabilities of $54.2 million as reflected in the consolidated balance sheet in Item 8.

(1) The c onsolidated investment products are generally those products we provided seed capital at the time of their formation and we have a controlling interest.

The $1,037.9 million represents the total value at December 31, 2024 of our interest in the consolidated investment products.

The total net assets of the investment products at December 31, 2024 of $1,981.9 million includes assets of $2,044.0 million, less liabilities of $62.1 million as reflected in the consolidated balance sheet in Item 8.

Financial Statements of this Form 10-K.

(2) Includes $160.7 million of non-controlling interests in consolidated entities and represents the portion of these investments, held by third parties, that we cannot sell in order to obtain cash for general operations.

Our consolidated balance sheet reflects the assets and liabilities of those sponsored investment products we consolidate, as well as redeemable non-controlling interests for the portion of these sponsored investment products that are held by unrelated third-party investors.

Although we can redeem our net interest in these sponsored investment products at any time, we cannot directly access or sell the assets held by the products to obtain cash for general operations.

Additionally, the assets of these sponsored investment products are not available to our general creditors.

Our interest in these sponsored investment products was used as initial seed capital and is recategorized as discretionary when it is determined by management that the seed capital is no longer needed.

Our consolidated balance sheet reflects the assets and liabilities of those investment products we consolidate, as well as redeemable non-controlling interests for the portion of these investment products that are held by unrelated third-party investors.

Although we can redeem our net interest in these investment products at any time, we cannot directly access or sell the assets held by the products to obtain cash for general operations.

Additionally, the assets of these investment products are not available to our general creditors.

Our interest in these investment products was primarily used as initial seed capital and is recategorized as discretionary when it is determined by management that the seed capital is no longer needed.

We assess the discretionary products and, when we decide to liquidate our interest, we seek to do so in a way as to not impact the product and, ultimately, the unrelated third-party investors.

1 unchanged sentence

We paid $4.96 per share in regular dividends in 2024, an increase of 1.6% over the $4.88 per share paid in 2023.

Further, we expended $253.9 million in 2023 to repurchase 2.4 million shares, or 1.1%, of our outstanding common stock at an average price of $104.63 per share.

Further, we expended $334.5 million in 2024 to repurchase nearly 3.0 million shares, or 1.3%, of our outstanding common stock at an average price of $112.57 per share.

These dividends and repurchases were expended using existing cash balances and cash generated from operations.

We will generally repurchase our common stock over time to offset the dilution created by our equity-based compensation plans.

During 2021, our Board of Directors declared a special cash dividend of $3.00 per share, or $699.8 million, on June 14, 2021, that was paid on July 7, 2021.

Further, on December 29, 2021, we paid approximately $2.5 billion in cash and issued $881.5 million of T.

Rowe Price Group, Inc.

common shares, approximately 4.4 million shares, to complete the acquisition of OHA.

Since the end of 2020, we have returned $6.2 billion to stockholders through stock repurchases, our regular quarterly dividends, and a special dividend of $3.00 per share in 2021, as follows:

(in millions) Recurring dividend Special dividend Stock repurchases Total cash returned to stockholders

We generally repurchase our common stock over time to offset the dilution created by our equity-based compensation plans.

Since the end of 2021, we have returned $4.8 billion to stockholders through stock repurchases and our regular quarterly dividends, as follows:

(in millions) Recurring dividend Stock repurchases Total cash returned to stockholders

2022 $ 1,108.8 $ 855.3 $ 1,964.1

2 unchanged sentences

Total $ 3,365.9 $ 1,444.1 $ 4,810.0

We anticipate property and equipment expenditures for the full-year 2024 to be about $487 million.

More than one-half is planned for technology initiatives, while the remaining will be facility related, including the completion of our new corporate headquarters.

We anticipate property and equipment expenditures for the full-year 2025 to be about $300 million, of which more than three-quarters is planned for technology initiatives.

We expect to fund our anticipated capital expenditures with operating cash flows and other available resources.

The following tables summarize the cash flows for 2024, 2023 and 2022, that are attributable to T.

Rowe Price Group, our consolidated sponsored investment products, and the related eliminations required in preparing the statement.

Cash flow attributable to:

(in millions) T.

Rowe Price Group Consolidated sponsored investment products Elims As reported

Rowe Price Group Inc., our consolidated investment products, and the related eliminations required in preparing the consolidated statement of cash flows.

(in millions) Cash flow attributable to T.

Rowe Price Group, Inc.

Cash flow attributable to consolidated investment products Eliminations As reported

Cash flows from operating activities

Net income $ 1,788.7 $ 153.5 $ (106.5) $ 1,835.7

Adjustments to reconcile net income to net cash provided by operating activities

Net income (loss) $ 2,100.1 $ 120.5 $ (84.8) $ 2,135.8

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities

Depreciation, amortization and impairments of property, equipment and software 254.1 — — 254.1

2 unchanged sentences

Stock-based compensation expense 247.3 — — 247.3

Net gains recognized on investments (567.3) — 106.5 (460.8)

Net change in sponsored investment products used to economically hedge supplemental savings plan liability (10.3) — 66.4 56.1

Net change in trading securities held by consolidated sponsored investment products — (1,070.3) — (1,070.3)

Other changes in assets and liabilities 182.7 27.9 (17.0) 193.6

Net (gains) losses recognized on investments (425.0) — 84.8 (340.2)

Total non-cash adjustments 313.1 — 84.8 397.9

Net investments in sponsored investment products used to economically hedge deferred compensation liabilities (123.2) — 30.0 (93.2)

Net change in trading securities held by consolidated investment products — (760.4) — (760.4)

Other changes 23.9 6.1 (24.5) 5.5

Net cash provided by (used in) operating activities 2,313.9 (633.8) 5.5 1,685.6

1 unchanged sentence

Net cash provided by (used in) financing activities (1,542.8) 637.9 (31.7) (936.6)

Effect of exchange rate changes on cash and cash equivalents of consolidated sponsored investment products — 0.4 — 0.4

Net change in cash and cash equivalents during period 311.0 (41.9) — 269.1

Effect of exchange rate changes on cash and cash equivalents of consolidated investment products — (2.4) — (2.4)

Net change in cash and cash equivalents during year 583.2 (14.1) — 569.1

Cash and cash equivalents at beginning of year 2,066.6 77.2 — 2,143.8

Cash and cash equivalents at end of period $ 2,066.6 $ 77.2 $ — $ 2,143.8

Cash flow attributable to:

(in millions) T.

Rowe Price Group Consolidated sponsored investment products Elims As reported

Cash and cash equivalents at end of year $ 2,649.8 $ 63.1 $ — $ 2,712.9

(in millions) Cash flow attributable to T.

Rowe Price Group, Inc.

Cash flow attributable to consolidated investment products Eliminations As reported

Cash flows from operating activities

Net income $ 1,557.9 $ (211.7) $ 103.4 $ 1,449.6

Adjustments to reconcile net income to net cash provided by operating activities

Net income (loss) $ 1,788.7 $ 153.5 $ (106.5) $ 1,835.7

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities

Depreciation, amortization and impairments of property, equipment and software 254.8 — — 254.8

2 unchanged sentences

Stock-based compensation expense 265.6 — — 265.6

Net losses recognized on investments 314.0 — (103.4) 210.6

Net change in sponsored investment products used to economically hedge supplemental savings plan liability (18.8) — — (18.8)

Net change in trading securities held by consolidated sponsored investment products — 87.9 — 87.9

Other changes in assets and liabilities (182.8) 46.6 (3.7) (139.9)

Net (gains) losses recognized on investments (567.3) — 106.5 (460.8)

Total non-cash adjustments 97.5 — 106.5 204.0

Net (investments) redemptions in sponsored investment products used to economically hedge deferred compensation liabilities (10.3) — 66.4 56.1

Net change in trading securities held by consolidated investment products — (1,070.3) — (1,070.3)

Other changes 182.7 27.9 (17.0) 193.6

Net cash provided by (used in) operating activities 2,058.6 (888.9) 49.4 1,219.1

1 unchanged sentence

Net cash provided by (used in) financing activities (1,437.4) 903.4 (544.6) (1,078.6)

Effect of exchange rate changes on cash and cash equivalents of consolidated sponsored investment products — 9.5 — 9.5

Net change in cash and cash equivalents during period 232.5 18.0 — 250.5

Effect of exchange rate changes on cash and cash equivalents of consolidated investment products — 0.4 — 0.4

Net change in cash and cash equivalents during year 311.0 (41.9) — 269.1

Cash and cash equivalents at beginning of year 1,755.6 119.1 — 1,874.7

Cash and cash equivalents at end of period $ 1,755.6 $ 119.1 $ — $ 1,874.7

Cash flow attributable to:

(in millions) T.

Rowe Price Group Consolidated sponsored investment products Elims As reported

Cash and cash equivalents at end of year $ 2,066.6 $ 77.2 $ — $ 2,143.8

(in millions) Cash flow attributable to T.

Rowe Price Group, Inc.

Cash flow attributable to consolidated investment products Eliminations As reported

Cash flows from operating activities

Net income $ 3,082.9 $ 62.5 $ (46.9) $ 3,098.5

Adjustments to reconcile net income to net cash provided by operating activities

Net income (loss) $ 1,557.9 $ (211.7) $ 103.4 $ 1,449.6

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities

Depreciation, amortization and impairments of property, equipment and software 225.7 — — 225.7

Amortization and impairment of acquisition-related assets and retention agreements 420.1 — — 420.1

Fair value remeasurement of contingent consideration liability (161.2) — — (161.2)

Stock-based compensation expense 285.4 — — 285.4

Net gains recognized on investments (169.4) — 46.9 (122.5)

Net change in sponsored investment products used to economically hedge supplemental savings plan liability (85.7) — — (85.7)

Net change in trading securities held by consolidated sponsored investment products — 14.9 — 14.9

Other changes in assets and liabilities 121.1 (51.9) (1.8) 67.4

Net (gains) losses recognized on investments 314.0 — (103.4) 210.6

Total non-cash adjustments 1,084.0 — (103.4) 980.6

Net investments in sponsored investment products used to economically hedge deferred compensation liabilities (18.8) — — (18.8)

Net change in trading securities held by consolidated investment products — 87.9 — 87.9

Other changes (182.8) 46.6 (3.7) (139.9)

Net cash provided by (used in) operating activities 2,440.3 (77.2) (3.7) 2,359.4

1 unchanged sentence

Net cash provided by (used in) financing activities (2,028.5) 94.4 (142.8) (2,076.9)

Effect of exchange rate changes on cash and cash equivalents of consolidated sponsored investment products — 2.6 — 2.6

Net change in cash and cash equivalents during period (628.6) (3.7) — (632.3)

Effect of exchange rate changes on cash and cash equivalents of consolidated investment products — 9.5 — 9.5

Net change in cash and cash equivalents during year 232.5 18.0 — 250.5

Cash and cash equivalents at beginning of year 1,523.1 101.1 — 1,624.2

Cash and cash equivalents at end of period $ 1,523.1 $ 101.1 $ — $ 1,624.2

Cash and cash equivalents at end of year $ 1,755.6 $ 119.1 $ — $ 1,874.7

Operating activities

Operating activities attributable to T.

Rowe Price Group during 2023 provided cash flows of $2,058.6 million, a decrease of $381.7 million from $2,440.3 million during 2022.

This decrease in cash flows provided by operating activities attributable to T.

Rowe Price Group was primarily driven by a lower add-back of $986.5 million in non-cash items.

The impact of these non-cash adjustments was offset in part by a $230.8 million increase in net income combined with $365.5 million from the cash settlement timing of our assets and liabilities.

These non-cash adjustments were primarily driven by $567.3 million in net investment gains in 2023 compared to $314.0 million of net investment losses in 2022 as well as $226.8 million in amortization and impairments of acquisition-related assets and retention agreements incurred in 2023 compared to $420.1 million incurred in 2022.

Additionally, in 2023, we had net investments of $10.3 million from certain investment products that economically hedge our supplemental savings plan liability, compared to net investments of $18.8 million in 2022.

During 2024, operating activities attributable to T.

Rowe Price Group, Inc.

provided cash flows of $2,313.9 million, an increase of $255.3 million from $2,058.6 million provided during 2023.

The increase was primarily driven by a $311.4 million increase in net income and a $215.6 million increase in the add-back for non-cash items as detailed in the 2024 table above.

These increases to operating cash flows were offset in part by a $158.8 million decrease in cash flows related to timing differences associated with the cash settlement of our assets and liabilities.

Additionally, in 2024, we made $112.9 million more net investments in sponsored investment products used to economically hedge our deferred compensation liabilities compared to 2023.

The remaining change in reported cash flows from operating activities was attributable to the net change in trading securities held in our consolidated investment products’ underlying portfolios.

Operating activities attributable to T.

Rowe Price Group during 2022 provided cash flows of $2,440.3 million as compared to $3,428.3 million during 2021.

Operating cash flows attributable to T.

Rowe Price Group decreased $988.0 million, including a $1,525.0 million decrease in net income, timing differences on the cash settlement of our assets and liabilities of $303.9 million, and $774.0 million of higher non-cash adjustments, including unrealized investment gains/losses, depreciation, amortization and impairments of acquisition-related assets and retention arrangements, the fair value remeasurement of the contingent consideration liability, stock-based compensation expense, and other non-cash items.

The non-cash adjustments were primarily driven by $314.0 million of net investment losses in 2022 compared to $169.4 million of net investment gains in 2021.

Additionally, in 2022, we had net investments of $18.8 million from certain investment products that economically hedge our supplemental savings plan liability, compared to net investments of $85.7 million in 2021.

During 2023, operating activities attributable to T.

Rowe Price Group, Inc.

provided cash flows of $2,058.6 million, a decrease of $381.7 million from $2,440.3 million provided during 2022.

The decrease was primarily driven by a $986.5 million decrease in the add-back for non-cash items as detailed in the 2023 table above.

These decreases to operating cash flows were offset in part by a $230.8 million increase in net income and $365.5 million increase in cash flows related to timing differences associated with the cash settlement of our assets and liabilities.

Additionally, in 2023, we expended $8.5 million less in net investments in sponsored investment products used to economically hedge our deferred compensation liabilities compared to 2022.

The remaining change in reported cash flows from operating activities was attributable to the net change in trading securities held in our consolidated investment products’ underlying portfolios.

1 unchanged sentence

Net cash used in investing activities that are attributable to T.

Rowe Price Group totaled $310.2 million in 2023 compared with $179.3 million in 2022.

During 2023, net proceeds from the sale of investments of $36.1 million were lower compared to $62.0 million during 2022.

Rowe Price Group Inc.

totaled $187.9 million in 2024 compared to $310.2 million in 2023.

Net investing activities from our investments in sponsored investment products generated net proceeds of $407.1 million in 2024 compared to $36.1 million in 2023.

In 2024, we increased our property and equipment expenditures by $115.5 million and our other investing activity by $133.2 million.

We eliminate our capital in those sponsored investment products we consolidate in preparing our consolidated statements of cash flows.

The remaining change in reported cash flows from investing activities of $48.1 million is primarily related to the net cash removed from our balance sheet from consolidating and deconsolidating investment products.

We eliminate our capital in those investment products we consolidate in preparing our consolidated statements of cash flows.

The remaining change in reported cash flows from investing activities of $41.0 million is related to the net cash removed from our balance sheet from consolidating and deconsolidating investment products.

Net cash used in investing activities that are attributable to T.

Rowe Price Group totaled $179.3 million in 2022, compared with $1,134.9 million of cash used in investing activities in 2021.

During 2022, net proceeds from the sale of certain discretionary investments of $208.5 million were lower compared to $1,577.8 million during 2021 as investments were sold in 2021 to fund part of the consideration paid to complete the acquisition of OHA.

In 2022, we also increased the level of seed capital in those sponsored investment products we consolidate by $92.8 million.

We eliminate our seed capital in those sponsored investment products we consolidate in preparing our consolidated statements of cash flows.

Rowe Price Group totaled $310.2 million in 2023 compared to $179.3 million in 2022.

During 2023, net proceeds from the sale of investments of $36.1 million were lower compared to $62.0 million during 2022.

In 2023, we increased our property and equipment expenditures by $70.3 million and our other investing activity by $34.7 million.

We eliminate our capital in those investment products we consolidate in preparing our consolidated statements of cash flows.

1 unchanged sentence

Net cash used in financing activities attributable to T.

Rowe Price Group totaled $1,437.4 million in 2023 compared with $2,028.5 million in 2022.

Rowe Price Group totaled $1,542.8 million in 2024 compared to $1,437.4 million in 2023.

During 2024, we used $337.2 million to repurchase nearly 3.0 million shares compared to $254.4 million to repurchase 2.4 million shares in 2023.

The $13.9 million increase in dividends paid in 2024 was a result of the 1.6% increase in our quarterly dividend per share.

In addition, in 2024, net distributions to non-controlling interests in consolidated entities decreased by $6.6 million and cash flow related to common stock issued under stock compensation plans decreased by $15.3 million compared to 2023.

The remaining change in reported cash flows from financing activities is attributable to a $247.4 million increase in net subscriptions from redeemable non-controlling interest holders of our consolidated investment products during 2024.

Net cash used in financing activities attributable to T.

Rowe Price Group totaled $1,437.4 million in 2023 compared to $2,028.5 million in 2022.

During 2023, we used $254.4 million to repurchase 2.4 million shares compared to $849.8 million to repurchase 6.8 million shares in 2022.

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The remaining change in reported cash flows from financing activities is primarily attributable to a $407.2 million increase in net subscriptions from redeemable non-controlling interest holders of our consolidated investment products during 2023.

Net cash used in financing activities attributable to T.

Rowe Price Group totaled $2,028.5 million in 2022, compared with $2,922.0 million in 2021.

During 2022, we used $849.8 million to repurchase 6.8 million shares compared to

$1,138.5 million to repurchase 5.9 million shares in 2021.

The $594.5 million decrease in dividends paid in 2022 is a result of a special cash dividend paid in July 2021 that did not recur in 2022, partially offset by the 11.1% increase in our quarterly dividend per share in 2022.

In addition, $35.1 million in net distributions to non-controlling interests in consolidated entities increased net cash used in financing activities.

The remaining change in reported cash flows from financing activities is primarily attributable to a $18.4 million decrease in net redemptions from redeemable non-controlling interest holders of our consolidated investment products and a $45.4 million increase in cash flow related to common stock issued under stock compensation plans during 2022 compared to 2021.

MATERIAL CASH COMMITMENTS.

Our material cash commitments primarily include our obligations under the supplemental savings plan, our lease obligations, our headquarters build out, and other contractual amounts that will be due for the purchase of goods or services to be used in our operations.

Our material cash commitments primarily include our obligations related to our deferred compensation liabilities, facility leases, our headquarters build out, and other contractual amounts that will be due for the purchase of goods or services to be used in our operations.

Some of these contractual amounts may be cancellable under certain conditions and may involve termination fees.

We expect to fund these cash commitments from future cash flows from operations.

Our obligations under the supplemental savings plan are disclosed on our consolidated balance sheet with more information included in Note 16 to the consolidated financial statements.

Our obligations under our deferred compensation liabilities are disclosed on our consolidated balance sheet with more information included in Note 12 and Note 17 to the consolidated financial statements.

Our lease obligations are disclosed in Note 7 to the consolidated financial statements.

Additionally, there are unrecognized tax benefits discussed in Note 10 to our consolidated financial statements.

The note references above are in Item 8.

of this Form 10-K.

While most of our other material cash commitments consist of goods and services used in our operations, these commitments primarily consist of obligations related to long-term software licensing and maintenance contracts, construction in process, and service contracts.

We also have outstanding commitments to fund additional contributions to investment partnerships totaling $202.5 million.

The vast majority of these additional contributions will be made to investment partnerships in which we have an existing investment.

The vast majority of these additional contributions will be made to investment partnerships in which we have

an existing investment.

In addition to such amounts, a percentage of prior distributions may be called under certain circumstances.

As part of the OHA acquisition, T.

Rowe Price committed $500 million to fund OHA products through 2026.

Rowe Price committed $500 million to fund OHA product launches through 2026.

As of December 31, 2024, T.

Rowe Price has $404.0 million remaining to commit to the OHA products.

Rowe Price has $360 million remaining to commit to OHA products.

Rowe Price has also entered into certain earnout and other arrangements as part of that acquisition.

For more detail on these arrangements, see Note 5 and Note 15 to our consolidated financial statements.

For more detail on these arrangements, see Note 5 and Note 16 to our consolidated financial statements in Item 8.

of this Form 10-K.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES.

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Making these estimates and judgments requires the analysis of information concerning events that may not yet be complete and of facts and circumstances that may change over time.

Accordingly, actual amounts or future results can differ materially from those estimates that we include currently in our consolidated financial statements, significant accounting policies, and notes.

Accordingly, actual amounts or future results can differ materially from those estimates that we currently include in our consolidated financial statements, significant accounting policies, and notes.

We present those significant accounting policies used in the preparation of our consolidated financial statements as an integral part of those statements within this 2024 Annual Report on Form 10-K.

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We are deemed to have a controlling interest when we own the majority of the voting interest of an entity or are deemed to be the primary beneficiary of a variable interest entity ("VIE").

VIEs are entities that lack sufficient equity

to finance its activities or the equity holders do not have defined power to direct the activities of the entity normally associated with an equity investment.

VIEs are entities that lack sufficient equity to finance its activities or the equity holders do not have defined power to direct the activities of the entity normally associated with an equity investment.

Our analysis to determine whether an entity is a VIE or a voting interest entity ("VOE") involves judgment and considers several factors, including an entity’s legal organization, capital structure, the rights of the equity investment holders, our ownership interest in the entity, and our contractual involvement with the entity.

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We are the primary beneficiary if we have the power to direct the activities of the VIE that most significantly impact its economic performance and the obligation to absorb losses of the entity or the right to receive benefits from the VIE that could potentially be significant.

Our SICAV funds and other sponsored investment products regulated outside the U.S.

Our SICAV funds and other investment products regulated outside the U.S.

are determined to be VIEs.

In addition, in connection with the OHA acquisition, we acquired certain carried interest entities, which are considered VIEs.

These carried interest entities hold interests in general partners of affiliated private investment funds that are also VIEs;

however, the carried interest entities are not the primary beneficiaries to these investment funds.

We have interests in certain investment partnerships that are also considered VIEs, including entities that have interests in general partners of affiliated private investment funds, which are also VIEs.

We consolidate the entities that hold the interest in the general partners;

however, the entities are not the primary beneficiaries of the affiliated private investment funds.

Other-than-temporary impairments of equity method investments

We evaluate our equity method investments, including our investment in UTI, certain investments in sponsored investment products, and our investments in the affiliated private investment funds, for impairment when events or changes in circumstances indicate that the carrying value of the investment exceeds its fair value, and the decline in fair value is other than temporary.

We evaluate our equity method investments for impairment when events or changes in circumstances indicate that the carrying value of the investment exceeds its fair value, and the decline in fair value is other than temporary.

For our investments in our affiliated private investment funds, we consider the length of time and the extent to which market value has been less than cost, any specific events that may influence the operations of the funds and our intent and ability to retain the investment for a period of time to allow for any anticipated recovery in market value.

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Management must first determine the level at which indefinite-lived intangible assets are tested for impairment (i.e., unit of account).

We have concluded that each of the trade name and investment advisory agreements indefinite-lived intangible asset will be considered their own separate unit of account.

We have concluded that the trade name and investment advisory agreement indefinite-lived intangible assets will be considered their own separate unit of account.

Once the unit of account is determined, management has the option to first assess indefinite-lived intangible assets for qualitative factors to determine whether it is necessary to perform a quantitative impairment test.

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Changes in these inputs could produce different fair value amounts and therefore different impairment conclusions.

During 2023, our annual impairment review of our indefinite-lived intangible assets determined that they were not impaired at the review date.

Definite-lived intangible assets are reviewed for impairment whenever events or circumstances indicate that the asset group's carrying amount may not be recoverable (i.e., the carrying amount is less than the undiscounted estimated future cash flows).

During 2024, we recognized $31.1 million of non-cash impairment charges on the trade name intangible asset.

The maximum future impairment of indefinite-lived intangible assets that we could incur is the amount recognized in our consolidated balance sheets within intangible assets, $151.6 million as of December 31, 2024.

Definite-lived intangible assets are reviewed for impairment whenever events or circumstances indicate that the asset group's carrying amount may not be recoverable (i.e., the carrying amount is more than the undiscounted estimated future cash flows).

Management must first determine the level at which definite-lived intangible assets are tested for impairment (i.e., asset group).

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If required, fair value would be determined using a discounted cash flow analysis where estimated future cash flows are discounted to arrive at a single present value amount.

This approach includes inputs that require

significant management judgment, the most relevant of which include revenue growth, discount rates, and effective tax rates.

This approach includes inputs that require significant management judgment, the most relevant of which include revenue growth, discount rates, and effective tax rates.

Any impairment loss would be the difference between the fair value of the asset group and its carrying amount.

During 2023, we recognized an immaterial non-cash impairment charge on these intangible assets.

During 2024, we recognized immaterial non-cash impairment charges on these intangible assets.

We internally conduct, manage, and report our operations as one reportable business segment - investment advisory business.

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We evaluate the carrying amount of goodwill in our consolidated balance sheets for possible impairment on an annual basis in the fourth quarter of each year using a fair value approach.

Goodwill would be considered impaired whenever our historical carrying amount exceeds the fair value of our investment advisory business.

Goodwill would be considered impaired whenever its carrying amount exceeds the fair value of our investment advisory business.

Our annual testing has demonstrated that the fair value of our investment advisory business (our market capitalization) exceeds our carrying amount (our stockholders’ equity) and, therefore, no impairment exists.

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NEWLY ISSUED BUT NOT YET ADOPTED ACCOUNTING GUIDANCE.

See Note 1 - Basis of Preparation and Summary of Significant Accounting Policies within Item 8, Financial Statements for a discussion of newly issued but not yet adopted accounting guidance.

See Note 1 - Basis of Preparation and Summary of Significant Accounting Policies within Item 8.

Financial Statements for a discussion of newly issued but not yet adopted accounting guidance.

FORWARD-LOOKING INFORMATION.

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our expense levels;

our tax rate;

our effective tax rate;

legal or regulatory developments;

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Rowe Price is not a guarantee of future performance.

Actual results may differ materially from those in forward-looking information because of various factors including, but not limited to, those discussed below and in Item 1A, Risk Factors, of this Form 10-K Annual Report.

Actual results may differ materially from those in forward-looking information because of various factors including, but not limited to, those discussed below and in Item 1A.

Risk Factors, of this Form 10-K Annual Report.

Further, forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events.

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the relative investment performance of the T.

Rowe Price mutual funds and other managed investment products as compared with competing offerings and market indexes;

Rowe Price mutual funds and other managed investment products compared to competing offerings and market indexes;

the ability to maintain our investment management and administrative fees at appropriate levels;

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Rowe Price funds and could be adversely affected if the independent directors of one or more of the T.

Rowe Price funds terminated or significantly altered the terms of the investment management or related administrative services agreements.

Rowe Price funds terminated or significantly altered the

terms of the investment management or related administrative services agreements.

Non-operating investment income will also fluctuate primarily due to the size of our investments, changes in their market valuations, and any other-than-temporary impairments that may arise or, in the case of our equity method investments, our proportionate share of the investees’ net income.

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and disruptions of services, including those provided by third parties, such as fund and product recordkeeping, facilities, communications, power, and the mutual fund transfer agent and accounting systems, as a result of extreme events, cyberattacks or otherwise.

Our business is also subject to substantial governmental regulation, and changes in legal, regulatory, accounting, tax, and compliance requirements may have a substantial effect on our operations and results, including, but not limited to, effects on costs that we incur and effects on investor interest in sponsored investment products and investing in general or in particular classes of mutual funds or other investments.

Our business is also subject to substantial governmental regulation, and changes in legal, regulatory, accounting, tax, and compliance requirements may have a substantial effect on our operations and results, including, but not limited to, effects on costs that we incur and effects on investor interest in investment products and investing in general or in particular classes of mutual funds or other investments.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis