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Item 2. Management’s Discussion and Analysis

2025-08-01 compared with 2025-05-02 · 271 added, 174 removed, 499 unchanged (47% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Our revenues and net income are derived primarily from investment advisory services provided to individual and institutional investors in a broad range of investment solutions across equity, fixed income, multi-asset, and alternatives capabilities.

Our revenues and net income are derived primarily from investment advisory services provided globally to individual and institutional investors in a broad range of investment solutions across equity, fixed income, multi-asset, and alternatives capabilities.

We also provide certain investment advisory clients with related administrative services, including distribution, mutual fund transfer agent, accounting, and shareholder services;

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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;

The investment management industry is evolving, facing challenging trends such as passive investments taking market share from traditional active strategies;

continued downward fee pressure;

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In this regard, we have ample liquidity and resources that allow us to take advantage of attractive growth opportunities.

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.

Furthermore, we have developed a broad and ongoing plan to align our expense growth with anticipated revenue growth.

As a result, we have initiated certain actions to reduce expense growth, realign resources, and invest in existing and future capabilities, while also helping to offset ongoing inflationary pressures on compensation and contractual spending.

These investments include hiring investment professionals, distribution professionals, adopting new technologies, and offering new products to provide our clients with strong investment management expertise and services.

MARKET TRENDS.

Major stock indexes declined in the first quarter of 2025.

Early optimism about the incoming Trump administration’s likely business-friendly policies faded amid concerns that President Trump’s tariffs on imports from major trading partners would lead to higher prices of goods sold in the U.S.

and contribute to inflation pressures.

Investors were also concerned that some weaker-than-expected economic data and reports from various retailers warning about slowing sales or decreased consumer spending would translate into slower economic growth, if not a recession.

As the quarter ended, investors were bracing for President Trump to impose “reciprocal” tariffs in early April on countries that already have tariffs or other trade barriers on imports from the U.S.

stock market indexes rose in the second quarter.

Equities plunged at the beginning of April in response to the U.S.

reciprocal tariffs.

However, the market rallied starting April 9, when the U.S.

declared a 90-day pause on these tariffs for many countries.

Equities continued to rise throughout May and June, as the U.S.

and China agreed to a 90-day reduction in reciprocal and retaliatory tariffs while negotiating a trade deal.

Stocks also overcame a short-lived spike in oil prices in June and a multi-day exchange of missile and drone attacks between Israel and Iran.

As the quarter ended, investors were optimistic that trade deals with U.S.

trading partners would be announced soon and hopeful that the Federal Reserve would resume lowering interest rates at some point in the months ahead.

Developed non-U.S.

equity markets strongly outperformed U.S.

equity markets outperformed U.S.

shares in U.S.

dollar terms.

In Europe, equity markets were mostly positive in dollar terms, helped by expectations for eurozone spending on defense and infrastructure to increase, particularly in Germany.

Developed Asian markets were mixed in dollar terms, with Japanese stocks adding only about 0.5%.

Emerging equity markets rose but trailed stocks in developed non-U.S.

markets in U.S.

In Europe, equity markets were broadly positive, helped in part by short-term interest rate cuts.

UK shares lagged.

Developed Asian markets were also broadly positive in dollar terms, with Japanese stocks gaining more than 11%.

Stocks in emerging markets also outperformed U.S.

stocks in U.S.

dollar terms.

In emerging Asia, markets were mostly negative in dollar terms, but Chinese shares were lifted in part by hopes that fiscal and monetary stimulus would lead to increased consumption and stronger economic growth.

In Latin America and in the emerging Europe, Middle East, and Africa (EMEA) region, markets were mostly positive in dollar terms.

In the emerging Europe, Middle East, and Africa (EMEA) region, markets were broadly positive in dollar terms, though stocks in Türkiye (Turkey) lagged with a 3% gain.

In emerging Asia, markets were also broadly positive in dollar terms.

Equities in South Korea and Taiwan far outperformed the region, while Chinese stocks trailed with modest gains.

In Latin America, markets were mostly positive in dollar terms.

Returns of several major equity market indexes were as follows:

Three months ended Six months ended

Index 6/30/2025 6/30/2025

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(1) Returns exclude dividends

Global bond returns were mostly positive in the first quarter of 2025.

In the U.S., Treasury bill yields were little changed as the Federal Reserve held short-term interest rates steady due to inflation remaining above its 2% long-term goal.

Intermediate- and long-term U.S.

Treasury yields declined, however, amid concerns about slowing economic growth.

Global bond returns were mostly positive in the second quarter of 2025.

In the U.S., Treasury bill yields were little changed, as the Federal Reserve kept the federal funds target rate in the 4.25% to 4.50% range.

Intermediate-term U.S.

Treasury yields generally declined, but the 10-year U.S.

Treasury note yield increased from 4.23% to 4.24%.

The 30-year U.S.

Treasury note yield decreased from 4.58% to 4.23% in the first quarter.

investment-grade universe, sector performance was broadly positive.

Mortgage-backed and Treasury securities performed best, but corporate bonds and non-agency commercial mortgage-backed securities also did well.

Asset-backed securities lagged with milder gains.

Tax-free municipal bonds trailed the broad taxable bond market, as intermediate-term yields fell less than comparable Treasury yields, and as long-term muni yields increased during the quarter.

High yield corporate bonds produced modest gains but underperformed investment-grade bonds.

Treasury bond yield increased to a greater degree amid concerns about U.S.

debts and budget deficits, and as Moody’s downgraded U.S.

sovereign debt from AAA to AA1 in May.

In the investment-grade universe, sector performance was broadly positive.

Non-agency commercial mortgage-backed securities and corporate bonds performed best, while asset-backed and mortgage-backed securities produced milder gains.

Treasuries lagged.

Tax-free municipal bonds trailed the broad taxable bond market, but high yield corporate bonds produced strong gains and outperformed investment-grade bonds.

Bonds in developed non-U.S.

markets produced positive returns in U.S.

dollar terms;

returns to U.S.

investors were enhanced by stronger non-U.S.

currencies versus the dollar.

In Europe, longer-term bond yields increased in various countries, particularly in March, in response to the German government’s plans to ramp up infrastructure and defense spending.

The European Central Bank reduced interest rates twice during the quarter, while the Bank of England reduced its benchmark interest rate once.

In Japan, long-term government bond yields rose steadily for most of the quarter, to levels unseen in about 16 years, in anticipation of tighter monetary policy later this year.

However, yields retraced some of their increase in late March amid concerns that economic growth will slow in response to U.S.

tariffs on Japanese automobiles and other exports.

dollar terms in the second quarter, as major non-U.S.

currencies appreciated versus the U.S.

In the eurozone, longer-term bond yields declined in many countries, as the European Central Bank (ECB) reduced its benchmark interest rates twice in the second quarter.

In the UK, longer-term bond yields also decreased, as the Bank of England reduced its benchmark interest rate, the Bank Rate, from 4.50% to 4.25% in May.

The euro rose more than 8% versus the U.S.

dollar, while the British pound rose about 6%.

In Japan, long-term government bond yields were little changed, as the Bank of Japan kept its benchmark interest rate at 0.50%.

The yen rose about 3.5% versus the U.S.

Emerging markets bonds produced positive returns in U.S.

dollar terms.

Bonds denominated in local currencies generally outperformed dollar-denominated bonds in U.S.

Bonds denominated in local currencies strongly outperformed dollar-denominated bonds in U.S.

dollar terms, as most developing markets currencies appreciated versus the dollar.

Returns of several major bond market indexes were as follows:

Three months ended Six months ended

Index 6/30/2025 6/30/2025

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ASSETS UNDER MANAGEMENT.

Assets under management ended the first quarter of 2025 at $1,566.3 billion, a decrease of $40.3 billion from December 31, 2024.

The decrease in assets under management during the first quarter of 2025 was driven by market depreciation of $31.7 billion and net cash outflows of $8.6 billion.

The following table details changes in our assets under management, by asset class, during the first quarter of 2025:

Assets under management ended the second quarter of 2025 at $1,676.8 billion, an increase of $110.5 billion from March 31, 2025.

The increase in assets under management during the second quarter of 2025 was driven by market appreciation and income, net of distributions not reinvested, of $125.4 billion, offset by net cash outflows of $14.9 billion.

For the six months ended June 30, 2025, the increase in assets under management was driven by market appreciation, net of distributions not reinvested, of $93.7 billion, offset by net cash outflows of $23.5 billion.

The following tables detail changes in our assets under management, by asset class, during the three- and six-month periods ended June 30, 2025:

Three months ended 6/30/2025

Six months ended 6/30/2025

(in billions) Equity Fixed income, including money market Multi-asset (1)

Alternatives (2)

Total Equity Fixed income, including money market Multi-asset (1)

Alternatives (2)

Assets under management at beginning of period $ 773.4 $ 195.7 $ 544.4 $ 52.8 $ 1,566.3 $ 829.7 $ 188.1 $ 536.0 $ 52.8 $ 1,606.6

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Change during the period 65.1 4.6 38.9 1.9 110.5 8.8 12.2 47.3 1.9 70.2

Assets under management at March 31, 2025 $ 773.4 $ 195.7 $ 544.4 $ 52.8 $ 1,566.3

Assets under management at June 30, 2025 $ 838.5 $ 200.3 $ 583.3 $ 54.7 $ 1,676.8 $ 838.5 $ 200.3 $ 583.3 $ 54.7 $ 1,676.8

(1) The underlying assets under management of the multi-asset portfolios have been aggregated and presented in this category and not reported in the equity and fixed income columns.

(2) The alternatives asset class includes strategies authorized to invest more than 50% of its holdings in private credit, leveraged loans, mezzanine, real assets/CRE, structured products, stressed/distressed, non-investment grade CLOs, special situations, business development companies, or that have absolute return as its investment objective.

(2) The alternatives asset class includes strategies authorized to invest more than 50% of its holdings in private credit, leveraged loans, mezzanine, real assets/CRE, structured products, stressed / distressed, non-investment grade CLOs, special situations, or have absolute return as its investment objective.

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

Unfunded capital commitments were $17.1 billion at March 31, 2025 and are not reflected in fee basis AUM above.

(3) Includes net distributions not reinvested for the first quarter of 2025 of $0.5 billion.

Investment advisory clients outside the United States account for 8.7% of our assets under management at March 31, 2025 and 8.8% at December 31, 2024.

Assets under management in our target date retirement portfolios, which are included in the multi-asset totals shown above, were $484.2 billion at March 31, 2025, compared with $475.6 billion at December 31, 2024.

Net flows into these portfolios were $6.3 billion in the first quarter of 2025.

Unfunded capital commitments were $18.6 billion at June 30, 2025, $17.1 billion at March 31, 2025, and $16.2 billion at December 31, 2024, and are not reflected in fee basis AUM above.

(3) Includes net distributions not reinvested for the three- and six-month periods ended June 30, 2025 of $0.4 billion and $0.9 billion, respectively.

Investment advisory clients outside the United States account for 8.7% of our assets under management at June 30, 2025, 8.7% at March 31, 2025, and 8.8% at December 31, 2024.

Assets under management in our target date retirement portfolios, which are included in the multi-asset totals shown above, were $520.3 billion at June 30, 2025, $484.2 billion at March 31, 2025, and $475.6 billion at December 31, 2024.

Net flows into these portfolios were $1.7 billion and $8.0 billion in the three- and six-month periods ended June 30, 2025, respectively.

We also provide strategic investment advice solutions to certain portfolios.

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

As of March 31, 2025, total assets in these solutions were $566 billion, of which $551 billion are included in our reported assets under management in the table above.

As of June 30, 2025, total assets in these solutions were $623 billion, of which $592 billion are included in our reported assets under management in the tables above.

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

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

As of March 31, 2025, our assets under administration were $280 billion, of which $158 billion are assets we manage.

As of June 30, 2025, our assets under administration were $302 billion, of which $170 billion are assets we manage.

INVESTMENT PERFORMANCE.

S trong investment performance and brand awareness is a key driver to attracting and retaining assets—and to our long-term success.

Our performance disclosures include specific asset classes, assets under management weighted performance, mutual fund performance against passive peers, and composite performance against benchmarks.

The following tables present investment performance for the one-, three-, five-, and 10-years ended March 31, 2025.

Our performance disclosures include specific asset classes, assets under management weighted performance, U.S.

fund performance against passive peers, and composite performance against benchmarks.

The following tables present investment performance for the one-, three-, five-, and 10-years ended June 30, 2025.

Past performance is not a reliable indicator of future performance.

mutual funds that outperformed Morningstar median (2),(3)

funds that outperformed Morningstar median (2),(3)

1 year 3 years 5 years 10 years

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All Funds 35% 54% 50% 62%

mutual funds that outperformed passive peer median (2),(4)

funds that outperformed passive peer median (2),(4)

1 year 3 years 5 years 10 years

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AUM Weighted Performance

mutual funds AUM that outperformed Morningstar median (2),(3)

funds AUM that outperformed Morningstar median (2),(3)

1 year 3 years 5 years 10 years

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All Funds 41% 65% 58% 78%

mutual funds AUM that outperformed passive peer median (2),(4)

funds AUM that outperformed passive peer median (2),(4)

1 year 3 years 5 years 10 years

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All Composites 24% 48% 33% 41%

As of March 31, 2025, 83 of 142 (58.5%) of the firm's rated U.S.

As of June 30, 2025, 67 of 142 (47.2%) of the firm's rated U.S.

mutual funds (across primary share classes) received an overall rating of 4 or 5 stars.

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In addition, 58% (6) of AUM in the firm's rated U.S.

mutual funds (across primary share classes) ended March 31, 2025 with an overall rating of 4 or 5 stars.

mutual funds (across primary share classes) ended June 30, 2025 with an overall rating of 4 or 5 stars.

(1) The investment performance reflects that of T.

Rowe Price U.S.

mutual funds and composites AUM.

mutual funds, ETFs, and composites.

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Primary share class only.

Excludes money market mutual funds, U.S.

mutual funds with an operating history of less than one year, T.

Excludes money market mutual funds, funds with an operating history of less than one year, T.

Rowe Price passive funds, and T.

Rowe Price U.S.

mutual funds that are clones of other funds.

Rowe Price funds that are clones of other funds.

The top chart reflects the percentage of T.

Rowe Price U.S.

mutual funds with 1 year, 3 year, 5 year, and 10 year track record that are outperforming the Morningstar category median.

Rowe Price funds with 1 year, 3 year, 5 year, and 10 year track record that outperformed the Morningstar category median.

The bottom chart reflects the percentage of T.

Rowe Price U.S.

mutual funds AUM that has outperformed for the time periods indicated.

Mutual Fund AUM included for this analysis includes $307B for 1 year, $300B for 3 years, $299B for 5 years, and $298B for 10 years.

Rowe Price funds AUM that has outperformed for the time periods indicated.

Total AUM included for this analysis includes $327B for 1 year, $320B for 3 years, $318B for 5 years, and $317B for 10 years.

(4) Passive Peer Median was created by T.

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Primary share class only.

Excludes money market mutual funds, mutual funds with an operating history of less than one year, mutual funds with fewer than three peers, T.

Rowe Price passive mutual funds, and T.

Rowe Price mutual funds that are clones of other funds.

Excludes money market mutual funds, funds with an operating history of less than one year, funds with fewer than three peers, T.

Rowe Price passive funds, and T.

Rowe Price funds that are clones of a retail fund.

This analysis compares T.

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The top chart reflects the percentage of T.

Rowe Price mutual funds with 1 year, 3 year, 5 year, and 10 year track record that are outperforming the passive peer universe.

Rowe Price funds with 1 year, 3 year, 5 year, and 10 year track record that outperformed the passive peer universe.

The bottom chart reflects the percentage of T.

Rowe Price mutual funds AUM that has outperformed for the time periods indicated.

Rowe Price funds AUM that has outperformed for the time periods indicated.

Total AUM included for this analysis includes $275B for 1 year, $264B for 3 years, $262B for 5 years, and $254B for 10 years.

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RESULTS OF OPERATIONS.

The following table and discussion sets forth information regarding our consolidated financial results for the first quarter of 2025 and 2024 on a U.S.

GAAP basis and a non-GAAP basis.

The following table and discussion sets forth information regarding our consolidated financial results for the three- and six-month periods ended June 30, 2025 and 2024 on a U.S.

GAAP and a non-GAAP basis.

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.

Three months ended Q2 2025 vs.

Q2 2024 Six months ended YTD 2025 vs.

(in millions, except per-share data) 6/30/2025 6/30/2024 $ change % change (1)

6/30/2025 6/30/2024 $ change % change (1)

Investment advisory fees (2)

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Capital allocation-based income (3)

$ (1.2) $ 47.1 $ (48.3) n/m

$ (0.4) $ 0.1 $ (0.5) n/m $ (1.6) $ 47.2 $ (48.8) n/m

Net revenues $ 1,723.3 $ 1,733.3 $ (10.0) (0.6) % $ 3,487.2 $ 3,483.5 $ 3.7 0.1 %

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

(2) In the first quarter of 2024, performance-based advisory fees were included in investment advisory fees.

(2) 2024 performance-based advisory fees are reported separately from investment advisory fees to align with the presentation in 2025.

(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.

Results Overview - Quarter ended March 31, 2025

Results Overview - Quarter ended June 30, 2025

Net revenues consist of investment advisory revenues;

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More than 90% of our net revenues are related to investment advisory fees.

Total net revenues were $1,763.9 million in the first quarter of 2025, a 0.8% increase compared to $1,750.2 million in the 2024 quarter.

The increase was primarily driven by a 4.0% increase in investment advisory fee revenue as average assets under management increased 9.2%.

This increase was nearly offset by a $48.3 million decline in capital allocation-based income (change in accrued carried interest) earned from certain affiliated funds.

Total net revenues were $1,723.3 million in the second quarter of 2025, a 0.6% decrease compared to $1,733.3 million in the 2024 quarter.

The decrease was primarily driven by a decrease in performance-based advisory fees.

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

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Operating expenses on a U.S.

GAAP basis were $1,167.6 million in the first quarter of 2025, a 0.3% increase over the comparable 2024 period.

GAAP basis were $1,245.0 million in the second quarter of 2025, a 6.5% increase over the comparable 2024 period.

On a non-GAAP basis, operating expenses were $1,147.2 million, a 3.7% increase over the comparable 2024 period.

In comparison to the first quarter of 2024, higher costs across compensation and related benefits and other expense categories were nearly offset by the change in the market-related impacts on the deferred compensation liabilities.

As noted above, we remove the market-related impacts on the deferred compensation liabilities in our non-GAAP operating expenses measures as the liabilities are economically hedged.

Operating margin in the first quarter of 2025 was 33.8% on a U.S.

GAAP basis, compared to 33.5% earned in the first quarter of 2024.

The increase in our U.S.

GAAP operating margin for the first quarter of 2025 compared to the 2024 period was driven by net revenue growth outpacing operating expense growth primarily due to higher investment advisory fee revenue and market-related reductions in deferred compensation liabilities.

Diluted earnings per share was $2.15 for the first quarter of 2025 compared to $2.49 for the first quarter of 2024.

The decrease was primarily driven by lower investment gains compared to the 2024 period.

On a non-GAAP basis, diluted earnings per share was $2.23 for the first quarter of 2025 as compared to $2.38 for the first quarter of 2024.

The decrease was primarily due to lower adjusted operating income and a higher adjusted effective tax rate compared to the 2024 period.

Compared to the second quarter of 2024, over 65% of the increase in U.S.

GAAP operating expenses was due to increases in deferred compensation liabilities from higher markets.

Additionally, higher compensation and related benefits, as well as increased technology, occupancy, and facilities costs, contributed to the rise in U.S.

GAAP operating expenses and were the main drivers of the increase in non-GAAP operating expenses over the 2024 quarter.

As mentioned earlier, we exclude the market-related impacts on deferred compensation liabilities from our non-GAAP operating expenses measures because these liabilities are economically hedged.

Operating margin in the second quarter of 2025 was 27.8% on a U.S.

GAAP basis, compared to 32.6% earned in the second quarter of 2024.

The decrease was driven by operating expense growth outpacing net revenue growth primarily due to higher market-related increases in deferred compensation liabilities.

Diluted earnings per share was $2.24 for the second quarter of 2025 compared to $2.11 for the second quarter of 2024.

The increase was primarily driven by higher investment gains partially offset by lower operating income compared to the 2024 period.

A lower effective tax rate and fewer weighted average shares outstanding also contributed to the increase.

On a non-GAAP basis, diluted earnings per share was $2.24 for the second quarter of 2025 as compared to $2.26 for the second quarter of 2024.

The decrease was primarily due to lower adjusted operating income partially offset by a lower adjusted tax rate and higher adjusted investment gains compared to the 2024 period.

Results Overview - Year-to-Date ended June 30, 2025

Net revenues consist of investment advisory revenues;

performance-based advisory fees;

administrative, distribution, services, and other fees;

and capital allocation-based income.

More than 90% of our net revenues for the six months ended June 30, 2025 are related to investment advisory fees.

Total net revenues were $3,487.2 million in the six months ended June 30, 2025, a 0.1% increase over $3,483.5 million in the 2024 period.

The increase was primarily driven by a 2.0% increase in investment advisory fee revenue as average assets under management increased by 6.3% and a $9.3 million increase in non-advisory revenues, partially offset by a $48.8 million decrease in capital allocation-based income (change in accrued carried interest) earned from investments in certain affiliated funds and a $17.6 million decrease in performance-based advisory fees.

Operating expenses were $2,412.6 million in the six months ended June 30, 2025, compared with $2,332.2 million in the 2024 period.

On a non-GAAP basis, our operating expenses for the six months ended June 30, 2025, increased 4.8% to $2,282.3 million compared to the 2024 period.

Compared to the six months ended June 30, 2024, the increase in U.S.

GAAP and non-GAAP operating expenses was mainly due to higher technology and facility costs, compensation and related benefits costs, distribution and servicing costs, and general, administrative and other costs.

Operating margin in the six months ended June 30, 2025 was 30.8% on a U.S.

GAAP basis, compared to 33.1% earned in the 2024 period.

The decrease was primarily driven by operating expense growth outpacing net revenue growth.

Diluted earnings per share was $4.38 for the six months ended June 30, 2025, compared to $4.60 for 2024 period.

On a non-GAAP basis, adjusted diluted earnings per share was $4.47 for the six months ended June 30, 2025, compared to $4.64 for the 2024 period.

The decreases were primarily due to lower operating income partially offset by higher investment gains.

Three months ended Q2 2025 vs.

Q2 2024 Six months ended YTD 2025 vs.

(in millions) 6/30/2025 6/30/2024 $ change % change (1)

6/30/2025 6/30/2024 $ change % change (1)

Investment advisory fees (2)

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Capital allocation-based income

Change in accrued carried interest 9.2 59.5 (50.3) n/m

Change in accrued carried interest 36.5 27.0 9.5 35.2 % 45.7 86.5 (40.8) (47.2) %

Acquisition-related amortization and impairments (36.9) (26.9) (10.0) 37.2 % (47.3) (39.3) (8.0) 20.4 %

(1.2) 47.1 (48.3) n/m

(0.4) 0.1 (0.5) n/m (1.6) 47.2 (48.8) n/m

Administrative, distribution, services, and other fees

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Average AUM $ 1,588.8 $ 1,534.0 $ 54.8 3.6 % $ 1,604.5 $ 1,509.2 $ 95.3 6.3 %

Investment advisory annualized effective fee rate (bps) 40.3 42.1 (1.8) (4.3) %

Investment advisory annualized effective fee rate excluding performance-based fees (bps) 40.0 41.6 (1.6) (3.8) %

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

EFR without performance-based fees 39.7 41.6 (1.9) (4.6) % 40.0 41.8 (1.8) (4.3) %

EFR with performance-based fees 39.6 41.1 (1.5) (3.6) % 39.8 41.4 (1.6) (3.9) %

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

(2) In the first quarter of 2024, performance-based advisory fees were included in investment advisory fees.

Investment advisory fees in the first quarter of 2025 increased 4.0% over the comparable 2024 quarter as average assets under management increased $135.9 billion, or 9.2%, to $1,620.3 billion.

The average annualized effective fee rate earned for the first quarter of 2025 declined from the comparable 2024 period as client flows and transfers led to a mix shift in assets under management toward lower fee asset classes and products.

Performance-based advisory fees in the first quarter of 2025 were in equity and alternative strategies, while they were primarily equity in the 2024 period.

Capital allocation-based income decreased net revenues by $1.2 million in the first quarter of 2025 compared with an increase in net revenue of $47.1 million in the 2024 quarter.

The decrease over prior year was largely driven by a decline in the accrued carried interest allocation from investments in affiliated investment funds compared with the 2024 period.

The decline was due to lower overall market returns.

The firm realized carried interest of $43.1 million in the first quarter of 2025 compared to $52.7 million in the 2024 period.

(2) 2024 performance-based advisory fees are reported separately from investment advisory fees to align with the 2025 presentation.

Investment advisory fees in the second quarter of 2025 decreased 0.1% over the comparable 2024 quarter while average assets under management increased $54.8 billion, or 3.6%, to $1,588.8 billion.

For the six months ended June 30, 2025, investment advisory revenues increased 2.0% over the comparable 2024 period as average assets under management increased $95.3 billion, or 6.3%, to $1,604.5 billion.

The average annualized effective fee rate earned for the three- and six-month periods ended June 30, 2025 declined from the comparable 2024 periods as market movements and client flows and transfers shifted assets under management toward lower-fee asset classes and products.

Performance-based advisory fees in the second quarter of 2025 and 2024 were earned primarily from alternative strategies, and from equity and alternative strategies for the six months ended June 30, 2025 and 2024.

Capital allocation-based income includes the change in accrued carried interest along with acquisition-related amortization and impairments.

In the second quarter of 2025, the change in accrued carried interest increased net revenues by $36.5 million compared to $27.0 million in the 2024 period.

For the six months ended June 30, 2025, the change in accrued carried interest decreased net revenues by $45.7 million compared to $86.5 million for the 2024 period.

The change in accrued carried interest for both the second quarter and six month periods compared to the 2024 periods was due to relative market impacts and performance.

A portion of the capital allocation-based income is passed through to certain associates as compensation and the related expense recognized in compensation and related costs with the unpaid amount reported as non-controlling interest on the unaudited consolidated balance sheets.

Administrative, distribution, services, and other fees in the first quarter of 2025 were $156.3 million, an increase of $7.2 million, or 4.8%, from the comparable 2024 quarter.

The increase in the first quarter was primarily due to higher reimbursable costs associated with the firm's U.S.

mutual funds, and non-discretionary advisory services.

The reimbursable costs from the firm’s U.S.

mutual funds are offset by expenses recognized in product and recordkeeping costs.

Administrative, distribution, services, and other fees in the second quarter of 2025 were $149.7 million, an increase of $2.1 million, or 1.4%, from the comparable 2024 quarter.

For the six months ended June 30, 2025, these fees were $306.0 million, an increase of $9.3 million, or 3.1%, from the 2024 period.

The increases for both periods were primarily due to higher average assets on which we earn revenue for non-discretionary advisory services and higher recordkeeping fees.

For the second quarter of 2025, these increases were partially offset by the timing of costs to be reimbursed by the firm's U.S.

mutual funds compared to the 2024 period.

The offsetting expense is recognized in product and recordkeeping related costs.

Our net revenues reflect the elimination of advisory and administrative fee revenue earned from our consolidated

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The corresponding expenses recognized by these products, and consolidated in our financial statements, were also eliminated from operating expenses.

For the first quarter, we eliminated net revenue of $1.4 million in 2025 and $1.2 million in 2024.

For the second quarter, we eliminated net revenue of $1.4 million in 2025 and $0.5 million in 2024.

For the six months ended June 30, we eliminated net revenue of $2.8 million in 2025 and $1.7 million in 2024.

Operating expenses

Three months ended Q2 2025 vs.

Q2 2024 Six months ended YTD 2025 vs.

(in millions) 6/30/2025 6/30/2024 $ change % change (1)

6/30/2025 6/30/2024 $ change % change (1)

Compensation, benefits and related costs $ 648.8 $ 635.8 $ 13.0 2.0 % $ 1,306.7 $ 1,265.1 $ 41.6 3.3 %

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

Compensation, benefits, and related costs were $657.9 million in the first quarter of 2025, an increase of $28.6 million, or 4.5%, compared to the 2024 quarter.

The increase was primarily due to higher salaries, employee benefits, and a higher interim bonus accrual.

We award base salary increases in January of each year.

The firm employed 8,084 associates at March 31, 2025, a decrease of 0.9% from the end of 2024, and an increase of 2.6% from March 31, 2024.

Distribution and servicing costs were $93.6 million in the first quarter of 2025, an increase of $11.7 million, or 14.3%, compared to $81.9 million recognized in the 2024 quarter.

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

Compensation, benefits, and related costs were $648.8 million in the second quarter of 2025, an increase of $13.0 million, or 2.0%, compared to the 2024 quarter.

For the six months ended June 30, 2025, these costs were $1,306.7 million, an increase of $41.6 million, or 3.3%, compared to the 2024 period.

The increases in both periods were primarily due to higher salaries and related benefits, as base salaries modestly increased in January 2024 and we saw higher healthcare costs, and higher stock-based compensation.

These increases were partially offset by lower other employee related costs compared to the 2024 periods.

For the second quarter of 2025, a lower bonus accrual also partially offset the increase compared to the 2024 period.

The firm employed 8,063 associates at June 30, 2025, a decrease of 0.3% from 8,084 associates at March 31, 2025, a decrease of 1.2% from the end of 2024, and an increase of 1.7% from June 30, 2024.

Distribution and servicing costs were $92.5 million for the second quarter of 2025, an increase of $4.8 million, or 5.5%, from $87.7 million recognized in the 2024 quarter.

For the six months ended June 30, 2025, these costs were $186.1 million, an increase of $16.5 million, or 9.7%, from $169.6 million recognized in the comparable 2024 period.

The increases in both periods were primarily driven by higher average assets under management distributed through intermediaries.

The costs in this expense category include amounts paid to third-party intermediaries that source the assets of certain share classes of our U.S.

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

Product and recordkeeping related costs were $83.8 million in the first quarter of 2025, an increase of $8.8 million, or 11.7%, compared to $75.0 million in the 2024 quarter.

The increase was primarily due to higher reimbursable costs associated with the firm's U.S.

mutual funds which is offset by the expected reimbursement recognized in administrative, distribution, services and other fee revenue.

Technology, occupancy, and facility costs were $167.6 million in the first quarter of 2025, an increase of $17.7 million, or 11.8%, compared to $149.9 million recognized in the 2024 quarter.

The increase was primarily due to higher costs from the firm's ongoing investment in its technology capabilities, primarily hosted solutions and depreciation.

Additionally, the 2024 quarter included a non-recurring cost benefit related to the firm's UK facility.

We began occupying our new corporate headquarters in March.

General, administrative, and other expenses were $103.3 million in the first quarter of 2025, an increase of $10.7 million, or 11.6%, compared to $92.6 million recognized in the 2024 quarter.

The increase was primarily due to higher professional fees and information services.

Product and recordkeeping related costs were $74.8 million in the second quarter of 2025, an increase of $1.8 million, or 2.5%, compared to $73.0 million in the 2024 quarter.

For the six months ended June 30, 2025, these costs were $158.6 million, an increase of $10.6 million, or 7.2%, from $148.0 million recognized in the comparable 2024 period.

The increases in both periods were primarily due to higher custody fees related to our trust products and recordkeeping fees.

Technology, occupancy, and facility costs were $179.4 million in the second quarter of 2025, an increase of $18.5 million, or 11.5%, compared to the $160.9 million recognized in the 2024 quarter.

For the six months ended June 30, 2025, these costs were $347.0 million, an increase of $36.2 million, or 11.6%, compared with the 2024 period.

The increases in both periods were primarily due to higher technology costs, including hosted solutions and depreciation.

Also contributing to the increase was higher occupancy and facility costs related to the firm’s new corporate headquarters, which was occupied in March 2025, and a non-recurring cost benefit related to the firm's UK facility in the first quarter of 2024.

General, administrative, and other expenses were $109.5 million in the second quarter of 2025, an increase of $0.8 million, or 0.7%, compared to the $108.7 million recognized in the 2024 quarter.

For the six months ended June 30, 2025, these costs were $212.8 million, an increase of $11.5 million, or 5.7%, compared with the 2024 period.

The increases in both periods were primarily due to higher professional fees and information services partially offset by lower external research fees.

Acquisition-related amortization and impairment costs primarily relate to the indefinite- and definite-lived intangible assets identified and separately recognized, at fair value, on acquisition date.

In the first quarter of 2025, we recognized acquisition-related amortization and impairment costs of $28.7 million, a decrease of $1.2 million, or 4.0%, compared to $29.9 million recognized in the 2024 period.

The decrease was primarily driven by lower

impairment charges related to certain definite-lived intangible assets.

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

For the second quarter of 2025, we recognized $31.2 million in amortization and impairments related to the definite and indefinite-lived intangible assets, compared to $43.9 million in the 2024 quarter.

For the six months ended June 30, 2025, we recognized $59.9 million in amortization and impairments related to the definite and indefinite-lived intangible assets, compared to $73.8 million, in the 2024 period.

The 2024 periods include impairments charges totaling $18.0 million on definite and indefinite-lived intangible assets.

The decreases in both periods were primarily driven by lower impairment charges related to certain indefinite-lived intangible assets.

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

Non-operating income (loss)

Non-operating income for the first quarter of 2025 was $70.7 million compared to $188.9 million in the 2024 quarter.

The following table details the components of non-operating income for both the first quarter of 2025 and 2024.

Three months ended

Non-operating income for the second quarter of 2025 was $235.5 million compared to $80.3 million in the 2024 quarter.

The following table details the components of non-operating income for both the three- and six-month periods ended June 30, 2025 and 2024.

Three months ended Six months ended

(in millions) 6/30/2025 6/30/2024 6/30/2025 6/30/2024

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Total cash, discretionary, and seed investments 84.1 49.3 107.6 100.8

Net gains (losses) recognized upon deconsolidation 3.1 — 3.1 —

Investments used to hedge the deferred compensation liabilities 70.5 14.8 59.8 64.5

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

Lower investment gains earned by our investment portfolio during the first quarter of 2025 compared to the 2024 periods were primarily due to lower overall market returns.

Higher investment gains earned by our investment portfolio during the three- and six-month periods ended June 30, 2025 compared to the 2024 periods were primarily due to higher cash and investment holdings coupled with stronger overall market returns.

The table above shows the net investment income of the underlying portfolios of the consolidated investment products, not just the income from our ownership share.

The table below displays how consolidated investment products affected the individual lines of our unaudited consolidated income statements and the portion attributable to our interest.

Three months ended

Three months ended Six months ended

(in millions) 6/30/2025 6/30/2024 6/30/2025 6/30/2024

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Provision for income taxes

The GAAP effective tax rate for the first quarter of 2025 was 24.3% compared with 23.5% in the first quarter of 2024.

The GAAP effective tax rate for the second quarter of 2025 was 22.1% compared with 24.8% in the second quarter of 2024.

These quarterly rates were the result of an overall year-to-date rate of 23.1% for 2025 and 24.1% for 2024.

The following table reconciles the statutory federal income tax rate to our effective tax rate on a U.S.

GAAP basis for the three months ended March 31, 2025 and 2024:

Three months ended

GAAP basis for the six months ended June 30, 2025 and 2024:

Six months ended

6/30/2025 6/30/2024

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Net excess tax benefits from stock-based compensation plans activity (0.2) (0.3)

Valuation allowance 0.4 0.5

Valuation allowances (0.2) 0.5

Other items 0.6 0.6

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

Our adjusted effective tax rate for the first quarter was 24.7% in 2025 compared with 23.9% in 2024.

The increase in both the U.S.

GAAP and adjusted effective tax rates was primarily due to higher state taxes in the 2025 quarter.

The decrease in the year-to-date 2025 U.S.

GAAP and adjusted effective tax rates compared to 2024 was primarily due to the reversal of a valuation allowance related to U.S.

foreign tax credit carryovers.

We currently estimate that our effective tax rate for the full year 2025, on a U.S.

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On an adjusted basis, the range is 24.0% to 27.0% .

Our effective tax rate will continue to experience volatility in future periods as the tax benefits recognized from stock-based compensation are impacted by market fluctuations in our stock price and the timing of option exercises.

The rate also experiences volatility from the changes in deferred tax asset valuation allowances, primarily in foreign jurisdictions, based on the sufficiency of taxable income in future periods.

Our effective tax rate will continue to experience volatility in future periods due to tax benefits recognized from stock-based compensation being influenced by market fluctuations in our stock price, and changes in deferred tax asset valuation allowances, primarily in foreign jurisdictions, being impacted by the sufficiency of taxable income in future periods.

GAAP 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.

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The following schedules reconcile certain U.S.

GAAP financial measures for the three months ended

March 31, 2025 and 2024.

GAAP financial measures to Non-GAAP financial measures for the three months ended June 30, 2025 and 2024.

Three months ended 6/30/2025

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— — (39.3) (9.2) (30.1) (0.14)

Adjusted Non-GAAP Basis $ 1,135.1 $ 640.6 $ 35.5 $ 166.8 $ 509.3 $ 2.23

Adjusted Basis $ 1,147.2 $ 614.4 $ 47.1 $ 154.7 $ 506.8 $ 2.24

Three months ended 6/30/2024

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— — (22.3) (4.9) (17.4) (0.08)

Adjusted Non-GAAP Basis $ 1,071.4 $ 692.4 $ 28.5 $ 172.4 $ 548.5 $ 2.38

(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, if any, amortization of acquired investment and non-controlling interest basis differences and amortization of compensation-related arrangements.

Adjusted Basis $ 1,105.8 $ 654.9 $ 34.7 $ 169.9 $ 519.7 $ 2.26

The following schedules reconcile certain U.S.

GAAP financial measures to non-GAAP financial measures for the six months ended June 30, 2025 and 2024.

Six months ended 6/30/2025

Operating expenses Net operating income Non-operating income (loss) Provision (benefit) for income taxes (5)

Net income attributable to T.

Rowe Price Group, Inc.

Diluted earnings per share (6)

GAAP Basis (FS line item) $ 2,412.6 $ 1,074.6 $ 306.2 $ 319.6 $ 995.7 $ 4.38

Non-GAAP adjustments:

Acquisition-related:

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

19.1 28.2 — 6.4 21.8 0.10

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

(28.3) 28.3 — 6.3 22.0 0.10

Intangible assets amortization and impairments (1)

(59.9) 59.9 — 13.2 46.7 0.20

Total acquisition-related (69.1) 116.4 — 25.9 90.5 0.40

Deferred compensation liabilities (2) (Compensation and related costs)

(59.1) 59.1 (59.8) (0.3) (0.4) —

Consolidated investment products (3)

(2.1) 4.9 (110.5) (11.6) (28.5) (0.13)

Other non-operating income (4)

— — (53.3) (12.1) (41.2) (0.18)

Adjusted Basis $ 2,282.3 $ 1,255.0 $ 82.6 $ 321.5 $ 1,016.1 $ 4.47

Six months ended 6/30/2024

Operating expenses Net operating income Non-operating income (loss) Provision (benefit) for income taxes (5)

Net income attributable to T.

Rowe Price Group, Inc.

Diluted earnings per share (6)

GAAP Basis (FS line item) $ 2,332.2 $ 1,151.3 $ 269.2 $ 341.8 $ 1,057.2 $ 4.60

Non-GAAP adjustments:

Acquisition-related:

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

16.2 23.1 — 5.5 17.6 0.08

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

(26.6) 26.6 — 6.6 20.0 0.08

Intangible assets amortization and impairments (1)

(73.8) 73.8 — 18.0 55.8 0.24

Total acquisition-related (84.2) 123.5 — 30.1 93.4 0.40

Deferred compensation liabilities (2) (Compensation and related costs)

(67.6) 67.6 (64.5) 0.8 2.3 0.01

Consolidated investment products (3)

(3.2) 4.9 (80.8) (14.8) (39.6) (0.17)

Other non-operating income (4)

— — (60.7) (15.6) (45.1) (0.20)

Adjusted Basis $ 2,177.2 $ 1,347.3 $ 63.2 $ 342.3 $ 1,068.2 $ 4.64

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

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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) of the 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.

We believe it is useful to offset the non-operating investment income

(loss) of the 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.

(3) This non-GAAP adjustment removes the impact of the consolidated investment products by adding back their operating expenses and subtracting their investment income.

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(4) This non-GAAP adjustment removes non-operating income (loss) earned on those investments that are not economic hedges for the deferred compensation liabilities and are not part of the cash and discretionary investment portfolio.

We retain gains from cash and discretionary investments in our non-GAAP measures, as they are are considered part of our core operations.

We retain gains from cash and discretionary investments in our non-GAAP measures, as they are considered part of our 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 this portion of non-operating income (loss) when assessing the firm's performance.

(5) The income tax impacts were calculated in order to achieve an overall non-GAAP effective tax rate.

As such, the non-GAAP effective tax rate for the three months ended March 31, 2025 and 2024 was 24.7% and 23.9%, respectively.

(5) The income tax impacts were calculated in order to achieve an overall year-to-date non-GAAP effective tax rate of 24.0% in 2025 and 24.3% in 2024.

As such, the non-GAAP effective tax rate for the second quarter was 23.4% in 2025 and 24.6% in 2024.

(6) This non-GAAP measure was calculated by applying the two-class method to adjusted net income attributable to T.

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The calculation of adjusted net income allocated to common stockholders is as follows:

Three months ended

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(in millions) 6/30/2025 6/30/2024 6/30/2025 6/30/2024

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Rowe Price products $ 6,033.4 $ 5,480.1

Our discretionary investment portfolio is comprised of short duration bond funds, which typically yield higher than money market rates.

Our subsidiaries outside the United States held cash and discretionary investments of $644.0 million at March 31, 2025 and $653.9 million at December 31, 2024.

Our discretionary investment portfolio is primarily comprised of short duration bond funds, which typically yield higher than money market rates.

Our subsidiaries outside the United States held cash and discretionary investments of $741.7 million at June 30, 2025 and $653.9 million at December 31, 2024.

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.

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The following table details how T.

Rowe Price Group, Inc.’s interests in cash and investments relate to where they are presented on the unaudited consolidated balance sheet as of March 31, 2025.

Rowe Price Group, Inc.’s interests in cash and investments relate to where they are presented on the unaudited consolidated balance sheet as of June 30, 2025.

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

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Redeemable non-controlling interests — — 1,099.1 1,099.1

As reported on unaudited consolidated balance sheet at March 31, 2025

As reported on unaudited consolidated balance sheet at June 30, 2025

$ 3,058.9 $ 3,359.9 $ 1,907.5 $ 8,326.3

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mutual funds, ETFs, and funds regulated outside the U.S.

The $775.2 million represents the total value at March 31, 2025 of our interest in the consolidated investment products.

The $808.4 million represents the total value at June 30, 2025 of our interest in the consolidated investment products.

The total net assets of the T.

Rowe Price investment products at March 31, 2025 of $1,752.4 million includes assets of $1,794.4 million, less liabilities of $42.0 million as reflected in our unaudited consolidated balance sheets.

(2) Includes $160.4 million of non-controlling interests in consolidated entities held by related parties and cannot sell in order to obtain cash for general operations.

Rowe Price investment products at June 30, 2025 of $1,907.5 million includes assets of $1,989.0 million, less liabilities of $81.5 million as reflected in our unaudited consolidated balance sheets.

(2) Includes $153.3 million of non-controlling interests in consolidated entities held by related parties, and we cannot sell in order to obtain cash for general operations.

Our unaudited consolidated balance sheet includes the cash, investments, and other assets and liabilities of our consolidated investment products, which includes any redeemable non-controlling interests held by third-party investors.

While we can redeem our net interest in these investment products at any time, we cannot directly access or sell their assets for general operations, and their assets are not available to our general creditors.

Our interest typically serves as initial seed capital and is reclassified as discretionary when management decides the seed capital no longer needed.

Our interest typically serves as initial seed capital and is reclassified as discretionary when management decides the seed capital is no longer needed.

We evaluate these discretionary investment products and aim to liquidate our interest without affecting the product or unrelated third-party investors.

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We increased our quarterly recurring dividend per common share in February 2025 by 2.4% to $1.27 per common share from $1.24 per common share.

Further, we expended $217.5 million in the first quarter of 2025 to repurchase 2.1 million shares of our outstanding common stock, at an average price of $101.57 per share.

Further, we expended $326.1 million in the first half of 2025 to repurchase 3.4 million shares of our outstanding common stock, at an average price of $97.30 per share.

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

While opportunistic in our approach to stock buybacks, we will generally repurchase our common stock over time to offset the dilution created by our equity-based compensation plans.

Since the end of 2022, we have returned nearly $3.4 billion to stockholders through stock repurchases and regular quarterly dividends, as follows:

Since the end of 2022, we have returned over $3.7 billion to stockholders through stock repurchases and regular quarterly dividends, as follows:

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

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2024 1,135.2 334.5 1,469.7

Three months ended 3/31/2025

Six months ended 6/30/2025

574.9 326.1 901.0

Total $ 2,832.0 $ 914.9 $ 3,746.9

We anticipate property, equipment, software and other capital expenditures, including internal labor capitalization, for the full-year 2025 to be about $282 million of which 85% is planned for technology initiatives.

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

The following table summarizes the cash flows for the three months ended March 31, 2025 and 2024, that are attributable to T.

The following table summarizes the cash flows for the six months ended June 30, 2025 and 2024, that are attributable to T.

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

Three months ended

Six months ended

6/30/2025 6/30/2024

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Rowe Price Group, Inc.

during the first quarter of 2025 provided cash flows of $771.9 million, an increase of $32.4 million from $739.5 million provided during the 2024 period.

The increase was primarily driven by a $165.4 million increase in the add-back for non-cash items as detailed in the table above.

This increase to operating cash flows was offset in part by a $83.3 million decrease in net income and by a $80.5 million decrease in cash flows related to timing differences in the cash settlement of our assets and liabilities.

Additionally, in 2025, we made $30.8 million more in net redemptions from certain investment products that economically hedge our deferred compensation liabilities as compared to the 2024 period.

provided cash flows of $1,446.4 million during the first half of 2025, a decrease of $24.0 million from $1,470.4 million provided during the 2024 period.

The decrease was primarily driven by a $61.5 million decrease in net income and a $30.3 million decrease in cash flows related to timing differences in the cash settlement of our assets and liabilities.

These decreases in operating cash flows were offset in part by a $37.1 million increase in the add-back for non-cash items as detailed in the table above.

Additionally, in 2025, net redemptions from certain investment products that economically hedge our deferred compensation liabilities were $30.7 million higher as compared to the 2024 period.

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.

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Investing Activities

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

Net cash used in investing activities attributable to T.

Rowe Price Group, Inc.

totaled $144.9 million in 2025 compared with $75.7 million in 2024.

In 2025, we decreased our property and equipment expenditures by $61.6 million and decreased other investing activity by $20.9 million compared to the 2024 period.

Partially offsetting these decreases was lower net proceeds from the sale of sponsored investment products.

During 2025, we had net proceeds from the sale of investments of $20.3 million compared to $172.0 million during the 2024 period.

In 2025, we decreased our property and equipment expenditures by $20.5 million and increased other investing activity by $18.5 million compared to the 2024 period.

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

The remaining change in reported cash flows from investing activities of $3.8 million is primarily related to the net cash removed from our unaudited consolidated balance sheet from consolidating and deconsolidating investment products.

The remaining change in reported cash flows from investing activities of $12.0 million is related to the net cash removed from our unaudited consolidated balance sheet from consolidating and deconsolidating investment products.

Financing Activities

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The $5.4 million increase in dividends paid in 2025 was a result of the 2.4% increase in our quarterly dividend per share over prior year.

The remaining change in reported cash flows from financing activities was primarily attributable to a $9.4 million decrease in net subscriptions from redeemable non-controlling interest holders of our consolidated investment products during 2025.

The remaining change in reported cash flows from financing activities was primarily attributable to a $34.2 million increase in net subscriptions from redeemable non-controlling interest holders of our consolidated investment products during 2025.

CRITICAL ACCOUNTING POLICIES.

The preparation of financial statements often requires the selection of specific accounting methods and policies from among several acceptable alternatives.

Further, significant estimates and judgments may be required in selecting and applying those methods and policies in the recognition of the assets and liabilities in our unaudited consolidated balance sheets, the revenues and expenses in our unaudited consolidated statements of income, and the information that is contained in our significant accounting policies and notes to unaudited consolidated financial statements.

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.

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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 (including the proposed Maryland sales tax on certain information technology services), 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.

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.

Quantitative and Qualitative Disclosures About Market Risk.

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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-Q

Item 2. Management’s Discussion and Analysis