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BALTIMORE - T. Rowe Price Group (NASDAQ:TROW) reported second-quarter earnings that exceeded analyst expectations on Friday, despite facing continued client outflows and slightly missing revenue forecasts.
The investment management firm’s shares edged down 0.44% in pre-market trading following the announcement.
The Baltimore-based asset manager posted adjusted earnings per share of $2.24 for the second quarter, surpassing the analyst consensus of $2.13. However, revenue came in at $1.72 billion, slightly below the $1.73 billion analysts had expected and down 0.6% from the same period last year.
T. Rowe Price reported net client outflows of $14.9 billion during the quarter, highlighting ongoing challenges in retaining assets. Despite these outflows, the firm’s assets under management rose to $1.68 trillion at quarter-end, up 6.9% from $1.57 trillion a year earlier, benefiting from market appreciation of $125.4 billion during the quarter.
"We are building momentum for the long-term—growing our ETF business, leveraging partnerships to extend our reach, and expanding our leadership in retirement," said Rob Sharps, chair, CEO, and president. "We have developed a broad and ongoing plan to reduce our expense growth over time while continuing to invest in capabilities and client reach."
Operating expenses increased 6.5% YoY to $1.25 billion, while net operating income fell 15.3% to $478.3 million compared to the same quarter last year. The company’s investment advisory annualized effective fee rate declined to 39.6 basis points from 41.1 basis points a year ago, reflecting shifts toward lower-fee asset classes and products.
T. Rowe Price returned $395 million to stockholders through dividends and share repurchases during the quarter. The firm’s multi-asset strategies saw net inflows of $0.9 billion, while equity strategies experienced outflows of $18.1 billion.
"While we acknowledge the short-term headwinds, we are confident we are positioned to take advantage of the opportunities ahead," Sharps added.
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