T. Rowe Price Q2 Earnings Beat on High AUM, Revenues Fall, Stock Down

T. Rowe Price Group, Inc.’s TROW second-quarter 2025 adjusted earnings per share (EPS) of $2.24 beat the Zacks Consensus Estimate of $2.15. However, the bottom line decreased roughly 1% year over year.

TROW's results benefited from higher assets under management (AUM). On the other hand, lower investment advisory fees, higher expenses and negative capital allocation-based income were headwinds. In light of these concerns, shares of the company declined 1.3% in the pre-market trading session.

Net income attributable to T. Rowe Price (on a GAAP basis) was $505.2 million, which rose 4.5% from the prior-year quarter. Our estimate for the metric was $431.9 million.

TROW’s Revenues Decline, Expenses Rise

Net revenues fell marginally year over year to $1.72 billion. Further, the top line missed the Zacks Consensus Estimate of $1.74 billion.

Investment advisory fees declined slightly to $1.57 billion. Our estimate for investment advisory fees was $1.54 billion.

Capital allocation-based income declined to negative $0.4 million from $0.1 million in the prior-year quarter. Our estimate for capital allocation-based income was negative $1.7 million.

Total operating expenses increased 6.5% to $1.25 billion in the reported quarter. Our estimate for the metric was $1.17 billion. On an adjusted basis, operating expenses were $1.15 billion, up 3.7%.

TROW’s AUM Rises, Liquidity Position Strong

As of June 30, 2025, total AUM grew 6.9% year over year to $1.68 trillion. Our projection was $1.55 trillion.

In the second quarter, net market appreciation and income of $125.4 billion favorably impacted T. Rowe Price’s AUM, partially offset by net cash outflows of $14.9 billion.

The company had substantial liquidity, including cash and cash equivalents of $3.06 billion as of June 30, 2025, up from $2.65 billion as of Dec. 31, 2024. This will enable TROW to keep investing.

TROW’s Capital Distribution Activities

T. Rowe Price distributed a total of $395 million to shareholders through common stock dividends and share repurchases in the second quarter.

Our View on TROW

TROW’s solid AUM balance, broadening distribution reach and efforts to diversify business through acquisitions are likely to support top-line growth. However, an elevated expense base and excessive reliance on investment advisory fees are concerns. Further, the current tough operating environment is a headwind. Nonetheless, a solid liquidity position enables sustainable capital distributions.

T. Rowe Price Group, Inc. Price, Consensus and EPS Surprise

T. Rowe Price Group, Inc. price-consensus-eps-surprise-chart | T. Rowe Price Group, Inc. Quote

Currently, TROW sports a Zacks Rank #1 (Strong Buy). 

You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of T. Rowe Price’s Peers

Lazard Inc.’s LAZ second-quarter 2025 adjusted EPS of 52 cents beat the Zacks Consensus Estimate of 38 cents. This compared favorably with earnings of 49 cents per share in the year-ago quarter.

Lazard’s results were positively impacted by increases in revenues in the financial advisory and asset management sectors. A rise in AUM balances was another positive. However, a decrease in revenues in the corporate segment and elevated operating expenses acted as a spoilsport.

Invesco’s IVZ second-quarter 2025 adjusted earnings of 36 cents per share lagged the Zacks Consensus Estimate of 40 cents. Moreover, the bottom line declined 16.3% from the prior-year quarter.

IVZ’s results were adversely impacted by higher adjusted operating expenses. However, a rise in adjusted net revenues was a tailwind. An increase in AUM balance due to solid inflows was a positive too.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research