TROW Q3 Deep Dive: Strategic Partnerships and Product Expansion Support Modest Revenue Growth

Investment management firm T. Rowe Price (NASDAQ:TROW) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 6% year on year to $1.89 billion. Its non-GAAP profit of $2.81 per share was 10.5% above analysts’ consensus estimates.

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StockStory’s Take

T. Rowe Price’s third quarter reflected moderate growth, with results surpassing Wall Street’s expectations for both revenue and adjusted earnings. Management attributed the company’s performance to a combination of solid investment returns across equity and fixed income, as well as progress in its exchange-traded fund (ETF) business and alternative investment strategies. CEO Rob Sharps pointed to an improvement in one-year fund performance and highlighted positive momentum in the firm’s retirement-focused products, noting, “We’re encouraged by this improvement and the momentum we are building.”

Looking ahead, T. Rowe Price’s strategy is anchored by the recently announced collaboration with Goldman Sachs, which aims to broaden its solutions across public and private markets for retirement and wealth clients. Management emphasized the anticipated launch of co-branded products and the integration of digital assets as key opportunities for future growth. CFO Jen Dardis stated that ongoing expense management efforts and targeted investments in technology and distribution are designed to support continued product expansion while maintaining disciplined cost growth.

Key Insights from Management’s Remarks

Management highlighted product diversification, strategic collaborations, and operational discipline as the key drivers behind the latest quarter’s performance and the groundwork for future initiatives.

• Alternative investments momentum: The company reported strong performance in its senior direct lending and distressed alternative strategies, with private credit deployment accelerating and a more robust transaction pipeline. Management noted that OHA, its alternatives arm, is experiencing a record year in capital raising.
• ETF business expansion: T. Rowe Price’s ETF assets under management reached $19 billion, and several ETFs crossed notable asset thresholds. Management emphasized increasing adoption among individual investors and financial advisers, with new filings targeting both equity and fixed income markets.
• Strategic partnership with Goldman Sachs: The firm announced a collaboration with Goldman Sachs to deliver co-branded solutions for retirement and wealth channels. This includes model portfolios, multi-asset public and private market offerings, and personalized advice platforms, with initial launches expected before mid-2026.
• Expense management program: Cost control initiatives included a reduction in workforce and real estate adjustments, resulting in lower compensation and related costs for the quarter. Management indicated these savings are being reinvested in strategic areas such as technology and product development.
• International and new market entry: The company introduced new retirement allocation funds in Asia, marking the first time a U.S. asset manager has offered such products to retail investors in Hong Kong and Singapore. Additionally, the launch of an Emerging Markets Blue Economy Bond strategy in partnership with the International Finance Corporation is aimed at addressing water infrastructure needs in developing countries.

Drivers of Future Performance

Management’s outlook centers on expanding new product offerings, ongoing cost discipline, and building scale through partnerships in both retirement and wealth management.

• Product pipeline and launch timing: The upcoming launches of co-branded model portfolios and multi-asset strategies through the Goldman Sachs partnership are expected to broaden the firm’s reach. Management believes these offerings will enhance competitiveness, but cautions that adoption, particularly among large retirement plan sponsors, may be gradual due to regulatory and fee considerations.
• Expense control and reinvestment: Ongoing efforts to manage expenses, including workforce reductions and real estate optimization, are intended to keep controllable expense growth in the low single digits. Management stated that these savings will be redirected to strategic priorities, such as extending leadership in retirement solutions and building out ETF and digital capabilities.
• Active management and market headwinds: Leadership acknowledged ongoing challenges from passive investment trends and concentrated equity market performance. Management remains focused on improving long-term fund performance and believes that market conditions could eventually shift in favor of active strategies, creating opportunities for outperformance.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the pace and scale of product rollouts from the Goldman Sachs partnership, (2) the effectiveness of expense management initiatives in supporting margin stability, and (3) improvements in net flows across key product categories, especially ETFs and alternative investments. We will also track regulatory developments impacting retirement product adoption and the trajectory of active fund performance relative to passive benchmarks.

T. Rowe Price currently trades at $100.25, down from $102.15 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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