T. Rowe Price Group Inc.

10/29/2026 | Press release | Distributed by Public on 10/29/2026 11:58

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
OVERVIEW.
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; participant recordkeeping and transfer agent services for defined contribution retirement plans; brokerage; trust services; and other advisory services.
Investment advisory fees depend largely on the total value and composition of our assets under 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 clients and additional investments from our existing clients. These efforts often involve costs that precede any future revenues we may earn from an increase to our assets under management.
The investment management industry is evolving, facing challenging trends such as passive strategies taking market share from traditional active strategies; continued downward fee pressure; demand for new investment vehicles to meet client needs; and an ever-changing regulatory landscape. In this regard, we have ample liquidity and resources that allow us to take advantage of attractive growth opportunities. Furthermore, we developed a broad and ongoing plan to align our expense growth with anticipated revenue growth. As a result, we have taken 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 and distribution professionals, adopting new technologies, and offering new products to provide our clients with strong investment management expertise and services.
MARKET TRENDS.
Global equity markets generated mixed returns during the third quarter of 2026 as investors balanced resilient corporate earnings against renewed escalation in the U.S.-Iran conflict, uneven labor market data, and persistent inflation pressures. Higher energy prices and a tighter monetary policy backdrop contributed to divergent performance across regions, market capitalizations, investment styles, and sectors.
U.S. equity markets were mixed, with large-cap shares outperforming small- and mid-cap shares and value stocks outperforming growth stocks across market capitalizations. Within the S&P 500 Index, energy advanced by double-digit gains and information technology, health care, and communication services advanced, while utilities recorded double-digit losses and industrials and business services, real estate, consumer discretionary, materials, and consumer staples declined.
International equity markets were mixed during the third quarter as developed European markets posted gains in July and August before declining in September, while developed Asian markets increased. Japanese equities were supported by semiconductor and other artificial intelligence-related shares, as well as a weaker yen following the Bank of Japan's July policy meeting where it held its policy rate at 1.00%. Emerging market equities were roughly flat, as strength in semiconductor-related companies in South Korea and Taiwan was offset by pressure on energy-importing markets and weakness in China related to soft domestic demand and property-sector data.
Page 23
Returns of several major equity market indexes were as follows:
Three months ended Nine months ended
Index 9/30/2026 9/30/2026
S&P 500 Index 2.3% 12.8%
NASDAQ Composite Index(1)
2.5% 15.6%
Russell 2000 Index (7.2)% 13.7%
MSCI EAFE (Europe, Australasia, and Far East) Index 0.9% 10.8%
MSCI Emerging Markets Index (0.2)% 23.7%
(1) Returns exclude dividends
Global fixed income markets generated negative returns during the third quarter of 2026 as government bond yields moved higher and several major central banks shifted toward tighter monetary policy. Persistent inflation pressures, elevated energy costs, geopolitical uncertainty, and concerns about government debt supply weighed on bond prices across developed and emerging markets.
The Federal Reserve maintained the federal funds target range at 3.50% to 3.75% in July, with three policymakers dissenting in favor of an immediate increase. In September, the Federal Reserve unanimously raised the target range to 3.75% to 4.00%, its first increase in more than three years. Updated projections indicated that most policymakers expected another increase before year-end.
U.S. fixed income markets recorded negative returns as Treasury yields increased across the curve, with the Federal Reserve's September rate increase, stronger economic data, and firm inflation readings leading investors to price a higher policy-rate path. Within the investment-grade bond universe, mortgage-backed securities declined the most, followed by corporate bonds and U.S. Treasuries, while non-agency commercial mortgage-backed securities and asset-backed securities also decreased.
International and emerging markets also declined during the quarter. Developed market sovereign yields rose as tighter monetary policy and higher energy costs sustained inflation concerns, while weakness in several major currencies against the U.S. dollar reduced U.S. dollar-based returns. Emerging market hard currency debt underperformed local currency debt as rising U.S. Treasury yields pressured dollar-denominated sovereign bonds, while the U.S. dollar strengthened in September, weighing on currencies in several oil-importing economies.
Returns of several major bond market indexes were as follows:
Three months ended Nine months ended
Index 9/30/2026 9/30/2026
Bloomberg U.S. Aggregate Bond Index (3.5)% (2.9)%
J.P. Morgan Global High Yield Index (1.5)% 1.0%
Bloomberg Municipal Bond Index (6.4)% (4.2)%
Bloomberg Global Aggregate Ex-U.S. Dollar Bond Index (1.6)% (2.5)%
J.P. Morgan Emerging Markets Bond Index Plus (3.9)% (0.4)%
ICE BofA High Yield Index (1.8)% -%
S&P UBS Leveraged Loan Index 2.0% 3.4%
ASSETS UNDER MANAGEMENT.(1)
Assets under management ended the third quarter of 2026 at $1,862.7 billion, a decrease of $30.7 billion from June 30, 2026. The decrease was driven by net cash outflows of $28.3 billion and market depreciation, net of distributions not reinvested, of $2.4 billion.
Page 24
For the nine months ended September 30, 2026, the increase in assets under management of $87.1 billion was primarily driven by market appreciation, net of distributions not reinvested, of $135.6 billion, offset by net cash outflows of $48.5 billion.
The following table details changes in our assets under management, by asset class, during the three- and nine-month periods ended September 30, 2026:
Three months ended 9/30/2026
Nine months ended 9/30/2026
(in billions) Equity Fixed income, including money market
Multi-asset(2)
Alternatives(3)
Total Equity Fixed income, including money market
Multi-asset(2)
Alternatives(3)
Total
Assets under management at beginning of period $ 919.4 $ 222.3 $ 690.0 $ 61.7 $ 1,893.4 $ 878.5 $ 211.6 $ 627.0 $ 58.5 $ 1,775.6
Net cash flows prior to manager-driven distributions (25.6) 3.4 (7.6) 2.7 (27.1) (61.7) 11.5 (3.1) 7.4 (45.9)
Manager-driven distributions - - - (1.2) (1.2) - - - (2.6) (2.6)
Net cash flows (25.6) 3.4 (7.6) 1.5 (28.3) (61.7) 11.5 (3.1) 4.8 (48.5)
Net market appreciation (depreciation) and income(4)
2.5 (3.9) (1.8) 0.8 (2.4) 79.5 (1.3) 56.7 0.7 135.6
Change during the period (23.1) (0.5) (9.4) 2.3 (30.7) 17.8 10.2 53.6 5.5 87.1
Assets under management at September 30, 2026 $ 896.3 $ 221.8 $ 680.6 $ 64.0 $ 1,862.7 $ 896.3 $ 221.8 $ 680.6 $ 64.0 $ 1,862.7
(1) Firmwide AUM includes assets in which T. Rowe Price Group, Inc. and its affiliates have full discretionary authority along with managed account - model delivery assets.
(2) The underlying AUM of the multi-asset portfolios have been aggregated and presented in this category and not reported in the equity and fixed income columns.
(3) 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, private equity or that have absolute return as its investment objective. Generally, only those strategies with longer than daily liquidity are included. Unfunded capital commitments that do not earn fees were $19.0 billion at September 30, 2026, $21.0 billion at June 30, 2026, and $21.6 billion at December 31, 2025, and are not reflected in the AUM above.
(4) Includes net distributions not reinvested for the three- and nine-month periods ended September 30, 2026 of $0.7 billion and $1.9 billion, respectively.
Investors domiciled outside the United States account for 9.3% of our AUM at September 30, 2026, 9.1% at June 30, 2026, and 8.8% at December 31, 2025.
Assets under management in our target date retirement products, which are included in the multi-asset totals shown above, were $613.9 billion at September 30, 2026, $622.0 billion at June 30, 2026, and $561.4 billion at December 31, 2025. Net outflows for these portfolios were $6.5 billion and net inflows were $0.1 billion in the three- and nine-month periods ended September 30, 2026, respectively.
Our multi-asset investment division provides advisory solutions, including investment insights, strategic asset allocation design, tactical asset allocation recommendations, and portfolio rebalancing services. The assets in these portfolios, predominantly in the United States, were $31.4 billion at September 30, 2026 compared to $31.1 billion at June 30, 2026.
We provide participant accounting and plan administration for retirement plans that primarily invest in our U.S. mutual funds, collective investment trusts and products managed outside of our complex. At September 30, 2026, our assets under administration were $346 billion, of which $186 billion were assets we managed.
Page 25
INVESTMENT PERFORMANCE.(1)
Strong investment performance and brand awareness are key drivers to attracting and retaining assets-and to our long-term success. 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-year periods ended September 30, 2026. Past performance is not a guarantee nor a reliable indicator of future performance.
% of U.S. funds that outperformed Morningstar median(2),(3)
1 year 3 years 5 years 10 years
Equity 61% 56% 44% 58%
Fixed income 64% 52% 52% 62%
Multi-asset 56% 55% 48% 62%
All funds 60% 55% 48% 61%
% of U.S. funds that outperformed passive peer median(2),(4)
1 year 3 years 5 years 10 years
Equity 55% 40% 40% 44%
Fixed income 59% 48% 52% 56%
Multi-asset 57% 39% 38% 41%
All funds 57% 42% 42% 46%
% of composites that outperformed benchmarks(5)
1 year 3 years 5 years 10 years
Equity 35% 25% 22% 38%
Fixed income 59% 61% 47% 68%
All composites 45% 41% 32% 49%
AUM Weighted Performance
% of U.S. funds AUM that outperformed Morningstar median(2),(3)
1 year 3 years 5 years 10 years
Equity 48% 58% 37% 60%
Fixed income 85% 74% 76% 82%
Multi-asset 77% 75% 53% 93%
All funds 57% 62% 44% 69%
% of U.S. funds AUM that outperformed passive peer median(2),(4)
1 year 3 years 5 years 10 years
Equity 43% 21% 19% 29%
Fixed income 85% 63% 81% 73%
Multi-asset 79% 18% 26% 77%
All funds 53% 23% 25% 43%
% of composites AUM that outperformed benchmarks(5)
1 year 3 years 5 years 10 years
Equity 32% 21% 19% 30%
Fixed income 70% 65% 47% 51%
All composites 39% 30% 24% 34%
At September 30, 2026, 64 of 142 (45.1%) of the firm's rated U.S. 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 rating of 4 or 5 stars(6). In addition, 57.0%(6) of AUM in the firm's rated U.S. mutual funds (across primary share classes) ended September 30, 2026 with an overall rating of 4 or 5 stars.
Page 26
(1) The investment performance reflects that of T. Rowe Price U.S. mutual funds, ETFs, and composites.
(2) Source: © 2026 Morningstar, Inc. All rights reserved. The information contained herein: 1) is proprietary to Morningstar and/or its content providers; 2) may not be copied or distributed; and 3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
(3) Source: Morningstar. Primary share class only. Excludes money market mutual funds, funds with an operating history of less than one year, T. Rowe Price passive funds, and T. Rowe Price funds that are clones of other funds. The top chart reflects the percentage of T. 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 funds AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $319B for 1 year, $317B for 3 years, $302B for 5 years, and $299B for 10 years.
(4) Passive Peer Median was created by T. Rowe Price using data from Morningstar. Primary share class only. 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. Rowe Price active funds with the applicable universe of passive/index open-end funds and ETFs of peer firms. The top chart reflects the percentage of T. 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 funds AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $300B for 1 year, $259B for 3 years, $244B for 5 years, and $240B for 10 years.
(5) Composite net returns are calculated using the highest applicable separate account fee schedule. Excludes money market composites. All composites compared to official GIPS composite primary benchmark. The top chart reflects the percentage of T. Rowe Price composites with 1 year, 3 year, 5 year, and 10 year track record that are outperforming their benchmarks. The bottom chart reflects the percentage of T. Rowe Price composite AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $1,637B for 1 year, $1,635B for 3 years, $1,621B for 5 years, and $1,578B for 10 years.
(6) The Morningstar Rating™ for funds is calculated for funds with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. Morningstar gives its best ratings of 5 or 4 stars to the top 32.5% of all funds (of the 32.5%,10% get 5 stars and 22.5% get 4 stars). The Overall Morningstar Rating™ is derived from a weighted-average of the performance figures associated with a fund's 3, 5, and 10 year (if applicable) Morningstar Rating™ metrics.
RESULTS OF OPERATIONS.
The following table and discussion set forth information regarding our consolidated financial results for the three- and nine-month periods ended September 30, 2026 and 2025 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 non-recurring charges and gains, including the restructuring charges.
Page 27
Three months ended Q3 2026 vs. Q3 2025 Nine months ended YTD 2026 vs. YTD 2025
(in millions, except per-share data) 9/30/2026 9/30/2025 $ Change
% Change(1)
9/30/2026 9/30/2025 $ Change
% Change(1)
U.S. GAAP basis
Investment advisory fees $ 1,796.4 $ 1,698.7 $ 97.7 5.8 % $ 5,224.2 $ 4,864.7 $ 359.5 7.4 %
Capital allocation-based income(2)
$ 59.9 $ 42.0 $ 17.9 n/m $ 99.9 $ 40.4 $ 59.5 n/m
Net revenues $ 2,004.9 $ 1,893.5 $ 111.4 5.9 % $ 5,769.3 $ 5,380.7 $ 388.6 7.2 %
Operating expenses $ 1,235.1 $ 1,250.3 $ (15.2) (1.2) % $ 3,778.5 $ 3,662.9 $ 115.6 3.2 %
Net operating income $ 769.8 $ 643.2 $ 126.6 19.7 % $ 1,990.8 $ 1,717.8 $ 273.0 15.9 %
Non-operating income (loss) $ 17.6 $ 238.4 $ (220.8) n/m $ 338.4 $ 544.6 $ (206.2) n/m
Net income - T. Rowe Price Group, Inc. $ 612.3 $ 646.1 $ (33.8) (5.2) % $ 1,742.5 $ 1,641.8 $ 100.7 6.1 %
Diluted earnings per common share $ 2.79 $ 2.87 $ (0.08) (2.8) % $ 7.89 $ 7.25 $ 0.64 8.8 %
Weighted-average common shares outstanding assuming dilution 213.6 219.7 (6.1) (2.8) % 215.1 220.9 (5.8) (2.6) %
Adjusted basis(3)
Operating expenses $ 1,200.1 $ 1,134.4 $ 65.7 5.8 % $ 3,558.5 $ 3,416.7 $ 141.8 4.2 %
Operating expenses, excluding accrued carried interest related compensation $ 1,175.5 $ 1,111.8 $ 63.7 5.7 % $ 3,512.7 $ 3,376.9 $ 135.8 4.0 %
Net operating income $ 809.2 $ 774.1 $ 35.1 4.5 % $ 2,224.4 $ 2,029.1 $ 195.3 9.6 %
Non-operating income (loss) $ 18.0 $ 50.2 $ (32.2) (64.1) % $ 87.4 $ 132.8 $ (45.4) (34.2) %
Net income - T. Rowe Price Group, Inc. $ 629.5 $ 631.7 $ (2.2) (0.3) % $ 1,756.5 $ 1,647.8 $ 108.7 6.6 %
Diluted earnings per common share $ 2.86 $ 2.81 $ 0.05 1.8 % $ 7.95 $ 7.28 $ 0.67 9.2 %
Assets under management (AUM) (in billions)
Average AUM $ 1,887.2 $ 1,723.0 $ 164.2 9.5 % $ 1,834.0 $ 1,644.4 $ 189.6 11.5 %
Ending AUM $ 1,862.7 $ 1,767.2 $ 95.5 5.4 % $ 1,862.7 $ 1,767.2 $ 95.5 5.4 %
Investment advisory annualized effective fee rate (EFR) (in bps)
EFR without performance-based fees 37.8 39.1 (1.3) (3.3) % 38.1 39.6 (1.5) (3.8) %
EFR with performance-based fees 37.9 39.3 (1.4) (3.6) % 38.2 39.7 (1.5) (3.8) %
(1) n/m - the percentage change is not meaningful. (2) Capital allocation-based income represents the change in accrued carried interest along with acquisition-related, non-cash amortization and impairments. (3) 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.
Results Overview - Quarter ended September 30, 2026
Net revenues consist of investment advisory revenues; performance-based advisory fees; capital allocation-based income; and administrative, distribution, servicing, and other fees. About 90% of our net revenues are related to investment advisory fees. Total net revenues were $2,004.9 million in the third quarter of 2026, a 5.9% increase over $1,893.5 million in the third quarter of 2025. The increase was primarily driven by a 5.8% increase in investment advisory fee revenue as higher overall markets increased average assets under management by 9.5% and by higher capital allocation-based income.
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. 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. Our annualized effective fee rates can be impacted by market and cash flows related shifts among asset classes and products, including those with tiered-fee structures, along with price changes we make in existing products.
Capital allocation-based income will fluctuate quarter-to-quarter to reflect the adjustment to accrued carried interest for the change in value of certain affiliated funds assuming the funds' underlying investments were realized at the end of the period.
Page 28
Operating expenses on a U.S. GAAP basis were $1,235.1 million in the third quarter of 2026, a 1.2% decrease from the comparable 2025 period. On a non-GAAP basis, adjusted operating expenses were $1,200.1 million, a 5.8% increase over the comparable 2025 period.
Compared to the third quarter of 2025, market-related impacts on deferred compensation liabilities, lower restructuring charges, and lower acquisition-related amortization and impairments were the drivers of lower U.S. GAAP operating expenses during the third quarter of 2026. These decreases were partially offset by higher compensation and related benefits, distribution and servicing costs, technology and facility costs, and general, administrative, and other costs. These higher costs were the main drivers of the increase in adjusted operating expenses in the third quarter of 2026 compared to the 2025 period as market-related impacts on the deferred compensation liabilities, restructuring charge, and acquisition-related amortization and impairments are not included in our adjusted operating expenses. See the GAAP to non-GAAP reconciliation at the end of the Results of Operations section of this Management's Discussion and Analysis.
Operating margin in the third quarter of 2026 was 38.4% on a U.S. GAAP basis, compared to 34.0% earned in the third quarter of 2025. The increase in our operating margin for the third quarter of 2026 compared to the 2025 period was driven by net revenue growth together with a decrease in operating expenses.
Diluted earnings per share was $2.79 for the third quarter of 2026 compared to $2.87 for the third quarter of 2025. The decrease was primarily driven by lower non-operating income partially offset by higher operating income and lower weighted-average shares outstanding compared to the 2025 period.
On a non-GAAP basis, adjusted diluted earnings per share was $2.86 for the third quarter of 2026 compared to $2.81 for the third quarter of 2025. The increase was primarily driven by lower weighted-average shares outstanding compared to the 2025 period.
Results Overview - Year-to-Date ended September 30, 2026
Net revenues consist of investment advisory revenues; performance-based advisory fees; capital allocation-based income; and administrative, distribution, servicing, and other fees. More than 90% of our net revenues for the nine months ended September 30, 2026 were investment advisory fees. Total net revenues were $5,769.3 million in the nine months ended September 30, 2026, a 7.2% increase over $5,380.7 million in the 2025 period. The increase was primarily driven by a 7.4% increase in investment advisory fee revenue as average assets under management increased by 11.5%.
Operating expenses were $3,778.5 million in the nine months ended September 30, 2026 compared to $3,662.9 million in the 2025 period. On a non-GAAP basis, adjusted operating expenses for the nine months ended September 30, 2026 increased 4.2% to $3,558.5 million compared to the 2025 period.
Compared to the nine months ended September 30, 2025, the primary drivers of the increase in U.S. GAAP and non-GAAP operating expenses during the nine months ended September 30, 2026 were higher compensation and related benefits costs, technology and facility costs, distribution and servicing costs, and general, administrative, and other costs partially offset by lower advertising and promotion costs. U.S. GAAP operating expenses were also impacted by lower acquisition-related amortization and impairments compared to the 2025 period, which are not included in our adjusted operating expenses. See the GAAP to non-GAAP reconciliation at the end of the Results of Operations section of this Management's Discussion and Analysis.
Operating margin in the nine months ended September 30, 2026 was 34.5% on a U.S. GAAP basis, compared to 31.9% earned in the 2025 period. The increase in our U.S. GAAP operating margin for the nine months ended September 30, 2026 compared to the 2025 period was driven by net revenue growth outpacing operating expense growth, primarily driven by higher investment advisory fees.
Diluted earnings per share was $7.89 for the nine months ended September 30, 2026 compared to $7.25 for the nine months ended September 30, 2025. The increase was driven by higher operating income and lower weighted- average shares outstanding, partially offset by lower net investment gains compared to the 2025 period.
Page 29
On a non-GAAP basis, adjusted diluted earnings per share was $7.95 for the nine months ended September 30, 2026 as compared to $7.28 for the 2025 period. The increase was driven by higher operating income and lower weighted-average shares outstanding, partially offset by lower net investment gains compared to the 2025 period.
Net Revenues
Three months ended Q3 2026 vs. Q3 2025 Nine months ended YTD 2026 vs. YTD 2025
(in millions) 9/30/2026 9/30/2025 $ Change
% Change(1)
9/30/2026 9/30/2025 $ Change
% Change(1)
Investment advisory fees
Equity $ 1,047.4 $ 1,011.8 $ 35.6 3.5 % $ 3,034.0 $ 2,894.6 $ 139.4 4.8 %
Fixed income, including money market 118.7 110.1 8.6 7.8 % 344.0 319.2 24.8 7.8 %
Multi-asset 537.6 492.1 45.5 9.2 % 1,576.2 1,402.7 173.5 12.4 %
Alternatives 92.7 84.7 8.0 9.4 % 270.0 248.2 21.8 8.8 %
1,796.4 1,698.7 97.7 5.8 % 5,224.2 4,864.7 359.5 7.4 %
Performance-based advisory fees 7.3 6.4 0.9 14.1 % 21.3 23.2 (1.9) (8.2) %
Capital allocation-based income
Change in accrued carried interest 63.1 56.2 6.9 12.3 % 109.6 101.9 7.7 7.6 %
Acquisition-related amortization and impairments (3.2) (14.2) 11.0 n/m (9.7) (61.5) 51.8 n/m
59.9 42.0 17.9 n/m 99.9 40.4 59.5 n/m
Administrative, distribution, servicing, and other fees
Administrative and other fees 118.8 124.1 (5.3) (4.3) % 357.5 387.5 (30.0) (7.7) %
Distribution and servicing fees 22.5 22.3 0.2 0.9 % 66.4 64.9 1.5 2.3 %
141.3 146.4 (5.1) (3.5) % 423.9 452.4 (28.5) (6.3) %
Net revenues $ 2,004.9 $ 1,893.5 $ 111.4 5.9 % $ 5,769.3 $ 5,380.7 $ 388.6 7.2 %
Average AUM (in billions):
Equity $ 908.2 $ 865.8 $ 42.4 4.9 % $ 885.5 $ 825.7 $ 59.8 7.2 %
Fixed income, including money market 223.1 203.8 19.3 9.5 % 218.6 197.8 20.8 10.5 %
Multi-asset 692.8 597.7 95.1 15.9 % 668.8 566.8 102.0 18.0 %
Alternatives 63.1 55.7 7.4 13.3 % 61.1 54.1 7.0 12.9 %
Total average AUM $ 1,887.2 $ 1,723.0 $ 164.2 9.5 % $ 1,834.0 $ 1,644.4 $ 189.6 11.5 %
Ending AUM (in billions) $ 1,862.7 $ 1,767.2 $ 95.5 5.4 % $ 1,862.7 $ 1,767.2 $ 95.5 5.4 %
Investment advisory annualized effective fee rate (EFR) (in bps)
EFR without performance-based fees 37.8 39.1 (1.3) (3.3) % 38.1 39.6 (1.5) (3.8) %
EFR with performance-based fees 37.9 39.3 (1.4) (3.6) % 38.2 39.7 (1.5) (3.8) %
(1) n/m - the percentage change is not meaningful.
Investment advisory fees in the third quarter of 2026 increased 5.8% over the comparable 2025 quarter as average assets under management increased $164.2 billion or 9.5%, to $1,887.2 billion. For the nine months ended September 30, 2026, investment advisory revenues increased 7.4% over the comparable 2025 period as average assets under management increased $189.6 billion, or 11.5%, to $1,834.0 billion.
The average annualized effective fee rate earned for the three- and nine-month periods ended September 30, 2026 declined from the comparable 2025 periods driven by client flows and transfers drove a mix shift in assets under management toward lower fee products and asset classes partially offset by equity market appreciation.
Performance-based advisory fees in the third quarter of 2026 and 2025 were primarily earned from alternatives
Page 30
strategies. For the nine months ended September 30, 2026, fees were primarily earned from alternatives strategies, while for the comparable period of 2025, they were earned from alternatives and equity strategies.
Capital allocation-based income includes the change in accrued carried interest and acquisition-related amortization and impairments. In the third quarter of 2026, the change in accrued carried interest increased net revenues by $63.1 million, compared to $56.2 million in the 2025 period, reflecting the inclusion of our late-stage venture fund which was not included in the 2025 period. For the nine months ended September 30, 2026, the change in accrued carried interest increased net revenues by $109.6 million compared to $101.9 million for the 2025 period. The decrease in acquisition-related amortization and impairments from the comparable 2025 periods was driven by impairments recognized in the 2025 periods that did not recur. We realized carried interest of $0.1 million and $49.3 million in the three- and nine-month periods ended September 30, 2026, respectively, compared to $0.2 million and $54.2 million in the 2025 periods, respectively.
A portion of the capital allocation-based income is passed through to certain associates as compensation and the related expense is recognized in compensation and related costs with the unpaid amount reported as non-controlling interest on the unaudited consolidated balance sheet.
Administrative, distribution, servicing, and other fees in the third quarter of 2026 were $141.3 million, a decrease of $5.1 million, or 3.5%, from the comparable 2025 quarter. For the nine months ended September 30, 2026, these fees were $423.9 million, a decrease of $28.5 million, or 6.3%, from the 2025 period. The decrease from the third quarter of 2025 is primarily due to lower recordkeeping fees and transfer agent services. Compared to the nine months ended 2025, the decrease primarily reflects the reporting change implemented in the third quarter of 2025, in which revenue earned from managed account - model delivery assets and certain other advisory services began being reported within investment advisory fees, along with lower recordkeeping fees.
Our net revenues reflect the elimination of advisory and administrative fee revenue earned from our consolidated
investment products. The corresponding expenses recognized by these products, and consolidated in our financial statements, were also eliminated from operating expenses. For the third quarter, we eliminated net revenue of $1.2 million in 2026 and $0.8 million in 2025. For the nine months ended September 30, we eliminated net revenue of $3.9 million in 2026 and $3.6 million in 2025.
Page 31
Operating Expenses
Three months ended Q3 2026 vs. Q3 2025 Nine months ended YTD 2026 vs. YTD 2025
(in millions) 9/30/2026 9/30/2025 $ Change
% Change(1)
9/30/2026 9/30/2025 $ Change
% Change(1)
Compensation, benefits, and related costs $ 664.7 $ 632.5 $ 32.2 5.1 % $ 1,995.7 $ 1,939.2 $ 56.5 2.9 %
Acquisition-related retention arrangements 14.2 14.2 - - % 42.6 42.5 0.1 0.2 %
Capital allocation-based income compensation(2)
23.1 16.8 6.3 n/m 41.3 14.9 26.4 n/m
Market-related change in deferred compensation liabilities 1.5 50.8 (49.3) n/m 107.0 109.9 (2.9) (2.6) %
Total compensation and related costs 703.5 714.3 (10.8) (1.5) % 2,186.6 2,106.5 80.1 3.8 %
Distribution and servicing costs 111.0 95.8 15.2 15.9 % 316.4 281.9 34.5 12.2 %
Advertising and promotion costs 21.7 21.3 0.4 1.9 % 60.4 77.3 (16.9) (21.9) %
Product and recordkeeping related costs 79.3 78.7 0.6 0.8 % 236.7 237.3 (0.6) (0.3) %
Technology, occupancy, and facility costs(3)
205.1 197.3 7.8 4.0 % 615.4 573.5 41.9 7.3 %
General, administrative, and other costs(3)
95.5 87.6 7.9 9.0 % 292.8 271.2 21.6 8.0 %
Acquisition-related amortization, impairments, and other costs 15.0 26.8 (11.8) (44.0) % 49.5 86.7 (37.2) (42.9) %
Restructuring charge 4.0 28.5 (24.5) n/m 20.7 28.5 (7.8) n/m
Total operating expenses $ 1,235.1 $ 1,250.3 $ (15.2) (1.2) % $ 3,778.5 $ 3,662.9 $ 115.6 3.2 %
Total adjusted operating expenses(4)
$ 1,200.1 $ 1,134.4 $ 65.7 5.8 % $ 3,558.5 $ 3,416.7 $ 141.8 4.2 %
(1) n/m - the percentage change is not meaningful.
(2) Capital allocation-based income compensation represents the change in accrued carried interest compensation along with acquisition-related, non-cash amortization and impairments.
(3) In Q1 2026, we implemented a reporting change that moved technology-related professional fees and servicing costs from general, administrative, and other costs to technology, occupancy, and facility costs to better align with the nature of the expenses following the outsourcing and expansion of our technology capabilities through trusted vendor partnerships. Prior periods were recast to reflect this change. The amounts reclassified for the three- and nine-month periods ended September 30, 2025 were $14.2 million and $43.3 million, respectively.
(4) 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 $664.7 million for the third quarter of 2026, an increase of $32.2 million, or 5.1%, compared to $632.5 million in the 2025 quarter. For the nine months ended September 30, 2026, these costs were $1,995.7 million, an increase of $56.5 million, or 2.9%, compared to $1,939.2 million in the 2025 period. The increases in both periods were primarily driven by a higher interim bonus accrual and long-term incentive compensation partially offset by lower salaries and related benefits and temporary personnel.
The average associate headcount for the third quarter of 2026 was 7,577, a decrease of 4.3% compared to the 2025 period. For the nine months ended September 30, 2026, average associate headcount was 7,584, a decrease of 5.4% compared to the 2025 period. The firm employed 7,640 associates at September 30, 2026, a decrease of 1.7% from the end of 2025.
Distribution and servicing costs were $111.0 million for the third quarter of 2026, an increase of $15.2 million, or 15.9% compared to $95.8 million in the 2025 quarter. For the nine months ended September 30, 2026, these costs were $316.4 million, an increase of 12.2%, compared to $281.9 million in the 2025 period. The increases in both periods were primarily driven by higher average assets under management distributed through third-party 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. mutual funds, ETFs, and certain international products, such as our Japanese ITMs and SICAVs. These costs are offset entirely by the investment advisory revenue we earn from these products,
Page 32
or in the case of the Advisor and R share classes of the U.S. mutual funds, 12b-1 fees recognized in administrative, distribution, servicing, and other fees.
Advertising and promotion costs were $21.7 million in the third quarter of 2026, an increase of $0.4 million, or 1.9%, compared to the $21.3 million recognized in the 2025 quarter. For the nine months ended September 30, 2026, these costs were $60.4 million, a decrease of $16.9 million, or 21.9%, compared to the $77.3 million in the 2025 period. The decrease in the nine months ended September 30, 2026 was primarily driven by lower media spend and agency costs.
Product and recordkeeping related costs were $79.3 million in the third quarter of 2026, an increase of $0.6 million, or 0.8%, compared to the $78.7 million recognized in the 2025 quarter. For the nine months ended September 30, 2026, these costs were $236.7 million, a decrease of $0.6 million, or 0.3%, compared to $237.3 million recognized in the 2025 period.
Technology, occupancy, and facility costs were $205.1 million in the third quarter of 2026, an increase of $7.8 million, or 4.0%, compared to the $197.3 million recognized in the 2025 quarter. For the nine months ended September 30, 2026, these costs were $615.4 million, an increase of $41.9 million, or 7.3%, compared to $573.5 million recognized in the 2025 period. The increases in both periods were primarily driven by higher technology costs associated with the firm's decision in prior periods to outsource certain technology capabilities, which were partially offset by a reduction in compensation expenses, and higher costs for cloud-based infrastructure and hosted solutions. The third quarter of 2026 included the reversal of about $10 million in accrued technology-related expenses related to work that is expected to be completed in future periods.
General, administrative, and other costs were $95.5 million in the third quarter of 2026, an increase of $7.9 million, or 9.0%, compared to the $87.6 million recognized in the 2025 quarter. For the nine months ended September 30, 2026, these costs were $292.8 million, an increase of $21.6 million, or 8.0%, compared to $271.2 million recognized in the 2025 period. The increases from both periods were primarily attributable to period-specific items, including a benefit recognized in the third quarter of 2025 that didn't recur in the 2026 periods, and a non-recurring cost recognized in 2026. Higher travel costs in the 2026 periods also contributed to the increase.
Acquisition-related amortization, impairments, and other costs. As part of the purchase accounting for our acquisitions, we identified and separately recognized, at fair value, certain intangible assets. During the three- and nine-month periods ended September 30, 2026, we recognized $15.0 million and $49.5 million, respectively, in amortization and impairments compared to $26.8 million and $86.7 million, respectively, in the comparable 2025 periods. The decreases primarily reflect amortization and impairments recognized over time, which reduced the remaining carrying value of the related definite-lived intangibles as well as impairments recognized in 2025 that did not recur in the 2026 period.
Restructuring charge was $4.0 million in the third quarter of 2026, a decrease of $24.5 million, or 86.0%, compared to the $28.5 million recognized in the 2025 quarter. For the nine months ended September 30, 2026, this charge was $20.7 million, a decrease of $7.8 million, or 27.4%, compared to $28.5 million recognized in the 2025 period. These charges relate to actions taken under our previously announced broad and ongoing expense management program, which allows the firm to reduce expense growth and realign resources to support investment in existing and future capabilities. The decreases primarily reflect lower compensation-related costs, primarily severance, and lower costs related to exiting owned buildings.
Page 33
Non-Operating Income (Loss)
The following table details the components of non-operating income (loss) for both the three- and nine-month periods ended September 30, 2026 and 2025.
Three months ended Nine months ended
(in millions) 9/30/2026 9/30/2025 9/30/2026 9/30/2025
Net gains (losses) from non-consolidated investment products
Cash and discretionary investments
Dividend income $ 40.5 $ 38.1 $ 112.4 $ 102.3
Market-related gains (losses) and equity in earnings (losses) (22.0) 12.1 (24.6) 29.6
Total net gains (losses) from cash and discretionary investments 18.5 50.2 87.8 131.9
Seed capital investments
Dividend income 1.5 0.5 3.1 0.9
Market-related gains (losses) and equity in earnings (losses) (5.6) 17.1 49.3 42.6
Total seed capital investments (4.1) 17.6 52.4 43.5
Total cash, discretionary, and seed investments 14.4 67.8 140.2 175.4
Net gains (losses) recognized upon deconsolidation 4.3 - 4.5 3.1
Investments used to hedge the deferred compensation liabilities (4.4) 53.0 96.7 112.8
Total net gains (losses) from non-consolidated investment products 14.3 120.8 241.4 291.3
Other investment income 18.0 40.4 22.2 67.7
Net gains (losses) on investments 32.3 161.2 263.6 359.0
Net gains (losses) on consolidated investment products (18.0) 72.6 73.2 183.1
Other gains, including foreign currency gains 3.3 4.6 1.6 2.5
Non-operating income (loss) $ 17.6 $ 238.4 $ 338.4 $ 544.6
Adjusted non-operating income (loss)(1)
$ 18.0 $ 50.2 $ 87.4 $ 132.8
(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.
On an adjusted basis, non-operating income (loss) consists of investment gains and losses generated from our cash and discretionary investment portfolio. Lower investment gains during the three- and nine-month periods ended September 30, 2026 compared to the 2025 periods were primarily driven by losses on fixed income holdings resulting from rising interest rates, which more than offset higher dividends on cash equivalents and other fixed income holdings.
The table above includes the net investment income of the underlying portfolios included in the consolidated
investment products and not just the net investment income related to our ownership interest in the products. The table below shows the impact that the consolidated investment products had on the individual lines of our unaudited consolidated statements of income and the portion attributable to our interest:
Three months ended Nine months ended
(in millions) 9/30/2026 9/30/2025 9/30/2026 9/30/2025
Operating expenses reflected in net operating income $ (3.1) $ (2.2) $ (8.6) $ (7.1)
Net investment income (loss) reflected in non-operating income (18.0) 72.6 73.2 183.1
Impact on income before taxes $ (21.1) $ 70.4 $ 64.6 $ 176.0
Net income (loss) attributable to our interest in the consolidated investment products $ (5.9) $ 30.0 $ 30.5 $ 70.1
Net income (loss) attributable to redeemable non-controlling interests (unrelated third-party investors) (15.2) 40.4 34.1 105.9
Impact on income before taxes $ (21.1) $ 70.4 $ 64.6 $ 176.0
Page 34
Provision for Income Taxes
The GAAP effective income tax rate for the third quarter of 2026 was 24.2% compared to 22.1% in the third quarter of 2025. These quarterly rates were the result of an overall year-to-date rate of 23.7% for 2026 and 22.8% for 2025. The following table reconciles the statutory federal income tax rate to our effective income tax rate on a U.S. GAAP basis for the nine months ended September 30, 2026 and 2025:
Nine months ended
9/30/2026 9/30/2025
Statutory U.S. federal income tax rate 21.0 % 21.0 %
State income taxes, net of federal income tax benefits 2.6 2.5
Net (income) losses attributable to redeemable non-controlling interests(1)
(0.3) (1.0)
Net excess tax losses (benefits) from stock-based compensation plans activity (0.1) (0.2)
Valuation allowances - (0.2)
Other items 0.5 0.7
Effective income tax rate 23.7 % 22.8 %
Adjusted effective income tax rate 24.0 % 23.8 %
(1) Net income attributable to redeemable non-controlling interests represents the portion of earnings held in our consolidated investment products, which are not taxable to us despite being included in pre-tax income.
The adjusted effective income tax rate primarily adjusts for the impact of the consolidated investment products, including the net income attributable to redeemable non-controlling interests. The increase in the U.S. GAAP effective income tax rate for the nine months ended September 30, 2026 was primarily related to the net income attributable to redeemable non-controlling interests which is not taxable to the firm. The increase in the adjusted effective income tax rate for the nine months ended September 30, 2026 was primarily driven by higher valuation allowances in 2026 compared to 2025 which also impacted the U.S. GAAP effective income tax rate.
We currently estimate that our effective income tax rate for the full year 2026, on a U.S. GAAP and adjusted basis, will be in the range of 23.5% to 25.5%.
Our effective income tax rate will continue to experience volatility in future periods driven by, among other things, the impact market fluctuations in our stock price have on stock-based compensation tax benefits, changes in the mix of our earnings among countries with differing tax laws or rates, and changes in the valuation allowances of foreign-based deferred tax assets.
Page 35
NON-GAAP INFORMATION AND RECONCILIATION.
We believe the non-GAAP financial measures below provide relevant and meaningful information to investors about our core operating results. These measures have been established to increase transparency in evaluating our core business, comparing current results with prior-period results, and making more meaningful comparisons with industry peers. However, non-GAAP financial measures should not be considered as a substitute for financial measures calculated in accordance with U.S. GAAP and may be calculated differently by other companies.
The following schedules reconcile certain U.S. GAAP financial measures to non-GAAP financial measures for the three months ended September 30, 2026 and 2025.
Three months ended 9/30/2026
(in millions, except per-share data) Operating expenses Net operating income Non-operating income (loss)
Provision (benefit) for income taxes(6)
Net income attributable to T. Rowe Price Group, Inc.
Diluted earnings per share(7)
U.S. GAAP Basis (FS line item) $ 1,235.1 $ 769.8 $ 17.6 $ 190.3 $ 612.3 $ 2.79
Non-GAAP adjustments:
Acquisition-related:
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs)
1.5 1.7 - 0.5 1.2 0.01
Acquisition-related retention arrangements(1) (Compensation and related costs)
(14.2) 14.2 - 4.3 9.9 0.04
Intangible assets amortization and impairments(1)
(15.0) 15.0 - 4.5 10.5 0.05
Total acquisition-related (27.7) 30.9 - 9.3 21.6 0.10
Deferred compensation liabilities(2) (Compensation and related costs)
(1.5) 1.5 4.4 1.8 4.1 0.02
Restructuring charge(3)
(4.0) 4.0 - 1.2 2.8 -
Consolidated investment products(4)
(1.8) 3.0 18.0 1.7 4.1 0.02
Other non-operating income(5)
- - (22.0) (6.6) (15.4) (0.07)
Adjusted Basis $ 1,200.1 $ 809.2 $ 18.0 $ 197.7 $ 629.5 $ 2.86
Three months ended 9/30/2025
(in millions, except per-share data) Operating expenses Net operating income Non-operating income (loss)
Provision (benefit) for income taxes(6)
Net income attributable to T. Rowe Price Group, Inc.
Diluted earnings per share(7)
U.S. GAAP Basis (FS line item) $ 1,250.3 $ 643.2 $ 238.4 $ 195.1 $ 646.1 $ 2.87
Non-GAAP adjustments:
Acquisition-related:
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs)
5.8 8.4 - 1.2 7.2 0.03
Acquisition-related retention arrangements(1) (Compensation and related costs)
(14.2) 14.2 - 2.1 12.1 0.05
Intangible assets amortization and impairments(1)
(26.8) 26.8 - 3.9 22.9 0.10
Total acquisition-related (35.2) 49.4 - 7.2 42.2 0.18
Deferred compensation liabilities(2) (Compensation and related costs)
(50.8) 50.8 (53.0) (0.3) (1.9) (0.01)
Restructuring charge(3)
(28.5) 28.5 - 4.2 24.3 0.11
Consolidated investment products(4)
(1.4) 2.2 (72.6) (4.4) (25.6) (0.11)
Other non-operating income(5)
- - (62.6) (9.2) (53.4) (0.23)
Adjusted Basis $ 1,134.4 $ 774.1 $ 50.2 $ 192.6 $ 631.7 $ 2.81
Page 36
The following schedules reconcile certain U.S. GAAP financial measures to non-GAAP financial measures for the nine months ended September 30, 2026 and 2025.
Nine months ended 9/30/2026
(in millions, except per-share data) Operating expenses Net operating income Non-operating income (loss)
Provision (benefit) for income taxes(6)
Net income attributable to T. Rowe Price Group, Inc.
Diluted earnings per share(7)
U.S. GAAP Basis (FS line item) $ 3,778.5 $ 1,990.8 $ 338.4 $ 552.6 $ 1,742.5 $ 7.89
Non-GAAP adjustments:
Acquisition-related:
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs)
4.5 5.2 - 1.4 3.8 0.02
Acquisition-related retention arrangements(1) (Compensation and related costs)
(42.6) 42.6 - 12.0 30.6 0.14
Intangible assets amortization and impairments(1)
(49.5) 49.5 - 13.8 35.7 0.16
Total acquisition-related (87.6) 97.3 - 27.2 70.1 0.32
Deferred compensation liabilities(2) (Compensation and related costs)
(107.0) 107.0 (96.7) 3.6 6.7 0.03
Restructuring charge(3)
(20.7) 20.7 - 6.3 14.4 0.06
Consolidated investment products(4)
(4.7) 8.6 (73.2) (13.6) (16.9) (0.08)
Other non-operating income(5)
- - (81.1) (20.8) (60.3) (0.27)
Adjusted Basis $ 3,558.5 $ 2,224.4 $ 87.4 $ 555.3 $ 1,756.5 $ 7.95
Nine months ended 9/30/2025
(in millions, except per-share data) Operating expenses Net operating income Non-operating income (loss)
Provision (benefit) for income taxes(6)
Net income attributable to T. Rowe Price Group, Inc.
Diluted earnings per share(7)
U.S. GAAP Basis (FS line item) $ 3,662.9 $ 1,717.8 $ 544.6 $ 514.7 $ 1,641.8 $ 7.25
Non-GAAP adjustments:
Acquisition-related:
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs)
24.9 36.6 - 7.7 28.9 0.13
Acquisition-related retention arrangements(1) (Compensation and related costs)
(42.5) 42.5 - 8.3 34.2 0.15
Intangible assets amortization and impairments(1)
(86.7) 86.7 - 17.1 69.6 0.31
Total acquisition-related (104.3) 165.8 - 33.1 132.7 0.59
Deferred compensation liabilities(2) (Compensation and related costs)
(109.9) 109.9 (112.8) (0.6) (2.3) (0.01)
Restructuring charge(3)
(28.5) 28.5 - 4.2 24.3 0.11
Consolidated investment products(4)
(3.5) 7.1 (183.1) (16.0) (54.1) (0.24)
Other non-operating income(5)
- - (115.9) (21.3) (94.6) (0.42)
Adjusted Basis $ 3,416.7 $ 2,029.1 $ 132.8 $ 514.1 $ 1,647.8 $ 7.28
(1) These non-GAAP adjustments remove the impact of acquisition-related amortization of intangible assets, 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.
(2) This non-GAAP adjustment eliminates the compensation expense impact from market valuation changes in deferred compensation liabilities, including the supplemental savings plan and restricted fund units, and the related net gains (losses) on investments used as economic hedges against the related liabilities. The liabilities are adjusted based on the performance of hypothetical investments selected by participants. We use investment products to economically hedge the market risk associated with the supplemental saving 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 our core operating results and to increase comparability period to period.
Page 37
(3) This non-GAAP adjustment removes the impact of actions taken as part of our broad and ongoing plan to reduce expense growth and realign resources to invest in existing and future capabilities. We believe this adjustment helps the reader's ability to understand our core operating results and increases comparability period to period.
(4) This non-GAAP adjustment removes the impact of the consolidated investment products by adding back their operating expenses and subtracting their investment income. The operating expense adjustment represents their operating expenses net of related investment advisory and administrative fees. The adjustment to net income attributable to T. Rowe Price Group, Inc. represents the consolidated investment products' net income, net of redeemable non-controlling interests. We believe this adjustment helps the reader's ability to understand our core operating results and increases comparability period to period.
(5) 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 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 period to period. Additionally, we do not emphasize this portion of non-operating income (loss) when assessing our performance.
(6) The income tax impacts were calculated in order to achieve an overall year-to-date non-GAAP effective income tax rate of 24.0% in 2026 and 23.8% in 2025. As such, the non-GAAP effective income tax rate for the third quarter was 23.9% in 2026 and 23.4% in 2025.
(7) This non-GAAP measure was calculated by applying the two-class method to adjusted net income attributable to T. Rowe Price Group, Inc. divided by the weighted-average common shares outstanding assuming dilution. The calculation of adjusted net income allocated to common stockholders is as follows:
Three months ended Nine months ended
(in millions) 9/30/2026 9/30/2025 9/30/2026 9/30/2025
Adjusted net income attributable to T. Rowe Price Group, Inc. $ 629.5 $ 631.7 $ 1,756.5 $ 1,647.8
Less: adjusted net income allocated to outstanding restricted stock and stock unit holders 17.6 14.3 45.9 39.7
Adjusted net income allocated to common stockholders $ 611.9 $ 617.4 $ 1,710.6 $ 1,608.1
CAPITAL RESOURCES AND LIQUIDITY.
Sources of Liquidity
We have ample liquidity, including cash and investments in T. Rowe Price products, as follows:
(in millions) 9/30/2026 12/31/2025
Cash and cash equivalents $ 3,774.3 $ 3,378.2
Discretionary investments 1,151.7 463.7
Total cash and discretionary investments 4,926.0 3,841.9
Redeemable seed capital investments 1,245.2 1,144.1
Investments used to hedge the deferred compensation liabilities 1,350.1 1,317.3
Total cash and investments in T. Rowe Price products attributable to T. Rowe Price Group $ 7,521.3 $ 6,303.3
Our discretionary investment portfolio is primarily comprised of short-duration bond funds, which typically offer yields above money market rates. Our subsidiaries outside the United States held cash and discretionary investments of $1,000.5 million at September 30, 2026 and $730.6 million at December 31, 2025. 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.
Our seed capital investments are redeemable, although we generally expect to be invested for several years for the products to build an investment performance history and until unrelated third-party investors substantially reduce our relative ownership percentage.
The cash and investment presentation on the unaudited consolidated balance sheet is based on the accounting treatment for the cash equivalent or investment item. 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 at September 30, 2026.
Page 38
(in millions) Cash and cash equivalents Investments
Net assets of consolidated investment products(1)
Total
Cash and discretionary investments $ 3,774.3 $ 1,105.8 $ 45.9 $ 4,926.0
Redeemable seed capital investments - 333.8 911.4 1,245.2
Investments used to hedge the deferred compensation liabilities - 1,333.6 16.5 1,350.1
Total cash and investments in T. Rowe Price products attributable to T. Rowe Price Group 3,774.3 2,773.2 973.8 7,521.3
Investments in affiliated private investment funds(2)
- 817.6 - 817.6
Investments in affiliated collateralized loan obligations - 21.2 38.4 59.6
Investment in UTI and other investments - 573.2 - 573.2
Total cash and investments attributable to T. Rowe Price Group 3,774.3 4,185.2 1,012.2 8,971.7
Redeemable non-controlling interests - - 1,057.4 1,057.4
As reported on the consolidated balance sheet at September 30, 2026 $ 3,774.3 $ 4,185.2 $ 2,069.6 $ 10,029.1
(1) The consolidated 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. These products generally represent U.S. mutual funds, ETFs, and funds regulated outside the U.S. The $1,012.2 million represents the total value at September 30, 2026 of our interest in the consolidated T. Rowe Price investment products. The total net assets of the T. Rowe Price investment products at September 30, 2026 of $2,069.6 million include assets of $2,624.0 million, less liabilities of $554.4 million as reflected in our unaudited consolidated balance sheet.
(2) Includes $184.7 million of non-controlling interests in consolidated entities and represents the portion of these investments, held by related parties, that we cannot sell in order to obtain cash for general operations.
Our unaudited consolidated balance sheet reflects the cash and cash equivalents, investments, other 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 generally 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 consolidated investment products is generally 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 investment products and, when we decide to liquidate our interest, we seek to do so in a way so as to not impact the product and, ultimately, the unrelated third-party investors.
Uses of Liquidity
We increased our quarterly recurring dividend per common share in February 2026 by 2.4% to $1.30 per common share from $1.27 per common share. Further, we expended $497.5 million in the first nine months of 2026 to repurchase 5.3 million shares of our outstanding common stock, at an average price of $94.44 per share. These dividends and repurchases were funded 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 2023, we have returned $4.6 billion to stockholders through stock repurchases and regular quarterly dividends, as follows:
(in millions) Recurring dividend Stock repurchases Total returned to stockholders
2024 $ 1,135.2 $ 334.5 $ 1,469.7
2025 1,143.4 624.6 1,768.0
Nine months ended September 30, 2026
857.6 497.5 1,355.1
Total $ 3,136.2 $ 1,456.6 $ 4,592.8
Page 39
We anticipate property, equipment, software and other capital expenditures, including internal labor capitalization, for the full-year 2026 to be about $290 million, of which nearly all is planned for technology initiatives. We expect to fund our anticipated capital expenditures with operating cash flows and other available resources.
In August 2026, we entered into an agreement to acquire F/m Investments, LLC for about $75 million plus up to $50 million in contingent consideration that may be due as part of an earnout payment. The transaction is expected to close in the first quarter of 2027, subject to receipt of required regulatory approvals and satisfaction of other customary closing conditions, and is expected to be funded with existing cash balances.
Page 40
Cash Flows
The following table summarizes the cash flows for the nine months ended September 30, 2026 and 2025, that are attributable to T. Rowe Price Group, Inc., our consolidated investment products, and the related eliminations required in preparing the statement.
Nine months ended
9/30/2026 9/30/2025
(in millions) Cash flow attributable to T. Rowe Price Group, Inc. Cash flow attributable to consolidated investment products Elims As reported Cash flow attributable to T. Rowe Price Group, Inc. Cash flow attributable to consolidated investment products Elims As reported
Cash flows from operating activities
Net income (loss) $ 1,742.5 $ 64.6 $ (30.5) $ 1,776.6 $ 1,641.8 $ 176.0 $ (70.1) $ 1,747.7
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation, amortization and impairments of property, equipment and software 213.6 - - 213.6 203.7 - - 203.7
Amortization and impairments of acquisition-related assets and retention arrangements 97.3 - - 97.3 165.8 - - 165.8
Stock-based compensation expense 135.5 - - 135.5 134.2 - - 134.2
Net (gains) losses recognized on investments (269.6) - 30.5 (239.1) (417.6) - 70.1 (347.5)
Total non-cash adjustments 176.8 - 30.5 207.3 86.1 - 70.1 156.2
Net redemptions from investment products used to economically hedge deferred compensation liabilities 60.8 - 15.4 76.2 63.3 - 46.7 110.0
Net change in trading securities held by consolidated investment products - (982.4) - (982.4) - (821.4) - (821.4)
Other changes 772.6 43.5 (8.9) 807.2 588.8 (1.1) (8.1) 579.6
Net cash provided by (used in) operating activities 2,752.7 (874.3) 6.5 1,884.9 2,380.0 (646.5) 38.6 1,772.1
Net cash provided by (used in) investing activities (985.0) (1.4) 271.5 (714.9) (79.3) (35.8) 96.2 (18.9)
Net cash provided by (used in) financing activities (1,371.6) 948.8 (278.0) (700.8) (1,315.7) 664.9 (134.8) (785.6)
Effect of exchange rate changes on cash and cash equivalents of consolidated investment products - (2.9) - (2.9) - 3.4 - 3.4
Net change in cash and cash equivalents during period 396.1 70.2 - 466.3 985.0 (14.0) - 971.0
Cash and cash equivalents at beginning of year 3,378.2 39.1 - 3,417.3 2,649.8 63.1 - 2,712.9
Cash and cash equivalents at end of period $ 3,774.3 $ 109.3 $ - $ 3,883.6 $ 3,634.8 $ 49.1 $ - $ 3,683.9
Page 41
Operating Activities
Operating activities attributable to T. Rowe Price Group during the first nine months of 2026 provided cash flows of $2,752.7 million, an increase of $372.7 million from $2,380.0 million provided during the 2025 period. The increase was primarily driven by a $183.8 million increase in cash flows related to timing differences associated with the cash settlement of our assets and liabilities, a $100.7 million increase in net income, and a $90.7 million increase in the add-back for non-cash items as detailed in the table above. These increases were partially offset by a $2.5 million decrease in proceeds received from net redemptions of investments that economically hedge our deferred compensation liabilities compared to the 2025 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.
Our interim operating cash flows do not include the cash impact of variable incentive compensation that is accrued throughout the year before being substantially paid out in December.
Investing Activities
Net cash used in investing activities attributable to T. Rowe Price Group during the first nine months of 2026 totaled $985.0 million, compared to $79.3 million during the 2025 period. The increase was primarily driven by net purchases of investments of $739.5 million in 2026 compared to net proceeds from the sale of investments of $241.9 million in 2025. Net cash used in other investing activities during 2026 decreased $69.3 million compared to the 2025 period. The 2026 amount reflects proceeds from the sale of certain buildings in our real estate portfolio. Additionally, our property and equipment expenditures decreased by $6.4 million compared to the 2025 period primarily driven by the completion of our corporate headquarters build out in 2025. 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 $34.4 million is primarily related to a reduction in the net cash removed from our unaudited consolidated balance sheet from consolidating and deconsolidating investment products.
Financing Activities
Net cash used in financing activities attributable to T. Rowe Price Group during the first nine months of 2026 totaled $1,371.6 million compared to $1,315.7 million during the 2025 period. During the 2026 period, we used $500.9 million to repurchase 5.3 million shares compared to $481.8 million to repurchase 4.8 million shares during the 2025 period. Cash flows generated from common stock issued under stock compensation plans decreased by $30.7 million during the 2026 period compared to the 2025 period. Additionally, the $2.0 million decrease in dividends paid in 2026 was driven by a reduction in outstanding shares due to repurchases over the last 12 months, partially offset by a 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 borrowings of debt of consolidated products of $403.9 million and a $263.2 million decrease in net subscriptions from redeemable non-controlling interest holders of our consolidated investment products during 2026.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES.
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 the 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. Accordingly, actual amounts or future results can differ materially from those estimates that we include currently in our unaudited consolidated financial statements, significant accounting policies, and notes.
There have been no material changes in the critical accounting policies previously identified in our 2025 Annual Report on Form 10-K.
NEWLY ISSUED BUT NOT YET ADOPTED ACCOUNTING GUIDANCE.
See Note 1 - Basis of Preparation and Summary of Significant Accounting Policies within Item 1. Financial Statements for a discussion of newly issued but not yet adopted accounting guidance.
Page 42
FORWARD-LOOKING INFORMATION.
From time to time, information or statements provided by or on behalf of T. Rowe Price, including those within this report, may contain certain forward-looking information, including information or anticipated information relating to: our revenues, net income, and earnings per share of common stock; changes in the amount and composition of our assets under management; our expense levels; our effective income tax rate; legal or regulatory developments; geopolitical instability; interest rates and currency fluctuations; and our expectations regarding financial markets, future transactions, dividends, stock repurchases, investments, new products and services, capital expenditures, changes in our effective fee rate, and other industry or market conditions. Readers are cautioned that any forward-looking information provided by or on behalf of T. 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, included in our Form 10-K Annual Report for 2025. 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.
Our future revenues and results of operations will fluctuate primarily driven by changes in the total value and composition of assets under our management. Such changes result from many factors, including, among other things: client-related cash inflows and outflows in our products, performance fees, capital allocation-based income, fluctuations in global financial markets that result in appreciation or depreciation of the assets under our management, our introduction of new investment products, and changes in retirement savings trends relative to participant-directed investments and defined contribution plans.
Our ability to attract and retain investors' assets under our management is dependent on investor sentiment and confidence; the relative investment performance of the T. 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; the impact of changes in interest rates and inflation; competitive conditions in the mutual fund, asset management, and broader financial services sectors; our level of success in implementing our strategy to expand our business; and our ability to attract and retain key personnel. Our revenues are substantially dependent on fees earned under contracts with the T. 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. Non-operating investment income will also fluctuate primarily driven by 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.
Our future results are also dependent upon the level of our expenses, which are subject to fluctuation for the following or other reasons: changes in the level of our advertising and promotion expenses in response to market conditions, including our efforts to expand our investment advisory business to investors outside the U.S. and to further penetrate our distribution channels within the U.S.; the pace and level of spending to support key strategic priorities; variations in the level of total compensation expense driven by, among other things, bonuses, restricted stock units and other equity grants, other incentive awards, our supplemental savings plan, changes in our employee count and mix, and competitive factors; any goodwill, intangible asset or other asset impairments that may arise; fluctuation in foreign currency exchange rates applicable to the costs of our international operations; expenses and capital costs, such as technology assets, depreciation, amortization, and research and development, incurred to maintain and enhance our administrative and operating services infrastructure; the timing of the assumption of all third party research payments, unanticipated costs that may be incurred to protect investor accounts and the goodwill of our clients; and disruptions of services, including those provided by third parties, such as fund and products 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 investment products and investing in general or in particular classes of mutual funds or other investments.
Page 43
T. Rowe Price Group Inc. published this content on October 29, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 29, 2026 at 17:58 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]