Enhanced Investments - Financial Portal

Published: 2024-11-01 07:13:29 ET

EX-99 2 earningsreleaseq32024.htm EX-99.1 Document

NEWS RELEASE

T. ROWE PRICE GROUP REPORTS THIRD QUARTER 2024 RESULTS

BALTIMORE (November 1, 2024) - T. Rowe Price Group, Inc. (NASDAQ-GS: TROW) today reported its results for the third quarter of 2024.

▪Quarter-end assets under management of $1.63 trillion

▪Net client outflows of $12.2 billion

▪Diluted earnings per common share (EPS) of $2.64

▪Adjusted diluted EPS of $2.57

▪Returned $354 million to stockholders from the recurring quarterly dividend and stock repurchases

Rob Sharps, chair, CEO, and president, commented, “We are seeing encouraging signs that we are on the right path. Our active ETF franchise is expanding, we are deepening our retirement leadership position with the launch of innovative retirement solutions, and our associates are advancing our strategic initiatives. Our long-term performance is solid and we remain on track to reduce net outflows this year.”

Financial Highlights


	Three months ended
(in millions, except per-share data)	9/30/2024		9/30/2023		Change(1)		6/30/2024		Change(1)

U.S. GAAP basis
Investment advisory fees	$	1,632.9	$	1,463.9	11.5	%	$	1,585.6	3.0	%
Capital allocation-based income(2)	$	4.6	$	66.1	n/m		$	0.1	n/m
Net revenues	$	1,785.6	$	1,670.7	6.9	%	$	1,733.3	3.0	%
Operating expenses	$	1,172.0	$	1,089.4	7.6	%	$	1,168.6	0.3	%
Net operating income	$	613.6	$	581.3	5.6	%	$	564.7	8.7	%
Non-operating income (loss)	$	212.5	$	2.8	n/m		$	80.3	n/m
Net income attributable to T. Rowe Price	$	603.0	$	453.2	33.1	%	$	483.4	24.7	%
Diluted earnings per common share	$	2.64	$	1.97	34.0	%	$	2.11	25.1	%
Weighted average common shares outstanding assuming dilution	222.8		224.8		(0.9)	%	223.5		(0.3)	%

Adjusted basis(3)
Operating expenses	$	1,099.0	$	1,061.3	3.6	%	$	1,105.8	(0.6)	%
Operating expenses, excluding accrued carried interest related compensation	$	1,087.4	$	1,030.8	5.5	%	$	1,097.3	(0.9)	%
Net operating income	$	718.4	$	635.9	13.0	%	$	654.9	9.7	%
Non-operating income (loss)	$	51.2	$	28.7	78.4	%	$	34.7	n/m
Net income attributable to T. Rowe Price	$	586.5	$	499.5	17.4	%	$	519.7	12.9	%
Diluted earnings per common share	$	2.57	$	2.17	18.4	%	$	2.26	13.7	%

Assets under management (in billions)
Average assets under management	$	1,589.5	$	1,393.6	14.1	%	$	1,534.0	3.6	%
Ending assets under management	$	1,630.9	$	1,346.5	21.1	%	$	1,569.1	3.9	%

Investment advisory annualized effective fee rate in basis points (bps)	40.9		41.7		(0.8)		41.6		(0.7)

Investment advisory annualized effective fee rate excluding performance-based fees (bps)	40.7		41.6		(0.9)		41.1		(0.4)

(1) n/m - the percentage change is not meaningful. (2) Capital allocation-based income represents the change in accrued carried interest. (3) See the reconciliation to the comparable U.S. GAAP measures at the end of this earnings release.

Assets Under Management

During Q3 2024, assets under management (AUM) increased $61.8 billion to $1.63 trillion. The components of the change in AUM, by asset class, are shown in the table below.


	Three months ended 9/30/2024
(in billions)	Equity		Fixed income, including money market		Multi-asset(1)		Alternatives(2)		Total
Assets under management at beginning of period	$	810.3	$	179.9	$	529.1	$	49.8	$	1,569.1

Net cash flows prior to manager-driven distributions	(16.1)		1.1		1.9		1.7		(11.4)
Manager-driven distributions	—		—		—		(0.8)		(0.8)
Net cash flows	(16.1)		1.1		1.9		0.9		(12.2)
Net market appreciation (depreciation) and income(3)	37.8		5.3		29.9		1.0		74.0

Change during the period	21.7		6.4		31.8		1.9		61.8
Assets under management at September 30, 2024	$	832.0	$	186.3	$	560.9	$	51.7	$	1,630.9

(1) 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.

(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. Generally, only those strategies with longer than daily liquidity are included. Unfunded capital commitments as of September 30, 2024 were $14.5 billion and $11.3 billion as of June 30, 2024, and are not reflected in fee basis AUM above.

(3) Includes net distributions not reinvested of $0.2 billion.

Investors domiciled outside the United States accounted for 8.6% of the firm's AUM at September 30, 2024, June 30, 2024 and December 31, 2023.

The firm provides participant accounting and plan administration for retirement plans that primarily invest in the firm's U.S. mutual funds, collective investment trusts, and funds managed outside of the firm's complex. As of September 30, 2024, the firm's assets under administration were $286 billion, of which $163 billion were assets we manage.

The firm offers non-discretionary advisory services through model delivery and multi-asset solutions for providers to implement. The firm records the revenue earned on these services in administrative fees. The assets under advisement in these portfolios, predominantly in the United States, were $16.8 billion at September 30, 2024.

Financial Results Highlights

Net Revenues


	Three months ended
(in millions)	9/30/2024		9/30/2023		Change		6/30/2024		Change




Investment advisory fees
Equity	$	978.5	$	885.0	10.6	%	$	948.9	3.1	%
Fixed income, including money market	104.1		100.9		3.2	%	100.2		3.9	%
Multi-asset	465.8		405.5		14.9	%	444.8		4.7	%
Alternatives	84.5		72.5		16.6	%	91.7		(7.9)	%
Total investment advisory fees	1,632.9		1,463.9		11.5	%	1,585.6		3.0	%
Capital allocation-based income(1)	4.6		66.1		n/m		0.1		n/m
Administrative, distribution, and servicing fees	148.1		140.7		5.3	%	147.6		0.3	%
Net revenues	$	1,785.6	$	1,670.7	6.9	%	$	1,733.3	3.0	%

Average AUM (in billions):
Equity	$	813.1	$	725.0	12.2	%	$	790.4	2.9	%
Fixed income, including money market	183.3		169.0		8.5	%	174.8		4.9	%
Multi-asset	542.3		453.8		19.5	%	520.1		4.3	%
Alternatives	50.8		45.8		10.9	%	48.7		4.3	%
Average AUM	$	1,589.5	$	1,393.6	14.1	%	$	1,534.0	3.6	%

Investment advisory annualized effective fee rate (bps)	40.9		41.7		(0.8)		41.6		(0.7)

Investment advisory annualized effective fee rate excluding performance-based fees (bps)	40.7		41.6		(0.9)		41.1		(0.4)

(1)The Capital allocation-based income represents the change in accrued carried interest. The percentage change is not meaningful (n/m).

Net revenues in Q3 2024 were $1.8 billion, an increase of 6.9% from Q3 2023 and 3.0% from Q2 2024. Performance-based fees earned were $5.6 million in Q3 2024, $2.1 million in Q3 2023, and $16.8 million in Q2 2024.

▪The investment advisory annualized effective fee rate, excluding performance-based fees, of 40.7 basis points in Q3 2024 decreased from 41.6 basis points earned in Q3 2023 and 41.1 basis points earned in Q2 2024. In comparison to prior periods, client flows and transfers drove a mix shift in assets under management toward lower fee products and asset classes.

▪Capital allocation-based income in Q3 2024 of $4.6 million includes $35.1 million in additional accrued carried interest, offset by $30.5 million in acquisition-related, non-cash amortization and impairments. Comparatively, the Q3 2023 amount of $66.1 million includes $91.9 million in additional accrued carried interest, partially offset by $25.8 million in acquisition-related, non-cash amortization and impairments.The decreases from prior periods were primarily the result of overall lower relative returns.

A portion of the capital allocation-based income is passed through as compensation and recognized in compensation and related costs, with the unpaid amount reported as non-controlling interest on the consolidated balance sheet. For detail on the quarterly change in accrued carried interest, which is reported as part of investments on the consolidated balance sheet, and related non-controlling interest, see the applicable tables at the end of this release.

Operating Expenses


	Three months ended
(in millions)	9/30/2024		9/30/2023		Change (1)		6/30/2024		Change (1)

Compensation, benefits, and related costs	$	632.9	$	617.0	2.6	%	$	635.8	(0.5)	%
Acquisition-related retention agreements	4.0		13.7		(70.8)	%	13.1		(69.5)	%
Capital allocation-based income compensation(2)	(2.0)		19.9		n/m		(2.4)		n/m
Supplemental savings plan	43.4		(14.2)		n/m		14.6		n/m
Total compensation and related costs	678.3		636.4		6.6	%	661.1		2.6	%
Distribution and servicing	91.6		74.9		22.3	%	87.7		4.4	%
Advertising and promotion	20.8		21.1		(1.4)	%	33.3		(37.5)	%
Product and recordkeeping related costs	75.0		73.1		2.6	%	73.0		2.7	%
Technology, occupancy, and facility costs	164.0		159.7		2.7	%	160.9		1.9	%
General, administrative, and other	104.2		85.7		21.6	%	108.7		(4.1)	%
Change in fair value of contingent consideration	(13.4)		—		n/m		—		n/m
Acquisition-related amortization and impairment costs	51.5		38.5		33.8	%	43.9		17.3	%
Total operating expenses	$	1,172.0	$	1,089.4	7.6	%	$	1,168.6	0.3	%

Total adjusted operating expenses(3)	$	1,099.0	$	1,061.3	3.6	%	$	1,105.8	(0.6)	%

(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) See the reconciliation to the comparable U.S. GAAP measures at the end of this earnings release.

Operating expenses were $1,172.0 million, an increase of 7.6% from Q3 2023 and 0.3% from Q2 2024. On a non-GAAP basis, adjusted operating expenses in Q3 2024 were $1,099.0 million, a 3.6% increase from Q3 2023 and a 0.6% decrease from Q2 2024.

▪Compensation, benefits, and related costs in Q3 2024 of $632.9 million increased $15.9 million from Q3 2023 and were $2.9 million lower than Q2 2024. The increase from Q3 2023 was primarily due to higher salaries and related benefits and interim bonus accrual. These increases were partially offset by lower stock-based compensation. The Q3 2023 period included severance costs related to the July 2023 workforce action. Compared to Q2 2024, higher salaries and related benefits were more than offset by lower other employee-related costs. The firm employed 8,104 associates at September 30, 2024, an increase of 3.3% from 7,842 associates at September 30, 2023, and 2.2% from 7,929 associates at June 30, 2024.

▪Distribution and servicing costs in Q3 2024 of $91.6 million increased $16.7 million from Q3 2023 and $3.9 million from Q2 2024. The increase from prior periods was primarily driven by higher average assets under management distributed through intermediaries.

▪Advertising and promotion expenses in Q3 2024 of $20.8 million decreased $0.3 million from Q3 2023 and $12.5 million from Q2 2024. The decrease from Q2 2024 was primarily due to the timing of advertising and promotion spend.

▪Technology, occupancy, and facility costs in Q3 2024 of $164.0 million increased $4.3 million from Q3 2023 and $3.1 million from Q2 2024. The increase from Q3 2023 was due to higher costs from the firm's ongoing investment in its technology capabilities, primarily hosted solutions. Compared to Q2 2024, the increase was due to higher costs related to our existing facilities.

▪General, administrative, and other costs in Q3 2024 of $104.2 million increased $18.5 million from Q3 2023 and decreased $4.5 million from Q2 2024. The increase over the prior year was primarily driven by a cost recovery recognized in Q3 2023 that didn't recur in Q3 2024. Additionally, higher professional fees recognized in Q3 2024 were partially offset by lower research fee expense as the firm changed its approach to paying for research beginning in Q1 2024, consistent with regulations and general industry practice. Compared to Q2 2024, the decrease was primarily driven by lower travel, entertainment, and research fee expenses. These lower costs were partially offset by higher professional fees.

Non-operating income (loss)


(in millions)	Three months ended
	9/30/2024		9/30/2023		6/30/2024
Net gains (losses) from non-consolidated T. Rowe Price investment products
Cash and discretionary investments
Dividend income	$	37.4	$	30.3	$	33.6
Market-related gains (losses) and equity in earnings (losses)	5.9		2.2		0.1
Total net gains (losses) from cash and discretionary investments	43.3		32.5		33.7
Seed capital investments
Dividend income	0.5		0.3		0.3
Market-related gains (losses) and equity in earnings (losses)	21.3		(4.5)		15.3
Net gains (losses) recognized upon deconsolidation	(0.6)		0.7		—
Investments used to hedge the supplemental savings plan liability	41.1		(19.7)		14.8
Total net gains (losses) from non-consolidated T. Rowe Price investment products	105.6		9.3		64.1
Other investment income (loss)	13.4		21.4		13.9
Net gains (losses) on investments	119.0		30.7		78.0
Net gains (losses) on consolidated sponsored investment products	85.9		(24.4)		8.5
Other gains (losses), including foreign currency gains (losses)	7.6		(3.5)		(6.2)
Non-operating income (loss)	$	212.5	$	2.8	$	80.3

On a non-GAAP basis, non-operating income (loss) consists of investment gains/losses generated from the firm's cash and discretionary investment portfolio.

Income taxes

The firm's GAAP effective tax rate for Q3 2024 was 22.5%, compared with 24.8% in Q3 2023. These quarterly rates were the result of an overall year-to-date rate of 23.5% for 2024 and 26.1% for 2023. The following reconciles the statutory federal income tax rate to the firm's effective tax rate for the nine months ended September 30, 2024 and 2023:


	Nine months ended
		9/30/2024		9/30/2023
Statutory U.S. federal income tax rate		21.0	%	21.0	%


State income taxes for current year, net of federal income tax benefits(1)		2.7		3.0
Net (income) losses attributable to redeemable non-controlling interests(2)		(0.6)		(0.2)
Net excess tax losses (benefits) from stock-based compensation plans activity		(0.2)		(0.3)
Valuation allowances		0.3		2.7
Other items		0.3		(0.1)
Effective income tax rate		23.5	%	26.1	%

(1) State income tax benefits are reflected in the total benefits for net income attributable to redeemable non-controlling interests and stock-based compensation plans activity.

(2) Net income attributable to redeemable non-controlling interest represents the portion of earnings held in the firm's consolidated investment products, which are not taxable to the firm despite being included in pre-tax income.

The firm's non-GAAP effective tax rate for Q3 2024 was 23.8%, compared with 24.8% for Q3 2023. The quarterly rates were the result of an overall year-to-date rate of 24.1% for 2024 and 26.8% for 2023. The decrease in the firm's effective tax rate is primarily due to lower valuation allowances recognized in 2024 compared with the 2023 period. In 2023, valuation allowances were recognized against cumulative UK-based deferred tax assets.

The firm estimates that its effective tax rate for the full year 2024 will be in the range of 23.5% to 26.5% on a U.S. GAAP basis, and 23.5% to 25.5% on a non-GAAP basis.

Other Matters

The financial results presented in this release are unaudited. The firm expects that it will file its Form 10-Q Quarterly Report for the third quarter of 2024 with the U.S. Securities and Exchange Commission later today. The Form 10-Q will include additional information on the firm's unaudited financial results at September 30, 2024.

Certain statements in this earnings release may represent “forward-looking information,” including information relating to anticipated changes in revenues, our operations, expenses, earnings, liquidity, cash flows and capital expenditures, industry or market conditions, amount or composition of assets under management, regulatory developments, changes in our effective fee rate, demand for and pricing of our products, new products and services, effective tax rates, net income and earnings per common share, future transactions, our strategic initiatives, general economic conditions, dividends, stock repurchases, and other market conditions. For a discussion concerning risks and other factors that could affect future results, see the firm's 2023 Annual Report on Form 10-K.

Founded in 1937, T. Rowe Price (NASDAQ – GS: TROW) helps individuals and institutions around the world achieve their long-term investment goals. As a large global asset management company known for investment excellence, retirement leadership, and independent proprietary research, the firm is built on a culture of integrity that puts client interests first. Clients rely on the award-winning firm for its retirement expertise and active management of equity, fixed income, alternatives, and multi-asset investment capabilities. T. Rowe Price serves millions of clients globally and manages $1.63 trillion in assets under management as of September 30, 2024. About two-thirds of the assets under management are retirement-related. News and other updates can be found on Facebook, Instagram, LinkedIn, X, YouTube, and troweprice.com/newsroom.

Webcast Information

Chair, CEO, and President Rob Sharps and Chief Financial Officer Jen Dardis will provide an update on business performance, review financial results, and answer questions on a webcast to be held on Friday, November 1, 2024 from 8:00 - 8:45 AM (Eastern Time). To access the webcast or to obtain dial in instructions to ask a question, please visit: investors.troweprice.com.

Supplemental materials will be available on the company's investor relations website shortly before the start of the call. A replay of the webcast will be available on the company's investor relations website shortly after the event.

CONTACTS:


Public Relations						Investor Relations
Jamaal Mobley						Linsley Carruth
410-345-3403						410-345-3717
jamaal.mobley@troweprice.com						linsley.carruth@troweprice.com


Unaudited Consolidated Statements of Income
(in millions, except per-share amounts)
		Three months ended						Nine months ended
Revenues		9/30/2024		9/30/2023		6/30/2024		9/30/2024		9/30/2023
	Investment advisory fees	$	1,632.9	$	1,463.9	$	1,585.6	$	4,772.5	$	4,286.5
	Capital allocation-based income	4.6		66.1		0.1		51.8		121.7
	Administrative, distribution, and servicing fees	148.1		140.7		147.6		444.8		410.3
	Net revenues	1,785.6		1,670.7		1,733.3		5,269.1		4,818.5

Operating expenses
	Compensation, benefits, and related costs	632.9		617.0		635.8		1,898.0		1,801.3
	Acquisition-related retention agreements	4.0		13.7		13.1		30.6		41.5
	Capital allocation-based income compensation	(2.0)		19.9		(2.4)		8.8		34.0
	Supplemental savings plan	43.4		(14.2)		14.6		111.0		61.3
	Total compensation and related costs	678.3		636.4		661.1		2,048.4		1,938.1
	Distribution and servicing	91.6		74.9		87.7		261.2		214.2
	Advertising and promotion	20.8		21.1		33.3		79.4		69.8
	Product and recordkeeping related costs	75.0		73.1		73.0		223.0		222.9
	Technology, occupancy, and facility costs	164.0		159.7		160.9		474.8		461.0
	General, administrative, and other	104.2		85.7		108.7		305.5		293.2
	Change in fair value of contingent consideration	(13.4)		—		—		(13.4)		(72.8)
	Acquisition-related amortization and impairment costs	51.5		38.5		43.9		125.3		93.1

	Total operating expenses	1,172.0		1,089.4		1,168.6		3,504.2		3,219.5

Net operating income		613.6		581.3		564.7		1,764.9		1,599.0

Non-operating income (loss)
Net gains (losses) on investments		119.0		30.7		78.0		318.5		213.7
Net gains (losses) on consolidated sponsored investment products		85.9		(24.4)		8.5		166.7		45.4
Other gains (losses), including foreign currency gains (losses)		7.6		(3.5)		(6.2)		(3.5)		(14.7)
Total non-operating income (loss)		212.5		2.8		80.3		481.7		244.4

Income before income taxes		826.1		584.1		645.0		2,246.6		1,843.4
Provision for income taxes		185.7		144.9		159.7		527.5		481.3
Net income		640.4		439.2		485.3		1,719.1		1,362.1
	Less: net income (loss) attributable to redeemable non-controlling interests	37.4		(14.0)		1.9		58.9		11.0
Net income attributable to T. Rowe Price Group, Inc.		603.0		453.2		483.4		1,660.2		1,351.1
	Less: net income allocated to outstanding restricted stock and stock unit holders	15.5		10.6		12.9		44.2		32.7
Net income allocated to T. Rowe Price common stockholders		$	587.5	$	442.6	$	470.5	$	1,616.0	$	1,318.4

Earnings per share
	Basic	$	2.64	$	1.98	$	2.11	$	7.25	$	5.88
	Diluted	$	2.64	$	1.97	$	2.11	$	7.23	$	5.86

Weighted-average common shares
	Outstanding	222.3		224.1		223.0		223.0		224.3
	Outstanding assuming dilution	222.8		224.8		223.5		223.5		225.1

	Summary of Adjusted Basis(1)	Three months ended						Nine months ended
	(in millions, except per-share data)	9/30/2024		9/30/2023		6/30/2024		9/30/2024		9/30/2023

	Operating expenses	$	1,099.0	$	1,061.3	$	1,105.8	$	3,276.2	$	3,110.0
	Operating expenses, excluding accrued carried interest related compensation	$	1,087.4	$	1,030.8	$	1,097.3	$	3,237.6	$	3,055.2
	Net operating income	$	718.4	$	635.9	$	654.9	$	2,065.7	$	1,760.5
	Non-operating income (loss)	$	51.2	$	28.7	$	34.7	$	114.4	$	91.3
	Net income attributable to T. Rowe Price	$	586.5	$	499.5	$	519.7	$	1,654.7	$	1,355.4
	Diluted earnings per common share	$	2.57	$	2.17	$	2.26	$	7.21	$	5.88
	(1) See the reconciliation to the comparable U.S. GAAP measures at the end of this earnings release.


Assets Under Management	Nine months ended 9/30/2024
(in billions)	Equity		Fixed income, including money market		Multi-asset(1)		Alternatives(2)		Total
Assets under management at beginning of period	$	743.6	$	170.0	$	483.0	$	47.9	$	1,444.5

Net cash flows prior to manager-driven distributions	(43.8)		9.1		9.0		4.7		(21.0)
Manager-driven distributions	—		—		—		(2.9)		(2.9)
Net cash flows(3)	(43.8)		9.1		9.0		1.8		(23.9)
Net market appreciation and gains(4)	132.2		7.2		68.9		2.0		210.3

Change during the period	88.4		16.3		77.9		3.8		186.4
Assets under management at September 30, 2024	$	832.0	$	186.3	$	560.9	$	51.7	$	1,630.9

(1) 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.

(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. Generally, only those strategies with longer than daily liquidity are included. Unfunded capital commitments as of September 30, 2024 were $14.5 billion and $11.6 billion as of December 31, 2023 and are not reflected in fee basis AUM above.

(3) Alternatives net cash flows include $2.9 billion in outflows that represent investment manager-driven distributions.

(4) Includes net distributions not reinvested of $1.1 billion.


Net Revenues	Nine months ended
(in millions)	9/30/2024		9/30/2023		% Change




Investment advisory fees
Equity	$	2,877.0	$	2,581.2	11.5	%
Fixed income, including money market	304.9		303.3		0.5	%
Multi-asset	1,340.3		1,182.8		13.3	%
Alternatives	250.3		219.2		14.2	%
Total investment advisory fees	$	4,772.5	$	4,286.5	11.3	%




Average AUM (in billions):
Equity	$	791.4	$	705.3	12.2	%
Fixed income, including money market	175.9		169.6		3.7	%
Multi-asset	519.9		438.5		18.6	%
Alternatives	49.0		44.8		9.4	%
Average AUM	$	1,536.2	$	1,358.2	13.1	%


Non-Operating Income (Loss)
(in millions)	Nine months ended
	9/30/2024		9/30/2023
Net gains (losses) from non-consolidated T. Rowe Price investment products
Cash and discretionary investments
Dividend income	$	98.8	$	76.0
Market-related gains (losses) and equity in earnings (losses)	6.2		19.1
Total net gains (losses) from cash and discretionary investments	105.0		95.1
Seed capital investments
Dividend income	0.8		1.2
Market-related gains (losses) and equity in earnings (losses)	60.1		25.0
Net gains (losses) recognized upon deconsolidation	(0.6)		0.7
Investments used to hedge the supplemental savings plan liability	105.6		58.6
Total net gains (losses) from non-consolidated T. Rowe Price investment products	270.9		180.6
Other investment income (loss)	47.6		33.1
Net gains (losses) on investments	318.5		213.7
Net gains (losses) on consolidated sponsored investment portfolios	166.7		45.4
Other gains (losses), including foreign currency gains (losses)	(3.5)		(14.7)
Non-operating income (loss)	$	481.7	$	244.4

The following table summarizes the cash flows for the nine months ended 2024 that are attributable to T. Rowe Price Group, our consolidated sponsored investment products, and the related eliminations required.


	Nine months ended
	9/30/2024
(in millions)	Cash flow attributable to T. Rowe Price		Cash flow attributable to consolidated T. Rowe Price investment products		Elims		As reported
Cash flows from operating activities
Net income (loss)	$	1,660.2	$	159.4	$	(100.5)	$	1,719.1
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation, amortization and impairments of property, equipment and software	188.4		—		—		188.4
Amortization and impairment of acquisition-related assets and retention agreements	196.5		—		—		196.5
Fair value remeasurement of contingent liability	(13.4)		—		—		(13.4)

Stock-based compensation expense	162.2		—		—		162.2
Net (gains) losses recognized on investments	(432.6)		—		100.5		(332.1)
Net redemptions in sponsored investment products used to economically hedge supplemental savings plan liability	29.8		—		—		29.8
Net change in trading securities held by consolidated sponsored investment products	—		(517.9)		—		(517.9)
Other changes	548.3		5.7		(19.1)		534.9
Net cash provided by (used in) operating activities	2,339.4		(352.8)		(19.1)		1,967.5
Net cash provided by (used in) investing activities	(143.1)		(15.7)		3.8		(155.0)
Net cash provided by (used in) financing activities	(1,089.4)		345.9		15.3		(728.2)
Effect of exchange rate changes on cash and cash equivalents of consolidated sponsored investment products	—		0.5		—		0.5
Net change in cash and cash equivalents during period	1,106.9		(22.1)		—		1,084.8
Cash and cash equivalents at beginning of year	2,066.6		77.2		—		2,143.8
Cash and cash equivalents at end of period	$	3,173.5	$	55.1	$	—	$	3,228.6


Unaudited Condensed Consolidated Balance Sheet Information (in millions)	As of
	9/30/2024		12/31/2023
Cash and cash equivalents	$	3,173.5	$	2,066.6
Accounts receivable and accrued revenue	890.0		807.9
Investments	2,966.0		2,554.7
Assets of consolidated sponsored investment products	1,857.2		1,959.3
Operating lease assets	228.5		241.1
Property, equipment and software, net	930.1		806.6
Goodwill and intangible assets	3,038.0		3,150.1
Other assets	622.6		692.5
Total assets	13,705.9		12,278.8
Supplemental savings plan liability	969.6		895.0
Contingent consideration	—		13.4
Total other liabilities, includes $57.8 at September 30, 2024, and $54.2 at December 31, 2023, from consolidated sponsored investment products	1,520.2		1,974.2
Non-controlling interests*	966.8		786.1
Stockholders' equity attributable to T. Rowe Price Group, Inc., 222.1 common shares outstanding at September 30, 2024 and 223.9 common shares outstanding at December 31, 2023	$	10,249.3	$	9,505.1

* This includes both redeemable and non-redeemable non-controlling interest in consolidated entities.

The following tables detail changes in our investments in affiliated private investment funds - carried interest and non-controlling interest in consolidated entities.


	Three months ended						Nine months ended
Investments in affiliated private investment funds - carried interest	9/30/2024		9/30/2023		6/30/2024		9/30/2024		9/30/2023
Balance at beginning of period	$	497.3	$	514.2	$	514.3	$	519.9	$	467.8
Capital allocation-based income:
Change in accrued carried interest	35.1		91.9		27.0		121.6		172.1
Acquisition-related amortization and impairments	(30.5)		(25.8)		(26.9)		(69.8)		(50.4)
Net distributions	(2.2)		(2.1)		(17.1)		(72.0)		(11.3)
Balance at end of period	$	499.7	$	578.2	$	497.3	$	499.7	$	578.2


	Three months ended						Nine months ended
Non-controlling interests (NCI) in consolidated entities	9/30/2024		9/30/2023		6/30/2024		9/30/2024		9/30/2023
Balance at beginning of period	$	205.3	$	202.1	$	205.4	$	192.0	$	190.7
Capital allocation-based income compensation:
Change in accrued carried interest compensation	11.6		30.5		8.5		38.6		54.8
Acquisition-related amortization and impairments	(13.6)		(10.6)		(10.9)		(29.8)		(20.8)
Net contributions (distributions)	0.1		(0.5)		2.3		2.6		(3.2)
Balance at end of period	$	203.4	$	221.5	$	205.3	$	203.4	$	221.5

Non-GAAP Information and Reconciliation

The firm believes the non-GAAP financial measures below provide relevant and meaningful information to investors about its core operating results. These measures have been established in order to increase transparency for the purpose of evaluating the firm's core business, for comparing current results with prior period results, and to enable more appropriate comparison 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 U.S. GAAP financial measures to non-GAAP financial measures for the three months ended September 30, 2024 and 2023 and June 30, 2024.


	Three months ended 9/30/2024
	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)
U.S. GAAP Basis (FS line item)	$	1,172.0	$	613.6	$	212.5	$	185.7	$	603.0	$	2.64
Non-GAAP adjustments:
Acquisition-related:
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs)	13.6		16.9		—		2.3		14.6		0.06
Acquisition-related retention arrangements(1) (Compensation and related costs)	(4.0)		4.0		—		0.5		3.5		0.02
Contingent consideration(1)	13.4		(13.4)		—		(1.8)		(11.6)		(0.05)
Intangible assets amortization and impairments(1)	(51.5)		51.5		—		7.0		44.5		0.19

Total acquisition-related	(28.5)		59.0		—		8.0		51.0		0.22
Supplemental savings plan liability(2) (Compensation and related costs)	(43.4)		43.4		(41.1)		0.3		2.0		0.01
Consolidated T. Rowe Price investment products(3)	(1.1)		2.4		(85.9)		(6.3)		(39.8)		(0.17)
Other non-operating income(4)	—		—		(34.3)		(4.6)		(29.7)		(0.13)
Adjusted Non-GAAP Basis	$	1,099.0	$	718.4	$	51.2	$	183.1	$	586.5	$	2.57


	Three months ended 9/30/2023
	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)
U.S. GAAP Basis (FS line item)	$	1,089.4	$	581.3	$	2.8	$	144.9	$	453.2	$	1.97
Non-GAAP adjustments:
Acquisition-related:
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs)	10.6		15.2		—		4.6		10.6		0.04
Acquisition-related retention arrangements(1) (Compensation and related costs)	(13.7)		13.7		—		4.2		9.5		0.04

Intangible assets amortization and impairments(1)	(38.5)		38.5		—		11.7		26.8		0.12

Total acquisition-related	(41.6)		67.4		—		20.5		46.9		0.20
Supplemental savings plan liability(2) (Compensation and related costs)	14.2		(14.2)		19.7		1.7		3.8		0.02
Consolidated T. Rowe Price investment products(3)	(0.7)		1.4		24.4		3.6		8.2		0.03
Other non-operating income(4)	—		—		(18.2)		(5.6)		(12.6)		(0.05)
Adjusted Non-GAAP Basis	$	1,061.3	$	635.9	$	28.7	$	165.1	$	499.5	$	2.17


	Three 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)
U.S. GAAP Basis (FS line item)	$	1,168.6	$	564.7	$	80.3	$	159.7	$	483.4	$	2.11
Non-GAAP adjustments:
Acquisition-related:
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs)	10.9		16.0		—		3.5		12.5		0.05
Acquisition-related retention arrangements(1) (Compensation and related costs)	(13.1)		13.1		—		2.9		10.2		0.04

Intangible assets amortization and impairments(1)	(43.9)		43.9		—		9.6		34.3		0.15

Total acquisition-related	(46.1)		73.0		—		16.0		57.0		0.24
Supplemental savings plan liability(2) (Compensation and related costs)	(14.6)		14.6		(14.8)		—		(0.2)		—
Consolidated T. Rowe Price investment products(3)	(2.1)		2.6		(8.5)		(0.9)		(3.1)		(0.01)
Other non-operating income(4)	—		—		(22.3)		(4.9)		(17.4)		(0.08)
Adjusted Non-GAAP Basis	$	1,105.8	$	654.9	$	34.7	$	169.9	$	519.7	$	2.26

The following schedules reconcile certain U.S. GAAP financial measures for the nine months ended September 30, 2024 and 2023.


	Nine months ended 9/30/2024
	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)
U.S. GAAP Basis (FS line item)	$	3,504.2	$	1,764.9	$	481.7	$	527.5	$	1,660.2	$	7.23
Non-GAAP adjustments:
Acquisition-related:
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs)	29.8		40.0		—		7.8		32.2		0.14
Acquisition-related retention arrangements(1) (Compensation and related costs)	(30.6)		30.6		—		7.2		23.4		0.10
Contingent consideration(1)	13.4		(13.4)		—		(1.8)		(11.6)		(0.05)
Intangible assets amortization and impairments(1)	(125.3)		125.3		—		24.9		100.4		0.44

Total acquisition-related	(112.7)		182.5		—		38.1		144.4		0.63
Supplemental savings plan liability(2) (Compensation and related costs)	(111.0)		111.0		(105.6)		1.2		4.2		0.02
Consolidated T. Rowe Price investment products(3)	(4.3)		7.3		(166.7)		(21.2)		(79.3)		(0.35)
Other non-operating income(4)	—		—		(95.0)		(20.2)		(74.8)		(0.32)
Adjusted Non-GAAP Basis	$	3,276.2	$	2,065.7	$	114.4	$	525.4	$	1,654.7	$	7.21


	Nine months ended 9/30/2023
	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)
U.S. GAAP Basis (FS line item)	$	3,219.5	$	1,599.0	$	244.4	$	481.3	$	1,351.1	$	5.86
Non-GAAP adjustments:
Acquisition-related:
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs)	20.8		29.6		—		6.2		23.4		0.10
Acquisition-related retention arrangements(1) (Compensation and related costs)	(41.5)		41.5		—		7.2		34.3		0.15
Contingent consideration(1)	72.8		(72.8)		—		(8.0)		(64.8)		(0.28)
Intangible assets amortization and impairments(1)	(93.1)		93.1		—		17.7		75.4		0.33

Total acquisition-related	(41.0)		91.4		—		23.1		68.3		0.30
Supplemental savings plan liability(2) (Compensation and related costs)	(61.3)		61.3		(58.6)		1.4		1.3		0.01
Consolidated T. Rowe Price investment products(3)	(7.2)		8.8		(45.4)		(0.5)		(25.1)		(0.11)
Other non-operating income(4)	—		—		(49.1)		(8.9)		(40.2)		(0.18)
Adjusted Non-GAAP Basis	$	3,110.0	$	1,760.5	$	91.3	$	496.4	$	1,355.4	$	5.88

(1) These non-GAAP adjustments remove the impact of acquisition-related amortization and costs including intangible assets and acquired assets amortization and impairments, contingent consideration liability fair value remeasurements, amortization and impairments of acquired investments and non-controlling interest basis differences, and amortization of compensation-related arrangements. Management believes adjusting for these charges helps the reader's ability to understand the firm's core operating results and to increase comparability period to period.

(2) This non-GAAP adjustment removes the compensation expense impact from market valuation changes in the supplemental savings plan liability and the related net gains (losses) on investments designated as economic hedges against the related liability. Amounts deferred under the supplemental savings plan are adjusted for appreciation (depreciation) of hypothetical investments chosen by participants. The firm uses T. Rowe Price investment products to economically hedge the exposure to these market movements. Management believes it is useful to offset the non-operating investment income (loss) recognized on the economic 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) These non-GAAP adjustments remove the impact the consolidated sponsored investment products have on the firm's U.S. GAAP consolidated statements of income. Specifically, the firm adds back the operating expenses and subtracts the investment income of the consolidated sponsored investment products. The adjustment to operating expenses represents the operating expenses of the consolidated products, net of the elimination of related management and administrative fees. The adjustment to net income attributable to T. Rowe Price represents the net income of the consolidated products, net of redeemable non-controlling interests. Management believes the consolidated sponsored investment products may impact the reader’s ability to understand the firm's core operating results.

(4) This non-GAAP adjustment represents the other non-operating income (loss) and the net gains (losses) earned on the firm's investment portfolio that are not designated as economic hedges of the supplemental savings plan liability and that are not part of the cash and discretionary investment portfolio. Management retains in its non-GAAP measures the investment gains recognized on the cash and discretionary investments as these assets and related income (loss) are considered part of the firm's core operations. Management believes adjusting for the remaining non-operating income (loss) helps the reader’s ability to understand the firm's core operating results and increases comparability to prior years. Additionally, management does not emphasize the impact of this portion of non-operating income (loss) when managing and evaluating the firm's performance.

(5) The income tax impacts were calculated in order to achieve an overall year-to-date non-GAAP effective tax rate of 24.1% in 2024 and 26.8% in 2023. As such, the non-GAAP effective tax rate for the three months ended September 30, 2024 and 2023 was 23.8% and 24.8%, respectively.

(6) This non-GAAP measure was calculated by applying the two-class method to adjusted net income attributable to T. Rowe Price Group and dividing 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
	9/30/2024		9/30/2023		6/30/2024		9/30/2024		9/30/2023
Adjusted net income attributable to T. Rowe Price	$	586.5	$	499.5	$	519.7	$	1,654.7	$	1,355.4
Less: adjusted net income allocated to outstanding restricted stock and stock unit holders	15.0		11.7		13.9		44.1		32.8
Adjusted net income allocated to common stockholders	$	571.5	$	487.8	$	505.8	$	1,610.6	$	1,322.6