PRICE T ROWE GROUP INC [TROW] Filings

10-Q 1 trow-20240630.htm 10-Q trow-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

FORM 10-Q

______________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-32191

______________________________________

T. ROWE PRICE GROUP, INC.

(Exact name of registrant as specified in its charter)


Maryland						52-2264646
(State of incorporation)						(I.R.S. Employer Identification No.)

100 East Pratt Street, Baltimore, Maryland 21202

(Address, including Zip Code, of principal executive offices)

(410) 345-2000

(Registrant’s telephone number, including area code)

________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.20 par value per share	TROW	The NASDAQ Stock Market LLC

______________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares outstanding of the issuer’s common stock ($0.20 par value), as of the latest practicable date, July 23, 2024, is 222,597,816.

The exhibit index is at Item 6 on page 43.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)


	6/30/2024		12/31/2023
ASSETS
Cash and cash equivalents	$	2,714.9	$	2,066.6
Accounts receivable and accrued revenue	846.9		807.9
Investments	2,758.9		2,554.7
Assets of consolidated sponsored investment products ($1,211.9 million at June 30, 2024 and $1,204.4 million at December 31, 2023, related to variable interest entities)	1,929.6		1,959.3
Operating lease assets	229.4		241.1
Property, equipment and software, net	884.5		806.6
Intangible assets, net	442.3		507.3
Goodwill	2,642.8		2,642.8
Other assets	640.5		692.5
Total assets	$	13,089.8	$	12,278.8

LIABILITIES
Accounts payable and accrued expenses	$	367.2	$	409.5
Liabilities of consolidated sponsored investment products ($28.7 million at June 30, 2024 and $35.2 million at December 31, 2023, related to variable interest entities)	65.1		54.2
Operating lease liabilities	299.3		308.5
Accrued compensation and related costs	566.5		240.8

Supplemental savings plan liability	941.7		895.0
Contingent consideration liability	13.4		13.4
Income taxes payable	13.6		66.2
Total liabilities	2,266.8		1,987.6

Commitments and contingent liabilities

Redeemable non-controlling interests	689.0		594.1

STOCKHOLDERS’ EQUITY
Preferred stock, undesignated, $0.20 par value – authorized and unissued 20,000,000 shares	—		—
Common stock, $0.20 par value—authorized 750,000,000; issued 222,612,000 shares at June 30, 2024 and 223,938,000 at December 31, 2023	44.5		44.8
Additional capital in excess of par value	368.8		431.7
Retained earnings	9,564.6		9,076.1
Accumulated other comprehensive loss	(49.2)		(47.5)
Total stockholders’ equity attributable to T. Rowe Price Group, Inc.	9,928.7		9,505.1
Non-controlling interests in consolidated entities	205.3		192.0
Total stockholders’ equity	10,134.0		9,697.1
Total liabilities, redeemable non-controlling interests, and stockholders’ equity	$	13,089.8	$	12,278.8

The accompanying notes are an integral part of these statements.

Page 2

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per-share amounts)


	Three months ended				Six months ended
	6/30/2024		6/30/2023		6/30/2024		6/30/2023
Revenues
Investment advisory fees	$	1,585.6	$	1,430.8	$	3,139.6	$	2,822.6
Capital allocation-based income	0.1		38.7		47.2		55.6
Administrative, distribution, and servicing fees	147.6		140.7		296.7		269.6
Net revenues	1,733.3		1,610.2		3,483.5		3,147.8

Operating expenses
Compensation and related costs	661.1		648.2		1,370.1		1,301.7
Distribution and servicing	87.7		67.8		169.6		139.3
Advertising and promotion	33.3		22.9		58.6		48.7
Product and recordkeeping related costs	73.0		77.7		148.0		149.8
Technology, occupancy, and facility costs	160.9		154.7		310.8		301.3
General, administrative, and other	108.7		100.0		201.3		207.5
Change in fair value of contingent consideration	—		(23.2)		—		(72.8)
Acquisition-related amortization and impairment costs	43.9		28.6		73.8		54.6

Total operating expenses	1,168.6		1,076.7		2,332.2		2,130.1

Net operating income	564.7		533.5		1,151.3		1,017.7

Non-operating income (loss)
Net gains (losses) on investments	78.0		89.1		199.5		183.0
Net gains (losses) on consolidated sponsored investment products	8.5		24.4		80.8		69.8
Other gains (losses), including foreign currency gains (losses)	(6.2)		(7.3)		(11.1)		(11.2)
Total non-operating income (loss)	80.3		106.2		269.2		241.6

Income before income taxes	645.0		639.7		1,420.5		1,259.3
Provision for income taxes	159.7		158.5		341.8		336.4
Net income	485.3		481.2		1,078.7		922.9
Less: net income (loss) attributable to redeemable non-controlling interests	1.9		4.8		21.5		25.0
Net income attributable to T. Rowe Price Group	$	483.4	$	476.4	$	1,057.2	$	897.9

Earnings per share on common stock of T. Rowe Price Group
Basic	$	2.11	$	2.07	$	4.61	$	3.90
Diluted	$	2.11	$	2.06	$	4.60	$	3.89

The accompanying notes are an integral part of these statements.

Page 3

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)


	Three months ended				Six months ended
	6/30/2024		6/30/2023		6/30/2024		6/30/2023
Net income	$	485.3	$	481.2	$	1,078.7	$	922.9
Other comprehensive income (loss)
Currency translation adjustments
Consolidated T. Rowe Price investment products - variable interest entities	1.8		9.5		(3.8)		18.6


Equity method investments	(0.6)		1.1		0.5		—


Other comprehensive income (loss) before income taxes	1.2		10.6		(3.3)		18.6
Net deferred tax (expense) benefits	(0.4)		(1.2)		0.4		(1.8)
Total other comprehensive income (loss)	0.8		9.4		(2.9)		16.8

Total comprehensive income	486.1		490.6		1,075.8		939.7
Less: comprehensive income (loss) attributable to redeemable non-controlling interests	2.3		10.5		20.3		36.8
Total comprehensive income attributable to T. Rowe Price Group	$	483.8	$	480.1	$	1,055.5	$	902.9

The accompanying notes are an integral part of these statements.

Page 4

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


	Six months ended
	6/30/2024		6/30/2023
Cash flows from operating activities
Net income	$	1,078.7	$	922.9
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, amortization and impairment of property, equipment and software	126.3		117.9
Amortization and impairment of acquisition-related assets and retention arrangements	124.1		97.9
Fair value remeasurement of contingent consideration liability	—		(72.8)

Stock-based compensation expense	112.6		115.4
Net gains recognized on investments	(213.4)		(215.6)
Net redemptions in sponsored investment products used to economically hedge supplemental savings plan liability	15.1		18.4
Net change in securities held by consolidated sponsored investment products	(218.0)		(414.5)
Other changes in assets and liabilities	289.6		336.9
Net cash provided by operating activities	1,315.0		906.5

Cash flows from investing activities
Purchases of sponsored investment products	(43.5)		(27.3)
Dispositions of sponsored investment products	210.9		73.8
Net cash of sponsored investment products on deconsolidation	(13.1)		(17.8)
Additions to property, equipment and software	(205.8)		(132.4)
Other investing activity	(41.9)		(32.2)
Net cash used in investing activities	(93.4)		(135.9)

Cash flows from financing activities
Repurchases of common stock	(195.5)		(50.4)
Common share issuances under stock-based compensation plans	16.3		12.1
Dividends paid to common stockholders of T. Rowe Price	(569.7)		(562.4)
Net contributions (distributions) to non-controlling interests in consolidated entities	2.5		(2.7)
Net subscriptions from redeemable non-controlling interest holders	170.9		283.4
Net cash used in financing activities	(575.5)		(320.0)

Effect of exchange rate changes on cash and cash equivalents of consolidated T. Rowe Price investment products	(1.1)		0.9

Net change in cash and cash equivalents during period	645.0		451.5
Cash and cash equivalents at beginning of period, including $77.2 million at December 31, 2023, and $119.1 million at December 31, 2022, held by consolidated sponsored investment products	2,143.8		1,874.7
Cash and cash equivalents at end of period, including $73.9 million at June 30, 2024, and $76.5 million at June 30, 2023, held by consolidated sponsored investment products	$	2,788.8	$	2,326.2

The accompanying notes are an integral part of these statements.

Page 5

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(shares in thousands; dollars in millions)


	Three months ended 6/30/2024
	Common shares outstanding	Common stock		Additional capital in excess of par value		Retained earnings		AOCI(1)		Total stockholders’ equity attributable to T. Rowe Price Group, Inc.		Non-controlling interests in consolidated entities		Total stockholders’ equity		Redeemable non-controlling interests
Balances at March 31, 2024	223,494	$	44.7	$	424.2	$	9,364.8	$	(49.6)	$	9,784.1	$	205.4	$	9,989.5	$	676.7
Net income (loss)	—	—		—		483.4		—		483.4		(2.4)		481.0		1.9
Other comprehensive income (loss), net of tax	—	—		—		—		0.4		0.4		—		0.4		0.4
Dividends declared (1.24 per share)	—	—		—		(283.5)		—		(283.5)		—		(283.5)		—

Shares issued upon option exercises	49	0.1		2.9		—		—		3.0		—		3.0		—
Restricted shares issued, net of shares withheld for taxes	7	—		(0.3)		—		—		(0.3)		—		(0.3)		—
Net shares issued upon vesting of restricted stock units	29	—		(0.4)		—		—		(0.4)		—		(0.4)		—

Stock-based compensation expense	—	—		54.3		—		—		54.3		—		54.3		—
Restricted stock units issued as dividend equivalents	—	—		0.1		(0.1)		—		—		—		—		—
Common shares repurchased	(967)	(0.3)		(112.0)		—		—		(112.3)		—		(112.3)		—
Net contributions to non-controlling interests in consolidated entities	—	—		—		—		—		—		2.3		2.3		—
Net subscriptions into T. Rowe Price investment products	—	—		—		—		—		—		—		—		78.1
Net deconsolidations of T. Rowe Price investment products	—	—		—		—		—		—		—		—		(68.1)
Balances at June 30, 2024	222,612	$	44.5	$	368.8	$	9,564.6	$	(49.2)	$	9,928.7	$	205.3	$	10,134.0	$	689.0


	Three months ended 6/30/2023
	Common shares outstanding	Common stock		Additional capital in excess of par value		Retained earnings		AOCI(1)		Total stockholders’ equity attributable to T. Rowe Price Group, Inc.		Non-controlling interests in consolidated entities		Total stockholders’ equity		Redeemable non-controlling interests
Balances at March 31, 2023	224,527	$	44.9	$	501.8	$	8,550.4	$	(51.7)	$	9,045.4	$	194.4	$	9,239.8	$	834.1
Net income (loss)	—	—		—		476.4		—		476.4		10.6		487.0		4.8
Other comprehensive income (loss), net of tax	—	—		—		—		3.9		3.9		—		3.9		5.5
Dividends declared ($1.22 per share)	—	—		—		(280.5)		—		(280.5)		—		(280.5)		—

Shares issued upon option exercises	69	—		4.6		—		—		4.6		—		4.6		—
Restricted shares issued, net of shares withheld for taxes	54	—		—		—		—		—		—		—		—
Net shares issued upon vesting of restricted stock units	26	—		(0.4)		—		—		(0.4)		—		(0.4)		—

Stock-based compensation expense	—	—		56.8		—		—		56.8		—		56.8		—
Restricted stock units issued as dividend equivalents	—	—		0.1		(0.1)		—		—		—		—		—
Common shares repurchased	(395)	(0.1)		(42.3)		—		—		(42.4)		—		(42.4)		—
Net distributions to non-controlling interests in consolidated entities	—	—		—		—		—		—		(2.9)		(2.9)		—
Net subscriptions into T. Rowe Price investment products	—	—		—		—		—		—		—		—		134.9
Net consolidations of T. Rowe Price investment products	—	—		—		—		—		—		—		—		5.9
Balances at June 30, 2023	224,281	$	44.8	$	520.6	$	8,746.2	$	(47.8)	$	9,263.8	$	202.1	$	9,465.9	$	985.2

(1) Accumulated other comprehensive income

The accompanying notes are an integral part of these statements.

Page 6

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(shares in thousands; dollars in millions)


	Six months ended 6/30/2024
	Common shares outstanding	Common stock		Additional capital in excess of par value		Retained earnings		AOCI(1)		Total stockholders’ equity attributable to T. Rowe Price Group, Inc.		Non-controlling interests in consolidated entities		Total Stockholders’ equity		Redeemable non-controlling interests
Balances at December 31, 2023	223,938	$	44.8	$	431.7	$	9,076.1	$	(47.5)	$	9,505.1	$	192.0	$	9,697.1	$	594.1
Net income (loss)	—	—		—		1,057.2		—		1,057.2		10.8		1,068.0		21.5
Other comprehensive income, net of tax	—	—		—		—		(1.7)		(1.7)		—		(1.7)		(1.2)
Dividends declared ($2.48 per share)	—	—		—		(568.5)		—		(568.5)		—		(568.5)		—


Shares issued upon option exercises	295	0.1		18.3		—		—		18.4		—		18.4		—
Restricted shares issued, net of shares withheld for taxes	7	—		(0.3)		—		—		(0.3)		—		(0.3)		—
Net shares issued upon vesting of restricted stock units	56	—		(1.8)		—		—		(1.8)		—		(1.8)		—

Stock-based compensation expense	—	—		112.7		—		—		112.7		—		112.7		—
Restricted stock units issued as dividend equivalents	—	—		0.2		(0.2)		—		—		—		—		—
Common shares repurchased	(1,684)	(0.4)		(192.0)		—		—		(192.4)		—		(192.4)		—
Net contributions to non-controlling interests in consolidated entities	—	—		—		—		—		—		2.5		2.5		—
Net subscriptions into T. Rowe Price investment products	—	—		—		—		—		—		—		—		170.8
Net deconsolidations of T. Rowe Price investment products	—	—		—		—		—		—		—		—		(96.2)
Balances at June 30, 2024	222,612	$	44.5	$	368.8	$	9,564.6	$	(49.2)	$	9,928.7	$	205.3	$	10,134.0	$	689.0


	Six months ended 6/30/2023
	Common shares outstanding	Common stock		Additional capital in excess of par value		Retained earnings		AOCI(1)		Total stockholders’ equity attributable to T. Rowe Price Group, Inc.		Non-controlling interests in consolidated entities		Total Stockholders’ equity		Redeemable non-controlling interests
Balances at December 31, 2022	224,310	$	44.9	$	437.9	$	8,409.7	$	(53.0)	$	8,839.5	$	190.7	$	9,030.2	$	656.7



Net income (loss)	—	—		—		897.9		—		897.9		14.1		912.0		25.0
Other comprehensive income (loss), net of tax	—	—		—		—		5.2		5.2		—		5.2		11.6
Dividends declared ($2.44 per share)	—	—		—		(561.2)		—		(561.2)		—		(561.2)		—

Shares issued upon option exercises	259	—		14.9		—		—		14.9		—		14.9		—
Restricted shares issued, net of shares withheld for taxes	54	—		—		—		—		—		—		—		—
Net shares issued upon vesting of restricted stock units	78	—		(2.8)		—		—		(2.8)		—		(2.8)		—

Stock-based compensation expense	—	—		115.5		—		—		115.5		—		115.5		—
Restricted stock units issued as dividend equivalents	—	—		0.2		(0.2)		—		—		—		—		—
Common shares repurchased	(420)	(0.1)		(45.1)		—		—		(45.2)		—		(45.2)		—
Net distributions to non-controlling interests in consolidated entities	—	—		—		—		—		—		(2.7)		(2.7)		—
Net subscriptions into T. Rowe Price investment products	—	—		—		—		—		—		—		—		286.0
Net consolidations of T. Rowe Price investment products	—	—		—		—		—		—		—		—		5.9
Balances at June 30, 2023	224,281	$	44.8	$	520.6	$	8,746.2	$	(47.8)	$	9,263.8	$	202.1	$	9,465.9	$	985.2

(1) Accumulated other comprehensive income

The accompanying notes are an integral part of these statements.

Page 7

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – THE COMPANY AND BASIS OF PREPARATION.

T. Rowe Price Group, Inc. derives its consolidated revenues and net income primarily from investment advisory services that its subsidiaries provide to individual and institutional investors that invest in a broad range of investment solutions across equity, fixed income, multi-asset, and alternative 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 non-discretionary advisory services through model delivery.

The investment solutions are provided in a number of vehicles, including the T. Rowe Price U.S. mutual funds ("U.S. mutual funds"), subadvised funds, separately managed accounts, collective investment trusts, and other T. Rowe Price products. The other T. Rowe Price products include: open-ended investment products offered to investors outside the U.S., products offered through variable annuity life insurance plans in the U.S., affiliated private investment funds and collateralized loan obligations.

Investment advisory revenues depend largely on the total value and composition of assets under our management. Accordingly, fluctuations in financial markets and in the composition of assets under management impact our revenues and results of operations.

BASIS OF PRESENTATION.

These unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. These principles require the use of estimates and reflect all adjustments that are, in the opinion of management, necessary for a fair statement of our results for the interim periods presented. All such adjustments are of a normal recurring nature. Actual results may vary from our estimates.

The unaudited financial information contained in these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in our 2023 Annual Report.

NEWLY ISSUED BUT NOT YET ADOPTED ACCOUNTING GUIDANCE.

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07 - Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. As required by the guidance, we will adopt the annual disclosures of significant segment expenses that are regularly provided to the chief operating decision maker  in our 2024 year-end reporting. Interim segment reporting will become effective under the amendment on January 1, 2025.

In December 2023, the FASB issued Accounting Standards Update No. 2023-09 - Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. This amendment is effective for the firm on January 1, 2025. We are currently evaluating the impact of adopting this standard and have not yet determined our transition approach.

We have considered all other newly issued accounting guidance that is applicable to our operations and the preparation of our unaudited condensed consolidated statements, including those we have not yet adopted. We do not believe that any such guidance has or will have a material effect on our financial position or results of operations.

NOTE 2 – INFORMATION ABOUT RECEIVABLES, REVENUES, AND SERVICES.

Net revenues earned in the three- and six-month periods ended June 30, 2024 and 2023, are included in the table below along with details of investment advisory revenues earned from clients by their underlying asset class. We also included average assets under management by asset class, on which we earn the investment advisory revenues.

Page 8


	Three months ended				Six months ended
(in millions)	6/30/2024		6/30/2023		6/30/2024		6/30/2023
Investment advisory fees
Equity	$	948.9	$	862.3	$	1,898.5	$	1,696.2
Fixed income, including money market	100.2		100.0		200.8		202.4
Multi-asset	444.8		391.3		874.5		777.3
Alternatives	91.7		77.2		165.8		146.7
Total investment advisory fees	$	1,585.6	$	1,430.8	$	3,139.6	$	2,822.6
Capital allocation-based income	0.1		38.7		47.2		55.6
Total administrative, distribution, and servicing fees	147.6		140.7		296.7		269.6
Net revenues	$	1,733.3	$	1,610.2	$	3,483.5	$	3,147.8

Average AUM (in billions):
Equity	$	790.4	$	703.4	$	780.4	$	695.2
Fixed income, including money market	174.8		170.4		172.1		170.0
Multi-asset	520.1		439.0		508.6		430.7
Alternatives	48.7		44.6		48.1		44.3
Average AUM	$	1,534.0	$	1,357.4	$	1,509.2	$	1,340.2

Total net revenues earned from our sponsored products, primarily our sponsored U.S. mutual funds and collective investment trusts, aggregate $1,429.4 million and $1,324.4 million for the three months ended June 30, 2024 and 2023, respectively. Total net revenues earned during the six months ended June 30, 2024 and 2023 aggregate $2,873.0 million and $2,592.4 million, respectively. Accounts receivable from our sponsored products aggregate to $577.3 million at June 30, 2024 and $533.9 million at December 31, 2023.

Investors that we serve are primarily domiciled in the U.S.; investment advisory clients outside the U.S. account for 8.6% at June 30, 2024, 8.5% at March 31, 2024, and 8.6% at December 31, 2023 of our assets under management.

Page 9

NOTE 3 – INVESTMENTS.

The carrying values of our investments that are not part of the consolidated sponsored investment products are as follows:


(in millions)	6/30/2024		12/31/2023

Investments held at fair value
T. Rowe Price investment products
Discretionary investments	$	245.9	$	246.4
Seed capital	260.3		247.8
Supplemental savings plan liability economic hedges	852.0		806.6
Investment partnerships and other investments	108.0		69.7
Investments in affiliated collateralized loan obligations	7.6		8.4
Equity method investments
T. Rowe Price investment products
Discretionary investments	40.4		5.3
Seed capital	136.9		91.1
Supplemental savings plan liability economic hedges	40.6		21.0
23% Investment in UTI Asset Management Company Limited (India)	175.1		164.5
Investments in affiliated private investment funds - carried interest	497.3		519.9
Investments in affiliated private investment funds - seed/co-investment	280.5		253.4
Investments in partnerships and other investments	1.9		2.2
Held to maturity
Investments in affiliated collateralized loan obligations	81.8		94.1
Certificates of deposit	29.6		23.3
U.S. Treasury note	1.0		1.0
Total	$	2,758.9	$	2,554.7

The investment partnerships held at fair value are valued using net asset value (“NAV”) per share as a practical expedient. Our interests in these partnerships are generally not redeemable and are subject to significant transferability restrictions. The underlying investments of these partnerships have contractual terms through 2029, though we may receive distributions of liquidating assets over a longer term. The investment strategies of these partnerships include growth equity, buyout, venture capital, and real estate.

During the three- and six- months ended June 30, 2024, net gains on investments included $20.0 million and $85.0 million, respectively, of net unrealized gains related to investments carried at fair value that were still held at June 30, 2024. For the same periods of 2023, net gains on investments included $28.3 million and $75.0 million, respectively, of net unrealized gains related to investments carried at fair value that were still held at June 30, 2023.

During the six months ended June 30, 2024 and 2023, certain sponsored investment products in which we provided initial seed capital at the time of formation were deconsolidated, as we no longer had a controlling interest. Depending on our ownership interest, we report our residual interests in these sponsored investment products as either an equity method investment or an investment held at fair value. The net impact of these changes on our unaudited condensed consolidated balance sheets and statements of income as of the dates the products were deconsolidated is detailed below.


	Three months ended				Six months ended
(in millions)	6/30/2024		6/30/2023		6/30/2024		6/30/2023
Net increase (decrease) in assets of consolidated sponsored investment products	$	(236.4)	$	(79.0)	$	(271.8)	$	(81.4)
Net increase (decrease) in liabilities of consolidated sponsored investment products	$	(4.9)	$	(33.0)	$	(4.9)	$	(33.1)
Net increase (decrease) in redeemable non-controlling interests	$	(68.1)	$	5.9	$	(96.2)	$	5.9

Page 10

INVESTMENTS IN AFFILIATED COLLATERALIZED LOAN OBLIGATIONS.

There is debt associated with our long-term investments in affiliated collateralized loan obligations (“CLOs”). This debt is carried at $77.2 million at June 30, 2024 and $89.4 million at December 31, 2023, and is reported in accounts payable and accrued expenses in our unaudited condensed consolidated balance sheets. The debt includes outstanding repurchase agreements of €61.1 million (equivalent to $65.5 million at June 30, 2024 and $72.3 million at December 31, 2023 at the respective EUR spot rates) that are collateralized by the CLO investments. The debt also includes outstanding note facilities of €10.9 million (equivalent to $11.7 million at June 30, 2024 and $17.1 million at December 31, 2023, at the respective EUR spot rates) that are collateralized by first priority security interests in the assets of a consolidated subsidiary that is party to the notes. These note facilities bear interest at rates based on EURIBOR plus the initial margin, which equals all-in rates ranging from 1.15% to 12.77% as of June 30, 2024. The debt matures on various dates through 2035 or if the investments are paid back in full or cancelled, whichever is sooner.

VARIABLE INTEREST ENTITIES.

Our investments at June 30, 2024 and December 31, 2023 include interests in variable interest entities that we do not consolidate as we are not deemed the primary beneficiary. Our maximum risk of loss related to our involvement with these entities is as follows:


(in millions)	6/30/2024		12/31/2023
Investment carrying values	$	877.3	$	919.3
Unfunded capital commitments	81.4		94.1
Accounts receivable	74.8		92.1
	$	1,033.5	$	1,105.5

The unfunded capital commitments, totaling $81.4 million at June 30, 2024 and $94.1 million at December 31, 2023, relate primarily to the affiliated private investment funds and the investment partnerships in which we have an existing investment. In addition to such amounts, a percentage of prior distributions may be called under certain circumstances.

INVESTMENTS IN AFFILIATED FUNDS - CARRIED INTEREST.

Certain of the investments in affiliated funds represent interests in the general partners of affiliated private investment funds that are entitled to a disproportionate allocation of income or carried interest. The entities holding such interests are considered variable interest entities and are consolidated as we were determined to be the primary beneficiary.

The total assets, liabilities, and non-controlling interests of these consolidated variable interest entities are as follows:


(in millions)	6/30/2024		12/31/2023
Assets	$	561.2	$	564.7
Liabilities	$	0.2	$	1.9
Non-controlling interest	$	205.3	$	192.0

NOTE 4 – FAIR VALUE MEASUREMENTS.

We determine the fair value of our cash equivalents and investments held at fair value using the following broad levels of inputs as defined by related accounting standards:

Level 1 – quoted prices in active markets for identical securities.

Level 2 – observable inputs other than Level 1 quoted prices including, but not limited to, quoted prices for similar

securities, interest rates, prepayment speeds, and credit risk. These inputs are based on market data

Page 11

obtained from independent sources.

Level 3 – unobservable inputs reflecting our own assumptions based on the best information available. The inputs into the determination of fair value require significant management judgment or estimation. Investments in this category generally include investments for which there is not an actively-traded market.

These levels are not necessarily an indication of the risk or liquidity associated with our investments. The following table summarizes our investments and liabilities that are recognized in our unaudited condensed consolidated balance sheets using fair value measurements determined based on the differing levels of inputs. This table excludes investments held by the consolidated sponsored investment products which are presented separately in our unaudited condensed consolidated balance sheets and are detailed in Note 5.


	6/30/2024						12/31/2023
(in millions)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
T. Rowe Price investment products
Cash equivalents held in money market funds	$	2,371.1	$	—	$	—	$	1,678.1	$	—	$	—
Discretionary investments	245.9		—		—		246.4		—		—
Seed capital	220.9		39.4		—		206.0		41.8		—
Supplemental savings plan liability economic hedges	852.0		—		—		806.6		—		—
Other investments	0.1		—		41.5		0.7		—		—
Investments in affiliated collateralized loan obligations	—		7.6		—		—		8.4		—
Total	$	3,690.0	$	47.0	$	41.5	$	2,937.8	$	50.2	$	—

Contingent consideration liability	$	—	$	—	$	13.4	$	—	$	—	$	13.4

The fair value hierarchy level table above does not include the investment partnerships and other investments for which fair value is estimated using their NAV per share as a practical expedient. The carrying value of these investments as disclosed in Note 3 were $66.4 million at June 30, 2024, and $69.0 million at December 31, 2023.

The Level 3 investments’ fair value is derived from inputs that are unobservable and that reflect our own determinations about the assumptions that market participants would use in pricing the investments, including assumptions about risk. These inputs are developed based on our data, which is adjusted if information indicates that market participants would use different assumptions. For the three months ended June 30, 2024, the change in Level 3 fair values are solely attributable to the purchases of new investments and there were no transfers into or out of Level 3. The following table provides information about the significant Level 3 inputs:

Fair value measurements as of June 30, 2024

(in millions)

Fair value

Valuation techniques

Unobservable inputs

Interest rate input

Other investments

41.5

Market Yield (Comparables)

Yield

9.4%

Contingent Consideration

As part of the purchase consideration for our acquisition of OHA in December 2021, there was contingent

consideration in the amount of up to $900 million, payable in cash, that may be due as part of an earnout payment starting in 2025 and ending in 2027 upon satisfying or exceeding certain defined revenue targets. These defined revenue targets will be evaluated on a cumulative basis beginning at the end of 2024, with the ability to extend two additional years if the defined revenue targets are not achieved. About 22% of the earnout is conditioned upon continued service with T. Rowe Price and was excluded from the purchase consideration and deemed compensatory. The fair value of the earnout deemed compensatory is remeasured each reporting period and recognized over the related service period. The amount recorded as compensation expense for the three- and six- months ended June 30, 2024 and 2023 was immaterial.

Page 12

The change in the contingent consideration liability measured at fair value for which we used Level 3 inputs to determine fair value is as follows:


	Three months ended				Six months ended
(in millions)	6/30/2024		6/30/2023		6/30/2024		6/30/2023
Balance at beginning of period	$	13.4	$	46.2	$	13.4	$	95.8

Unrealized gains, included in earnings	—		(23.2)		—		(72.8)
Balance at end of period	$	13.4	$	23.0	$	13.4	$	23.0

The fair value of the contingent consideration is measured using the Monte Carlo simulation methodology of valuation. The most significant assumptions used relate to the discount rates and from changes pertaining to the achievement of the defined financial targets.

In addition, simultaneously with the OHA acquisition, a Value Creation Agreement was entered into whereby certain employees of OHA will receive incentive payments in the aggregate equal to 10% of the appreciated value of the OHA business, subject to an annualized preferred return to T. Rowe Price, on the fifth anniversary of the acquisition date. This arrangement is treated as a post-combination compensation expense. This arrangement will be remeasured at fair value at each reporting date and recognized over the related service period. For the three- and six- months ended June 30, 2024 and 2023, the amounts recognized as part of compensation expense in our unaudited condensed consolidated statements of income were immaterial.

NOTE 5 – CONSOLIDATED SPONSORED INVESTMENT PRODUCTS.

The sponsored investment products that we consolidate in our unaudited condensed consolidated financial statements are generally those products we provided initial seed capital at the time of their formation and have a controlling interest. Our U.S. mutual funds and certain other sponsored products are considered voting interest entities, while those regulated outside the U.S. are considered variable interest entities.

The following table details the net assets of the consolidated sponsored investment products:


	6/30/2024						12/31/2023
(in millions)	Voting interest entities		Variable interest entities		Total		Voting interest entities		Variable interest entities		Total
Cash and cash equivalents(1)	$	21.4	$	52.5	$	73.9	$	25.7	$	51.5	$	77.2
Investments(2)	674.5		1,144.7		1,819.2		718.0		1,129.0		1,847.0
Other assets	21.8		14.7		36.5		11.2		23.9		35.1
Total assets	717.7		1,211.9		1,929.6		754.9		1,204.4		1,959.3
Liabilities	36.4		28.7		65.1		19.0		35.2		54.2
Net assets	$	681.3	$	1,183.2	$	1,864.5	$	735.9	$	1,169.2	$	1,905.1

Attributable to T. Rowe Price Group	$	461.4	$	714.1	$	1,175.5	$	589.9	$	721.1	$	1,311.0
Attributable to redeemable non-controlling interests	219.9		469.1		689.0		146.0		448.1		594.1
	$	681.3	$	1,183.2	$	1,864.5	$	735.9	$	1,169.2	$	1,905.1

(1) Cash and cash equivalents includes $17.8 million at June 30, 2024, and $16.2 million at December 31, 2023, of investments in T. Rowe Price money market mutual funds.

(2) Investments include $6.2 million at June 30, 2024, and $6.2 million at December 31, 2023 of other sponsored investment products.

Although we can redeem our interest in these consolidated sponsored investment products at any time, we cannot directly access or sell the assets held by these products to obtain cash for general operations. Additionally, the assets of these investment products are not available to our general creditors.

Since third party investors in these investment products have no recourse to our credit, our overall risk related to the net assets of consolidated sponsored investment products is limited to valuation changes associated with our

Page 13

interest. We, however, are required to recognize the valuation changes associated with all underlying investments held by these products in our unaudited condensed consolidated statements of income and disclose the portion attributable to third party investors as net income attributable to redeemable non-controlling interests.

The operating results of the consolidated sponsored investment products for the three- and six- months ended June 30, 2024 and 2023, are reflected in our unaudited condensed consolidated statements of income as follows:


	Three months ended
	6/30/2024						6/30/2023
(in millions)	Voting interest entities		Variable interest entities		Total		Voting interest entities		Variable interest entities		Total
Operating expenses reflected in net operating income	$	(0.7)	$	(1.9)	$	(2.6)	$	(0.8)	$	(2.6)	$	(3.4)
Net investment income (loss) reflected in non-operating income (loss)	(3.7)		12.2		8.5		5.8		18.2		24.0
Impact on income before taxes	$	(4.4)	$	10.3	$	5.9	$	5.0	$	15.6	$	20.6

Net income (loss) attributable to T. Rowe Price Group	$	(3.0)	$	7.0	$	4.0	$	4.4	$	11.4	$	15.8
Net income (loss) attributable to redeemable non-controlling interests	(1.4)		3.3		1.9		0.6		4.2		4.8
	$	(4.4)	$	10.3	$	5.9	$	5.0	$	15.6	$	20.6


	Six months ended
	6/30/2024						6/30/2023
(in millions)	Voting interest entities		Variable interest entities		Total		Voting interest entities		Variable interest entities		Total
Operating expenses reflected in net operating income	$	(1.5)	$	(3.4)	$	(4.9)	$	(2.5)	$	(4.9)	$	(7.4)
Net investment income (loss) reflected in non-operating income (loss)	29.7		51.1		80.8		12.7		57.1		69.8
Impact on income before taxes	$	28.2	$	47.7	$	75.9	$	10.2	$	52.2	$	62.4

Net income (loss) attributable to T. Rowe Price Group	$	22.8	$	31.6	$	54.4	$	8.1	$	29.3	$	37.4
Net income (loss) attributable to redeemable non-controlling interests	5.4		16.1		21.5		2.1		22.9		25.0
	$	28.2	$	47.7	$	75.9	$	10.2	$	52.2	$	62.4

The operating expenses of the consolidated investment products are reflected in general, administrative and other expenses. In preparing our unaudited condensed consolidated financial statements, we eliminated operating expenses of $0.5 million and $0.3 million for the three months ended June 30, 2024 and 2023, respectively, against the investment advisory and administrative fees earned from these products. Operating expenses eliminated for the six months ended June 30, 2024 and 2023, were $1.7 million and $0.9 million, respectively. The net investment income (loss) reflected in non-operating income (loss) includes dividend and interest income as well as realized and unrealized gains and losses on the underlying securities held by the consolidated sponsored investment products.

Page 14

The table below details the impact of these consolidated investment products on the individual lines of our unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2023.

Six months ended

6/30/2024

6/30/2023

(in millions)

Voting
interest entities

Variable interest entities

Total

Voting
interest entities

Variable interest entities

Total

Net cash provided by (used in) operating activities

(111.4)

(

PRICE T ROWE GROUP INC [TROW] Filings
10-Q	[2024-07-26]
10-Q	[2024-04-26]
10-K	[2024-02-16]
10-Q	[2023-10-27]
10-Q	[2023-07-28]
10-Q	[2023-05-02]
10-K	[2023-02-15]
10-Q	[2022-10-27]
10-Q	[2022-07-28]
10-Q	[2022-04-28]
10-K	[2022-02-24]
10-Q	[2021-10-28]
10-Q	[2021-07-29]
10-Q	[2021-04-29]
10-K	[2021-02-11]
10-Q	[2020-10-29]
10-Q	[2020-07-29]
10-Q	[2020-04-28]
10-K	[2020-02-13]
10-Q	[2019-10-24]
10-Q	[2019-07-24]
10-Q	[2019-04-24]
10-K	[2019-02-13]
10-Q	[2018-10-25]
10-Q	[2018-07-25]
10-Q	[2018-04-25]
10-K	[2018-02-16]
10-Q	[2017-10-26]
10-Q	[2017-07-25]
10-Q	[2017-04-25]
10-K	[2017-02-07]
10-Q	[2016-10-27]
10-Q	[2016-07-26]
10-Q	[2016-04-26]
10-K	[2016-02-05]
10-Q	[2015-10-22]
10-Q	[2015-07-23]
10-Q	[2015-04-22]
10-K	[2015-02-05]
10-Q	[2014-10-23]
10-Q	[2014-07-24]
10-Q	[2014-04-24]
10-K	[2014-02-04]
10-Q	[2013-10-24]
10-Q	[2013-07-24]
10-Q	[2013-04-24]
10-K	[2013-02-05]
10-Q	[2012-10-24]
10-Q	[2012-07-25]
10-Q	[2012-04-24]
10-K	[2012-02-03]