10-Q 1 trow-20240331.htm 10-Q trow-20240331
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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 March 31, 2024
OR
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)
________________
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.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 ($.20 par value), as of the latest practicable date, April 23, 2024, is 223,299,903.
The exhibit index is at Item 6 on page 38.



PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
 
3/31/202412/31/2023
ASSETS
Cash and cash equivalents$2,416.5 $2,066.6 
Accounts receivable and accrued revenue883.0 807.9 
Investments2,588.7 2,554.7 
Assets of consolidated sponsored investment products ($1,229.2 million at March 31, 2024 and $1,204.4 million at December 31, 2023, related to variable interest entities)
2,117.2 1,959.3 
Operating lease assets234.9 241.1 
Property, equipment and software, net846.4 806.6 
Intangible assets, net481.8 507.3 
Goodwill2,642.8 2,642.8 
Other assets642.7 692.5 
Total assets$12,854.0 $12,278.8 
LIABILITIES
Accounts payable and accrued expenses$366.4 $409.5 
Liabilities of consolidated sponsored investment products ($27.7 million at March 31, 2024 and $35.2 million at December 31, 2023, related to variable interest entities)
71.1 54.2 
Operating lease liabilities302.1 308.5 
Accrued compensation and related costs330.6 240.8 
Supplemental savings plan liability927.4 895.0 
Contingent consideration liability13.4 13.4 
Income taxes payable176.8 66.2 
Total liabilities2,187.8 1,987.6 
Commitments and contingent liabilities
Redeemable non-controlling interests676.7 594.1 
STOCKHOLDERS’ EQUITY
Preferred stock, undesignated, $.20 par value – authorized and unissued 20,000,000 shares
  
Common stock, $.20 par value—authorized 750,000,000; issued 223,494,000 shares at March 31, 2024 and 223,938,000 at December 31, 2023
44.7 44.8 
Additional capital in excess of par value424.2 431.7 
Retained earnings9,364.8 9,076.1 
Accumulated other comprehensive loss(49.6)(47.5)
Total stockholders’ equity attributable to T. Rowe Price Group, Inc.9,784.1 9,505.1 
Non-controlling interests in consolidated entities205.4 192.0 
Total stockholders’ equity9,989.5 9,697.1 
Total liabilities, redeemable non-controlling interests, and stockholders’ equity$12,854.0 $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
 3/31/20243/31/2023
Revenues
Investment advisory fees$1,554.0 $1,391.8 
Capital allocation-based income47.1 16.9 
Administrative, distribution, and servicing fees149.1 128.9 
Net revenues1,750.2 1,537.6 
Operating expenses
Compensation and related costs709.0 653.5 
Distribution and servicing81.9 71.5 
Advertising and promotion25.3 25.8 
Product and recordkeeping related costs75.0 72.1 
Technology, occupancy, and facility costs149.9 146.6 
General, administrative, and other92.6 107.5 
Change in fair value of contingent consideration (49.6)
Acquisition-related amortization and impairment costs 29.9 26.0 
Total operating expenses1,163.6 1,053.4 
Net operating income586.6 484.2 
Non-operating income (loss)
Net gains (losses) on investments121.5 93.9 
Net gains (losses) on consolidated sponsored investment products72.3 45.4 
Other gains (losses), including foreign currency gains (losses)(4.9)(3.9)
Total non-operating income (loss)188.9 135.4 
Income before income taxes775.5 619.6 
Provision for income taxes182.1 177.9 
Net income593.4 441.7 
Less: net income (loss) attributable to redeemable
non-controlling interests
19.6 20.2 
Net income attributable to T. Rowe Price Group$573.8 $421.5 
Earnings per share on common stock of T. Rowe Price Group
Basic$2.50 $1.83 
Diluted$2.49 $1.83 

The accompanying notes are an integral part of these statements.
Page 3


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
 
 Three months ended
 3/31/20243/31/2023
Net income$593.4 $441.7 
Other comprehensive income (loss)
Currency translation adjustments
Consolidated T. Rowe Price investment products - variable interest entities(5.6)9.1 
Equity method investments
1.1 (1.1)
Other comprehensive income (loss) before income taxes(4.5)8.0 
Net deferred tax (expense) benefits0.8 (0.6)
Total other comprehensive income (loss)(3.7)7.4 
Total comprehensive income589.7 449.1 
Less: comprehensive income (loss) attributable to redeemable non-controlling interests18.0 26.3 
Total comprehensive income attributable to T. Rowe Price Group$571.7 $422.8 

The accompanying notes are an integral part of these statements.
Page 4


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
 
 Three months ended
 3/31/20243/31/2023
Cash flows from operating activities
Net income$593.4 $441.7 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, amortization and impairment of property, equipment and software62.6 58.8 
Amortization and impairment of acquisition-related assets and retention arrangements 50.8 48.2 
Fair value remeasurement of contingent consideration liability (49.6)
Stock-based compensation expense
58.4 58.8 
Net gains recognized on investments(147.0)(102.3)
Net redemptions in sponsored investment products used to economically hedge supplemental savings plan liability15.1 18.4 
Net change in securities held by consolidated sponsored investment products(158.3)(200.7)
Other changes in assets and liabilities162.3 238.4 
Net cash provided by operating activities637.3 511.7 
Cash flows from investing activities
Purchases of sponsored investment products(4.5)(8.4)
Dispositions of sponsored investment products95.7 14.7 
Net cash of sponsored investment products on deconsolidation(0.1)(2.5)
Additions to property, equipment and software(102.5)(60.7)
Other investing activity2.8 (0.6)
Net cash used in investing activities(8.6)(57.5)
Cash flows from financing activities
Repurchases of common stock(83.1)(8.2)
Common share issuances under stock-based compensation plans14.2 8.0 
Dividends paid to common stockholders of T. Rowe Price(286.5)(282.2)
Net contributions to non-controlling interests in consolidated entities0.2 0.2 
Net subscriptions from redeemable non-controlling interest holders87.4 138.0 
Net cash used in financing activities(267.8)(144.2)
Effect of exchange rate changes on cash and cash equivalents of consolidated
T. Rowe Price investment products
(0.8)1.5 
Net change in cash and cash equivalents during period360.1 311.5 
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 $87.4 million at March 31, 2024, and $92.1 million at March 31, 2023, held by consolidated sponsored investment products
$2,503.9 $2,186.2 

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 3/31/2024
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 entitiesTotal 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)— — — 573.8 — 573.8 13.2 587.0 19.6 
Other comprehensive income (loss), net of tax— — — — (2.1)(2.1)— (2.1)(1.6)
Dividends declared ($1.24 per share)
— — — (285.0)— (285.0)— (285.0)— 
Shares issued upon option exercises246 — 15.4 — — 15.4 — 15.4 — 
Net shares issued upon vesting of restricted stock units27 — (1.4)— — (1.4)— (1.4)— 
Stock-based compensation expense— — 58.4 — — 58.4 — 58.4 — 
Restricted stock units issued as dividend equivalents— — 0.1 (0.1)— — —  — 
Common shares repurchased(717)(0.1)(80.0)— — (80.1)— (80.1)— 
Net contributions to non-controlling interests in consolidated entities— — — — — — 0.2 0.2 — 
Net subscriptions into T. Rowe Price investment products— — — — — — — — 92.7 
Net deconsolidations of T. Rowe Price investment products— — — — — — — — (28.1)
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 

Three months ended 3/31/2023
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 entitiesTotal stockholders’ equityRedeemable 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)— — — 421.5 — 421.5 3.5 425.0 20.2 
Other comprehensive income (loss), net of tax— — — — 1.3 1.3 — 1.3 6.1 
Dividends declared ($1.22 per share)
— — — (280.7)— (280.7)— (280.7)— 
Shares issued upon option exercises190 — 10.2 — — 10.2 — 10.2 — 
Net shares issued upon vesting of restricted stock units52 — (2.5)— — (2.5)— (2.5)— 
Stock-based compensation expense— — 58.8 — — 58.8 — 58.8 — 
Restricted stock units issued as dividend equivalents— — 0.1 (0.1)—  —  — 
Common shares repurchased(25)— (2.7)— — (2.7)— (2.7)— 
Net contributions to non-controlling interests in consolidated entities— — — — — — 0.2 0.2 — 
Net subscriptions into T. Rowe Price investment products— — — — — — — — 151.1 
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 
(1) Accumulated other comprehensive income
The accompanying notes are an integral part of these statements.
Page 6


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 first quarter of 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 7


Three months ended
(in millions)3/31/20243/31/2023
Investment advisory fees
  Equity$949.6 $833.9 
  Fixed income, including money market100.6 102.4 
  Multi-asset429.7 386.0 
  Alternatives74.1 69.5 
Total investment advisory fees$1,554.0 $1,391.8 
Capital allocation-based income47.1 16.9 
Total administrative, distribution, and servicing fees149.1 128.9 
Net revenues$1,750.2 $1,537.6 
Average AUM (in billions):
  Equity$770.4 $687.0 
  Fixed income, including money market169.5 169.6 
  Multi-asset497.0 422.2 
  Alternatives47.5 44.1 
Average AUM$1,484.4 $1,322.9 

Total net revenues earned from our sponsored products, primarily our sponsored U.S. mutual funds and collective investment trusts, aggregate $1,443.6 million and $1,268.0 million for the three months ended March 31, 2024 and 2023, respectively. Accounts receivable from our sponsored products aggregate to $582.2 million at March 31, 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 8.5% and 8.6% of our assets under management at March 31, 2024 and December 31, 2023, respectively.


Page 8


NOTE 3 – INVESTMENTS.

The carrying values of our investments that are not part of the consolidated sponsored investment products are as follows:
(in millions)3/31/202412/31/2023
Investments held at fair value
T. Rowe Price investment products
Discretionary investments$259.9 $246.4 
Seed capital237.7 247.8 
Supplemental savings plan liability economic hedges837.4 806.6 
Investment partnerships and other investments67.7 69.7 
Investments in affiliated collateralized loan obligations7.9 8.4 
Equity method investments
T. Rowe Price investment products
Discretionary investments 5.3 
Seed capital96.3 91.1 
Supplemental savings plan liability economic hedges24.5 21.0 
23% Investment in UTI Asset Management Company Limited (India)
171.5 164.5 
Investments in affiliated private investment funds - carried interest514.3 519.9 
Investments in affiliated private investment funds - seed/co-investment254.5 253.4 
Other investment partnerships and investments1.7 2.2 
Held to maturity
Investments in affiliated collateralized loan obligations88.9 94.1 
Certificates of deposit25.4 23.3 
 U.S. Treasury note1.0 1.0 
Total$2,588.7 $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 months ended March 31, 2024, net gains on investments included $64.5 million of net unrealized gains related to investments held at fair value that were still held at March 31, 2024. For the same period of 2023, net gains on investments included $46.7 million of net unrealized gains related to investments held at fair value that were still held at March 31, 2023.

During the three months ended March 31, 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
(in millions)3/31/20243/31/2023
Net increase (decrease) in assets of consolidated sponsored investment products$(35.4)$(2.4)
Net increase (decrease) in liabilities of consolidated sponsored investment products$ $(0.1)
Net increase (decrease) in redeemable non-controlling interests$(28.1)$ 



Page 9


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 $84.3 million at March 31, 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 €64.2 million (equivalent to $69.3 million at March 31, 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 €13.9 million (equivalent to $15.0 million at March 31, 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 12.84% as of March 31, 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 March 31, 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)3/31/202412/31/2023
Investment carrying values$910.7 $919.3 
Unfunded capital commitments92.0 94.1 
Accounts receivable75.3 92.1 
$1,078.0 $1,105.5 

The unfunded capital commitments, totaling $92.0 million at March 31, 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 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 T. Rowe Price was 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)3/31/202412/31/2023
Assets$604.2 $564.7 
Liabilities$0.3 $1.9 
Non-controlling interest$205.4 $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
     obtained from independent sources.

Page 10


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 on our unaudited condensed consolidated balance sheets and are detailed in Note 5.

3/31/202412/31/2023
(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$1,997.4 $ $ $1,678.1 $ $ 
Discretionary investments259.9   246.4   
Seed capital187.0 50.7  206.0 41.8  
Supplemental savings plan liability economic hedges837.4   806.6   
Other investments0.6   0.7   
Investments in affiliated collateralized loan obligations 7.9   8.4  
Total$3,282.3 $58.6 $ $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 $67.1 million at March 31, 2024, and $69.0 million at December 31, 2023.

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 months ended March 31, 2024 was immaterial.

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
(in millions)3/31/20243/31/2023
Balance at beginning of period$13.4 $95.8 
  Unrealized gains, included in earnings (49.6)
Balance at end of period$13.4 $46.2 

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

Page 11


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 months ended March 31, 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:
3/31/202412/31/2023
(in millions)
Voting
interest entities
Variable interest entities
Total
Voting
interest entities
Variable interest entities
Total
Cash and cash equivalents(1)
$36.6 $50.8 $87.4 $25.7 $51.5 $77.2 
Investments(2)
828.2 1,158.0 1,986.2 718.0 1,129.0 1,847.0 
Other assets23.2 20.4 43.6 11.2 23.9 35.1 
Total assets888.0 1,229.2 2,117.2 754.9 1,204.4 1,959.3 
Liabilities43.4 27.7 71.1 19.0 35.2 54.2 
Net assets$844.6 $1,201.5 $2,046.1 $735.9 $1,169.2 $1,905.1 
Attributable to T. Rowe Price Group$611.1 $758.3 $1,369.4 $589.9 $721.1 $1,311.0 
Attributable to redeemable non-controlling interests233.5 443.2 676.7 146.0 448.1 594.1 
$844.6 $1,201.5 $2,046.1 $735.9 $1,169.2 $1,905.1 
(1) Cash and cash equivalents includes $22.5 million at March 31, 2024, and $16.2 million at December 31, 2023, of investments in T. Rowe Price money market mutual funds.
(2) Investments include $6.4 million at March 31, 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 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 months ended March 31, 2024 and 2023, are reflected in our unaudited condensed consolidated statements of income as follows:


Page 12


Three months ended
3/31/20243/31/2023
(in millions)Voting
interest entities
Variable interest entitiesTotalVoting
interest entities
Variable interest entitiesTotal
Operating expenses reflected in net operating income$(0.8)$(1.5)$(2.3)$(1.7)$(2.3)$(4.0)
Net investment income (loss) reflected in non-operating income (loss)33.4 38.9 72.3 6.9 38.9 45.8 
Impact on income before taxes$32.6 $37.4 $70.0 $5.2 $36.6 $41.8 
Net income (loss) attributable to T. Rowe Price Group$25.8 $24.6 $50.4 $3.7 $17.9 $21.6 
Net income (loss) attributable to redeemable non-controlling interests6.8 12.8 19.6 1.5 18.7 20.2 
$32.6 $37.4 $70.0 $5.2 $36.6 $41.8 

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 $1.2 million and $0.6 million for the three months ended March 31, 2024 and 2023, respectively, against the investment advisory and administrative fees earned from these products. 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 13


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 three months ended March 31, 2024 and 2023.
Three months ended
3/31/20243/31/2023
(in millions)
Voting
interest entities
Variable interest entities
Total
Voting
interest entities
Variable interest entities
Total
Net cash provided by (used in) operating activities$(61.8)$(33.9)$(95.7)$(12.4)$(147.2)$(159.6)
Net cash provided by (used in) investing activities (0.1)(0.1) (2.5)(2.5)
Net cash provided by (used in) financing activities72.7 34.1 106.8 4.4 129.2 133.6 
Effect of exchange rate changes on cash and cash equivalents of consolidated sponsored investment products (0.8)(0.8) 1.5 1.5 
Net change in cash and cash equivalents during period
10.9 (0.7)10.2 (8.0)(19.0)(27.0)
Cash and cash equivalents at beginning of year
25.7 51.5 77.2 16.2 102.9 119.1 
Cash and cash equivalents at end of period
$36.6 $50.8 $87.4 $8.2 $83.9 $92.1 

For the three months ended March 31, 2024, the net cash provided by or used in financing activities includes $19.4 million of net redemptions we made from the consolidated sponsored investment products and dividends received. For the three months ended March 31, 2023, the net cash provided by or used in financing activities included $4.4 million of net subscriptions we made into the consolidated sponsored investment products, net of dividends received. These cash flows were eliminated in consolidation.

FAIR VALUE MEASUREMENTS.

We determine the fair value of investments held by consolidated sponsored investment products 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 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 these investment holdings. The following table summarizes the investment holdings held by our consolidated sponsored investment products using fair value measurements determined based on the differing levels of inputs.
3/31/202412/31/2023
(in millions)
Level 1
Level 2
Level 1
Level 2
Assets
  Cash equivalents$23.6 $12.0 $17.2 $8.0 
Equity securities430.8 228.7 365.1 213.6 
Fixed income securities 1,308.9  1,241.9 
Other investments3.2 14.6 3.6 22.8 
$457.6 $1,564.2 $— $385.9 $1,486.3 
Liabilities$(4.9)$(7.5)$(5.1)$(16.2)




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NOTE 6 - GOODWILL AND INTANGIBLE ASSETS.

Goodwill and intangible assets consist of the following:

(in millions)3/31/202412/31/2023
Goodwill$2,642.8 $2,642.8 
Indefinite-lived intangible assets - trade name117.1 117.1 
Indefinite-lived intangible assets - investment advisory agreements65.6 65.6 
Definite-lived intangible assets - investment advisory agreements299.1 324.6 
Total$3,124.6 $3,150.1 

Amortization and impairment expense for the definite-lived intangible assets was $25.5 million and $26.0 million for the three months ended March 31, 2024 and 2023, respectively. Estimated amortization expense for the definite-lived intangible assets for the five succeeding years is a follows:

(in millions)
Remaining 2024
$64.5 
202584.7 
202667.6 
202746.0 
202814.3 

We evaluate the carrying amount of goodwill in our unaudited condensed consolidated balance sheets for possible impairment on an annual basis in the fourth quarter or if triggering events occur that require us to evaluate for impairment earlier. No triggering events arose during the three months ended March 31, 2024.

NOTE 7 – STOCK-BASED COMPENSATION.

STOCK OPTIONS.

The following table summarizes the status of, and changes in, our stock options during the three months ended March 31, 2024.

Options
Weighted-
average
exercise
price
Outstanding at December 31, 2023
1,476,104 $75.39 
Exercised(348,728)$76.47 
Expired(1,768)$76.75 
Outstanding at March 31, 2024
1,125,608 $75.06 
Exercisable at March 31, 2024
1,125,608 $75.06 

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RESTRICTED SHARES AND STOCK UNITS.

The following table summarizes the status of, and changes in, our nonvested restricted shares and restricted stock units during the three months ended March 31, 2024.
Restricted
shares
Restricted
stock
units
Weighted-average
fair value
Nonvested at December 31, 2023
56,740 6,485,253 $127.74 
Time-based grants 13,136 $108.66 
Dividend equivalents granted to non-employee directors 973 $121.92 
Vested (40,241)$98.65 
Forfeited (30,035)$127.15 
Nonvested at March 31, 2024
56,740 6,429,086 $127.89 

Nonvested at March 31, 2024, includes performance-based restricted stock units of 334,548. These nonvested performance-based restricted stock units include 108,775 units for which the performance period has lapsed, and the performance threshold has been met.

FUTURE STOCK-BASED COMPENSATION EXPENSE.

The following table presents the compensation expense to be recognized over the remaining vesting periods of the stock-based awards outstanding at March 31, 2024. Estimated future compensation expense will change to reflect future grants of restricted stock awards and units, future option grants, changes in the probability of performance thresholds being met, and adjustments for actual forfeitures.
 
(in millions)
Second quarter 2024$58.2 
Third quarter 202457.2 
Fourth quarter 202450.2 
2025118.8 
2026 through 202988.4 
Total$372.8 

NOTE 8 – EARNINGS PER SHARE CALCULATIONS.

The following table presents the reconciliation of net income attributable to T. Rowe Price to net income allocated to our common stockholders and the weighted-average shares that are used in calculating the basic and diluted earnings per share on our common stock. Weighted-average common shares outstanding assuming dilution reflects the potential dilution, determined using the treasury stock method, that could occur if outstanding stock options were exercised and non-participating stock awards vested. No outstanding stock options had an anti-dilutive impact on the diluted earnings per common share calculation in the periods presented.
 Three months ended
(in millions)3/31/20243/31/2023
Net income attributable to T. Rowe Price$573.8 $421.5 
Less: net income allocated to outstanding restricted stock and stock unit holders15.8 10.5 
Net income allocated to common stockholders$558.0 $411.0 
Weighted-average common shares
Outstanding223.6 224.4 
Outstanding assuming dilution224.2 225.2 


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NOTE 9 – OTHER COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS.

The changes in currency translation adjustments included in accumulated other comprehensive loss for the three months ended March 31, 2024 and 2023 are presented in the table below.
Three months ended 3/31/2024
Three months ended 3/31/2023
(in millions)Equity method investmentsConsolidated T. Rowe Price investment products - variable interest entities
Total currency translation adjustments
Equity method investmentsConsolidated T. Rowe Price investment products - variable interest entitiesTotal currency translation adjustments
Balances at beginning of period$(51.9)$4.4 $(47.5)$(50.5)$(2.5)$(53.0)
Other comprehensive income (loss) before reclassifications and income taxes
1.1 (4.0)(2.9)(1.1)3.0 1.9 
Net deferred tax benefits (income taxes)
(0.1)0.9 0.8 0.2 (0.8)(0.6)
Other comprehensive income (loss)
1.0 (3.1)(2.1)(0.9)2.2 1.3 
Balances at end of period$(50.9)$1.3 $(49.6)$(51.4)$(0.3)$(51.7)
The other comprehensive income (loss) in the table above excludes other comprehensive losses of $1.6 million for the three months ended March 31, 2024, and other comprehensive income of $6.1 million for the three months ended March 31, 2023 related to redeemable non-controlling interests held in our consolidated products.

NOTE 10 – COMMITMENTS AND CONTINGENCIES.

COMMITMENTS.

T. Rowe Price has committed $397 million to fund OHA products over the next three years.

CONTINGENCIES.

Various claims against us arise in the ordinary course of business, including employment-related claims. In the opinion of management, after consultation with counsel, the likelihood of an adverse determination in one or more of these pending ordinary course of business claims that would have a material adverse effect on our financial position or results of operations is remote.




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors
T. Rowe Price Group, Inc.:

Results of Review of Interim Financial Information
We have reviewed the condensed consolidated balance sheet of T. Rowe Price Group, Inc. and subsidiaries (the Company) as of March 31, 2024, the related condensed consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the three-month periods ended March 31, 2024 and 2023 and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2023, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February 16, 2024, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2023, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ KPMG LLP
Baltimore, Maryland
April 26, 2024
 



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Item 2.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 to individual and institutional investors 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.

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 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 investment advisory clients and additional investments from our existing clients. These efforts often involve costs that precede any future revenues that we may recognize from an increase to our assets under management.

The investment management industry has been evolving and industry participants are facing several challenging trends including passive investments 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. We are investing in key capabilities, including investment professionals, distribution professionals, technologies, and new product offerings in order to provide our clients with strong investment management expertise and service.


MARKET TRENDS.

U.S. stocks produced strong first-quarter gains that lifted several broad indexes to all-time highs. The market was driven by investors’ optimism about the corporate profit potential stemming from advances in artificial intelligence (AI). Investors were also encouraged by the outcome of the Federal Reserve’s most recent monetary policy meeting. Although the central bank kept short-term interest rates steady throughout the quarter, policymakers in March maintained their December 2023 projections for three quarter-point interest rate cuts by the end of 2024 despite recent upticks in inflation readings.

Developed non-U.S. equity markets appreciated in U.S. dollar terms, but total returns to U.S. investors were hurt by a stronger dollar versus other major currencies. In Europe, equity markets were mostly positive, as investors hoped that easing inflation pressures would enable major central banks to begin reducing short-term interest rates later this year. Asian markets were widely mixed: Japanese shares led the region with a gain exceeding 11%, while Hong Kong stocks dropped almost 12%.

Emerging equity markets generally rose but trailed stocks in developed markets in dollar terms. In Europe, Turkish shares advanced as investors were encouraged that the central bank continued to raise interest rates to fight elevated inflation. In Asia, several markets produced gains, but Chinese stocks fell slightly, as the property market remained in distress. In Latin America, a few markets rose sharply, but stocks in regional heavyweight Brazil fell 7%.




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Returns of several major equity market indexes were as follows for the three months ended:
Index3/31/2024
S&P 500 Index10.6%
NASDAQ Composite Index(1)
9.1%
Russell 2000 Index5.2%
MSCI EAFE (Europe, Australasia, and Far East) Index5.9%
MSCI Emerging Markets Index2.4%
 (1) Returns exclude dividends

Global bond returns were mixed in U.S. dollar terms in the first quarter of 2024. In the U.S., Treasury bill yields increased, even though the fed funds target rate remained in the 5.25% to 5.50% range. Yields of Treasuries with intermediate- and long-term maturities rose to a greater degree due in part to some recent upticks in inflation readings. The 10-year U.S. Treasury note yield increased from 3.88% to 4.20% during the quarter.

In the U.S. investment-grade bond universe, sector performance was mixed. Mortgage-backed and Treasury securities performed worst. Corporate bonds held up somewhat better but still posted mild losses. Asset-backed securities rose slightly, while non-agency commercial mortgage-backed securities produced a solid gain. Tax-free municipal bonds held up slightly better than the broad taxable bond market. High yield corporate bonds produced gains and outperformed the broad investment-grade market.

Bonds in developed non-U.S. markets declined in dollar terms. In Europe, longer-term bond yields generally increased while major European currencies weakened versus the dollar. While the European Central Bank and the Bank of England held short-term interest rates steady, Switzerland’s central bank surprised investors in March with a quarter-point rate cut. In Japan, long-term government bond yields increased and the yen fell to 34-year lows versus the dollar, even though the Bank of Japan decided in March to lift its benchmark interest rate out of negative territory. Emerging markets bonds were mixed: Dollar-denominated issues produced gains, but bonds denominated in local currencies declined, as many developing markets currencies depreciated versus the U.S. dollar.

Returns for several major bond market indexes were as follows for the three months ended:
Index3/31/2024
Bloomberg U.S. Aggregate Bond Index(0.8)%
JPMorgan Global High Yield Index    2.2%
Bloomberg Municipal Bond Index(0.4)%
Bloomberg Global Aggregate Ex-U.S. Dollar Bond Index(3.2)%
JPMorgan Emerging Markets Bond Index Plus2.3%
ICE Bank of America U.S. High Yield Index1.5%
Credit Suisse Leveraged Loan Index2.5%



Page 20


ASSETS UNDER MANAGEMENT.(1)

Assets under management ended the first quarter of 2024 at $1,542.2 billion, an increase of $97.7 billion from December 31, 2023. The increase in assets under management during the first quarter of 2024 was driven by market appreciation and income, net of distributions not reinvested, of $105.7 billion, offset by net cash outflows of $8.0 billion.

The following tables detail changes in our assets under management, by asset class, during the first quarter of 2024:

(in billions)EquityFixed 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(12.8)0.2 5.5 0.1 (7.0)
Manager-driven distributions— — — (1.0)(1.0)
Net cash flows(12.8)0.2 5.5 (0.9)(8.0)
Net market appreciation (depreciation) and income(3)
72.1 0.7 32.1 0.8 105.7 
Change during the period59.3 0.9 37.6 (0.1)97.7 
Assets under management at March 31, 2024$802.9 $170.9 $520.6 $47.8 $1,542.2 
(1)    The underlying assets under management 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, or have absolute return as its investment objective. Generally, only those strategies with longer than daily liquidity are included. Unfunded capital commitments as of March 31, 2024 were $12.0 billion and are not reflected in fee basis AUM above.
(3) Includes net distributions not reinvested for the first quarter of 2024 of $0.2 billion.

Investment advisory clients outside the United States account for 8.5% of our assets under management at March 31, 2024 and 8.6% at December 31, 2023.

Assets under management in our target date retirement products, which are included in the multi-asset totals shown above, were $443.0 billion at March 31, 2024, compared with $408.4 billion at December 31, 2023. Net flows into these portfolios were $6.8 billion in the first quarter of 2024.

We also provide strategic investment advice solutions for certain portfolios. These advice solutions, which the vast majority is overseen by our multi-asset division, may include strategic asset allocation, and in certain portfolios, asset selection and/or tactical asset allocation overlays. We also offer advice solutions through retail separately managed accounts and separately managed accounts model delivery. As of March 31, 2024, total assets in these solutions were $537 billion, of which $525 billion are included in our reported assets under management in the tables above.

We provide participant accounting and plan administration for retirement plans that invest in the firm's U.S. mutual funds, collective investment trusts and funds outside of the firm's complex. As of March 31, 2024, our assets under administration were $266 billion, of which nearly $156 billion are assets we manage.

INVESTMENT PERFORMANCE.(1)

Strong investment performance and brand awareness is a key driver to attracting and retaining assets—and to our long-term success. Our performance disclosures include specific asset classes, assets under management weighted performance, mutual fund performance against passive peers and composite performance against benchmarks. The following tables present investment performance for the one-, three-, five-, and 10-years ended March 31, 2024. Past performance is no guarantee of future results.


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% of U.S. mutual funds that outperformed Morningstar median(2),(3)
1 year3 years5 years10 years
Equity55%45%53%68%
Fixed Income53%51%56%65%
Multi-Asset84%50%72%78%
All Funds65%48%60%70%
% of U.S. mutual funds that outperformed passive peer median(2),(4)
1 year3 years5 years10 years
Equity53%40%51%54%
Fixed Income68%50%50%57%
Multi-Asset92%37%74%58%
All Funds72%42%58%56%
% of composites that outperformed benchmarks(5)
1 year3 years5 years10 years
Equity58%31%51%64%
Fixed Income55%31%52%69%
All Composites57%31%51%66%

AUM Weighted Performance
% of U.S. mutual funds AUM that outperformed Morningstar median(2),(3)
1 year3 years5 years10 years
Equity69%40%53%82%
Fixed Income49%63%66%80%
Multi-Asset93%69%90%96%
All Funds73%49%63%85%
% of U.S. mutual funds AUM that outperformed passive peer median(2),(4)
1 year3 years5 years10 years
Equity66%32%37%53%
Fixed Income85%71%68%69%
Multi-Asset96%71%95%94%
All Funds74%43%54%64%
% of composites AUM that outperformed benchmarks(5)
1 year3 years5 years10 years
Equity61%34%41%62%
Fixed Income50%24%43%48%
All Composites59%33%41%60%

As of March 31, 2024, 69 of 130 (53.1%) 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(5). In addition, 65%(6) of AUM in the firm's rated U.S. mutual funds (across primary share classes) ended March 31, 2024 with an overall rating of 4 or 5 stars.

(1) The investment performance reflects that of T. Rowe Price sponsored mutual funds and composites AUM and not of OHA’s products.
(2) Source: © 2024 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-, 3-, 5-, and 10-year track record that are outperforming 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 $327B for 1 year,

Page 22


$326B for 3 years, $326B for 5 years, and $323B 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 other funds. This analysis compares T. Rowe Price active funds to 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-, 3-, 5-, and 10-year track record that are outperforming 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 $310B for 1 year, $310B for 3 years, $273B for 5 years, and $265B for 10 years.
(5)Composite net returns are calculated using the highest applicable separate account fee schedule. Excludes money market composites. All composites compared with the official GIPS composite primary benchmark. The top chart reflects the percentage of T. Rowe Price composites with 1-, 3-, 5-, 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 $1,377B for 1 year, $1,372B for 3 years, $1,365B for 5 years, and $1,317B 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.




Page 23


RESULTS OF OPERATIONS.

The following table and discussion sets forth information regarding our consolidated financial results for the first quarter of 2024 and 2023 on a U.S. GAAP basis and a non-GAAP basis. The non-GAAP basis adjusts for the impact of our consolidated sponsored investment products, the impact of market movements on the supplemental savings plan liability and related economic hedges, investment income related to certain other investments, acquisition-related amortization and costs, impairment charges, and certain nonrecurring charges and gains.
Three months endedQ1 2024 vs. Q1 2023
(in millions, except per-share data)3/31/20243/31/2023$ change
% change(1)
U.S. GAAP basis
Investment advisory fees$1,554.0 $1,391.8 $162.2 11.7 %
Capital allocation-based income(2)
$47.1 $16.9 $30.2 n/m
Net revenues$1,750.2 $1,537.6 $212.6 13.8 %
Operating expenses$1,163.6 $1,053.4 $110.2 10.5 %
Net operating income$586.6 $484.2 $102.4 21.1 %
Non-operating income (loss)$188.9 $135.4 $53.5 n/m
Net income attributable to T. Rowe Price$573.8 $421.5 $152.3 36.1 %
Diluted earnings per common share$2.49 $1.83 $0.66 36.1 %
Weighted average common shares outstanding assuming dilution224.2 225.2 $(1.0)(0.4)%
Adjusted non-GAAP basis(3)
Operating expenses$1,071.4 $1,022.5 $48.9 4.8 %
Net operating income$692.4 $528.0 $164.4 31.1 %
Non-operating income (loss)$28.5 $30.8 $(2.3)n/m