T. Rowe Price Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Adjusted Diluted EPS: $2.57, up from $2.52 in Q1 2026 and $2.24 in Q2 2025.

Assets Under Management (AUM): $1.9 trillion, with net outflows of $6.5 billion in Q2.

Adjusted Net Revenue: $1.9 billion, a 2.7% increase from Q1 2026 and an 8.5% increase from Q2 2025.

Investment Advisory Revenue: $1.7 billion, up from both prior periods.

Annualized Effective Fee Rate: 38.1 basis points, down from 38.4 basis points in Q1 2026.

Adjusted Operating Expenses: $1.2 billion, a 4.2% increase from Q1 2026 and 4.9% from Q2 2025.

Share Buybacks: $157 million in Q2, totaling $497 million year-to-date.

2Strategic Updates and Business Highlights

Market Recovery: Positive flows in May and June, driven by a large defined contribution investment-only win and a significant sub-advisory win.

ETF Growth: Launched the T. Rowe Price Capital Appreciation Market Opportunities ETF and the Active Crypto ETF, growing the ETF business to 34 funds with $30 billion in AUM.

AI Integration: Over 130 AI solutions deployed across the firm, with 70% associate adoption, enhancing decision-making and operational efficiency.

Leadership Changes: Eric Veiel appointed President, with a focus on enterprise execution and strengthening connections across various departments.

Goldman Sachs Partnership: Launched the T. Rowe Price Goldman Sachs Private Markets Fund and plans for a public-private equity interval fund.

3Forward Guidance and Outlook

Expense Growth: Full-year adjusted operating expenses expected to rise by 4%-7% over 2025's $4.6 billion.

Net Flows: Anticipated to be more challenging in the second half of 2026, particularly in active equity, with expectations for a record year in gross flows.

Investment Focus: Continued emphasis on fixed income, alternatives, and expanding the ETF and SMA businesses.

4Bad News, Challenges, or Points of Concern

Net Outflows: Continued pressure in fundamental active equity, with significant outflows in April leading to overall net outflows of $6.5 billion.

Fee Pressure: Ongoing decline in effective fee rates due to a shift toward lower-fee strategies and vehicles.

Market Volatility: Anticipated portfolio rebalancing in the second half could negatively impact flows, particularly in equities.

Pipeline Concerns: Noted a lull in the late-stage pipeline for target date funds, which could affect future flows.

5Notable Q&A Insights

Strategic Reshaping: Management acknowledged the need to adapt to lower fee environments and highlighted the importance of maintaining investment capabilities in active equity, despite outflows.

SMA Growth Strategy: T. Rowe Price is focusing on scaling its SMA business, which currently has $20 billion in AUM, through partnerships and tax optimization capabilities.

Digital Assets and Tokenization: Management sees tokenization as a significant evolution in investment management, with plans to integrate digital wallets as client interfaces.

ETF Strategy: Emphasis on scaling existing ETF offerings rather than launching new ones, with a focus on innovative and thematic products to drive growth. This summary encapsulates T. Rowe Price's financial performance, strategic initiatives, and challenges faced during Q2 2026, providing a clear overview for stakeholders.