TROW — T. Rowe Price Group, Inc.

T. Rowe Price Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Adjusted EPS: $2.52, up 3% from Q4 2025 and 13% from Q1 2025.
• AUM: Ended the quarter at $1.71 trillion with net outflows of $13.7 billion; average AUM was $1.78 trillion, up 9.6% year-over-year.
• Net Revenue: Adjusted net revenue exceeded $1.8 billion, a 5% increase from Q1 2025.
• Investment Advisory Revenue: Approximately $1.7 billion, up 5.3% year-over-year but down 3.2% from Q4 2025.
• Effective Fee Rate: 38.4 basis points, down from Q4 2025, influenced by shifts towards lower-fee products.
• Operating Expenses: Adjusted operating expenses were $1.14 billion, a 1% increase from Q1 2025 but down 7% from Q4 2025.

2. Strategic Updates and Business Highlights

• Performance: Approximately half of T. Rowe Price's funds outperformed their peer group medians over various time frames, with strong performance in fixed income and target date funds.
• Growth Initiatives: Continued expansion in ETFs and SMAs, with $2.8 billion in net ETF inflows and a total of 32 ETFs launched. Plans to launch ETFs in Europe are underway.
• Partnerships: Advancements in collaboration with Goldman Sachs and First Abu Dhabi Bank, focusing on model portfolios and new product launches.
• Alternatives Business: OHA reported a significant increase in AUM to $112 billion, driven by a strong credit market presence and innovative product offerings.

3. Forward Guidance and Outlook

• Expense Management: Expected adjusted operating expenses for 2026 to increase by 3% to 6% over 2025 levels.
• Market Positioning: T. Rowe Price aims to leverage market volatility for growth opportunities, particularly in the alternatives space.
• Capital Management: Strong balance sheet with over $4.1 billion in cash, with ongoing stock buybacks and a commitment to returning capital to shareholders.

4. Bad News, Challenges, or Points of Concern

• Net Outflows: Continued outflows in equity and mutual fund businesses, particularly in U.S. growth-oriented strategies.
• Performance Challenges: 1-year performance metrics for several funds remain weak, with only 21% of assets outperforming peers.
• Market Volatility: Ongoing geopolitical tensions (e.g., conflict with Iran) and economic uncertainties are impacting market conditions and investor sentiment.

5. Notable Q&A Insights

• Deployment Opportunities: OHA's management discussed the widening of credit spreads and the potential for increased deal activity once geopolitical tensions ease.
• Retail Market Dynamics: There is a distinction between institutional and retail investor behaviors, with institutional clients showing interest in alternative investments despite market challenges.
• ETF Growth: T. Rowe Price's ETF growth is attributed to both new client acquisition and migration from mutual funds, with a focus on innovative strategies and active management.
• M&A Considerations: Management expressed openness to strategic acquisitions in the alternatives space, emphasizing the importance of cultural fit and capability enhancement.

This summary encapsulates T. Rowe Price's financial performance, strategic initiatives, and market outlook while highlighting challenges and insights from the Q&A session.