TROW · Q3 2025 Earnings

Cautious

T. Rowe Price

Reported October 31, 2025

30-second summary

T. Rowe printed Q3 revenue of $1.89B (+6% YoY, +9.9% QoQ) and non-GAAP EPS of $2.81, with AUM reaching a new high of $1.767T and net outflows decelerating sharply to $7.9B from Q2's $14.9B — a tangible answer to management's H2 commitment. Every revenue-bearing segment grew YoY (equity +3.4%, multi-asset +5.6%, fixed income +5.8%, alternatives +7.4%), and the announced Goldman Sachs strategic collaboration plus a multi-token crypto ETP filing reframe the growth narrative around product expansion rather than defending the active equity base. Fee compression continued at the margin (effective rate ex-perf 39.1 bps vs. 39.6 bps in Q2), and management deflected on Goldman partnership economics.

Headline numbers

EPS

Q3 FY2025

$2.81

Revenue

Q3 FY2025

$1.89B

+6.0% YoY

Operating margin

Q3 FY2025

34.0%

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$1.89B	+6.0%	$1.72B	+9.9%
EPS	$2.81	—	$2.24	+25.4%
Operating margin	34.0%	—	27.8%	+620bps

Guidance

Company raised full-year FY2025 tax rate guidance while narrowing ranges, signaling better-than-expected tax efficiency.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Effective tax rate (U.S. GAAP basis)	FY 2025	23.5% to 27.5%	23.0% to 26.0%	narrowed and lowered by 50 bps at midpoint (25.5% → 24.5%)	Raised
Adjusted effective tax rate	FY 2025	24.0% to 27.0%	23.5% to 25.5%	narrowed and lowered by 75 bps at midpoint (25.5% → 24.5%)	Raised

Segment performance

Q3 FY2025

Segment	Q3 FY2025	YoY
Equity	$1.012B	+3.4%
Fixed Income, including Money Market	$0.11B	+5.8%
Multi-asset	$0.492B	+5.6%
Alternatives	$0.085B	+7.4%

Capital & returns

Q3 FY2025

Segment	Q3 FY2025
Capital Returned to Shareholders	$442 million

Other KPIs

Q3 FY2025

Segment	Q3 FY2025
Assets Under Management (AUM)	$1.767 trillion
Average Assets Under Management	$1.723 trillion
Investment Advisory Effective Fee Rate (excluding performance fees)	39.1 bps
Investment Advisory Effective Fee Rate (including performance fees)	39.3 bps
Net Client Outflows	$7.9 billion
Operating Margin	33.96%
Adjusted Operating Margin	40.86%

Management tone

The Q&A surfaced three concrete posture changes worth flagging. First, on the Goldman Sachs partnership, Sharps was direct that ambitions for the three new co-branded strategies (target date, public-private equity, managed accounts) are "meaningfully greater than a couple billion dollars" combined, with launches throughout 2026 — quantified ambition replacing the Q2 framing of private assets in DC as "direction of travel." Second, digital assets have moved from absent in prior quarters to a filed multi-token ETP with internal seed capital deployed and a 2022-origin investment thesis — Eric Veiel's articulation suggests this is now a distinct product line, not exploratory. Third, on Goldman partnership economics specifically, Sharps explicitly stated "I'm not going to get into the specifics with regard to the economics for obvious reasons" — a clean deflection on a material commercial topic that investors will need to underwrite without disclosure.

Q&A highlights

Michael Cypress · Morgan Stanley

Asked about T. Rowe Price's digital asset strategy, specifically regarding a filed multi-token crypto ETF, how crypto fits into client portfolios, demand trends, and overall strategy in the digital asset space.

Eric Bile (Head of Global Investments) explained that T. Rowe Price began its digital asset journey in 2022, building internal expertise before launching products. They are launching a multi-token ETP, investing seed capital across tokens and blockchains, and view digital assets as a growing part of client portfolios. The team has studied momentum, volatility, and tail risk characteristics, believing digital assets will play a role in portfolios over time.

Digital asset initiative began in 2022Investing small amount of internal seed capital across multiple tokens and blockchainsPlanning to launch multi-token ETPGrowing demand observed from advisors and gatekeepers

Dan Fannin · Jefferies

Asked about near-term and longer-term flow trends, seasonal impacts into year-end, areas of emerging strength, and whether U.S. equity headwinds are expected to persist.

Rob Sharps noted Q4 outlook is weaker, with October showing August-like patterns with higher equity redemptions. He attributed weakness to rebalancing after strong equity returns and passive share gains from concentration in cap-weighted benchmarks. However, management highlighted positives: gross sales up substantially, strong flows in target date funds and fixed income, momentum in ETFs and SMA, and OHA raising record capital ($6 billion+ in Q3 commitments). Near-term growth in these areas needs to build before offsetting equity redemptions.

Q4 outlook weaker at marginOctober showing rebalancing pressures with higher equity redemptionsGross sales up substantially vs Q3 2024, up in every channelOHA raising record capital: $6 billion+ gross commitments in Q3

Ken Worthington · JP Morgan

Asked for sizing and success metrics for three new Goldman Sachs partnership strategies (co-branded target date, public-private equity, and managed accounts), questioning whether success means a couple billion or significantly more in AUM over a few years.

Rob Sharps stated that wealth and retirement are large markets and T. Rowe Price's aspirations are meaningfully greater than a couple billion dollars for these strategies combined. He cautioned that launches will occur throughout 2026 and track record building is required, but expressed that he would be disappointed if only a couple billion in AUM was raised over a three-year horizon, indicating ambitions significantly greater than that.

Aspirations meaningfully greater than couple billion dollars for three strategies combinedLaunches throughout 2026Track record, scale, and platform placement neededManagement expressed disappointment if only couple billion raised over three years

Craig Siegenthaler · Bank of America

Asked about potential migration from legacy target date funds to the new Goldman Sachs co-branded sister series, timeline, and what client conversations reveal about adoption rates and concerns.

Rob Sharps indicated the sister series will launch in collective trust coinciding with initial client. Client engagement shows understanding of the investment case, but fees and fiduciary risk remain meaningful concerns, particularly among large plan sponsors where ERISA is a consideration. He expects relatively slow uptake initially and noted that clarity on DOL/SEC executive order guidance after year-end will likely be important to building interest. Objective is to be in market with best-in-class product while building track record.

Sister series launching in collective trust formatLaunch timing to coincide with initial clientClient concern: fees and fiduciary risk, especially for large ERISA plansExpecting relatively slow initial uptake

Alex Bond · KBW

Asked about ETF traction and where relative strength exists, and how large an opportunity the active ETF space represents for T. Rowe Price and the industry.

Eric Bile noted strong momentum in ETF growth across individual investors, RIAs, and advisors, with recent filings for eight new active ETFs (four equity, four fixed income). Two new equity ETFs target lower-fee active core market where T. Rowe Price previously had no offering. Rob Sharps added that the firm doubled market share in each of the previous two years, currently holds ~1.5% of U.S. active ETF market share. Over a dozen additional ETFs are in planning stages for 2026 filing. International expansion potential in Europe and Australia noted for future. Digital/innovative solutions (multi-token ETP, T-call) seen as additional growth drivers.

Eight new active ETFs filed (4 equity, 4 fixed income)Two new equity ETFs target active core market, a new market for TRPDoubled market share in previous two yearsCurrent ~1.5% share of U.S. active ETF market

Answers to last quarter's watch list

H2 net outflows below H1's $23.5B run rate. Q3 net outflows of $7.9B brings H2-to-date to $7.9B against an H1 base of $23.5B. The pace decelerated sharply from Q2's $14.9B, putting management's commitment on track unless Q4 reverses dramatically — and Sharps' Q4 commentary about elevated equity rebalancing redemptions in October is the relevant caution flag.

Continue monitoring

Q3 AUM disclosure under new methodology including model delivery. AUM printed $1.767T at period-end with average AUM $1.723T; the press release disclosed $9.2B of managed account model delivery assets added on July 1, with related revenue ($13.5M in Q3) now reported in investment advisory fees rather than admin/distribution fees. Status: Resolved

Equity segment revenue trajectory. Equity revenue accelerated from -2.5% YoY in Q2 to +3.4% YoY in Q3 — a 590 bps swing. This is almost entirely AUM appreciation driven (period-end AUM +5.4% QoQ market-led), not a flow reversal; equity redemptions remain the dominant net outflow driver per Sharps' Q4 commentary. The revenue print is favorable but does not signal franchise stabilization. Status: Resolved positively (revenue line); Continue monitoring (underlying flows)

Effective fee rate trend. Ex-performance fee rate compressed to 39.1 bps from Q2's 39.6 bps — a 0.5 bps QoQ step-down and 1.6 bps YoY decline. The mix shift toward fixed income, alternatives, and multi-asset is continuing to pressure the blended fee rate even as those segments lift revenue growth.

Resolved negatively

Concrete progress on private assets in DC. The Goldman Sachs strategic collaboration — including a co-branded target-date sister series with public-private equity and a managed accounts component — is the concrete deliverable. Sharps quantified ambition at "meaningfully greater than a couple billion" over three years, with launches throughout 2026.

Resolved positively

2026-2027 non-market expense growth specificity. The Q3 press release did not refresh the prior commitment to low-single-digit non-market expense growth through 2027, and did not introduce a dollar range or margin floor that would make the commitment falsifiable.

Not resolved

What to watch into next quarter

Whether Q4 net outflows exceed Q3's $7.9B given Sharps' October caution. The H2 < H1 commitment ($23.5B ceiling) leaves $15.6B of headroom for Q4 alone. A Q4 outflow above ~$15B would breach the explicit H2 commitment; anything in the $8–12B range honors it but signals reacceleration of equity redemptions.

Effective fee rate ex-performance below 39.0 bps. The cadence has been 39.6 → 39.6 → 39.1 across recent quarters. Breaking 39.0 in Q4 would confirm structural acceleration of mix compression and pressure FY2026 revenue modeling.

Initial client and AUM disclosure on the Goldman Sachs target-date sister series. Management committed launches throughout 2026; the first named client and seed AUM figure will be the first checkpoint against Sharps' "meaningfully greater than a couple billion" three-year ambition.

OHA gross commitment cadence. Q3's $6B+ was characterized as a record. Q4 commitments below $3B would suggest Q3 was lumpy fundraising rather than a new run rate; sustained $4B+ per quarter would lift the alternatives segment's contribution materially in FY2026.

Whether FY2026 expense guidance refreshes the 2026-2027 non-market expense commitment with a dollar range or margin floor. Q3 did not advance specificity; the Q4/FY2025 print is the natural opportunity to put a number on the prior commitment.

Active ETF AUM and net flow disclosure. With ~1.5% market share doubling annually and a dozen-plus additional ETFs in the pipeline, watch for a discrete ETF AUM number and net flow disclosure that lets investors size the trajectory independent of the broader flow narrative.

Sources

T. Rowe Price Q3 2025 Earnings Release: https://www.sec.gov/Archives/edgar/data/1113169/000162828025047662/earningsreleaseq32025.htm
T. Rowe Price Q3 2025 earnings call transcript (Q&A).
T. Rowe Price Q2 2025 Tapebrief (prior-quarter watch list and guidance baseline).

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