On October 27, 2023, T. Rowe Price Group Inc (TROW, Financial) released its Q3 2023 earnings report. The company reported solid investment performance, progress on strategic initiatives, and execution on planned cost savings efforts. However, net outflows from equity outweighed the positive net flows to fixed income, multi-asset, and alternatives this quarter.
Financial Performance
For the third quarter of 2023, TROW reported net revenues of $1.67 billion, a 5.2% increase from the same period in 2022. Operating expenses were $1.09 billion, a 7.5% increase from Q3 2022. The company's net operating income stood at $581.3 million, a 1.2% increase from the same period last year. Net income attributable to T. Rowe Price was $453.2 million, a 17.9% increase from Q3 2022.
Assets Under Management
During Q3 2023, assets under management (AUM) decreased by $52.9 billion to $1.35 trillion. The decrease was primarily due to net outflows from equity, which outweighed the positive net flows to fixed income, multi-asset, and alternatives.
Investment Advisory Fees
The investment advisory fee annualized effective fee rate of 41.7 basis points in Q3 2023 decreased from 42.5 basis points earned in Q3 2022 and 42.3 basis points earned in Q2 2023. The decrease was primarily driven by a mix shift in assets under management toward lower fee asset classes and vehicles as a result of net equity outflows over the last twelve months.
Operating Expenses
Operating expenses for Q3 2023 were $1,089.4 million, an increase of 7.5% from Q3 2022 and an increase of 1.2% from Q2 2023. The increase was primarily driven by higher salaries and related benefits, including severance related to the July workforce action, higher accrued carried interest-related compensation, and an increase in technology, occupancy, and facility costs.
Income Taxes
The firm's non-GAAP effective tax rate was 24.8% for Q3 2023, compared with 24.4% for Q3 2022. The firm estimates that its effective tax rate for the full year 2023 will be in the range of 26% to 30%, on a U.S. GAAP basis, and 26.5% to 29.5%, on a non-GAAP basis.
Other Matters
The financial results presented in this release are unaudited. The firm expects to file its Form 10-Q Quarterly Report for the third quarter of 2023 with the U.S. Securities and Exchange Commission later today.
Explore the complete 8-K earnings release (here) from T. Rowe Price Group Inc for further details.
