PRICE T ROWE GROUP INC Q3 FY2025 earnings call

• Investment Performance: Third quarter returns strong, AUM reached $1.77 trillion, long-term investment performance solid with 50% or more funds beating peer groups on 3-, 5- and 10-year basis, asset-weighted results stronger. - Strategic Collaboration with Goldman Sachs: Focus on 4 areas: co-branded Target Date sister series, model portfolios, multi-asset offerings, personalized advice; progress on model portfolios, multi-asset solutions, managed account platform, and co-branded Target Date series. - Other Highlights: Introduced 2 new retirement allocation funds in Asia, ETF business growth, launched Emerging Markets Blue Economy Bond strategy, inaugural investor development program. - Financial Results: Adjusted diluted EPS $2.81, investment advisory fees up on higher AUM, adjusted revenues up, operating expenses discussed, buybacks, real estate changes including exit from Owings Mills campus buildings.

Equity: On an asset-weighted basis, over half of equity fund assets beat their peer groups for the 1-, 3- and 5-year time periods, and over 70% beat their peers over 10 years. Fixed Income: Over 70% of fund assets beat their peer groups in all reported time periods. Target Date Franchise: 81%, 71% and 98% of fund assets beat their peer groups on a 3-, 5- and 10-year basis, but 1-year results were weaker at 43% due to underlying equity building block issues. Alternatives: Senior direct lending strategies were strong, distressed mandates outperformed, liquid credit generally in line with benchmarks, some opportunistic funds modestly below target; private credit deployment similar to prior quarter with accelerated deal activity. ETF Business: As of September 30, AUM was $19 billion, with 12 ETFs surpassing $500 million and 5 reaching over $1 billion.

• Flows: Outlook for Q4 flows weaker marginally due to equity redemptions; gross sales up, some segments like fixed income, multi-asset, alternatives had positive net flows. - Partnerships: Aspirations for strategies with Goldman Sachs are substantial, aiming for meaningful AUM growth over time with new products launched and track record built. - Expenses: Expect 2025 adjusted operating expenses, excluding carried interest expense, to be up 2% to 4% over 2024; controllable expenses to grow in low single digits in 2026 and 2027, with real estate and other cost-saving measures contributing.

• Market Conditions: Narrow market environment where risky stocks outperformed, challenging for longer-term investment approach. - Product Launch Risks: Slow uptake of new strategies due to fees and fiduciary concerns, need for track record and platform placement. - Investment Performance Risks: Stock selection issues, errors of omission in some sectors, portfolio manager changes needed due to underperformance in certain areas.

Q: About digital assets and crypto ETF.

A: Eric Veiel says they started journey in digital assets in 2022, built expertise, ETF launch forthcoming, demand growing.

Q: Partnership with Goldman Sachs economics.

A: Robert Sharps says economics balanced, T. Rowe as adviser on sister series and multi-asset solutions, Goldman Sachs as adviser on model accounts.

Q: Flows and near-term momentum.

A: Robert Sharps says Q4 flows weaker marginally due to equity redemptions, but gross sales up in various channels.

Q: Marketing of co-branded sister series to DC plan sponsors.

A: Robert Sharps says launch in collective trust, uptake slow initially due to fees and fiduciary concerns.

Q: Potential sales from strategies with Goldman Sachs.

A: Robert Sharps says aspirations are meaningfully greater than a couple billion over time.

Q: Expenses and real estate savings.

A: Jen Dardis talks about expense management program, real estate changes and savings contributing to controllable expense growth.

Q: ETF offerings traction and opportunity.

A: Eric Veiel and Robert Sharps discuss ETF growth, new ETFs filed, market share growth, and future opportunities.

Q: Performance weakness sources and steps.

A: Eric Veiel talks about market backdrop headwind, stock selection issues, introspection and portfolio manager changes.

Q: Mix and costs of sister Target Date series.

A: Robert Sharps says product design set, all-in fee competitive despite private market allocations.