PRICE T ROWE GROUP INC Q1 FY2025 earnings call

• Investment performance: Over 60% of funds beat peer groups, value outperformed growth in equity, target date performance strong, fixed income had solid performance, alternative portfolios mixed. • Retirement leadership: Launched [Sub-advised] Retirement Date Fund Series in Japan, selected for partnership with global bank for retirement funds in Asia, UK, Middle East, grew custom target date relationship in Korea, launched Social Security Analyzer in US, examining private market alternative allocations to target date franchise. • ETF and SMA offerings: Launched two transparent equity ETFs, broadened ETF roster to 19 with over $12.5 billion AUM, broadened SMA offerings. • Awards and new headquarters: T. Rowe Price OHA Select Private Credit Fund named 2024 BDC of the Year Americas, named one of Fortune's World's Most Admired Companies, placed in top 10 in Extel's ranking, officially opened global headquarters in Baltimore.

Investment performance improved with over 60% of funds beating peer groups for various time periods. Equity value outperformed growth. Target date performance strong with 99% of assets beating peers for 3, 5, 10-year. Fixed income had 64% of funds beating peer group median on 1-year basis. Alternative portfolios had mixed results. Target date franchise had $6.3 billion net inflows. Fixed income had strong net inflows of $5.4 billion, primarily from institutional clients. ETF business had net inflows of $3.26 billion with eight ETFs having over $100 million inflows and capital appreciation equity having almost $1 billion inflows. Revenue contribution: Investment advisory revenue increased due to higher average AUM but offset by lower effective fee rate. Target date franchise contributed net inflows, fixed income had institutional net inflows, ETFs had strong inflows.

• 2025 adjusted operating expenses, excluding carried interest expense, are expected to be up 1% to 3% over 2024's $4.46 billion, down from prior 4% to 6% range, driven by market-driven expenses and intentional management of controllable expenses. • April assets inflows to be reported on May 12th, with rebalancing in late March and early April affecting flows, but pattern normalized in late April. • Continue to prioritize returning capital to stockholders, with share repurchases ongoing and opportunistic approach to market downturns.

• Market volatility pressuring assets under management and revenues. • Intense competition in ETF and other product segments. • Deployment of capital in private lending funds muted due to slow M&A environment. • Market-driven changes in asset allocation impacting fee rates and expenses.

Q: Michael Cyprys asked about ETFs, including steps to drive early success, progress over 12-24 months, and opportunities with Vanguard's ETF share class patent expiration.

A: Rob Sharps and Eric Veiel responded, discussing strong performance, scaling products, platform placement, marketing muscle, and opportunities with ETF share class including considerations like transparency, capacity, and client orientation.

Q: Benjamin Budish asked about private lending AUM and OCREDIT update.

A: Rob Sharps replied that private market alternatives are ~$20 billion, OCREDIT had $54 million flows in the quarter, building momentum with more placements and sales coverage.

Q: Craig Seigenthaler asked about alternative investments accessing U.S. Retirement channel.

A: Rob Sharps stated that eventually defined contribution and other markets will access private market alternatives, considering partnerships and client needs, with retirement solutions providers evaluating incorporation of private market alternatives based on investment research.

Q: Dan Fannon asked about flows, gross sales vs redemptions, and sales momentum.

A: Rob Sharps and Jen Dardis mentioned flow outlook largely unchanged, Q1 slightly behind last year, April soft but improved from 2024, net pipeline for large mandates favorable, with rebalancing and market volatility affecting flows.

Q: Bill Katz (via Manu) asked about fee rate dynamics.

A: Jen Dardis explained that fee rate decrease was due to structural shifts in investment strategies/vehicles and cyclical AUM mix, with 60% structural and 40% cyclical, impacted by equity market decline in the quarter.

Q: Alexander Blostein asked about expense budget drivers and market assumptions in guidance.

A: Jen Dardis said expense guidance range change was due to market-driven expenses and controllable expense management, considering April market volatility in setting the range.

Q: Ken Worthington asked about retirement business expansion outside the US.

A: Rob Sharps and Eric Veiel detailed various partnerships and bespoke offerings in different countries, focusing on capabilities rather than just products, with early stages in most regions but potential long-term impact.

Q: Mike Brown asked about balance sheet and capital allocation.

A: Jen Dardis and Rob Sharps discussed cash and discretionary investments, ongoing share buybacks, opportunistic approach, and M&A framework focusing on unique, sustainable capabilities meeting client demand, with private market alternatives a potential area.