T. Rowe Price (TROW) Q3 2025: Analyzing Growth, Expenses, and Restructuring

As a major player in the global investment management landscape, T. Rowe Price (TROW) navigates the ebbs and flows of financial markets on behalf of its clients. To understand its own financial health, we can turn to its latest quarterly report filed with the SEC. Let's delve into the numbers from its Q3 2025 10-Q filing to see how the company is performing.

The latest quarter reveals a story of solid growth in both assets and revenue, though accompanied by rising expenses and a notable restructuring charge.

Growing Assets Fuel Revenue Engine

For an asset manager like T. Rowe Price, the size of its Assets Under Management (AUM) is a critical performance indicator, as it directly drives fee-based revenue. The company saw healthy growth here, ending the third quarter with $1.77 trillion in AUM, an 8.4% increase from the prior year.

This AUM growth translated directly to the top line. Net revenues for the quarter reached $1.89 billion, up 6.0% from the same period last year. The primary contributor was Investment advisory fees, which climbed 4.4% to $1.7 billion. A standout performer was Capital allocation-based income, which surged to $42.0 million from just $4.6 million in Q3 2024. This line item largely represents accrued "carried interest"—a share of profits from certain investment funds—suggesting strong performance in its alternative investment strategies.

The following flow diagram provides a clear visual breakdown of the company's revenues and expenses for the third quarter, illustrating how revenue is converted into profit.

The Rising Cost of Doing Business

While revenue growth is strong, the filing also shows a clear rise in expenditures. Total operating expenses for the quarter increased by 6.7% year-over-year to $1.25 billion.

Two key areas drove this increase:

• Compensation and related costs, the firm's largest expense, grew 5.3% to $714.3 million.
• Technology, occupancy, and facility costs saw a significant 11.7% jump to $183.2 million, hinting at continued investment in technology infrastructure and a larger physical footprint.

Interestingly, a new line item appeared this quarter: a $28.5 million restructuring charge. While the filing doesn't provide extensive detail, such charges often signal internal reorganizations aimed at improving long-term efficiency.

Profitability and Returning Capital to Shareholders

Despite the higher costs, T. Rowe Price improved its bottom line. Net income attributable to the company was $646.1 million, a 7.1% increase from the prior year, resulting in a diluted earnings per share (EPS) of $2.87, up from $2.64.

The company continues to actively return capital to its shareholders. In the first nine months of 2025, it paid out $858.5 million in dividends and spent another $481.8 million on share repurchases.

Final Thoughts

T. Rowe Price delivered a solid third quarter, leveraging favorable market conditions to grow its assets and revenues. The strong performance in capital allocation-based income highlights the increasing importance of its alternative investments. However, the concurrent rise in operating expenses and the new restructuring charge underscore a focus on managing costs and optimizing operations. In a highly competitive industry marked by the rise of low-cost passive funds, T. Rowe Price's ability to demonstrate the value of its active management while controlling its expense base will be crucial for sustained success.