PRESS RELEASE: T. Rowe Price Group Reports Third Quarter 2022 Results

NEWS RELEASE

T. ROWE PRICE GROUP REPORTS THIRD QUARTER 2022 RESULTS

BALTIMORE (October 27, 2022) - T. Rowe Price Group, Inc. (NASDAQ-GS: TROW) today reported its results for the third quarter of 2022.

• Quarter end assets under management of $1.23 trillion
• Net client outflows of $24.6 billion
• Net revenues of $1.6 billion, including capital allocation-based income of $1.1 million
• Diluted earnings per common share (EPS) of $1.66; Adjusted non-GAAP diluted EPS of $1.86
• Returned $500.9 million to stockholders in Q3 2022, including $224.5 million of share repurchases
• Solid investment performance over longer time horizons

Financial Highlights

					Three months ended
(in millions, except per-share data)		9/30/2022(1)			9/30/2021	%		6/30/2022(1)	%
				change			change
U.S. GAAP basis
Investment advisory fees	$	1,442.0	$	1,813.4	(20.5)%	$	1,496.7	(3.7)%
Capital allocation-based income(2)(3)	$	1.1	$	-		n/m	$	(126.3)		n/m
Net revenues	$	1,588.2	$	1,954.1	(18.7)%	$	1,513.0	5.0 %
Operating expenses	$	1,013.6	$	957.9	5.8 %	$	844.4	20.0 %
Net operating income	$	574.6	$	996.2	(42.3)%	$	668.6	(14.1)%
Non-operating income (loss)(3)	$	(82.8)	$	(11.5)		n/m	$	(279.9)		n/m
Net income attributable to T. Rowe Price	$	384.4	$	777.2	(50.5)%	$	339.6	13.2 %
Diluted earnings per common share	$	1.66	$	3.31	(49.8)%	$	1.46	13.7 %
Weighted average common shares outstanding assuming dilution		226.3			229.1	(1.2)%		227.9	(.7)%
Adjusted non-GAAPbasis(4)
Operating expenses	$	1,028.2	$	957.2	7.4 %	$	947.3	8.5 %
Net operating income	$	573.7	$	998.7	(42.6)%	$	579.7	(1.0)%
Non-operating income (loss)(3)	$	(3.7)	$	(3.0)		n/m	$	(30.6)		n/m
Net income attributable to T. Rowe Price	$	430.6	$	767.6	(43.9)%	$	417.7	3.1 %
Diluted earnings per common share	$	1.86	$	3.27	(43.1)%	$	1.79	3.9 %
Assets under Management (5)(in billions)
Average assets under management	$	1,347.5	$	1,648.7	(18.3)%	$	1,407.1	(4.2)%
Ending assets under management	$	1,230.0	$	1,612.3	(23.7)%	$	1,309.7	(6.1)%
Investment advisory effective fee rate (in bps)		42.5			43.6	(2.5)%		42.7	(.5)%

1. The firm's Q2 and Q3 2022 operating results include the results of OHA following its acquisition on December 29, 2021.
2. Capital allocation-based income fluctuates period to period as it reflects the adjustment to accrued carried interest. The realization of accrued carried interest occurs over a number of years.
3. The percentage change is not meaningful (n/m).
4. Adjusts the U.S. GAAP basis for the impact of consolidated T. Rowe Price investment products, the impact of market movements on the supplemental savings plan liability and related economic hedges, investment income related to certain other investments, acquisition-related amortization and costs, and certain nonrecurring charges and gains, if any. The firm believes the non-GAAP financial measures provide relevant and meaningful information to investors about its core operating results. See the reconciliation to the comparable U.S. GAAP measures at the end of this earnings release.
5. Assets under management for the 2021 period do not include the acquired fee-basis assets under management related to the OHA acquisition.

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Management Commentary

Rob Sharps, chief executive officer and president, commented, "Global equity markets were lower in the third quarter with overseas returns for U.S. investors further pressured by a steep decline in major currencies against the dollar. Bond returns were also negative as the Bloomberg U.S. Aggregate Index closed out the quarter with its worst month since 1980. The third quarter began on a note of optimism as signs emerged that the Fed was making progress in tamping down inflation without causing too much harm to the economy. Hopes that 'peak inflation' would result in a 'soft landing' appeared to evaporate in the middle of the quarter, however, as investors reacted to a rebound in core inflation in the U.S. and some weak economic readings, particularly overseas.

"Our assets under management ended the quarter at $1.23 trillion, down 6% from June 30. Average assets under management were down 4% and quarterly investment advisory revenues of $1.4 billion were down 4% from the prior quarter and down 20% from third quarter 2021. Expenses, which include OHA in 2022, were up 6% on a GAAP basis and up 7% on a non-GAAP basis over third quarter 2021.

"Throughout this year, we have taken steps to slow our expense growth, including focusing on our highest priority initiatives, slowing hiring, and reducing planned third party spend. We continue to evaluate market conditions and will consider other levers as needed to manage expense growth and support our ability to invest in strategic initiatives.

"Our cash position remains strong, ending the quarter with $2.8 billion in cash and discretionary investments on the balance sheet. During the quarter, we paid our $1.20 regular dividend and repurchased 1.9 million shares, reducing our shares outstanding by 5.7 million shares year to date.

"Many of our equity and fixed income strategies have performed well during recent market volatility. However, certain of our equity strategies have posted weaker returns which do not meet the high standards we strive to deliver for our clients. We continue to believe that our robust research resources and fundamental investment processes will allow us to deliver strong, long-term performance across our broad range of strategies, despite these recent performance challenges.

"Outflows of $24.6 billion in the quarter continue to be largely driven by a handful of growth-oriented equity strategies, amplified in this quarter with redemptions from a few large institutional clients. Fixed income outflows were $2.4 billion in the quarter. We saw inflows this quarter to our target date franchise, our U.S. equity research product, and our full-service defined contribution channel. We remain confident that a combination of improved investment performance and our ongoing investments in new capabilities will allow us to return to positive flows over time as market conditions stabilize.

"We continue to focus on our strategic priorities to position the business for long-term success and are proud of several milestones. Highlights from Q3 include:

• At the end of September, we celebrated the 20th anniversary of the launch of our first retirement funds, the start of what is now our $312 billion target date retirement franchise. All four anniversary vintages rank first in their respective Morningstar categories for the 20-year period.
• T. Rowe Price Investment Management, Inc. (TRPIM) filed its first disaggregated holdings, a final step in the process of establishing our separate SEC-registered U.S. investment adviser.

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• We were honored to be named to several of Forbes' 'Best Employer' award lists, including: World's Best Employers 2022, America's Best Employers for Women 2022, and Best-in-State Employers 2022, ranking second in Maryland and in the top 25 in Colorado.

"We have a strong culture and a history of delivering solid, long-term investments results and world-class client service. We are committed to preserving these attributes while adapting to the needs of our clients and evolving our priorities thoughtfully to meet that demand. I would like to thank our associates whose hard work make all of this possible."

Assets Under Management

During Q3 2022, assets under management (AUM) decreased $79.7 billion to $1.23 trillion. Market depreciation, along with net distributions not reinvested, of $55.1 billion and net cash outflows of $24.6 billion reduced the firm's AUM during Q3 2022. Clients transferred $3.3 billion in net assets from the U.S. mutual funds primarily to collective investment trusts and other investment products, of which $2.2 billion transferred into the retirement date trusts. The components of the change in AUM, by vehicle and asset class, are shown in the tables below.

								Three months ended 9/30/2022
								Subadvised		Collective
									investment
					U.S. mutual			funds and	trusts and other
(in billions)							separate		investment		Total
				funds			accounts		products
Assets under management at beginning of period			$	657.1		$	332.8		$	319.8		$	1,309.7
Net cash flows before client transfers					(11.2)			(14.4)			1.0			(24.6)
Client transfers					(3.3)			.5			2.8			-
Net cash flows after client transfers					(14.5)			(13.9)			3.8			(24.6)
Net market depreciation and losses					(27.9)			(12.4)			(14.6)			(54.9)
Net distributions not reinvested					(.2)			-		-		(.2)
Change during the period					(42.6)			(26.3)			(10.8)			(79.7)
Assets under management at September 30, 2022			$	614.5		$	306.5		$	309.0		$	1,230.0
					Three months ended 9/30/2022
					Fixed income,
(in billions)	Equity		including money			Multi-asset(1)			Alternatives(2)			Total
	market
Assets under management at beginning of	$	699.6		$	171.1	$	395.9		$	43.1		$	1,309.7
period
Net cash flows		(22.8)			(2.4)			.8			(.2)			(24.6)
Net market depreciation and losses(3)		(29.0)			(3.3)			(22.6)			(.2)			(55.1)
Change during the period		(51.8)			(5.7)			(21.8)			(.4)			(79.7)
Assets under management at September	$	647.8		$	165.4	$	374.1		$	42.7		$	1,230.0
30, 2022

1. The underlying AUM of the multi-asset portfolios have been aggregated and presented in this category and not reported in the equity and fixed income columns.
2. The alternatives asset class includes strategies authorized to invest more than 50% of its holdings in private credit, leveraged loans, mezzanine, real assets/CRE, structured products, stressed/distressed, non-investment grade CLOs, special situations, or have absolute return as its investment objective. Generally, only those strategies with longer than daily liquidity are included.
3. Includes distributions reinvested and not reinvested.

AUM in the firm's target date retirement products, which are reported as part of the multi-asset column in the table above, were $311.5 billion at September 30, 2022, compared with $327.1 billion at June 30, 2022. These portfolios experienced net cash inflows of $3.5 billion for Q3 2022.

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Investors domiciled outside the United States accounted for 9.0% of the firm's AUM at September 30, 2022, 9.4% at June 30, 2022, and 9.9% at December 31, 2021.

The firm provides participant accounting and plan administration for defined contribution retirement plans that invest in the firm's U.S. mutual funds and collective investment trusts, as well as funds managed outside of the firm's complex. As of September 30, 2022, the firm's assets under administration were $206 billion, of which $125 billion were assets we manage.

In recent years, the firm began offering non-discretionary advisory services through model delivery and multi-asset solutions for providers to implement. The firm records the revenue earned on these services in administrative fees. The assets under advisement in these portfolios, predominantly in the United States, were $7 billion at September 30, 2022.

Financial Results

Net revenues earned in Q3 2022 were $1.6 billion, a decrease of 18.7% from Q3 2021. Average AUM in Q3 2022 were $1.35 trillion, a decrease of 18.3% from Q3 2021. The firm did not waive money market investment advisory fees in Q3 2022 and does not expect to waive any fees for the remainder of the year. In Q3 2021, the firm voluntarily waived money market investment advisory fees of $13.7 million.

• Investment advisory revenues earned in Q3 2022 from the firm's U.S. mutual funds were $841.7 million, a decrease of 25.2% from Q3 2021. Average AUM in these funds decreased 23.1% to $677.6 billion in Q3 2022 from Q3 2021.
• Investment advisory revenues earned in Q3 2022 from subadvised funds, separate accounts, collective investment trusts and other investment products were $600.3 million, a decrease of 12.7% from Q3 2021. Average AUM for these products decreased 12.7% to $669.9 billion in Q3 2022 from Q3 2021. Investment advisory revenues and average AUM in Q3 2022 reflect OHA's revenue and related average AUM.
• The investment advisory fee annualized effective fee rate of 42.5 basis points in Q3 2022 decreased from 42.7 basis points earned in Q2 2022 and 43.6 basis points earned in Q3 2021. In comparison to Q2 2022, the annualized effective fee rate was primarily driven by a mix shift toward lower fee asset classes and vehicles as a result of market declines and net flows. In comparison to Q3 2021, these changes were slightly offset by the higher-than-average effective fee rate earned on the firm's alternative asset class and lower money market fee waivers. Over time, the firm's effective fee rate can be impacted by market or cash flow related shifts among asset and share classes, price changes in existing products, and asset level changes in products with tiered-fee structures.

4

• Capital allocation-based income in Q3 2022 increased net revenues by $1.1 million. Capital allocation- based income will fluctuate quarter-to-quarter to reflect the adjustment to accrued carried interest for the change in value of the affiliated funds' underlying investments assuming the value was realized as of the end of the period, regardless of whether the funds' underlying investments have been realized. The realization of accrued carried interest occurs over a number of years. The Q3 2022 amount represents an increase of $14.3 million in accrued carried interest, substantially offset by $13.2 million in non-cash amortization associated with the difference in the closing date fair value and carrying value of investments acquired as part of the OHA acquisition. For detail of the change in accrued carried interest, which is reported as investments on the condensed consolidated balance sheet, from the end of 2021, including realized carry distributions, see the applicable table at the end of this release.
• Administrative, distribution, and servicing fees in Q3 2022 were $145.1 million, an increase of 3.1% from Q3 2021. The increase was primarily attributable to higher transfer agent servicing activities provided to the T. Rowe Price mutual funds for retail shareholders and higher trustee services revenue, partially offset by lower 12b-1 fees earned from certain share classes of the U.S. mutual funds.

Operating expenses in Q3 2022 were $1,013.6 million, an increase of 5.8% compared to Q3 2021 and an increase of 20.0% compared to Q2 2022. On a non-GAAP basis, the firm's operating expenses in Q3 2022 were

$1,028.2 million, a 7.4% increase over Q3 2021 and an increase of 8.5% compared to Q2 2022. The firm's 2022 operating expenses include OHA's operating expenses, including the accrued carried interest compensation associated with the capital allocation-based income. OHA's operating expenses primarily impact compensation expense; technology, occupancy, and facility costs; and general, administrative and other costs. The accrued carried interest compensation is reported in non-controlling interest in the condensed consolidated balance sheet.

Approximately 63% of the increase in the firm's non-GAAP operating expenses compared to Q2 2022 was attributable to the accrued carried interest compensation associated with the increase in capital allocation-based income recognized in Q3 2022 compared to Q2 2022. In comparison to Q3 2021, the increase in non-GAAP operating expenses was primarily attributable to salaries and benefits, including non-cashstock-based compensation expense; the addition of OHA operating expenses; and higher costs related to the ongoing investment in the firm's technology capabilities. These increases were mostly offset by lower distribution and servicing costs and a lower interim bonus accrual.

• Compensation and related costs on a U.S. GAAP basis were $588.1 million in Q3 2022, an increase of $23.5 million, or 4.2%, compared to Q3 2021 and an increase of $124.7 million, or 26.9%, from Q2 2022. Compensation and related costs, excluding the impact of the supplemental savings plan, accrued carried interest compensation, and non-cash amortization of certain acquisition-related retention arrangements, were $595.6 million in Q3 2022, an increase of 5.4% compared to Q3 2021. The third quarter of 2022

includes higher salaries and benefits from increased average headcount and base salary increases made in 5