Earnings call transcript Q2 2023

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Operator

Good morning. My name is Gigi, and I'll be your conference facilitator today. Welcome to T. Rowe Price's Second Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode until the question-and-answer period. instructions to you that questions give time. will on ask how at I

this recorded, shortly is available a call As reminder, being concludes. on Rowe call for T. and Price's the website after replay be will

I will to T Price's Rowe call of Relations. Linsley Investor Carruth, Director turn now the over

Linsley Carruth

us you second for quarter earnings and thank today Hello, call. for joining our

call The IR website our be found press on minutes. release and XX investors.troweprice.com. a will Today's supplemental approximately materials document can last at

Dardis, to President, will about you and Sharps, We question Rob one results then CFO, Jen per ask to the CEO for discuss Our XX we'll and company's open your that and minutes, it participant. it limit up questions.

of to the the certain that release during reference supplemental and XX-Q. remind refer call, non-GAAP in course financial like well measures. we GAAP press the to you materials and statements a language forward-looking as forward-looking statement as Please and this I'd the number in to reconciliations of may make our

Now, to I'll Rob. turn it over

Rob Sharps

Thank you, for joining and all today. us thank Linsley, you

While continued in number to levels, saw growth pursue a we quarter in strategies. from initiatives. cost outflows important substantial continuing that will revenue to quarter, savings us meaningfully second identified slow investment lift performance equity of improved Stronger and we first allow while markets the helped equity expense our strategic

advancing we've a financial investment your in of provide today's milestones of followed our by strategic performance will On reached brief we overview results a on I'll our give take view key call, update the initiatives. questions. detailed an before then our Jen

their across The of asset growth benchmarks. posting was the encouraging performance percentage reasonably large-cap versus growth and peers chip results and classes outperforming outperformed stock U.S. franchise quarter, large-cap increasing peers the and quarter. this with from growth quarter results top-quartile solid their prior funds beating second investment blue Overall, with

in XXXX, mid-cap outperformance first large-cap and its of franchise, gave continued spot relative research of to the back contrast, in value value strong XXXX. a performance. equity In bright some strategies U.S. the Our deliver half

favorable. remain results long-term the However,

another all the outperforming Our of quartile. funds income the flagship international products, multisector franchise with yield, majority in with both of quarter ranking as in quarter. and fixed Performance a retirement top segments and the of in in solid target delivered equity U.S. groups performance top date was bond including our number strong of and peer the global decile for well, high funds

bond XX-year quarter have Our the overseas municipal strategies global records. in of all stock, and performance top-quartile and track stock and five- three-, second several performers our were strong

growth under organic remains gains, pressure. these Despite

quarter billion quarter saw net we outflows for lagging The continued and growth Target the outflows as with on impact market saw were As redemptions. primarily rates of date as the in performance. we and for patterns largely the past from second rose improved we muted remained quarter the demand investment market reported, sales net and flows of U.S. U.S. second. sales the first equity $X.X slowed strategies outflows the demand inflows performance were had and International redemption Fixed prior declined driven by in demand and $XX better net income products large-cap softened. quarter. global and billion. that

our clients, To deliver our invest corporate ability managing and our expense to protect strategy are in for growth. we proactively

for run cost agile XXXX, quarter our these have and million continuous also over since corporate deliver continue to discuss will even a of firm and mindset. improvement industry rate today. Institutionalizing a for process efficiency, scale improvement with work the to structure driving the and partly $XXX ongoing expenses, reflects and are XXXX. reflects our that's a of manage and allow our or an drive to in in We us durability, greater commitment to of invest of efficiency size steps clients company better appropriate This this challenging to challenges, culture we in remove efforts fourth strategy taken number a detail, reallocate pursuing work but in will for efforts broader costs create in innovation times. but Jen

Our made and areas we our to our greatest growth key corporate we believe the the our to and long-term reach. opportunity we investment strategy broaden milestones. partnerships, have continued is for met capabilities, advanced on focused some expand operational important efforts and quarter, hires In global in success. We've deepen where second client

making strategies Clients bolstering intermediary industry. firms USI our in channel largest their progress on compelling delivering partnerships the variety steady vehicles both in to this are progress made a needs, quarter. We meet investment offered expect with the and in Wealth by of fortifying we

On fully-transparent interest equity active which client June five are launched already XX, ETFs, inflows. and we generating

Our is ETFs building existing lineup at XX now of billion in $X.X momentum. AUM steadily

quarter. our of fill four SMA We this out addition SMA strategies muni roster continue equity to strategies with and two the of

with the our for company, BDC, milestone T. launch, the which Rowe OHA product legal joint Fund, for XX. filing closed development first Credit and election for June OHA, on this filing for year. Private OCredit, The We key commitment business a or finalized co-branded is seed Select or planned later our Price is

support and to to and hired resources we'll effort. also a of expertise Intermediary We invest Head continue U.S. this Sales Alternative in

expand retirement demonstrate of retiree Inc., expanding and acquisition our pre-retiree and our ability our We social relationships to acquisition, providing by evolving and we which strategies. to income strong claiming enhance clients retirement security already retain capabilities. with tax With closed and this commitment on Retiree, will our aware

making clear while to we flows continue So, our challenges, reflect lingering are progress.

associates will efficiencies to future growth. driving and clients resiliency support Rowe expenses Price like management deliver for our invest our T. remain continue I the I'm no matter the fundamental global the environment. on impressed and can active firm commitment and by of in a to managing work value deliver Our allow investment that to confident and us long-term

quarter. for I'll second now our cover to the turn to Jen results financial

Jen Dardis

I management efforts the hello expense our open detail today we financial provide everyone. and Rob, will our additional and reviewing line for you, on by will before questions. begin Thank results

As from and share both QX increase also XXXX QX QX EPS quarterly reported, lower rate. revenues XXXX, a carefully impacted was per growth. effective an earnings our managed $X.XX XXXX expense higher was tax favorably versus adjusted in for by $X.XX

We $XX quarter by ended outflows. increase March XXXX, of appreciation billion the from net offset an trillion driven AUM, in partially XX, $X.X with by market and

assets for average up Our QX but trillion, from XXXX. from QX almost were $XX the quarter billion $X.XX down XXXX,

the than net seen active we we've longer years. mentioned, income and lower in quarter. which muted to market net billion current outflows we Rob is the equity based clients decisions flows prior As resulting have been to Across volatility, Industry-wide, taking over $XX a see year. on in for continue complex, entire posted in inflows fixed sales and make for fund

will to more and interest direction as become cyclical rates, is slowdown this that recession of normal inflation and the the a expect clearer. revert patterns likelihood We of

of quarter, U.S. take we sales a products clients. equity performance a It range the outflows, redemptions majority the last our products seeing with growth are these some improvement performance-related time lower for will the outflows. of drove slow recent large-cap consistent Also and and elevated from to in

opportunities. research, U.S. the core Positive capital all-cap and included international quarter appreciation, equity inflows for

and income, We Euro also Global driven by Multisector to inflows had Global Grade, fixed international Corporate net Bond. Investment

from U.S. offset were by However, income floating than the outflows stable inflows fixed international to more our fixed and rate value income products.

billion $X.X net the Our target quarter. for date were inflows

first higher products. the given inflows keep While QX, down year-end. the in our quarter a that target around that this year, happen planned first of to flows are typically date strongest In billion half mind was we net recorded proportion the $X.X of from decisions of

products, more including and growth conditions some market changing have equity, to future we available to emerging expect growth, response flows. mid-cap will support reopened small-cap investors, new In previously capacity, net our and and closed market we sales which of

closed and the capacity future. we'll consider evaluate levels for to continue reopening in strategies, also other We the these

XXXX that Our billion investment from billion, net on gains. adjusted up revenues QX including $X.X were equity market revenue, of was advisory QX $X.X

basis rate back slight fee XXXX. to the first in quarter was level Our same effective of it QX a after points, XX.X the in XXXX uptick was

expenses up were the allocation-based X.X% The of change first little compensation. this was Our a quarter billion, from the of generally second was income year-over-year related over year, the adjusted by driven $X quarter in but flat operating largely to change which XXXX. capital

quarter negative which offset. allocation-based in capital created expense income, a last was second year, there As an reminder,

operating and related compensation compensation to year-over-year. allocation-based up the related expense with period X% up than capital adjusted were X.X% expenses less over income, Excluding costs year, the last same

X% continue year or over market be We the billion. to expense, adjusted of to land full capital expense range Based growth, expect to excluding forecast operating our current compensation allocation-based comparable XXXX of below this X% we in on midpoint conditions, of still at $X.X the amount XXXX the range. related income will

and drive the to Last X% existing are efforts we mentioned, of to manage we proactively our growth approximately of internally a difficult As number Rob globally. expense positions week, pursuing decision eliminate our communicated efficiency.

hiring select growth headcount We have by the across pace also of slowed and closing open firm. positions the

All long-term drive the are actions a growth review based for to clients sure and our been of these we careful aligning have make support to best on our firm. resources

with quarter in hiring our of than reduction of year, initiatives, to costs the force already to the the expense higher be third recent strategic headcount in mentioned. our our on in start modestly Based be even of current are included will Most I guidance. the against expect at the the end incurred related pace XXXX we reductions just the of and

remain committed to finding drive to efficient a continuous be we As and improvement. ways we forward, culture move more of

our our realized. in expenses however, For impact be estate estate use before facilities objective current approach, the It some of would are work and be our new time, occupancy example, will light with growth. we real from of real expense evaluating slowing hybrid any to

income $XXX In rate will we the or have and XXXX. will we total, future last allow This million for took financial excluding strategic versus adjusted expense us removed year, between in efforts low-single impact run discipline of allocation-based this continue positioning us operating growth reallocated XXXX, growth, expense year in over the expenses digit our in operating to while support related to the compensation. capital initiatives for investing

get We estimates to closer as will year-end. these refine we

choose and on it estimate if As fall is always, to markets this based we market adjust significantly. current or rise levels could

of opportunistic approach we share in found management, repurchases capital some for bringing May $XX per remain average to our $XXX million price buybacks. opportunities year-to-date XXX,XXX share June, to buying over just We in and over our in at total. shares an Shifting to

uncertainty, market process. we being patient the continued in are given However,

remains first stockholders. million dividend recurring our the over returned a half priority, and we top of Supporting XXXX, $XXX to in

seed sheet liquidity our to M&A. strong, have and potential ample support remains balance Our both capital program and we

the We are business clients confident as and to organic our to efficiency continue to in time. support to the efforts growth, return and expense we drive slow growth our we've firm manage identified the over

times. challenging to will institutionalizing deliver in to in us said, work corporate value our better allow clients this for Rob our continue and invest strategy As even

ask line that, the operator With the to Q&A. I'll open for

Operator

Thank JPMorgan. you. the Instructions] line of Our question Worthington first Ken comes from [Operator from

Ken Worthington

And Hi, has starting good morning, not, performance of channels and so, funds. sales Performance a expect if to been were back that while comments in to And thanks most has elevated what better would channels indications is the the net outlook? performance, improved for decision in you extended? question. the quickly that distribution any for you outflows XQ, reflect seeing are still prominent And my which early benefiting? to your positively impact taking the growth near-term more your timeline number making if are improved given come

Rob Sharps

the you for in large-cap second franchise, growth year-to-date. With to as is morning. This you the Good question. regard Thank Rob. and quarter note, better Ken. meaningfully Yes, performance the

whether flows, margin, but to answer performance improved this it's to at the a is, better regard call too translating direct early With way the trend. is the into

work on that we experience while considerations. a impacts important performance buyers, flows performance for attractive five-year the the and institutional are on three- that have year-to-date Our a and with do three- one-year have basis we numbers further do a and performance compelling on very And basis, five-year numbers. lag suggests a to

the in would In where signals business. Wealth terms you individual might in expect it early would to or channels what and up USI earliest, be investor it pick of the you improve

and three- more decision five-year. think, making the tends heavily I again, more sizable to weigh institutional

to the meaningful in more is eventually of then see pattern would we a redemptions and think a I expect sales. lessening gross pickup

feeling If I about better I'm and Overall, talk broadly, take missing it's back about clearly flows a things. step the ingredient.

initiatives invest we've ourself level a think expense of kind in can been very growth. appropriate yet our position we front-footed have I of strategic putting an where against in

really at revenues has hard we lift now market put in return where the a given us a ourselves we're least can working in organic For position and growth. to to

clients to difficult that industry but don't As strategic think to central to execute There reach it are is will performance. our with come ultimately, initiatives become back. stands when on to it's sidelines. need to I of improved the we'll our today, the ultimately a conditions against know continue existing challenging. We'll need to drive forever, clients. last more And more will lot money and it

is begin to of historical can in we we in if at in sense long-term demonstrate My those and meaningfully path that invest the to a way again, on growth a you outflows execute company things should we look more and see sidelines at investors the orientation put come some and patterns, organic XXXX if against the point back XXXX. less off with

think rate another in all the leading work happen terms our suggests right to as saw through of But all half net our worst saying say, 'XX, we terms the and the of of less seeing we backdrop, year. investment I'm encouraged I'm of of the initiatives. to deeply expect strategic by, in outflows. what which of of in industry that back greater first on regard with as we'll that year are half the If we're which focused of be execution and I way we our on the experiencing now, things way to indicators the wouldn't way than of noticeably in again, look against have that the performance, some to we're the And again, it I flows, pressure run in I is see, at the me there

Operator

moment for One you. next question. Thank our

from from of the Wells Finian Our Securities. Fargo O'Shea line comes question next

Finian O'Shea

you. for funds? gain Hi, you're on Good to are a so of say, the question you what the Can that mutual on strategy or level, success about A the encouraged ETF active seeing, the far high extent capture roadblocks there you launches. as traction? And morning. everyone. by to talk are there they Thank their also outflows, that sister

Rob Sharps

high what Look, am been encouraged I level, at seeing more by a we've recently.

we to in a ETF garner interest we've ETFs launched have equity vehicle across And of and fixed I new across expand started really lineup, have the as now think a and the this and our noted, active range series attention of industry, delivered income. to quarter. strategies continued kind more broader

early But particular and in We are appreciation traction offering. getting capital encouraged broadly, in ETFs. have of the more interest ETF kind engagement more and we're increasingly equity by

their investors. an ETFs think an but those XX deliver that, we use I to Act whether or think that lineup, advisors ETF Wealth lot just exclusively. cannibalizing for and they're have the of And into sense really we're new that to good there kind until certain appropriate kind job it's days, a and What early we over strategies think It's there. be to go and the team We're Financial Advisory a out ultimately attracting really advisors. Coyne several of to could is a regard done of With has We frankly and open-ended getting with in of had our the giving us business, course weren't way you to there's I for just element momentum I strategies USI are marketplace Broker-Dealer last started of people our how find months. also pleased performing. engage Tim able long build our of a clients' the there's they why the really portfolios. would say

Operator

for One you. moment next our question. Thank

Dan of line question comes the Fannon Our from next from Jefferies.

Dan Fannon

Jen, the morning. I expense a to commentary. hoping upon was expand Good Thanks. bit

would what think kind have commentary included midpoint curious point, one-time or So, saving about at AUM for on the XQ as kind and -- longer-term this I that at actions severance the above further? that June 'XX be think just did real estate digits of include that's year, might or of also based be about further, year, would below in cost been you taken? And levels? then of that the low-single assume this of next XX we on or some about then, as be you and actions the And dynamic potentials that beyond and mentioned,

Jen Dardis

try Dan. get I to make of those. I'll Thanks, all sure

we the straight as as first, this range, to noticed in an or midpoint the particular the have So, average on of of look markets you the range, quarter. of into the up usual, the midpoint of might the below went tend end the month at the quarter, at

rolling look be to what might year. we balance the to So, XX-day for a tend at balance about at average the of look the

In terms balance lower year, the would on expect in departed of to severance, would would by severance million in And the July. look salaries at that roles QX. the be of the costs have some QX, you if there's $XX roll about $XX that reflected of we worth million into things you of partially would for based offset how that

that are Just of plans that remember, bit end that guidance a LTI to along about where year, issued how ad to be as has pop quarter new incentive of into the expense seasonal the quarter. and we typically more in create promo long-term the our think would tends fourth with fourth roll plans tends a

next as year, guidance, includes we But the general just I just it 'XX in be year. time. would would million. look give the of It over wanted going real includes you 'XX to $XXX mentioned. last, expect into or the planning for still low-single We probably The into estate early savings I next year would And digit that timeframe. again, late through might sense that what we're for more much land. where roll a

Rob Sharps

maintain and take want with an I'll in management. initiatives to the strategic We ability various our that we're regard our going We clients. going to want to growth. efficient, have against really at our to We're to do to our to reflects space skills. invest to be and approach to acquire clients just for more few culture our words be new and invest make more market that say in to sustain expense to talent invest to trying priorities. and in have do invest a profitability we're In environments, reach going have have order and to prioritization, to better be central and we're long-term

through business long So, in additional savings put in the over we to improvement to to should to able but drive optimization to to use time, able a the position want process to company our be going invest successful that be and we're be term. and over

Operator

Thank you. question. moment for One our next

from Siegenthaler question of Our comes America. of next line Craig from the Bank

Craig Siegenthaler

up on Hill coming We're morning. the Good two-year announcement. Oak of acquisition the anniversary

to on the a another us one and effort, on with So, on good acquiring private maybe your M&A time an maybe update focus this get provide thoughts is potentially markets also a real or estate infrastructure. manager,

Rob Sharps

priorities good our to Craig, don't for morning. Thank Yes, M&A typically quarter-to-quarter. question. Look, with you the regard change

evaluating that that We new offer to are are important our capabilities developing constantly relative currently don't organically. typically opportunities to we to clients. We evaluate add that and something

business alternatives So, we're stated build goal of to evaluating strategic It's our time. over opportunities. ours a

that evaluate it's you themselves as So, estate natural that we infrastructure, real present as areas them. opportunities and suggest, in like would

Look, to fit. going real where client-focused we going that are compelling. we're ourselves only is a there are to cultural to believe believe associate have We do and want are that performance-oriented, teams only orientation. long-term We're that do we investors things that things and with

we time like an with. in that's whether active whether not consolidation to opportunities imminent we those There and isn't industry do this feel the more forward themselves, should or now, when determine engage it's but might ultimately, do we're present from So, something is perspective. and, that right move anything and a going -- ultimately work work

with OHA, very acquisition I overall. happy the to the regard and to continue be With Board

around encouraged moment talented and a OHA long and to to very deployment new OHA's they've also very and about credit OHA. private as they more great it's strong is a reputation the regard little beginning client with think enthusiastic and to raising market term. doing performance business learning capital work equity, spent challenging are I bring in time. by our offering the They solid and relationships are our the across investors that private relationships. but in time teams I'm a globe with I'm private are markets, client opportunities from distribution backdrop the

intermediaries I'd either about demand But didn't product. seed we've our cap for muted the pipeline or is $XXX partner T. OHA. it's thing a space excited Again, this with to about Price joint distribution. Last compelling right It's Rowe I'm we noted is we think really building where this we've of say million of an secured a and serve BDC, now. that area in in past, are

when a So, private we can like the feel credit preeminent back. type BDC platforms we those demand have for product comes vehicle on

Operator

One our moment you. for next Thank question.

from line Evercore. Glenn Schorr next of question comes from Our the

Glenn Schorr

Hi. Thanks much. very

bunch a to lot, want markets go on because I a it's a intermediary the step back take time a bit up have channel, weird outflows. So, you yet the little where of

ETFs So, now? see the you hence in slow? weave and putting of been you've maybe a out, to your Are the basis? drives history just lag I Thanks. question performance it bigger Head and the your of in That preference be improve, that you that what's would responsibilities but relationship same the is Is on new things Appreciate is things charge as what channel we driving in still than have the it. here, is, performance should started Distribution making massive what say, could seeing that flows be would might of like Intermediate happen? SMAs change product a in

Rob Sharps

question. a good time. it's moment is in unusual Glenn, It Yes. an

market. at most yields If are in industry, money where come in haven't or an And of XX a market ETF passive, you getting that uncertain been it's People the in on that and environment. the in more. inflows they money years in look funds of it's have lot had

the of a opportunity. lot a there or investors the buying think I for more to that waiting are attractive get of Fed on for way waiting sidelines are are out that

that a narrow say market. been it's also I'd

driven bit. by number of market and the small that a a the note kind very It's You'd a narrow of overall is quite market of portion up been names.

you as So might broad been there as expect. participation hasn't

of retirement that good. this see moving think performance in vehicles. those shift vehicles. and to funds you I And into strategies you a quickly rapidly. both a is are including think vehicles, performance But still And quarter Look, good range we broader inflows saw XX Again, number business. growing term, I was SMA away I there open-ended drive mutual where will believe to Act across from a flows longer of other migration funds in across ETF of trust offer favor more our in noted, we're strategies as fund that

So, to that things while best-in-class global note real, a thematic fixed shift we shift equities terms shift platform, trends are I platform SMA optimization, in passive, ETF, tax we if account or I to that investment with the minimums, loss our, navigate those customization, shift you can to of think more are a leverage lower global to and to some income. think, research across extent,

of are think to building that we'll opportunities in make we our address, progress further forward. shelf we've space that All and made be should with availability I and -- those out able going progress

on management drive that I value engage to will I to And that for with active that of clients deliver them. understand market be it's selection will look, to incumbent security kind how we can believe excellent always deeply a value. there us think So our

good Glenn, of ultimately, you an cyclical, you'll today. very performance. a is behavior flow kind there's where are And think back strategies where is to I change So, of element this, have and money we of see that kind that

in changing SMA, on represented well to because present better there's more like the trends. also to more likely we and I of enduring, that demand are want hard BDC, why ETF, areas be OCredit, where in an be it working things there some we're think past the represented which But we've less been is is element

Operator

Thank moment you. for One question. our next

of the Deutsche Our from Bedell next question from comes Brian Bank. line

Brian Bedell

dive the so them. business. my with in the Charles channel, brokerage channels, then XXX(k) that Thanks and just Good could recordkeeping, Schwab on the just folks. maybe saw as and both two example, of in If for the In online taking channel, institutional DCIO side for Thanks. morning, questions. we one your elevated Great. XXX(k) like I of deeper platform contrasting channels, outflows

And drove your better concentrating Maybe any a about in seeing They're XXX(k). DCIO it's they And that's the in performance you there? better but recordkeeping? then, can enough assume color focused, on may trends Not whether retail second be Thanks. are just something I a or some if the mandate brokerage that provide the contribution you there more more big if So, you versus those? the on talk trends sensitive. lumpy sure are you quarter? losses platforms, seeing in can that just then, either online yet, were potential if

Rob Sharps

Yes, I'll plan our offer business. well. recordkeeping would Jen perspective healthy. our with start or ask overall business characterize that as a her to bundled It's I business and I'll XXX(k) services retirement start as

recordkeeping We for are which We're growing and executing small-, business market. in the is medium-sized expanding it's us. enterprise specialize quite below And for in well of a of what that we large is the think retirement call core coverage businesses. market, our that advisors kind overall, I

some often by our when there consolidation that's you planned is company of we where have one of those one midcap have is in, a or more enterprises have challenges medium-sized we Where deconversions large clients.

core to our growth market. largely business about that And good been momentum feel the some So that's pressured but that able in with to I set there. extent, we've

recordkeeping that for So, the I'll leave XXX(k) business.

institutional mixed. In terms contribution investment of say defined only DC the business, I'd it's or more

that It's the We pressure to it a in growth. some area reason close. continue we've have of part channel result with and we large-cap we meet that out. called success where has represented terminations it's an some put retirement the well had why that date plans as were on performance from And very there. of But in in franchise

I I and continue it's think get out historical that. back to think don't yet to been eventually of think standards, particularly this performance that I drive its run woods elevated will we're But or to of acute first the part the with regard course. if in we our year.

Jen Dardis

in recordkeeping about front products Yes, do the we helped It's plan been product of to our from defined business contribution able DC, business. innovation in target are I'd going that XXX(k) think lines benefits the us actually versus design, sponsors help an record-kept and income if thinking our think previously see it's it's help both the to only and about investment add asked stay date we've us the that forward. in trends work us representing think in about and able perspective important design mind Those that, us really to for products we about we planned retirement to of about business. both

Operator

question. next Thank you. One moment for our

Our next UBS. line question comes from from of Brennan Hawken the

Brennan Hawken

Good questions guess. my morning. question, for taking or I Thanks

side. you performance incentive understanding of my to to track that longer-term tend T. So, skew Rowe's records investment is the professional comp on

right, if So, and and have better-than-expected records confirm the one, like that's time which compensation just impact? we important whether -- periods more a bigger or to number wanted was track or expense records And some of that are track side begun what to from this continued reflect expect see the tailwinds longer-term expense that beginning to we the could on deteriorate, to some have and quarter therefore, dynamic? the fact not

Rob Sharps

even but long-tenured the that compensation not we records. Yes, define does really I the year on of you comment longer-term But XX-year And at the depends our are current look only accrual. three-, of not to emphasize portfolio five- I'm managers. on compensation specifically at underlying will kind track incentive for what around the and going of and professional. tenure how results results, drivers investment the philosophy that say approach

designed basically are long-term proposals. incentives our So, the performance investment reflect to for

a got to have different But the of associates. lot things that are X,XXX And in have we people you've remember, we doing organization.

broad very of a have range also strategies. We

delivered in other you strategies disappointing results. strategies, have three- where might have certain we while we five-year of excellent have and kind So results

capacity that retain I've the expense said we're our of of maintain kind talent diverse the we and at overall, culture. attract perspective end really day, before, from focused So, on, as making to and an world-class sure the have

are those the shareholders. time over for be for deliver for are deliver our able and that essential And us our to think to things clients be to to able really I

Jen Dardis

growth I notable rate think working in it as expense the took the an But that, existing the months down is close had the an to roles. on we've that the worth slow talked actually how from X% we we've actions with that can will we have perspective, been announcement several and leading looking of up salaries. expense at taking we roles, impact about for open where noting, in we been and steps the past

a period manage roles, open So, roles eliminate do them. trying to not to having us that to that necessarily people closing that of have time allows over through in

impact flowing the salaries. So, see that in you would through of

Operator

next you. moment One our question. for Thank

Our next KBW. from comes of from line the Brown Mike question

Mike Brown

good morning. Hi,

market So strong the you at rally the of Jennifer, noted, as quarter. the was particularly end

just second and wanted the for about should puts we second color any exit the any to here takes if see rate had quarter? really you here So, relative the And half? consider fee to

Jen Dardis

the been fees five-plus, years years, competitive. be actions over if at that different the No. and I'd lines over we've rates lower depending modest had on X%, taking past several last of fee trend several the we've to our say, look, X% in compression product the you look range to across

change. market wouldn't that a but expect different times mix really rally, out Obviously, an would specific shifts, I So, of of the nothing from business in little trends. bit to uptick you'll that's see as call

Operator

our for next moment One question. you. Thank

the from Autonomous. comes of line question Patrick Davitt Our next from

Patrick Davitt

everyone. morning, good Hey,

maintain one performance. Rowe the T. decades would market. to more ultimately, work culture impact to management managers last process best you've to management to pay start aggressively, cutting But the strong plus then, that be and widely places history obviously asset asset that to in start suggest So, bull been strong able packages the and is through investment known of and

So, a that I on in expenses waves you layoffs how are investment restraint after franchise? of impact guess, this with the the new negatively year, balancing risk you two, now

Rob Sharps

third maybe the this I think now said I've time.

sustain making to balanced is all getting driving we're that efficiency of are -- here company of long and, way term, the throughout opportunity investments. but organization, the have a us that allow will has and approach a making growth dynamic that out the the in culture talent we organization, roles, our a to to Our in balance in top overall, attract sure have value compensate particularly that throughout between sure that's our and is and diverse a resources

is strong. retention very our Look,

have very we think I culture. a strong

vast the that of expect we very compelling. impact did case. the all is compensation I not market based headcount not initiatives investments. have, on will majority competitive, it the remain data The of Our if

very our to throughout So, overly particularly It's a am with. that you focused be something but very there's of we for all, But something are it people it's mind seems practices handful is very, something top I always concerned that not we're that much mind in of question make organization. very that that no that place competitive on. appropriate incentives capacity the compensation and sure in my have the for we and intent have to

excellent. Again, our if there, professional investment think look the at pudding the proof retention, in is it's you I

think, of every the in we're what consistent What is throughout almost doing, with seen very is the organization I peers. strong. our retention you've organization quite Our one throughout

that say not way, in So, are that an outlier. do think I I would we

don't I know Jen, have to anything you'd add. if

Jen Dardis

five rapid also coming put the context. a were it's period last off think investment of it years, we business. look number of very we I Yes, in added If We've important at the in a tune that globalization operating rate capabilities $X five-plus past over the timeframe. across to investments, again, of distribution, in -- of operations technology, run over over and the years, increasing expenses business the during the to billion

time nice adjustments, take these things we able these doing as I we're efficiently a sure be look, as to think can. in that to are So make moments

we if the trying One work. in at things efficiency were -- the look we of way on we role particularly was were there things, increasing do. the three And to side

look So trying right we're ways work, most sure things we making technology the -- doing to rebalancing the with beneficial that can. we processes, have in that at

skill second need at changing sets. a is looking The just for

priorities And talking places against going. been we've these making new mentioned, strategic our we decked then Rob reprioritizing about. last business skills where and sure that we look the that the at vehicles, is against places thing about that resources the As have pivoting is

expense is this of about some reduction. So,

Some of expense this about is reallocation.

XXX started as in expense into new next help were of would somewhere higher our if put to neighborhood perspective, next we we And in the for expense basis business. year, have growth the investing work, just growth it baseline to the points an things all in from year been basis context, XXX points

this, make a to but reallocation spot. as right not So, also only exercise, as expense-cutting an again, we view the sure we're in investing

Rob Sharps

was Yes. roundly divisions of And global impact role the impacted for workforce investment this, to context, loop minimal. functions. multiple close the were our X% just and across The on eliminations

managers, a XXX managers, You of dozens of investment portfolio of all over investment associate people -- portfolio base analysts across and talk XXX between divisions. our about our

over professionals, also to for our across important ability of and very our time our and the global clients. that deliver steadily platform we've we base it's of remain investment I understand invested investment strength to think very in confident

If investors the our since end number grown back by this to to XXXX XX year, of of over total -- just has you June XX%. the look

So, investing any if or of not our or taking our think sense investment I there's platform concern misplaced. we're that talent, in care it's

Operator

you. Thank

of Stanley. from Michael Morgan line last from the Our Cyprys question comes

line Your momentarily. opened will be

Your now open. line is

Michael Cyprys

Thank question Great. More getting today. attention and in picture of of squeezing a me the has focus AI here. you. Thanks big lot for you. been for world a across

may a potential have this What about for Just the you're bit this respect how impact how opportunity about talk experiment your an how that today, little the you're with the management industry? with asset landscape to thinking Do competitive the expense on future? from experimenting business. could you this you Maybe sort with in a curious or you or of see as more and revenue AI could of play?

Jen Dardis

question. the for Thanks Sure.

AI and versus a evolving I think I past quarters here parts learning benefits generative that of of team talking machine over been and it's for we're our are using some an lot in machine to all the the I'd rapidly in people example, now capabilities certain several investment about we've investing AI. of processes. of business our is have sure data learning important been the that make know insight that our behind say that time

in sure safeguards looking impact establishing business generative to to one to will what generative protect and make of can to drive of place just just the to generate And insights then, we're data. the things early been that the clients evaluate ability we've regard and the fronts. One ability across been to improve clients, two new efficiency perspective, that, capabilities we important pilots we've the AI sure our a across from appropriate making that business. And to that at for that piece implement reach focused days. in with second in across Specifically the risk are on the it AI, also that's is been ways we have

I'd our technology pilots can channels So, and looking organization how that distribution across to our within efficiencies. we're to at across investment use organization, we say look our specifically at drive

in potentially significant that opportunities time, is want days, the way think and durable. are it over it's I we do a but So, early to

Rob Sharps

All right.

I the think that was last question.

and for interest good thanking us just questions. everyone and I'll close for by joining So, their

As by we noted, we're investment performance. encouraged

corporate while path deeply think as issues that there be clients. we on dedication it. some lingering And believe believe to XXXX. to through associates that of continue by a way our initiatives, flows, We commitment and our We focused in I work on deeply we strategic we focus improvement I'm the encouraged our and our and delivering impact have really are will for their

you. thank So,

Operator

you for today's participating. concludes call. conference This Thank

now disconnect. may You

T. Rowe Price (TROW) 28 Jul 232023 Q2 Earnings call transcript