Lpl financial : q1 2025 key metrics presentation

Published: 2025-05-08 20:08:44 ET LPLA

Published on 05/08/2025 at 20:08

‌LPL Financial Holdings Inc. Q1 2025 Key Metrics‌

May 8, 2025

Member FINRA/SIPC

‌Notice to Investors: Safe Harbor Statement

Statements in this presentation regarding LPL Financial Holdings Inc.'s (together with its subsidiaries, the "Company") future financial and operating results, growth, plans, priorities, business strategies, capabilities and outlook, including forecasts and statements relating to the Company's future advisory and brokerage asset levels and mix, organic asset growth, deposit betas, core G&A* expenses (including outlook for 2025), promotional, share-based compensation and depreciation and amortization expenses, Gross Profit* benefits, EBITDA* benefits, target leverage ratio, client cash balances and yields, service and fee revenue, transaction revenue, investments, acquisitions, capital returns, planned share repurchases, if any, the anticipated closing of pending transactions, including the expected closing of the Company's acquisition of Commonwealth Financial Network ("Commonwealth"), and the amount and timing of the onboarding of acquired, recruited or transitioned brokerage and advisory assets, as well as any other statements that are not related to present facts or current conditions or that are not purely historical, constitute forward-looking statements. They reflect the Company's expectations as of May 8, 2025 and are not guarantees that the expectations or objectives expressed or implied will be achieved. The achievement of such expectations and objectives involves risks and uncertainties that may cause actual results, levels of activity or the timing of events to differ materially from those expressed or implied by forward-looking statements. Important factors that could cause or contribute to such differences include: the failure to satisfy the closing conditions applicable to the Company's purchase agreement with Commonwealth; difficulties and delays in onboarding the assets of acquired or recruited advisors, including the receipt and timing of regulatory approvals that may be required; disruptions in the businesses of the Company that could make it more difficult to maintain relationships with advisors and their clients; the choice by clients of acquired or recruited advisors not to open brokerage and/or advisory accounts at the Company; changes in general economic and financial market conditions, including retail investor sentiment; changes in interest rates and fees payable by banks participating in the Company's client cash programs, including the Company's success in negotiating agreements with current or additional counterparties; the Company's strategy and success in managing client cash program fees; changes in the growth and profitability of the Company's fee-based offerings and asset-based revenues; fluctuations in the levels of advisory and brokerage assets, including net new assets, and the related impact on revenue; effects of competition in the financial services industry and the success of the Company in attracting and retaining financial advisors and institutions, and their ability to provide financial products and services effectively; whether the retail investors served by newly-recruited advisors choose to move their respective assets to new accounts at the Company; the effect of current, pending and future legislation, regulation and regulatory actions, including disciplinary actions imposed by federal and state regulators and self-regulatory organizations; the cost of defending, settling and remediating issues related to regulatory matters or legal proceedings, including civil monetary penalties or actual costs of reimbursing customers for losses in excess of our reserves or insurance; changes made to the Company's services and pricing, including in response to competitive developments and current, pending and future legislation, regulation and regulatory actions, and the effect that such changes may have on the Company's Gross Profit* streams and costs; execution of the Company's capital management plans, including its compliance with the terms of the Company's amended and restated credit agreement, the committed revolving credit facilities of the Company, and the indentures governing the Company's senior unsecured notes; strategic acquisitions and investments, including pursuant to the Company's liquidity and succession solution, and the effect that such acquisitions and investments may have on the Company's capital management plans and liquidity; the price, availability and trading volumes of shares of the Company's common stock, which will affect the timing and size of future share repurchases by the Company, if any; whether advisors affiliated with Atria Wealth Solutions, Inc. ("Atria") or Commonwealth will transition registration to the Company and whether assets reported as serviced by such financial advisors will translate into assets of the Company; the execution of the Company's plans and its success in realizing the synergies, expense savings, service improvements or efficiencies expected to result from its investments, initiatives and acquisitions, expense plans and technology initiatives; the performance of third-party service providers to which business processes have been transitioned; the Company's ability to control operating risks, information technology systems risks, cybersecurity risks and sourcing risks; and the other factors set forth in the Company's most recent Annual Report on Form 10-K, as may be amended or updated in the Company's Quarterly Reports on Form 10-Q or other filings with the Securities and Exchange Commission. Except as required by law, the Company specifically disclaims any obligation to update any forward-looking statements as a result of developments occurring after May 8, 2025 and you should not rely on statements contained herein as representing the Company's view as of any date subsequent to May 8, 2025.

‌Notice to Investors: Non-GAAP Financial Measures

Management believes that presenting certain non-GAAP financial measures by excluding or including certain items can be helpful to investors and analysts who may wish to use this information to analyze the Company's current performance, prospects and valuation. Management uses this non-GAAP information internally to evaluate operating performance and in formulating the budget for future periods. Management believes that the non-GAAP financial measures and metrics discussed herein are appropriate for evaluating the performance of the Company. Specific Non-GAAP financial measures have been marked with an asterisk (*) within this presentation. Reconciliations and calculations of such measures can be found in the appendix of this presentation.

Adjusted EPS is defined as adjusted net income, a non-GAAP measure defined as net income plus the after-tax impact of amortization of other intangibles, acquisition costs, certain regulatory charges, losses on extinguishment of debt, and amounts related to the departure of the Company's former Chief Executive Officer, divided by the weighted average number of diluted shares outstanding for the applicable period. The Company presents adjusted net income and adjusted EPS because management believes that these metrics can provide investors with useful insight into the Company's core operating performance by excluding non-cash items, acquisition costs and certain other charges that management does not believe impact the Company's ongoing operations. Adjusted net income and adjusted EPS are not measures of the Company's financial performance under GAAP and should not be considered as alternatives to net income, earnings per diluted share or any other performance measure derived in accordance with GAAP. For a reconciliation of net income and earnings per diluted share to adjusted net income and adjusted EPS, please see the appendix of this presentation.

Gross profit is calculated as total revenue less advisory and commission expense; brokerage, clearing and exchange expense ("BC&E"); and market fluctuations on employee deferred compensation. All other expense categories, including depreciation and amortization of property and equipment and amortization of other intangibles, are considered general and administrative in nature. Because the Company's gross profit amounts do not include any depreciation and amortization expense, the Company considers gross profit to be a non-GAAP financial measure that may not be comparable to similar measures used by others in its industry. Management believes that gross profit can provide investors with useful insight into the Company's core operating performance before indirect costs that are general and administrative in nature. For a calculation of gross profit, please see the appendix of this presentation.

Core G&A consists of total expense less the following expenses: advisory and commission; depreciation and amortization; interest expense on borrowings; BC&E; amortization of other intangibles; market fluctuations on employee deferred compensation; losses on extinguishment of debt; promotional (ongoing); employee share-based compensation; regulatory charges; and acquisition costs. Management presents core G&A because it believes core G&A reflects the corporate expense categories over which management can generally exercise a measure of control, compared with expense items over which management either cannot exercise control, such as advisory and commission, or which management views as promotional expense necessary to support advisor growth and retention, including conferences and transition assistance. Core G&A is not a measure of the Company's total expense as calculated in accordance with GAAP. For a reconciliation of the Company's total expense to core G&A, please see the appendix of this presentation. The Company does not provide an outlook for its total expense because it contains expense components, such as advisory and commission, that are market-driven and over which the Company cannot exercise control. Accordingly, a reconciliation of the Company's outlook for total expense to an outlook for core G&A cannot be made available without unreasonable effort.

EBITDA is defined as net income plus interest expense on borrowings, provision for income taxes, depreciation and amortization and amortization of other intangibles. Adjusted EBITDA is defined as EBITDA, a non-GAAP measure, plus acquisition costs, certain regulatory charges, amounts related to the departure of the Company's former Chief Executive Officer, and losses on extinguishment of debt. The Company presents EBITDA and adjusted EBITDA because management believes that they can be useful financial metrics in understanding the Company's earnings from operations. EBITDA and adjusted EBITDA are not measures of the Company's financial performance under GAAP and should not be considered as alternatives to net income or any other performance measure derived in accordance with GAAP. For a reconciliation of net income to EBITDA and adjusted EBITDA, please see the appendix of this presentation.

Adjusted pre-tax income is defined as income before provision for income taxes plus amortization of other intangibles, acquisition costs, certain regulatory charges, amounts related to the departure of the Company's former Chief Executive Officer, and losses on extinguishment of debt. The Company presents adjusted pre-tax income because management believes that it can provide investors with useful insight into the Company's core operating performance by excluding non-cash items, acquisition costs, and certain other charges that management does not believe impact the Company's ongoing operations. Adjusted pre-tax income is not a measure of the Company's financial performance under GAAP and should not be considered as an alternative to income before provision for income taxes or any other performance measure derived in accordance with GAAP. For a reconciliation of income before provision for income taxes to adjusted pre-tax income, please see the appendix of this presentation.

Credit Agreement EBITDA is defined in, and calculated by management in accordance with, the Company's amended and restated credit agreement ("Credit Agreement") as "Consolidated EBITDA," which is consolidated net income (as defined in the Credit Agreement) plus interest expense on borrowings, provision for income taxes, depreciation and amortization, and amortization of other intangibles, and is further adjusted to exclude certain non-cash charges and other adjustments, and to include future expected cost savings, operating expense reductions or other synergies from certain transactions. The Company presents Credit Agreement EBITDA because management believes that it can be a useful financial metric in understanding the Company's debt capacity and covenant compliance under its Credit Agreement. Credit Agreement EBITDA is not a measure of the Company's financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP. For a reconciliation of net income to Credit Agreement EBITDA, please see the appendix of this presentation.

‌Operating Metrics

$157.3

$78.8

$33.2

$34.0

$24.5

$3.7

$20.8

$21.7

$24.7

$27.5

$0.6

$7.9

$89.3

$16.7

$29.0

17.1%

$27.0

16.3%

10.7% $68.0 $70.9

7.5%

7.4%

8.0%

8.1%

7.2%

4.9%

~14% organic growth over past 4 quarters

2023 2024

2025

$5.0

Total Advisory and Brokerage Assets

Advisory Assets % of Total Assets

$1,795

$1,441

$1,498

$1,592

$1,741

$1,175

$1,240 $1,238

$1,354

55.0%

55.4%

56.0%

55.0%

54.5%

52.8%

53.3%

53.5%

54.3%

2023 2024

2025

YOY

Change

25%

(0.5) pts

Organic Total NNA

Acquired Total NNA

Organic Annualized Growth Rate

$78.7

$31.2

$38.6

$24.3

$25.7

$18.6

$20.2

$16.9

$12.9

~$167B of Recruited AUM over past 4 quarters

2023 2024

2025

98.4

98.2

97.0

97.3

~98% average retention over the past 4 quarters

2023 2024

2025

97.4

98.4

98.8

98.7

98.8

‌Financial Results

2023 2024

2025

$357

$398

$391

$411

$413

$420

$472

$509

Q4†

2023 2024

2025

$990

$1,007

$1,010

$1,020

$1,066

$1,079

$1,128

$1,228

$1,273

YOY

Change

19%

YOY

Change

23%

46.2

42.4

38.7

40.0

35.5

36.9

37.2

33.5

2023 2024

2025

$5.15

$4.49

$3.94

$4.21

$4.16

$4.25

$3.74

$3.51

$3.88

$17.44 of EPS* over past 4 quarters

2023 2024

2025

YOY

Change

1.3 pts

YOY

Change

22%

† The departure of the Company's former Chief Executive Officer resulted in other income of $26.4 million during the three months ended December 31, 2024 related to the clawback of share-based compensation awards.

‡ Adjusted Pre-Tax Income* as a % of Gross Profit*

LPL Financial Member FINRA/SIPC 5

‌Organic Net New Asset growth rate was ~16% in Q1 and ~14% over the past 4 quarters

Organic Total NNA

Organic Annualized Growth Rate

$68.0

$70.9

$33.2

$29.0

$27.0

$24.7

17.1%

16.3%

$20.8

$21.7

$16.7

10.7%

7.5%

7.4%

8.0%

8.1%

7.2%

4.9%

~14% organic growth over past 4 quarters

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2023 2024

2025

Organic Advisory NNA

Net Brokerage to Advisory Conversions(6)Organic Annualized Growth Rate

$49.3

$35.7

$26.6

$22.7

$23.2

$20.5

$18.1

$16.2

$13.7

22.1%

13.7%

14.9%

11.7%

12.4%

13.4%

11.2%

9.4%

8.8%

$2.1 $2.2 $2.7

Q1 Q2 Q3

$2.6

$3.6 $3.7

$3.5

$4.8

$5.9

Q1 Q2 Q3 Q4

2023

2024

2025

Organic Brokerage NNA

Net Brokerage to Advisory Conversions(6)Organic Annualized Growth Rate

$35.2

17.9%

10.7%

7.2%

5.4%

$18.8

2.6%

2.9%

0.3%

1.5%

2.3%

$10.5

$7.1

$3.6

$4.2

$2.5

$3.8

$0.5

($2.1) ($2.2) ($2.7) ($2.6)

($3.6)

($3.7) ($3.5)

($4.8)

($5.9)

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2023 2024 2025

‌Centrally Managed Assets grew at a 33% organic growth rate over the past 4 quarters

Centrally Managed Assets

Centrally Managed Assets % of Total Advisory Assets

$160.0

$164.4

$138.1

$121.7

$126.9

$112.1

$94.6

$99.8

$100.5

16.7%

16.8%

15.2%

15.3%

15.5%

15.3%

15.1%

15.2%

2023 2024

2025

Organic Centrally Managed NNA Organic Annualized Growth Rate

$24.9

72.0%

17.8%

12.0%

12.8%

14.6%

14.0%

16.2%

7.6%

8.7%

$6.5

$4.4 $4.4 $4.4

$3.0

$3.6

$1.7

$2.0

~33% organic growth over past 4 quarters

2023 2024

2025

YOY

Change

35%

1.5 pts

‌Net Buy (Sell) Activity was $42B in Q1; the Payout Rate was 86.8%

Net Buy (Sell) Activity

Client Cash % of Total Advisory and Brokerage Assets

$42.0

$39.3

$36.9

$37.8

$37.7

$38.3

$35.6

$32.3

$32.8

4.6%

4.0%

3.8%

3.6%

3.2%

2.9%

3.2%

3.0%

2023 2024

2025

87.8

87.6

87.3

87.5

86.7

86.6

86.8

86.2

~87% average payout over past 4 quarters

2023 2024

2025

‌Service and Fee Revenue grew 10% year-over-year, as our advisor and account base continued to grow

$146

$145

$139

$136

$135

$131 $132

$123

$119

2023 2024

2025

Revenue from advisor and end-client investor services, including: technology, insurance, conferences, licensing, Services Group solutions, and IRA-based fees

Service and Fee revenue is a function of advisor and account growth and greater adoption of Services Group solutions

$68

$62

$57

$59

$49

$47

$50

$54

2023 2024

2025

Transaction charges generated in both advisory and brokerage accounts from products including mutual funds, ETFs, and fixed income

Transaction revenue is a function of trading activity, but is becoming less sensitive to equity market volatility over time as business moves towards No Transaction Fee platforms

YOY

Change

10%

‌EBIT ROA declined slightly

Average Total Advisory & Brokerage Assets(10) YOY SEQ

OPEX ROA(12)

$1,638 27% 7%

$1,537

$1,428

$1,354

$1,290

$1,231

$1,114 $1,142 $1,186

33.4 bps 33.6 bps 32.8 bps

31.8 bps 31.6 bps 30.7 bps 30.1 bps

29.1 bps 28.5 bps (3.1) bps (0.6) bps

17.9 bps 18.2 bps 18.5 bps 18.8 bps 18.5 bps 18.3 bps 17.9 bps 17.6 bps 17.1 bps (1.4) bps (0.5) bps

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2023 2024 2025

EBIT ROA(13):

13.9 bps 15.2 bps 15.1 bps 14.0 bps 13.1 bps 12.4 bps 12.2 bps 11.5 bps 11.4 bps

(1.7) bps (0.1) bps

Note: All periods are based on the trailing twelve months. EBIT ROA excludes acquisition costs and regulatory charges that are excluded from Adjusted Net Income as

LPL Financial Member FINRA/SIPC 10

‌Q1 Gross Profit* ROA decreased sequentially, driven by a decrease in client cash revenue

Client Cash

Interest Income, net and Other Revenue

Service and Fee

Transaction, Net of BC&E

Other Asset-Based(14)

Net Advisory Fees and Commissions

33.4 33.6 32.8

12.0

13.8

13.9

12.9

11.8 11.0

10.4

9.8

9.4

0.6

0.7

0.8

0.8 0.8

0.9

0.8 0.8

4.3

4.2

4.1

4.0 3.9

3.8

3.6

3.4

0.8

0.8 0.8 0.8 0.8 0.8 0.8

0.7

0.6

7.2

7.0

7.1

7.0

6.9

7.0

6.9

7.1

7.2

7.4

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2023 2024 2025

19.8

19.6 19.7 19.9 19.8 19.7 19.7 19.3

19.1

‌OPEX ROA decreased sequentially in Q1

Amortization of Other Intangible Assets

D&A Expense (ex Amortization of Other Intangible Assets)

Employee Share-based Compensation

Promotional

Regulatory

Core G&A*

17.9 18.2 18.5 18.8 18.5 18.3 17.9 17.6

0.8 0.8

1.9 1.9

0.5 0.5

0.9

2.0

0.5

0.9

2.0

0.5

4.0

0.9

2.0

0.5

0.9 0.8

2.0 2.0

0.5 0.5

0.9

2.0

0.5

0.9

2.0

0.4

3.3

0.3

3.4

0.3

3.6

0.3

4.0

0.2

4.1

0.2

4.2

0.2

4.1

0.2

4.0

0.2

11.1

11.3

11.2

11.1

10.9

10.6

10.2

9.9

9.6

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2023 2024 2025

‌Our client cash balances are largely operational and decreased to 3.0% of total assets in Q1

By establishing sweep relationships across our ICA and DCA programs, we can leverage the balance sheets of our third-party bank partners

We do this through a combination of fixed and

floating rate deposit agreements

Client Cash as percent of Total Assets

$69.0

$66.3

$63.8

$60.8

$56.9

$54.0

$55.1 $53.1

$46.2

$47.9 $47.5 $47.5 $49.7

$49.6

$46.9 $48.2

$43.0

$44.9

$46.3

$44.0 $45.8

6.5% 6.4%

5.6% 5.5%

5.3%

5.7%

5.0%

5.2%

4.3%

4.4%

4.7%

4.6%

4.0%

3.8%

3.6%

3.2%

2.9%

3.2%

3.0%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2020 2021 2022 2023 2024 2025

Fed Funds target rate (EOP, lower limit in bps)

425

6.9%

Our client cash balances are largely operational

Typically small balances used for rebalancing, paying advisory fees, and customer withdrawals

This is reflected in the low client cash balances, which average ~5% or ~$7K per account

We believe the primary factor that moves that % of client cash up or down is market sentiment rather than rate seeking behavior

When clients are fully deployed in the markets, the ratio has gone as low as ~3%

In Q1 2025, cash was 3.0% of client assets

Cash balances decreased in the quarter, driven by quarterly advisory fees

150

300

425

475

500

525

475

425

‌We generate compelling economics on client cash balances

Since Q1 2022, as the Fed increased interest rates, our deposit beta averaged ~15%

Deposit betas averaged ~2.5% over the first 4 hikes, and ~20% on subsequent hikes, including a peak of ~25% on the final hike

Since the Fed started to cut interest rates in Q3 2024, deposit betas averaged ~20%

Applying historical deposit betas to our current cash balances would yield:

~$35M of Annual Gross Profit* per subsequent 25 bps rate adjustment, at a ~20% deposit beta

ICA Sweep

DCA Sweep

Money Market Sweep

Client Cash Account "CCA"

Average Yield(16)

$54.0

$1.6

$2.6

$49.6

$1.7

$46.9

$10.2

$2.3

$1.5

$2.6

$9.5

$48.2

$2.0

$2.4

$9.3

$46.3

$2.1

$2.3

$9.2

$55.1

$1.8

$4.3

$44.0

$45.8

$53.1

$1.9

$4.3

$1.5

$1.8

$10.7

$39.7

$9.1

$2.3

$9.2

$2.3

$10.7

$9.6

$36.0

$38.3

$33.6

$34.5

$36.1

$32.6

$31.0

$32.1

308 bps

314 bps

315 bps

320 bps

325 bps

326 bps

335 bps

318 bps

317 bps

2023 2024

2025

Deposit betas on recent Fed Funds rate changes

Deposit beta following Fed Funds target rate change Fed Funds target rate (EOP, lower limit in bps)

450

475

500 525 475

450

375

425

300

225

150

~10%

~20% ~20% ~20% ~20% ~20% ~20% ~20%

~25%

~20% ~20% ~20%

Jun'22 Jul'22 Sep'22 Nov'22 Dec'22 Feb'23 Mar'23 May'23 Jul'23 Sep'24 Nov'24 Dec'24

Month of Fed Funds target rate change

‌Fixed rate balances make up ~60% of the ICA portfolio, reducing our sensitivity to movement in short-term interest rates

Variable balances are primarily indexed to Fed Funds

Our variable ICA balances decreased in Q1'25, driven by quarterly advisory fees

Most variable balances are indexed to Fed Funds + a spread (~10 to ~15 bps)

Currently, new variable contracts are averaging Fed Funds plus 10 to 20 bps

Variable ICA Balances

Fixed Rate ICA Balances Fixed Rate ICA Balance %

~55% ~60% ~65% ~60% ~65% ~70% ~65% ~55% ~60%

$39.7

$17.7

$36.0

$33.6 $34.5 $32.6

$31.0 $32.1

$38.3

$36.1

Management target range for the ICA portfolio is 50-75% fixed rate contracts

In Q1'25, we added $1.0B of five-year fixed rate contracts with a yield of ~425 bps

$14.0

$11.6

$13.0

$11.2

$9.9

$11.9

$17.5

$15.1

Maturing ICA Contracts ($B)

as of end of Q1 2025

$22.0

$21.5

$21.1

$20.2

$20.8

$21.0

$1.6B matures in Q2

$1.5B matures in Q3

$1.6B matures in Q4

$4.7

$3.4 $3.1

$6.4

$2.0

$0.5

$1.0

$1.5

Q1 Q2

2023

Q4 Q1

Q2 Q3

2024

Q4 Q1

2025

Maturing Yield† (bps)

2025 2026 2027 2028 2029 2030

~350

~330

~425

~415

~380

~420

† Weighted average yield across ladder is ~385 bps

Note: Yields shown on this page are prior to client deposit rates (~64 bps) and administrator fees (~4 bps). Money market sweep balances are not subject to these costs. Given improved bank deposit demand and the launch of CCA, we no longer have any money market overflow balances

LPL Financial Member FINRA/SIPC 15

‌We remain focused on investing to drive organic growth while delivering long-term operating leverage in our core business

Deliver operating leverage in core business

Prioritize investments that drive additional growth

Drive productivity and efficiency

Adapt cost trajectory as environment evolves

Our 2024 Core G&A* was $1,475M prior to Prudential† and Atria, translating to ~8% year-over-year growth

We plan to slow Core G&A growth in 2025, as our ongoing investments to scale our business are driving greater efficiencies

Our initial 2025 Core G&A* outlook range prior to Prudential and Atria was 6% to 8%

year-over-year growth, or $1,560M to $1,600M

Given our performance to date, we are lowering the upper end of our outlook range by $15 million

- In addition, we continue to expect the full-year impact of Prudential and Atria to add $170M to $180M of Core G&A* in 2025

As a result, including expenses related to Prudential and Atria, our 2025 Core G&A* outlook range is $1,730M to $1,765M

Annual Core G&A*Growth

13%

15%

~6% - ~7.5%

2021 Prior to

Waddell & Reed

2022 ‡

2023

2024 Prior to 2025 Outlook Prior

Prudential to Prudential

and Atria and Atria

2025 Outlook

Including Prudential and Atria

$1,730M to $1,765M

2025 Outlook

Prior to Prudential and Atria

$1,560M to $1,585M

Prudential and Atria

$170M to $180M

‌Our balance sheet remains strong…

Our strategy is to maintain a strong balance sheet that can absorb market volatility while having the capacity to invest for growth

$708

Management Target Cash† : ~$200M

$684

$621

$479

$325

$309

$311

$234

$184

2023 2024

2025

A long-term target leverage range of 1.5x to 2.5x positions our balance sheet well over a range of cycles

We are willing to operate temporarily above or below our target range if conditions warrant

Management Target Range: 1.5x-2.5x through the cycle

2023 2024

2025

1.26x

1.25x

1.34x

1.61x

1.63x

1.65x

1.68x

1.82x

1.89x

‌...And we have continued to return capital to shareholders

Share Repurchases

Dividends

$373

$170

$150

Capital deployment focused

$2B share repurchase authorization†

$170

$95

$299

$275

$350

$273

$250

$248

$225

Paused share repurchases following the announcement of the acquisition of Atria. In Q4 2024, resumed repurchases following the close of the acquisition.

$70

$92

Paused share repurchases following the announcement of the acquisition of Commonwealth

$23

$100

$123 $122

on organic growth and M&A

$60 $70 $70 $70

$75

$150

$40

$20 $20 $20 $20 $20

$50

$22 $22

$20

$24

$23

$22

81.2

80.1

80.6

80.9

Average Diluted Share Count (M):

Q2 Q3 Q4 Q1 Q2 Q3 Q4

2020 2021

81.6

81.7

81.8

81.7

Q1 Q2

Q3 Q4

81.6

81.4

81.3

80.9

2022

Q1 Q2

80.0

78.2

77.1

76.2

2023

Q4 Q1

Q2 Q3

2024

Q4 Q1

2025

75.5

75.4

75.3

75.1

‌Appendix

‌Corporate and Independent RIA† Advisory assets

Independent RIA† Advisory Assets(19)

Corporate RIA Assets(19)

YOY

Change

$957

$977

23%

$892

$793

$829

$736

$279

$621

$662

$663

$273

$255

$261

$239

$220 $218

$678

30%

$568

$619

$442

$444

$497

$538

2023 2024

2025

$415

$206

$699

$278

Organic Independent RIA† Advisory NNA(20)

Organic Corporate RIA NNA(20)

$49.3

$35.7

$26.6

$22.7

$23.2

$18.1

$20.5

$3.4

$13.7

$5.7

$4.6

$16.2

$6.4

$4.2

$23.5

$17.0

$11.8

($0.3)

2024

2023

2025

Annualized Organic NNA Growth:

Independent

RIA† Advisory

12%

10%

(1%)

10%

Corporate RIA

10%

11%

15%

14%

11%

17%

28%

18%

$13.9

$2.3

$29.8

$5.9

$42.6

$6.6

$9.5

$15.9

$23.2

† Independent RIA assets consist of the advisory assets of Independent RIA advisors who have their own independent RIA license and also manage brokerage assets, as

LPL Financial Member FINRA/SIPC 20

‌Monthly Metrics Dashboard through March 2025

96.6

35.0

25.8

34.1

24.5

20.2

12.0

11.2

10.8

11.7

7.9

9.0

6.8

9.5% 8.8%

7.2%

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

2024

2025

6.2%

5.2%

6.8% 5.8%

0.3

8.8%

5.0

8.6%

7.1

15.8%

0.7

23.4%

0.1

17.4%

24.6%

0.3

0.8

88.3

Total Advisory and Brokerage Assets

Advisory Assets % of Total Assets

1,441 1,413 1,464 1,498 1,529 1,560 1,592

1,673 1,759 1,741 1,812 1,823 1,795

55.6%

56.0%

54.9%

55.3%

55.4%

55.7%

55.4%

54.4%

55.0% 54.8%

54.6%

54.5%

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

2024

2025

55.0%

YOY

Change

SEQ

Change

25%

(2%)

(0.5) pts

(0.1) pts

Organic Total NNA

Acquired Total NNA

Organic Annualized Growth Rate

Total Client Cash Balances (EOP)

Client Cash % of Total Advisory and Brokerage Assets

55.1

50.5

52.2

51.3

53.1

46.3 45.7

44.5

48.3

44.0

43.3

45.8

3.2%

3.0%

2.9% 2.9% 2.8% 2.9% 2.9%

2.9%

3.2%

2.9% 2.8% 3.0%

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

2024

2025

3.2%

15.0

14.5 14.3

12.9

12.3

12.1

12.9

12.6

13.5

12.2

12.5

12.4

13.2

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

2024

2025

YOY

Change

SEQ

Change

15%

‌Reconciliation

Gross Profit*

Gross profit* is a non-GAAP financial measure. Please see a description of gross profit* under "Non-GAAP Financial Measures" on page 3 of this presentation for additional information. Below is a calculation of gross profit* for the periods presented herein:

$ in millions

Q1 2025

Q4 2024

Q3 2024

Q2 2024

Q1 2024

Q4 2023

Q3 2023

Q2 2023

Q1 2023

Total revenue(21)

$3,670

$3,512

$3,108

$2,932

$2,833

$2,644

$2,522

$2,469

$2,418

Advisory and commission expense

2,354

2,250

1,948

1,819

1,733

1,608

1,488

1,449

1,371

Brokerage, clearing and exchange expense

Employee deferred compensation(22)

(1)

Gross Profit(21)

$1,273

$1,228

$1,128

$1,079

$1,066

$1,007

$1,010

$990

$1,020

Net Income to EBITDA*, Adjusted EBITDA*, and Credit Agreement EBITDA*

EBITDA*, Adjusted EBITDA*, and Credit Agreement EBITDA* are non-GAAP financial measures. Please see a description of EBITDA*, Adjusted EBITDA*, and Credit Agreement EBITDA* under "Non-GAAP Financial Measures" on page 3 of this presentation for additional information. Below are reconciliations of the Company's net income to EBITDA*, Adjusted EBITDA*, and Credit Agreement EBITDA* for the periods presented herein:

$ in millions

Q1 2025

Q4 2024

Q3 2024

Q2 2024

Q1 2024

Q4 2023

Q3 2023

Q2 2023

Q1 2023

Net income

$319

$271

$255

$244

$289

$218

$224

$286

$339

Interest expense on borrowings

Provision for income taxes

103

106

Depreciation and amortization

Amortization of other intangibles

EBITDA

$639

$558

$526

$496

$531

$445

$458

$519

$564

Acquisition costs excluding interest(23)

Regulatory charges(24)

Departure of former Chief Executive Officer(25)

(14)

Loss on extinguishment of debt

Adjusted EBITDA

$682

$585

$566

$533

$541

$480

$504

$523

$567

Q1 2025

Q4 2024

Q3 2024

Q2 2024

Q1 2024

Q4 2023

Q3 2023

Q2 2023

Q1 2023

EBITDA (trailing twelve months)

$2,219

$2,111

$1,998

$1,930

$1,953

$1,986

$2,074

$2,030

$1,822

Credit Agreement adjustments

578

554

343

330

208

209

175

133

142

Credit Agreement EBITDA

$2,798

$2,665

$2,341

$2,260

$2,160

$2,195

$2,249

$2,163

$1,964

Total debt

5,720

5,517

4,469

4,472

3,876

3,757

3,142

3,020

2,870

Total corporate cash

621

479

708

684

311

184

309

325

234

Credit Agreement Net Debt

$5,099

$5,038

$3,761

$3,788

$3,564

$3,574

$2,833

$2,694

$2,636

Leverage Ratio

1.82x

1.61x

1.68x

1.65x

1.63x

1.26x

1.25x

1.34x

1.39x

‌Reconciliation

Adjusted EPS* and Adjusted Net Income*

Adjusted EPS* and adjusted net income* are non-GAAP financial measures. Please see a description of adjusted EPS* and adjusted net income* under "Non-GAAP Financial Measures" on page 3 of this presentation for additional information. Below are the reconciliations of net income and earnings per diluted share to adjusted net income* and adjusted EPS* for the periods presented herein:

Q1 2025

Q4 2024

Q3 2024

Q2 2024

Q1 2024

Q4 2023

Q3 2023

Q2 2023

Q1 2023

in millions, except per share data

Amount

Per Share

Amount

Per Share

Amount

Per Share

Amount

Per Share

Amount

Per Share

Amount

Per Share

Amount

Per Share

Amount

Per Share

Amount

Per Share

Net income / earnings per diluted share

$319

$4.24

$271

$3.59

$255

$3.39

$244

$3.23

$289

$3.83

$218

$2.85

$224

$2.91

$286

$3.65

$339

$4.24

Amortization of other intangibles

0.58

0.57

0.43

0.41

0.39

0.38

0.36

0.34

0.30

Acquisition costs(23)

0.65

0.49

0.29

0.49

0.13

0.46

0.08

0.05

0.04

Regulatory charges(24)

0.24

0.52

Departure of former Chief Executive Officer(25)

(14)

(0.19)

Loss on extinguishment of debt

0.05

Tax benefit

(24)

(0.32)

(20)

(0.27)

(15)

(0.19)

(18)

(0.24)

(10)

(0.14)

(14)

(0.18)

(9)

(0.12)

(8)

(0.10)

(7)

(0.09)

Adjusted net income / adjusted EPS

$387

$5.15

$320

$4.25

$313

$4.16

$293

$3.88

$318

$4.21

$267

$3.51

$289

$3.74

$308

$3.94

$359

$4.49

Average diluted share count

75.1

75.3

75.4

75.5

76.2

77.1

78.2

80.0

Adjusted Pre-Tax Income*

Adjusted pre-tax income* is a non-GAAP financial measure. Please see a description of adjusted pre-tax income* under "Non-GAAP Financial Measures" on page 3 of this presentation for

additional information. Below is a reconciliation of income before provision for income taxes to adjusted pre-tax income* for the periods presented herein:

$ in millions

Q1 2025

Q4 2024

Q3 2024

Q2 2024

Q1 2024

Q4 2023

Q3 2023

Q2 2023

Q1 2023

Income before provision for income taxes

$417

$341

$347

$330

$374

$294

$318

$389

$444

Amortization of other intangibles

Acquisition costs(23)

Regulatory Charges(24)

Departure of former Chief Executive Officer(25)

(14)

Loss on extinguishment of debt

Adjusted pre-tax income

$509

$411

$420

$398

$413

$357

$391

$420

$472

‌Reconciliation

Core G&A* to Total Expense

Core G&A* is a non-GAAP financial measure. Please see a description of Core G&A* under "Non-GAAP Financial Measures" on page 3 of this presentation for additional information. Below is a reconciliation of total expense to Core G&A* for the periods presented herein:

$ in millions

Q1 2025

Q4 2024

Q3 2024

Q2 2024

Q1 2024

Q4 2023

Q3 2023

Q2 2023

Q1 2023

Total expense

$3,253

$3,171

$2,761

$2,602

$2,458

$2,350

$2,205

$2,080

$1,973

Advisory and commission

2,354

2,250

1,948

1,819

1,733

1,608

1,488

1,449

1,371

Depreciation and amortization

Interest expense on borrowings

Brokerage, clearing and exchange

Amortization of other intangibles

Employee deferred compensation(22)

(1)

Loss on extinguishment of debt

Total G&A

$634

$666

$602

$583

$535

$562

$552

$471

$456

Promotional (ongoing)(23)

152

173

176

148

132

138

140

107

101

Acquisition costs excluding interest(23)

Employee share-based compensation

Regulatory charges(24)

Core G&A

$413

$422

$359

$371

$364

$342

$337

$326

‌Endnotes

Organic Net New Assets include assets from Large Institutions. Below are Net New Assets from Large Institutions for the periods presented:

$ in billions

Q1 2025

Q4 2024

Q3 2024

Q2 2024

Q1 2024

Q4 2023

Q3 2023

Q2 2023

Q1 2023

Net new organic advisory assets

6.8

18.4

2.3

Net new organic brokerage assets

36.1

21.2

0.3

8.5

Total Organic Net New Assets from Large Institutions

43.0

39.6

0.3

10.8

Represents the estimated total advisory and brokerage assets expected to transition to the Company's primary broker-dealer subsidiary, LPL Financial LLC ("LPL Financial"), associated with advisors who transferred their licenses to LPL Financial during the period. The estimate is based on prior business reported by the advisors, which has not been independently and fully verified by LPL Financial. The actual transition of assets to LPL Financial generally occurs over several quarters and the actual amount transitioned may vary from the estimate.

Recruited assets include assets from Large Institutions. Below are recruited assets from Large Institutions for the periods presented:

$ in billions

Q1 2025

Q4 2024

Q3 2024

Q2 2024

Q1 2024

Q4 2023

Q3 2023

Q2 2023

Q1 2023

Recruited assets from Large Institutions

16.2

63.0

12.3

Reflects retention of total advisory and brokerage assets, calculated by deducting quarterly annualized attrition from total advisory and brokerage assets, over the prior-quarter total advisory and brokerage assets.

Consists of total client deposits into advisory or brokerage accounts less total client withdrawals from advisory or brokerage accounts, plus dividends, plus interest, minus advisory fees. The Company considers conversions from and to brokerage or advisory accounts as deposits and withdrawals, respectively. Annualized growth is calculated as the current period organic net new advisory or brokerage assets divided by preceding period total advisory or brokerage assets, multiplied by four.

Consists of existing custodied assets that converted from brokerage to advisory, less existing custodied assets that converted from advisory to brokerage.

Consists of advisory assets in LPL Financial's Model Wealth Portfolios, Optimum Market Portfolios, Personal Wealth Portfolios and Guided Wealth Portfolios platforms.

Consists of total client deposits into centrally managed assets (see EN 7) accounts less total client withdrawals from centrally managed assets accounts. Annualized growth is calculated as the current period

organic net new centrally managed assets divided by preceding period total centrally managed assets, multiplied by four.

Represents the amount of securities purchased less the amount of securities sold in client accounts custodied with LPL Financial, as well as assets under custody of a third-party custodian related to Atria's seven

introducing broker-dealer subsidiaries.

Represents the average month-end total advisory and brokerage assets for the period.

Represents total trailing twelve-month Gross Profit* for the period, divided by average month-end total advisory and brokerage assets for the period (see EN 10).

Represents total trailing twelve-month operating expenses for the period, excluding production-related expense ("OPEX"), divided by average month-end total advisory and brokerage assets for the period (see EN 10). Production-related expense includes advisory and commissions expense and brokerage, clearing and exchange expense. For purposes of this metric, operating expenses includes Core G&A*, regulatory, promotional, employee share-based compensation, depreciation & amortization and amortization of other intangibles.

EBIT ROA is calculated as Gross Profit ROA (see EN 11) less OPEX ROA (see EN 12).

Consists of revenues from the Company's sponsorship programs with financial product manufacturers and omnibus processing and networking services, but not including fees from client cash programs. Other asset-based revenues are a component of asset-based revenues and are derived from the Company's condensed consolidated statements of income.

Client cash accounts include cash that clients have deposited with LPL Financial that is included in client payables in the consolidated balance sheets. During the first quarter of 2024, the company updated its definition of the client cash account balances to exclude other client payables.

Calculated by dividing revenue for the period by the average balance during the quarter.

‌Endnotes

Corporate cash, a component of cash and equivalents, is the sum of cash and equivalents from the following: (1) cash and equivalents held at LPL Holdings, Inc., (2) cash and equivalents held at regulated subsidiaries as defined by the Company's Credit Agreement, which include LPL Financial, LPL Enterprise, LLC, The Private Trust Company, N.A. and certain of Atria Wealth Solutions, Inc.'s introducing broker-dealer subsidiaries, in excess of the capital requirements of the Company's Credit Agreement and (3) cash and equivalents held at non-regulated subsidiaries. Cash and equivalents held at regulated subsidiaries as of March 31, 2023, June 30, 2023 and September 30, 2023 included that of Financial Resources Group Investment Services, LLC; however, the broker-dealer registration for this entity was terminated during the fourth quarter of 2023. As a result, it is reflected in cash and equivalents held at non-regulated subsidiaries at December 31, 2023.

The Company calculates its leverage ratio as total debt less total corporate cash, divided by Credit Agreement EBITDA for the trailing twelve months.

Assets on the Company's corporate RIA platform are serviced by investment advisor representatives of LPL Financial or Allen & Company. Assets on the Company's independent RIA advisory platform are serviced

by investment advisor representatives of separate registered investment advisor firms rather than representatives of LPL Financial.

Consists of total client deposits into advisory accounts on LPL Financial's independent RIA advisory platform or corporate RIA platform less total client withdrawals from advisory accounts on its independent RIA advisory platform or its corporate RIA platform. Annualized growth is calculated as the current period net new independent RIA Advisory Assets or corporate RIA assets divided by preceding period total independent RIA Advisory Assets or corporate RIA assets, multiplied by four.

During the first quarter of 2023, the Company updated its presentation of employee deferred compensation to be consistent with its presentation of advisor deferred compensation. As a result, gains or losses related to market fluctuations on advisor and employee deferred compensation plans are presented in the same line item as the related increase or decrease in compensation expense for purposes of Management's Statements of Operations. This change has not been applied retroactively as the impact on prior periods was not material.

Acquisition costs include the costs to setup, onboard and integrate acquired entities and other costs that were incurred as a result of the acquisitions. The below table summarizes the primary components of acquisition costs for the periods presented:

$ in millions

Q1 2025

Q4 2024

Q3 2024

Q2 2024

Q1 2024

Q4 2023

Q3 2023

Q2 2023

Q1 2023

Compensation and benefits

17.4

16.0

$8.4

$6.8

$3.9

$2.8

$1.3

$1.0

$0.9

Professional services

6.1

7.4

6.7

3.6

3.2

3.7

2.2

2.6

1.6

Promotional

8.5

2.2

2.0

0.5

2.3

0.9

2.3

0.3

0.2

Fair value mark on contingent consideration(26)

6.6

11.2

5.8

24.6

26.7

Interest(27)

5.1

Other

4.7

0.5

(0.6)

1.3

0.2

0.9

0.2

0.4

Acquisition costs

48.5

37.3

$22.2

$36.9

$9.5

$34.9

$6.0

$4.1

$3.1

Regulatory charges for the three months ended September 30, 2024 and year ended December 31, 2024 include charges related to a settlement with the SEC to resolve the Company's civil investigation of certain elements of the Company's Anti-Money Laundering ("AML") compliance program. The Company has recorded an $18.0 million charge for the quarter ended September 30, 2024 and reached a settlement with the staff of the SEC and paid the civil monetary penalty in January 2025. Regulatory charges for the three months ended September 30, 2023 and year ended December 31, 2023 include a $40.0 million charge to reflect the amount of the penalty related to the SEC's civil investigation of the Company's compliance with records preservation requirements for business-related electronic communications that was not covered by the Company's captive insurance subsidiary. The Company reached a settlement with the staff of the SEC and paid the civil monetary penalty of $50.0 million in August 2024.

The departure of the Company's former Chief Executive Officer resulted in other income of $26.4 million during the three months ended December 31, 2024 related to the clawback of share-based compensation awards which was offset by share-based compensation expense of $12.0 million related to the modification of certain stock options that were retained as per the settlement agreement that the Company reached with the former Chief Executive Officer.

Represents a fair value adjustment to our contingent consideration liabilities that is reflected in other expense in the condensed consolidated statements of income.

‌Endnotes

Below is a reconciliation of interest expense on borrowings per Management's Statements of Operations to interest expense on borrowings on the Company's condensed consolidated statements of income for the periods presented:

$ in millions

Q1 2025

Q4 2024

Q3 2024

Q2 2024

Q1 2024

Q4 2023

Q3 2023

Q2 2023

Q1 2023

Interest expense on borrowings on Management's Statement of Operations

Cost of debt issuance related to Commonwealth acquisition(23)

Interest expense on borrowings on Condensed Consolidated Statements of Income

Disclaimer

LPL Financial Holdings Inc. published this content on May 08, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 08, 2025 at 23:19 UTC.