LPL Financial : Q1 2025 Earnings Release

Published: 2025-05-08 20:08:45 ET LPLA

Published on 05/08/2025 at 20:08

For Immediate Release

LPL Financial Announces First Quarter 2025 Results

Key Financial Results:

Gross profit* increased 19% year-over-year to $1,273 million

Core G&A* increased 14% year-over-year to $413 million

Adjusted pre-tax income* increased 23% year-over-year to $509 million

Key Business Results:

Advisory assets increased 23% year-over-year to $977 billion

Advisory assets as a percentage of total assets decreased to 54.5%, down from 55.0% a year ago

This included $27 billion of assets from Prudential Advisors ("Prudential") and $16 billion of assets from Wintrust Investments, LLC and certain private client business at Great Lakes Advisors, LLC (collectively, "Wintrust") that onboarded during the first quarter, as well as $0.7 billion of assets that off-boarded as part of the previously disclosed planned separation from misaligned large OSJs. Prior to these impacts, organic net new assets were $29 billion, translating to a 7% annualized growth rate

Recruited assets over the trailing twelve months were a record of $167 billion

Client cash balances as a percentage of total assets were 3.0%, down from 3.2% in the prior quarter and prior year

Key Capital and Liquidity Results:

Leverage ratio(3)was 1.82x

*See the Non-GAAP Financial Measures section and the endnotes to this release for further details about these non-GAAP financial measures

$27 billion transitioned onto our platform in Q1

$7 billion of brokerage and advisory assets

In February 2025, issued $1.25 billion of senior unsecured notes, including $750 million of 5.200% notes due 2030 and $500 million of 5.650% notes due 2035. Net proceeds from this offering were used to repay outstanding borrowings under the Company's revolving credit facility

In April 2025, issued $1.50 billion of senior unsecured notes, including $500 million of 4.900% notes due 2028, $500 million of 5.150% notes due 2030 and $500 million of 5.750% notes due 2035. Net proceeds from this offering are expected to fund a portion of the cash consideration payable in connection with the acquisition of Commonwealth

Lowered the upper end of our 2025 Core G&A* outlook range by $15 million, resulting in an updated range of

$1,730 million to $1,765 million. This includes $170 million to $180 million related to Prudential and Atria, but is prior to costs associated with Commonwealth

$289 million, or $3.83 per share, in the first quarter of 2024 and $271 million, or $3.59 per share, in the prior quarter.

"It's been a strong start to the year for LPL," said Rich Steinmeier, CEO. "We delivered another quarter of strong business performance, reported excellent financial results, and reached an agreement to acquire Commonwealth, significantly accelerating our progress toward our vision to be the best firm in wealth management."

"In the first quarter, we delivered solid business performance and financial results," said Matt Audette, President and CFO. "We onboarded Prudential and Wintrust and are preparing to onboard First Horizon later this year. As a complement to our strong organic growth, we closed and onboarded the acquisition of The Investment Center in March, continue to prepare to onboard our Atria advisors, and lastly, entered into an agreement to acquire Commonwealth Financial Network. Looking ahead, our business momentum and financial strength position us well to continue delivering shareholder value."

The Company's Board of Directors declared a $0.30 per share dividend to be paid on June 12, 2025 to all stockholders of record as of May 30, 2025.

The Company will hold a conference call to discuss its results at 5:00 p.m. ET on Thursday, May 8, 2025. The conference call will be accessible and available for replay at investor.lpl.com/events.

Contacts

Investor Relations [email protected]

Media Relations [email protected]

About LPL Financial

LPL Financial Holdings Inc. (Nasdaq: LPLA) is among the fastest growing wealth management firms in the U.S. As a leader in the financial advisor-mediated marketplace(4), LPL supports over 29,000 financial advisors and the wealth management practices of approximately 1,200 financial institutions, servicing and custodying approximately $1.8 trillion in brokerage and advisory assets on behalf of approximately 7 million Americans. The firm provides a wide range of advisor affiliation models, investment solutions, fintech tools and practice management services, ensuring that advisors and institutions have the flexibility to choose the business model, services, and technology resources they need to run thriving businesses. For further information about LPL, please visit https://www.lpl.com.

Throughout this communication, the terms "financial advisors" and "advisors" are used to refer to registered representatives and/or investment advisor representatives affiliated with LPL Financial or LPL Enterprise.

We routinely disclose information that may be important to shareholders in the "Investor Relations" or "Press Releases" section of our website.

This press release contains statements regarding:

the expected closing of the Company's acquisition of Commonwealth;

the use of proceeds from the issuance of common stock and senior notes to fund a portion of the cash consideration payable in connection with the acquisition of Commonwealth;

the amount and timing of the onboarding of acquired, recruited or transitioned brokerage and advisory assets, including Atria, Commonwealth, First Horizon and The Investment Center;

the Company's future financial and operating results, growth, plans, priorities and business strategies, including forecasts and statements related to the Company's ICA yield, service and fee revenue, transaction revenue, core G&A expense, promotional expense, interest expense and income, depreciation and amortization, leverage ratio (including plans to reduce leverage) and share repurchases; and

future capabilities, future advisor service experience, future investments and capital deployment, including share repurchase activity and dividends, if any, and long-term shareholder value.

These and 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 and objectives as of May 8, 2025 and are not guarantees that 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, including regulatory approvals;

difficulties and delays in onboarding the assets of acquired, recruited or transitioned advisors, including the receipt and timing of regulatory approvals that may be required;

disruptions in the businesses of the Company and Commonwealth 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;

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 retail investors served by newly-recruited advisors choose to move their respective assets to new accounts at the Company;

changes in the growth and profitability of the Company's fee-based offerings and asset-based revenues;

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;

the 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 LPL Financial, and the indentures governing the Company's senior unsecured notes;

strategic acquisitions and investments, including pursuant to the Company's Liquidity & 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;

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;

whether advisors affiliated with Atria, Commonwealth, First Horizon, and The Investment Center will transition registration to the Company and whether assets reported as serviced by such financial advisors will translate into assets of the Company;

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 the date of this earnings release, and you should not rely on statements contained herein as representing the Company's view as of any date subsequent to the date of this press release.

REVENUE

Advisory

$ 1,689,245

$ 1,595,834

1,199,811

41%

Commission:

Sales-based

610,038

525,795

16%

385,235

58%

Trailing

437,719

439,668

361,211

21%

Total commission

1,047,757

965,463

746,446

40%

Asset-based:

Client cash

392,031

378,816

352,382

11%

Other asset-based

303,210

290,962

248,339

22%

Total asset-based

695,241

669,778

600,721

16%

Service and fee

145,199

139,119

132,172

10%

Transaction

67,864

61,535

10%

57,258

19%

Interest income, net

43,851

46,680

(6%)

43,525

Other

(19,150)

33,942

n/m

52,660

n/m

Total revenue

3,670,007

3,512,351

2,832,593

30%

EXPENSE

Advisory and commission

2,353,925

2,250,427

1,733,487

36%

Compensation and benefits

305,546

321,933

(5%)

274,369

11%

Promotional

145,645

162,057

(10%)

126,619

15%

Depreciation and amortization

92,356

92,032

67,158

38%

Interest expense on borrowings

85,862

81,979

60,082

43%

Occupancy and equipment

77,240

75,538

66,264

17%

Brokerage, clearing and exchange

44,138

34,789

27%

30,532

45%

Amortization of other intangibles

43,521

42,614

29,552

47%

Professional services

36,326

32,055

13%

13,279

174%

Communications and data processing

19,506

18,772

19,744

(1%)

Other

48,689

58,874

(17%)

37,315

30%

Total expense

3,252,754

3,171,070

2,458,401

32%

INCOME BEFORE PROVISION FOR INCOME

TAXES

417,253

341,281

22%

374,192

12%

PROVISION FOR INCOME TAXES

98,680

70,532

40%

85,428

16%

NET INCOME

$ 318,573

$ 270,749

18%

288,764

10%

EARNINGS PER SHARE

Earnings per share, basic

$ 4.27

$ 3.62

18%

3.87

10%

Earnings per share, diluted

$ 4.24

$ 3.59

18%

3.83

11%

Weighted-average shares outstanding, basic

74,600

74,785

74,562

Weighted-average shares outstanding, diluted

75,112

75,337

-% 75,463

LPL Financial Holdings Inc.

Condensed Consolidated Statements of Financial Condition (In thousands, except share data)

(Unaudited)

March 31,

December 31,

2025

ASSETS

2024

Cash and equivalents $ 1,229,181

$ 967,079

Cash and equivalents segregated under federal or other regulations 1,513,037

1,597,249

Restricted cash 112,458

119,724

Receivables from clients, net 613,766

633,834

Receivables from brokers, dealers and clearing organizations 112,249

76,545

Advisor loans, net 2,468,033

2,281,088

Other receivables, net 939,411

902,777

Investment securities ($122,729 and $42,267 at fair value at March 31, 2025 and December

31, 2024, respectively) 138,007

57,481

Property and equipment, net 1,237,693

1,210,027

Goodwill 2,213,100

2,172,873

Other intangibles, net 1,570,558

1,482,988

Other assets 1,815,729

1,815,739

Total assets $ 13,963,222

$ 13,317,404

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:

Client payables

$ 2,045,285

$ 1,898,665

Payables to brokers, dealers and clearing organizations

252,035

129,228

Accrued advisory and commission expenses payable

303,837

323,996

Corporate debt and other borrowings, net

5,686,678

5,494,724

Accounts payable and accrued liabilities

479,803

588,450

Other liabilities

2,071,801

1,951,739

Total liabilities

10,839,439

10,386,802

STOCKHOLDERS' EQUITY:

Common stock, $0.001 par value; 600,000,000 shares authorized; 131,194,549 shares and 130,914,541 shares issued at March 31, 2025 and December 31, 2024, respectively

131

Additional paid-in capital

2,089,155

2,066,268

Treasury stock, at cost - 56,611,181 shares and 56,253,909 shares at March 31, 2025 and December 31, 2024, respectively

(4,331,582)

(4,202,322)

Retained earnings

5,366,079

5,066,525

Total stockholders' equity

3,123,783

2,930,602

Total liabilities and stockholders' equity

$ 13,963,222

$ 13,317,404

Certain information in this release is presented as reviewed by the Company's management and includes information derived from the Company's unaudited condensed consolidated statements of income, non-GAAP financial measures and operational and performance metrics. For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures" in this release.

Q1 2025 Q4 2024 Change Q1 2024 Change

Gross Profit(5)

Advisory

$ 1,689,245

$ 1,595,834

$ 1,199,811

41%

Trailing commissions

437,719

439,668

361,211

21%

Sales-based commissions

610,038

525,795

16%

385,235

58%

Advisory fees and commissions

2,737,002

2,561,297

1,946,257

41%

Production-based payout(6)

(2,374,368)

(2,248,674)

(1,686,332)

41%

Advisory fees and commissions, net of payout

362,634

312,623

16%

259,925

40%

Client cash(7)

408,224

397,001

373,408

Other asset-based(8)

303,210

290,962

248,339

22%

Service and fee

145,199

139,119

132,172

10%

Transaction

67,864

61,535

10%

57,258

19%

Interest income, net(9)

27,637

28,481

(3%)

22,482

23%

Other revenue(10)

2,023

32,705

(94%)

3,382

(40%)

Total net advisory fees and commissions and attachment

revenue

1,316,791

1,262,426

1,096,966

20%

Brokerage, clearing and exchange expense

(44,138)

(34,789)

27%

(30,532)

45%

Gross Profit(5)

1,272,653

1,227,637

1,066,434

19%

G&A Expense

Core G&A(11)

413,069

421,894

(2%)

363,513

14%

Regulatory charges

6,887

7,335

(6%)

7,469

(8%)

Promotional (ongoing)(12)(13)

151,932

173,191

(12%)

132,311

15%

Acquisition costs excluding interest(13)

43,407

37,261

16%

9,524

n/m

Employee share-based compensation

18,366

26,067

(30%)

22,633

(19%)

Total G&A

633,661

665,748

(5%)

535,450

18%

Loss on extinguishment of debt

3,983

(100%)

EBITDA(14)

638,992

557,906

15%

530,984

20%

Depreciation and amortization

92,356

92,032

67,158

38%

Amortization of other intangibles

43,521

42,614

29,552

47%

Interest expense on borrowings(15)

80,725

81,979

(2%)

60,082

34%

Acquisition costs - interest(13)

5,137

100%

INCOME BEFORE PROVISION FOR INCOME TAXES

417,253

341,281

22%

374,192

12%

PROVISION FOR INCOME TAXES

98,680

70,532

40%

85,428

16%

NET INCOME

$ 318,573

$ 270,749

18%

$ 288,764

10%

Earnings per share, diluted

$ 4.24

$ 3.59

18%

$ 3.83

11%

Weighted-average shares outstanding, diluted

75,112

75,337

75,463

Adjusted EBITDA(14)

$ 682,399

$ 584,783

17%

$ 540,508

26%

Adjusted pre-tax income(16)

$ 509,318

$ 410,772

24%

$ 413,268

23%

Adjusted EPS(17)

$ 5.15

$ 4.25

21%

$ 4.21

22%

Q1 2025 Q4 2024 Change Q1 2024 Change

Market Drivers

S&P 500 Index (end of period)

5,612

5,882

(5%)

5,254

Russell 2000 Index (end of period)

2,012

2,230

(10%)

2,125

(5%)

Fed Funds daily effective rate (average bps)

433

466

(33bps)

533

(100bps)

Advisory and Brokerage Assets(18)

Advisory assets

$ 977.4

$ 957.0

$ 793.0

23%

Brokerage assets

817.5

783.7

647.9

26%

Total Advisory and Brokerage Assets

$ 1,794.9

$ 1,740.7

$ 1,440.9

25%

Advisory as a % of Total Advisory and Brokerage Assets

54.5%

55.0%

(50bps)

55.0%

(50bps)

Assets by Platform

Corporate advisory assets(19)

$ 699.1

$ 678.3

$ 537.6

30%

Independent RIA advisory assets(19)

278.3

278.7

255.4

Brokerage assets

817.5

783.7

647.9

26%

Total Advisory and Brokerage Assets

$ 1,794.9

$ 1,740.7

$ 1,440.9

25%

Centrally Managed Assets

Centrally managed assets(20)

$ 164.4

$ 160.0

$ 121.7

35%

Centrally Managed as a % of Total Advisory Assets

16.8%

16.7%

10bps

15.3%

150bps

Q1 2025

Q4 2024

Change

Q1 2024

Change

Organic Net New Assets (NNA)(21)

Organic net new advisory assets

$ 35.7

$ 49.3

n/m

$ 16.2

n/m

Organic net new brokerage assets

35.2

18.8

n/m

0.5

n/m

Total Organic Net New Assets

$ 70.9

$ 68.0

n/m

$ 16.7

n/m

Acquired Net New Assets(21)

Acquired net new advisory assets

$ 1.9

$ 21.8

n/m

$ - n/m

Acquired net new brokerage assets

6.0

67.5

n/m

- n/m

Total Acquired Net New Assets

$ 7.9

$ 89.3

n/m

$ - n/m

Total Net New Assets(21)

Net new advisory assets

$ 37.6

$ 71.1

n/m

$ 16.2

n/m

Net new brokerage assets

41.2

86.2

n/m

0.5

n/m

Total Net New Assets

$ 78.8

$ 157.3

n/m

$ 16.7

n/m

Net brokerage to advisory conversions(22)

$ 5.9

$ 4.8

n/m

$ 3.6

n/m

Organic advisory NNA annualized growth(23)

14.9%

22.1%

n/m

8.8%

n/m

Total organic NNA annualized growth(23)

16.3%

17.1%

n/m

4.9%

n/m

Net New Advisory Assets(21)

Corporate RIA net new advisory assets

$ 31.7

$ 64.5

n/m

$ 13.9

n/m

Independent RIA net new advisory assets

5.9

6.6

n/m

2.3

n/m

Total Net New Advisory Assets

$ 37.6

$ 71.1

n/m

$ 16.2

n/m

Centrally managed net new advisory assets(21)

$ 6.5

$ 24.9

n/m

$ 3.6

n/m

Net buy (sell) activity(24)

Note: Totals may not foot due to rounding.

$ 42.0

$ 38.3

n/m

$ 37.8

n/m

Insured cash account sweep

$ 36.1

$ 38.3

(6%)

$ 32.6

11%

Deposit cash account sweep

10.7

9.2

16%

Total Bank Sweep

46.8

49.0

(4%)

41.8

12%

Money market sweep

4.3

2.4

79%

Total Client Cash Sweep Held by Third Parties

51.1

53.3

(4%)

44.2

16%

Client cash account (CCA)

1.9

1.8

2.1

(10%)

Total Client Cash Balances

$ 53.1

$ 55.1

(4%)

$ 46.3

15%

Client Cash Balances as a % of Total Assets

3.0%

3.2%

(20bps)

3.2%

(20bps)

Note: Totals may not foot due to rounding.

Insured cash account sweep $ 36.0 $ 299,618 337 $ 34.8 $ 292,661 335 $ 33.2 $ 266,792 323

Deposit cash account sweep

10.2

89,728

356

9.8

83,879

340

8.9

83,978

378

Total Bank Sweep

46.2

389,346

341

44.6

376,540

336

42.1

350,770

335

Money market sweep

4.1

2,685

3.3

2,277

2.3

1,612

Total Client Cash Held By Third Parties

50.4

392,031

316

47.9

378,817

315

44.4

352,382

319

Client cash account (CCA)

1.8

16,193

368

1.8

18,184

407

1.8

21,026

467

Total Client Cash

52.2

408,224

317

49.7

397,001

318

46.2

373,408

325

Margin receivables

0.6

11,444

789

0.6

11,506

829

0.5

10,249

890

Other interest revenue

1.3

16,193

512

1.3

16,975

524

0.9

12,233

535

Total Client Cash and Interest Income, Net

$ 54.0

$ 435,861

327

$ 51.6

$ 425,482

329

$ 47.6

$ 395,890

334

Note: Totals may not foot due to rounding.

March 2025 February 2025 Change January 2025 December 2024

Advisory and Brokerage Assets(18)

Advisory assets

$ 977.4

$ 995.0

(2%)

$ 992.4

$ 957.0

Brokerage assets

817.5

828.2

(1%)

819.4

783.7

Total Advisory and Brokerage Assets

$ 1,794.9

$ 1,823.1

(2%)

$ 1,811.8

$ 1,740.7

Organic Net New Assets (NNA)(21)

Organic net new advisory assets

$ 12.7

$ 9.6

n/m

$ 13.4

$ 12.5

Organic net new brokerage assets

0.5

14.1

n/m

20.5

12.9

Total Organic Net New Assets

$ 13.1

$ 23.8

n/m

$ 34.0

$ 25.5

Acquired Net New Assets(21)

Acquired net new advisory assets

1.8

n/m

$ 0.1

Acquired net new brokerage assets

5.3

0.7

n/m

0.2

Total Acquired Net New Assets

7.1

0.7

n/m

$ 0.1

0.3

Total Net New Assets(21)

Net new advisory assets

$ 14.5

$ 9.6

n/m

$ 13.5

$ 12.6

Net new brokerage assets

5.8

14.8

n/m

20.6

13.2

Total Net New Assets

$ 20.2

$ 24.5

n/m

$ 34.1

$ 25.8

Net brokerage to advisory conversions(22)

$ 1.9

n/m

$ 2.1

$ 2.0

Client Cash Balances(25)

Insured cash account sweep

$ 36.1

$ 35.6

$ 36.2

$ 38.3

Deposit cash account sweep

10.7

10.2

10.0

10.7

Total Bank Sweep

46.8

45.8

46.3

49.0

Money market sweep

4.3

4.0

4.1

4.3

Total Client Cash Sweep Held by Third Parties

51.1

49.8

50.4

53.3

Client cash account (CCA)

1.9

1.5

27%

1.8

Total Client Cash Balances

$ 53.1

$ 51.3

$ 52.2

$ 55.1

Net buy (sell) activity(24)

13.2 $

14.3 n/m $

14.5 $

13.5

Market Drivers

S&P 500 Index (end of period)

5,612

5,955

(6%)

6,041

5,882

Russell 2000 Index (end of period)

2,012

2,163

(7%)

2,288

2,230

Fed Funds effective rate (average bps)

433

-bps

433

448

Note: Totals may not foot due to rounding.

Q1 2025 Q4 2024 Change Q1 2024 Change

Commission Revenue by Product

Annuities

$ 615,594

$ 561,918

10%

$ 436,473

41%

Mutual funds

233,895

232,529

186,540

25%

Fixed income

61,553

59,332

48,641

27%

Equities

49,074

45,829

35,451

38%

Other

87,641

65,855

33%

39,341

123%

Total commission revenue

$ 1,047,757

$ 965,463

$ 746,446

40%

Commission Revenue by Sales-based and Trailing

Annuities

$ 365,767

$ 314,591

16%

$ 229,077

60%

Mutual funds

55,607

52,908

43,496

28%

Fixed income

61,553

59,332

48,641

27%

Equities

49,074

45,829

35,451

38%

Other

78,037

53,135

47%

28,570

173%

Total sales-based commissions

$ 610,038

$ 525,795

16%

$ 385,235

58%

Trailing commissions

Annuities

$ 249,827

$ 247,327

$ 207,396

20%

Mutual funds

178,288

179,621

(1%)

143,044

25%

Other

9,604

12,720

(24%)

10,771

(11%)

Total trailing commissions

$ 437,719

$ 439,668

$ 361,211

21%

Total commission revenue

$ 1,047,757

$ 965,463

$ 746,446

40%

Q1 2025

Q4 2024

Cash and equivalents

$ 1,229,181

$ 967,079

Cash at regulated subsidiaries

(1,085,459)

(884,779)

Excess cash at regulated subsidiaries per the Credit Agreement

476,908

397,138

Corporate Cash(2)

$ 620,630

$ 479,438

Corporate Cash(2)

Cash at LPL Holdings, Inc.

$ 104,080

$ 39,782

Excess cash at regulated subsidiaries per the Credit Agreement

476,908

397,138

Cash at non-regulated subsidiaries

39,642

42,518

Corporate Cash

$ 620,630

$ 479,438

Leverage Ratio

Total debt

$ 5,720,000

$ 5,517,000

Total corporate cash

620,630

479,438

Credit Agreement Net Debt

$ 5,099,370

$ 5,037,562

Credit Agreement EBITDA (trailing twelve months)(27)

$ 2,797,285

$ 2,665,033

Leverage Ratio

1.82x

1.89x

Margin Interest Rate Maturity

Revolving Credit Facility(a)

$ -

ABR+37.5 bps / SOFR+147.5 bps

5.794 %

5/20/2029

Broker-Dealer Revolving Credit Facility

SOFR+135 bps

5.760 %

5/19/2025

Senior Unsecured Term Loan A

1,020,000

SOFR+147.5 bps(b)

5.798 %

12/5/2026

Senior Unsecured Notes

500,000

5.700% Fixed

5.700 %

5/20/2027

Senior Unsecured Notes

400,000

4.625% Fixed

4.625 %

11/15/2027

Senior Unsecured Notes

750,000

6.750% Fixed

6.750 %

11/17/2028

Senior Unsecured Notes

900,000

4.000% Fixed

4.000 %

3/15/2029

Senior Unsecured Notes

750,000

5.200% Fixed

5.200 %

3/15/2030

Senior Unsecured Notes

400,000

4.375% Fixed

4.375 %

5/15/2031

Senior Unsecured Notes

500,000

6.000% Fixed

6.000 %

5/20/2034

Senior Unsecured Notes

500,000

5.650% Fixed

5.650 %

3/15/2035

Total / Weighted Average

$ 5,720,000

5.376 %

Unsecured borrowing capacity of $2.25 billion at LPL Holdings, Inc.

The SOFR rate option is a one-month SOFR rate and subject to an interest rate floor of 0 bps.

Q1 2025 Q4 2024 Change Q1 2024 Change

Business Metrics

Advisors

29,493

28,888

22,884

29%

Net new advisors

605

5,202

(88%)

224

170%

Annualized advisory fees and commissions per advisor(28)

$ 375

$ 390

(4%)

$ 342

10%

Average total assets per advisor ($ in millions)(29)

$ 60.9

$ 60.3

$ 63.0

(3%)

Transition assistance loan amortization ($ in millions)(30)

$ 81.8

$ 76.3

$ 58.3

40%

Total client accounts (in millions)

10.4

10.0

8.4

24%

Recruited AUM ($ in billions)

38.6

78.7

(51%)

20.2

91%

Employees(31)

9,118

9,051

8,252

10%

AUM retention rate (quarterly annualized)(32) 98.2% 97.3% 90bps 97.4% 80bps

Capital expenditures ($ in millions)(33)

$ 119.5

$ 165.5

(28%)

$ 121.0

(1%)

Acquisitions, net ($ in millions)(34)

$ 95.1

$ 847.9

(89%)

$ 10.2

n/m

Share repurchases ($ in millions)

$ 100.0

$ 70.0

43%

Dividends ($ in millions)

22.4

22.5

22.4

Total Capital Returned ($ in millions)

$ 122.4

$ 122.5

$ 92.4

32%

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 below are appropriate for evaluating the performance of the Company.

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, 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 endnote disclosures in this release.

Gross profit is calculated as total revenue less advisory and commission expense; brokerage, clearing and exchange expense; 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 endnote disclosures in this release.

Core G&A consists of total expense less the following expenses: advisory and commission; depreciation and amortization; interest expense on borrowings; brokerage, clearing and exchange; 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 endnote disclosures in this release. 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, 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 endnote disclosures in this release.

Adjusted pre-tax income is defined as income before provision for income taxes plus amortization of other intangibles, acquisition costs, 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 endnote disclosures in this release.

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 endnote disclosures in this release.

Represents the estimated total advisory and brokerage assets expected to transition to the Company's primary broker-dealer subsidiary, LPL Financial, in connection 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.

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'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.

Compliance with the Leverage Ratio is only required under the Company's revolving credit facility.

The Company was named a Top RIA custodian (Cerulli Associates, 2024 U.S. RIA Marketplace Report); No. 1 Independent Broker-Dealer in the U.S. (based on total revenues, Financial Planning magazine 1996-2022); and, among third-party providers of brokerage services to banks and credit unions, No. 1 in AUM Growth from Financial Institutions; No. 1 in Market Share of AUM from Financial Institutions; No. 1 in Market Share of Revenue from Financial Institutions; No. 1 on Financial Institution Market Share; No. 1 on Share of Advisors (2021-2022 Kehrer Bielan Research and Consulting Annual TPM Report). Fortune 500 as of June 2021.

Gross profit is a non-GAAP financial measure. Please see a description of gross profit under the "Non-GAAP Financial Measures" section of this release for additional information. Below is a calculation of gross profit for the periods presented (in thousands):

Q1 2025

Q4 2024

Q1 2024

Total revenue(a)

$ 3,670,007

$ 3,512,351 $

2,832,593

Advisory and commission expense

2,353,925

2,250,427

1,733,487

Brokerage, clearing and exchange expense

44,138

34,789

30,532

Employee deferred compensation

(709)

(502)

2,140

Gross profit(a)

$ 1,272,653

$ 1,227,637 $

1,066,434

Production-based payout is a financial measure calculated as advisory and commission expense plus (less) advisor deferred compensation. The payout rate is calculated by dividing the production-based payout by total advisory and commission revenue. Below is a reconciliation of the Company's advisory and commission expense to the production-based payout and a calculation of the payout rate for the periods presented (in thousands, except payout rate):

Q1 2025

Q4 2024

Q1 2024

Advisory and commission expense

$ 2,353,925

$ 2,250,427

$ 1,733,487

Plus (Less): Advisor deferred compensation

20,443

(1,753)

(47,155)

Production-based payout

$ 2,374,368

$ 2,248,674

$ 1,686,332

Advisory and commission revenue

$ 2,737,002

$ 2,561,297

$ 1,946,257

Payout rate

86.75%

87.79%

86.64%

Below is a reconciliation of client cash revenue per Management's Statements of Operations to client cash revenue, a component of asset-based revenue, on the Company's condensed consolidated statements of income for the periods presented (in thousands):

Q1 2025

Q4 2024

Q1 2024

Client cash on Management's Statement of Operations

$ 408,224

$ 397,001

$ 373,408

Interest income on CCA balances segregated under federal or other regulations(9)

(16,193)

(18,185)

(21,026)

Client cash on Condensed Consolidated Statements of Income

$ 392,031

$ 378,816

$ 352,382

Consists of revenue from the Company's sponsorship programs with financial product manufacturers, omnibus processing and networking services but does not include fees from client cash programs.

Below is a reconciliation of interest income, net per Management's Statements of Operations to interest income, net on the Company's condensed consolidated statements of income for the periods presented (in thousands):

Q1 2025

Q4 2024

Q1 2024

Interest income, net on Management's Statement of Operations

$ 27,637

$ 28,481

$ 22,482

Interest income on CCA balances segregated under federal or other regulations(7)

16,193

18,185

21,026

Interest income on deferred compensation

Interest income, net on Condensed Consolidated Statements of Income

$ 43,851

$ 46,680

$ 43,525

Below is a reconciliation of other revenue per Management's Statements of Operations to other revenue on the Company's condensed consolidated statements of income for the periods presented (in thousands):

Q1 2025

Q4 2024

Q1 2024

Other revenue on Management's Statement of Operations(a)

$ 2,023 $

32,705

$ 3.382

Interest income on deferred compensation

(21)

(14)

(17)

Deferred compensation

(21,152)

1,251

49,295

Other revenue on Condensed Consolidated Statements of Income

$ (19,150) $

33,942

$ 52,660

Core G&A is a non-GAAP financial measure. Please see a description of core G&A under the "Non-GAAP Financial Measures" section of this release for additional information. Below is a reconciliation of the Company's total expense to core G&A for the periods presented (in thousands):

Core G&A Reconciliation

Total expense

$ 3,252,754 $

3,171,070

$ 2,458,401

Advisory and commission

(2,353,925)

(2,250,427)

(1,733,487)

Depreciation and amortization

(92,356)

(92,032)

(67,158)

Interest expense on borrowings(15)

(85,862)

(81,979)

(60,082)

Brokerage, clearing and exchange

(44,138)

(34,789)

(30,532)

Amortization of other intangibles

(43,521)

(42,614)

(29,552)

Employee deferred compensation

709

502

(2,140)

Loss on extinguishment of debt

(3,983)

(-)

Total G&A

633,661

665,748

535,450

Promotional (ongoing)(12)(13)

(151,932)

(173,191)

(132,311)

Acquisition costs excluding interest(13)

(43,407)

(37,261)

(9,524)

Employee share-based compensation

(18,366)

(26,067)

(22,633)

Regulatory charges

(6,887)

(7,335)

(7,469)

Core G&A

$ 413,069 $

421,894

$ 363,513

Promotional (ongoing) includes $14.8 million, $13.4 million and $8.0 million for the three months ended March 31, 2025, December 31, 2024 and March 31, 2024, respectively, of support costs related to full-time employees that are classified within Compensation and benefits expense in the condensed consolidated statements of income and excludes costs that have been incurred as part of acquisitions that have been classified within acquisition costs.

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 thousands):

Acquisition costs

Fair value mark on contingent consideration(35)

$ 6,594

$ 11,249

$ -

Compensation and benefits

17,417

15,950

3,850

Professional services

6,145

7,357

3,246

Promotional(12)

8,538

2,235

2,268

Interest(15)

5,137

Other

4,713

470

160

Acquisition costs

$ 48,544

$ 37,261

$ 9,524

EBITDA and adjusted EBITDA are non-GAAP financial measures. Please see a description of EBITDA and adjusted EBITDA under the "Non-GAAP Financial Measures" section of this release for additional information. Below is a reconciliation of net income to EBITDA and adjusted EBITDA for the periods presented (in thousands):

Q1 2025

Q4 2024

Q1 2024

EBITDA and adjusted EBITDA Reconciliation

Net income

$ 318,573

$ 270,749 $

288,764

Interest expense on borrowings(15)

85,862

81,979

60,082

Provision for income taxes

98,680

70,532

85,428

Depreciation and amortization

92,356

92,032

67,158

Amortization of other intangibles

43,521

42,614

29,552

EBITDA

$ 638,992

$ 557,906 $

530,984

Acquisition costs excluding interest(13)

43,407

37,261

9,524

Departure of former Chief Executive Officer(a)

(14,367)

Loss on extinguishment of debt

3,983

Adjusted EBITDA

$ 682,399

$ 584,783 $

540,508

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.

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 thousands):

Interest expense on borrowings on Management's Statement of

Operations

80,725 $

81,979 $

60,082

Cost of debt issuance related to Commonwealth acquisition(13) 5,137 - -

Adjusted pre-tax income is a non-GAAP financial measure. Please see a description of adjusted pre-tax income under the "Non-GAAP Financial Measures" section of this release for additional information. Below is a reconciliation of income before provision for income taxes to adjusted pre-tax income for the periods presented (in thousands):

Q1 2025

Q4 2024

Q1 2024

Income before provision for income taxes

$ 417,253

$ 341,281 $

374,192

Amortization of other intangibles

43,521

42,614

29,552

Acquisition costs(13)

48,544

37,261

9,524

Departure of former Chief Executive Officer(a)

(14,367)

Loss on extinguishment of debt

3,983

Adjusted pre-tax income

$ 509,318

$ 410,772 $

413,268

Adjusted net income and adjusted EPS are non-GAAP financial measures. Please see a description of adjusted net income and adjusted EPS under the "Non-GAAP Financial Measures" section of this release for additional information. Below is a reconciliation of net income and earnings per diluted share to adjusted net income and adjusted EPS for the periods presented (in thousands, except per share data):

Q1 2025

Q4 2024

Q1 2024

Amount

Per Share

Amount

Per Share

Amount

Per Share

Net income / earnings per diluted share

$ 318,573

$ 4.24

$ 270,749

$ 3.59

$ 288,764

$ 3.83

Amortization of other intangibles

43,521

0.58

42,614

0.57

29,552

0.39

Acquisition costs(13)

48,544

0.65

37,261

0.49

9,524

0.13

Departure of former Chief Executive Officer(a)

(14,367)

(0.19)

Loss on extinguishment of debt

3,983

0.05

Tax benefit

(23,937)

(0.32)

(19,978)

(0.27)

(10,340)

(0.14)

Adjusted net income / adjusted EPS

$ 386,701 $

5.15 $ 320,262 $

4.25 $ 317,500 $

4.21

Diluted share count 75,112 75,337 75,463

Note: Totals may not foot due to rounding.

Consists of total advisory and brokerage assets under custody at the Company's primary broker-dealer subsidiary, LPL Financial, as well as assets under custody of a third-party custodian related to Atria's seven introducing broker-dealer subsidiaries.

Assets on the Company's corporate advisory platform are serviced by investment advisor representatives of LPL Financial. 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 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 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.

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

Calculated as annualized current period organic net new assets divided by preceding period assets in their respective categories of advisory assets or total advisory and brokerage assets.

Represents the amount of securities purchased less the amount of securities sold in client accounts custodied with LPL Financial.

Client cash balances include CCA and exclude purchased money market funds. CCA balances include cash that clients have deposited with LPL Financial that is included in Client payables in the condensed consolidated balance sheets. The following table presents purchased money market funds for the periods presented (in billions):

Purchased money market funds $ 44.7 $ 41.0 $ 32.6

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

EBITDA and Credit Agreement EBITDA are non-GAAP financial measures. Please see a description of EBITDA and Credit Agreement EBITDA under the "Non-GAAP Financial Measures" section of this release for additional information. Under the Credit Agreement, management calculates Credit Agreement EBITDA for a trailing twelve month period at the end of each fiscal quarter and in doing so may make further adjustments to prior quarters. Below are reconciliations of trailing twelve month net income to trailing twelve month EBITDA and Credit Agreement EBITDA for the periods presented (in thousands):

EBITDA and Credit Agreement EBITDA Reconciliations

Net income

$ 1,088,425

$ 1,058,616

Interest expense on borrowings

299,961

274,181

Provision for income taxes

347,528

334,276

Depreciation and amortization

333,725

308,527

Amortization of other intangibles

149,203

135,234

EBITDA

$ 2,218,842

$ 2,110,834

Credit Agreement Adjustments:

Acquisition costs and other(13)(36)

$ 249,870

$ 223,614

Employee share-based compensation

84,690

88,957

M&A accretion(37)

237,160

235,048

Advisor share-based compensation

2,740

2,597

Loss on extinguishment of debt

3,983

Credit Agreement EBITDA

$ 2,797,285

$ 2,665,033

Calculated based on the average advisor count from the current period and prior periods.

Calculated based on the end of period total advisory and brokerage assets divided by end of period advisor count.

Represents amortization expense on forgivable loans for transition assistance to advisors and institutions.

During the first quarter of 2025, the Company updated its reporting of employees to include all full-time employees, including those reflected in Core G&A, promotional (ongoing) and advisory and commission expense. Prior period disclosures have been updated to reflect this change as applicable.

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

Capital expenditures represent cash payments for property and equipment during the period.

Acquisitions, net represent cash paid for acquisitions, net of cash acquired during the period. Acquisitions, net for the three months ended March 31, 2025 excludes $70.2 million related to The Investment Center, which was prefunded on October 1, 2024 in conjunction with the close of the Atria acquisition, as well as cash inflows associated with working capital and other post-closing adjustments.

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

Acquisition costs and other primarily include acquisition costs related to Atria, costs incurred related to the integration of the strategic relationship with Prudential, a $26.4 million reduction related to the departure of the Company's former Chief Executive Officer and related clawback of share-based compensation awards, and an

$18.0 million regulatory charge recognized during the three months ended September 30, 2024 reflecting the amount of a penalty proposed by the SEC as part of its civil investigation of the Company's compliance with certain elements of the Company's AML compliance program.

M&A accretion is an adjustment to reflect the annualized expected run rate EBITDA of an acquisition as permitted by the Credit Agreement for up to eight fiscal quarters following the close of such acquisition.

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 23:31 UTC.