• LPL Financial Announces Third Quarter 2024 Results

    ソース: Nasdaq GlobeNewswire / 30 10 2024 15:05:02   America/Chicago

    Key Financial Results

    • Net Income was $255 million, translating to diluted earnings per share ("EPS") of $3.39, up 16% from a year ago
    • Adjusted EPS* increased 11% year-over-year to $4.16
      • Gross profit* increased 12% year-over-year to $1,128 million
      • Core G&A* increased 5% year-over-year to $359 million  
      • Adjusted EBITDA* increased 12% year-over-year to $566 million

    Key Business Results

    • Total advisory and brokerage assets increased 29% year-over-year to $1.6 trillion
      • Advisory assets increased 35% year-over-year to $892 billion
      • Advisory assets as a percentage of total assets increased to 56.0%, up from 53.5% a year ago
    • Total organic net new assets were $27 billion, representing 7% annualized growth
      • Excluding a $6 billion outflow related to a planned separation from misaligned large OSJs, total organic net new assets were $33 billion, translating to a 9% annualized growth rate
      • Organic net new advisory assets were $23 billion, representing 11% annualized growth. Excluding the impact of the planned separations, total organic net new advisory assets were $28 billion, translating to a 14% annualized growth rate.
    • Recruited assets(1) were $26 billion
      • Recruited assets over the trailing twelve months were $87 billion, up approximately 12% from a year ago
    • Advisor count(2) was 23,686, up 224 sequentially and 1,282 year-over-year
    • Total client cash balances were $46 billion, an increase of $2 billion sequentially and a decrease of $1 billion year-over-year
      • Client cash balances as a percentage of total assets were 2.9%, in-line with the prior quarter and down from 3.8% a year ago

    Key Capital and Liquidity Results

    • Corporate cash(3) was $708 million
    • Leverage ratio(4) was 1.61x
    • Dividends paid were $22.4 million

    Key Updates

    • M&A:
      • Atria Wealth Solutions, Inc. ("Atria"): In October 2024, closed the acquisition of Atria, a wealth management solutions holding company. Atria supports ~2,200 advisors and ~160 banks and credit unions, managing ~$110 billion of brokerage and advisory assets. Conversion is expected to be completed in mid-2025.
        • Estimated run-rate EBITDA has increased from $140 million at announcement to $150 million
      • The Investment Center, Inc. ("The Investment Center"): Announced a definitive agreement to acquire The Investment Center, a firm with ~240 advisors serving ~$9 billion of brokerage and advisory assets. We expect to close and convert the acquisition in the first half of 2025.
      • Liquidity & Succession: Deployed approximately $34 million of capital to close six deals, including our first three external practices
    • Prudential Advisors ("Prudential"): On track to onboard the retail wealth management business of Prudential during Q4
      • Estimated run-rate EBITDA has increased from $60 million at announcement to $70 million
    • Core G&A*:
      • While there are variable costs associated with supporting our strong levels of organic growth, given our ongoing focus on efficiency, we are tightening our 2024 Core G&A* outlook to a range of $1,475 million to $1,485 million
      • Additionally, we are increasing the range by $35 million to $40 million to include costs related to the acquisition of Atria and onboarding of Prudential, resulting in an updated range of $1,510 million to $1,525 million
    • Share Repurchases: We plan to resume our share repurchase program in Q4 2024, with an estimated $100 million of repurchases planned during the fourth quarter

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

    SAN DIEGO, Oct. 30, 2024 (GLOBE NEWSWIRE) -- LPL Financial Holdings Inc. (Nasdaq: LPLA) (the "Company") today announced results for its third quarter ended September 30, 2024, reporting net income of $255 million or $3.39 per share. This compares with $224 million, or $2.91 per share, in the third quarter of 2023 and $244 million, or $3.23 per share, in the prior quarter.

    "I joined LPL with the mandate to accelerate our growth, and for the past six years, have worked closely with Matt Audette and the rest of our leadership team, to set our strategic vision, and to build and execute on the plan to achieve that vision," said Rich Steinmeier, CEO. "Looking forward, our opportunity is clear – to assert our leadership and shape both the advisor and institutional markets. Our focus is on creating the culture, workplace environment, and capabilities, to achieve sustainable outperformance through becoming an indispensable partner to our advisors and institutions, while delivering long-term value to shareholders."

    "We’re operating from a position of strength with a leadership team that is focused on supporting our advisors’ success through innovative solutions," said Matt Audette, President and CFO. "In my expanded role, I look forward to the opportunity to help extend our leadership position in the advisor-mediated markets and to enhance value for our shareholders. Specific to the third quarter, we delivered strong organic growth in both our traditional and new markets. As a complement, we announced our acquisition of The Investment Center, and early in the fourth quarter we closed our acquisition of Atria. As we look ahead, we remain excited by the opportunities we have to serve and support our advisors, while continuing to deliver an industry leading value proposition."

    Dividend Declaration

    The Company's Board of Directors declared a $0.30 per share dividend to be paid on December 2, 2024 to all stockholders of record as of November 14, 2024.

    Conference Call and Additional Information

    The Company will hold a conference call to discuss its results at 5:00 p.m. ET on Wednesday, October 30, 2024. The conference call will be accessible and available for replay at investor.lpl.com/events.

    Contacts

    Investor Relations
    investor.relations@lplfinancial.com

    Media Relations
    media.relations@lplfinancial.com

    About LPL Financial

    LPL Financial Holdings Inc. (Nasdaq: LPLA) was founded on the principle that the firm should work for advisors and institutions, and not the other way around. Today, LPL is a leader in the markets we serve(5), serving more than 23,000 financial advisors, including advisors at approximately 1,000 institutions and at approximately 580 registered investment advisor ("RIA") firms nationwide. We are steadfast in our commitment to the advisor-mediated model and the belief that Americans deserve access to personalized guidance from a financial professional. At LPL, independence means that advisors and institution leaders have the freedom they deserve to choose the business model, services, and technology resources that allow them to run a thriving business. They have the flexibility to do business their way. And they have the freedom to manage their client relationships, because they know their clients best. Simply put, we take care of our advisors and institutions, so they can take care of their clients.

    Securities and Advisory services offered through LPL Financial LLC ("LPL Financial"), a registered investment advisor. Member FINRA/SIPC. LPL Financial and its affiliated companies provide financial services only from the United States.

    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.

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

    Forward-Looking Statements

    This press release contains statements regarding:

    • the amount and timing of the onboarding of acquired, recruited or transitioned brokerage and advisory assets, including Atria, Prudential 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 core G&A expenses; 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 October 30, 2024 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 strategic relationship agreement with Prudential, or the Company's purchase agreement with The Investment Center, 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 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 the 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;
    • 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, Prudential, 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.

     
    LPL Financial Holdings Inc.
    Condensed Consolidated Statements of Income
    (In thousands, except per share data)
    (Unaudited)
         
     Three Months Ended
    		  Three Months Ended
    		  
     September 30,
    		 June 30,
    		  September 30,
    		  
     2024
    		 2024
    		 Change2023 Change
    REVENUE     
    Advisory$1,378,050  $1,288,163  7%$1,081,562  27%
    Commission:     
    Sales-based 429,132   423,070  1% 311,792  38%
    Trailing 377,400   363,976  4% 331,808  14%
    Total commission 806,532   787,046  2% 643,600  25%
    Asset-based:     
    Client cash 353,855   341,475  4% 360,518  (2%)
    Other asset-based 272,336   259,533  5% 224,614  21%
    Total asset-based 626,191   601,008  4% 585,132  7%
    Service and fee 145,729   135,000  8% 135,648  7%
    Transaction 58,546   58,935  (1%) 50,210  17%
    Interest income, net 49,923   47,478  5% 40,773  22%
    Other 43,423   14,139  n/m (14,542) n/m
    Total revenue 3,108,394   2,931,769  6% 2,522,383  23%
    EXPENSE     
    Advisory and commission 1,948,065   1,819,027  7% 1,488,432  31%
    Compensation and benefits 266,415   274,000  (3%) 243,759  9%
    Promotional 164,538   136,125  21% 131,645  25%
    Depreciation and amortization 78,338   70,999  10% 64,627  21%
    Occupancy and equipment 69,879   69,529  1% 61,339  14%
    Interest expense on borrowings 67,779   64,341  5% 48,363  40%
    Amortization of other intangibles 32,461   30,607  6% 27,760  17%
    Brokerage, clearing and exchange 29,636   32,984  (10%) 24,793  20%
    Professional services 26,295   22,100  19% 18,699  41%
    Communications and data processing 17,916   19,406  (8%) 19,634  (9%)
    Other 59,724   62,580  (5%) 75,660  (21%)
    Total expense 2,761,046   2,601,698  6% 2,204,711  25%
    INCOME BEFORE PROVISION FOR INCOME TAXES 347,348   330,071  5% 317,672  9%
    PROVISION FOR INCOME TAXES 92,045   86,271  7% 93,381  (1%)
    NET INCOME$255,303  $243,800  5%$224,291  14%
    EARNINGS PER SHARE     
    Earnings per share, basic$3.41  $3.26  5%$2.95  16%
    Earnings per share, diluted$3.39  $3.23  5%$2.91  16%
    Weighted-average shares outstanding, basic 74,776   74,725  —% 76,062  (2%)
    Weighted-average shares outstanding, diluted 75,405   75,548  —% 77,147  (2%)
                     


     
    LPL Financial Holdings Inc.
    Condensed Consolidated Statements of Income
    (In thousands, except per share data)
    (Unaudited)
       
     Nine Months Ended
    		  
     September 30,
    		  
     2024
    		 2023
    		 Change
    REVENUE   
    Advisory$3,866,024  $3,050,184  27%
    Commission:   
    Sales-based 1,237,437   896,825  38%
    Trailing 1,102,587   973,386  13%
    Total commission 2,340,024   1,870,211  25%
    Asset-based:   
    Client cash 1,047,712   1,157,208  (9%)
    Other asset-based 780,208   639,387  22%
    Total asset-based 1,827,920   1,796,595  2%
    Service and fee 412,901   377,757  9%
    Transaction 174,739   146,081  20%
    Interest income, net 140,926   116,103  21%
    Other 110,222   52,088  112%
    Total revenue 8,872,756   7,409,019  20%
    EXPENSE   
    Advisory and commission 5,500,579   4,307,829  28%
    Compensation and benefits 814,784   708,972  15%
    Promotional 427,282   332,433  29%
    Depreciation and amortization 216,495   179,058  21%
    Occupancy and equipment 205,672   186,517  10%
    Interest expense on borrowings 192,202   132,389  45%
    Brokerage, clearing and exchange 93,152   80,067  16%
    Amortization of other intangibles 92,620   78,593  18%
    Professional services 61,674   51,011  21%
    Communications and data processing 57,066   57,903  (1%)
    Other 159,619   143,259  11%
    Total expense 7,821,145   6,258,031  25%
    INCOME BEFORE PROVISION FOR INCOME TAXES 1,051,611   1,150,988  (9%)
    PROVISION FOR INCOME TAXES 263,744   302,293  (13%)
    NET INCOME$787,867  $848,695  (7%)
    EARNINGS PER SHARE   
    Earnings per share, basic$10.55  $10.97  (4%)
    Earnings per share, diluted$10.45  $10.82  (3%)
    Weighted-average shares outstanding, basic 74,688   77,339  (3%)
    Weighted-average shares outstanding, diluted 75,424   78,439  (4%)
               


     
    LPL Financial Holdings Inc.
    Condensed Consolidated Statements of Financial Condition
    (In thousands, except share data)
    (Unaudited)
        
     September 30, 2024
    		 June 30, 2024
    		 December 31, 2023
    ASSETS
    Cash and equivalents$1,474,954  $1,318,894  $465,671 
    Cash and equivalents segregated under federal or other regulations 1,382,867   1,530,150   2,007,312 
    Restricted cash 104,881   109,618   108,180 
    Receivables from clients, net 622,015   563,923   588,585 
    Receivables from brokers, dealers and clearing organizations 53,763   74,432   50,069 
    Advisor loans, net 1,913,363   1,757,727   1,479,690 
    Other receivables, net 802,186   763,632   743,317 
    Investment securities ($94,694, $73,463 and $76,088 at fair value at September 30, 2024, June 30, 2024 and December 31, 2023, respectively) 111,096   89,853   91,311 
    Property and equipment, net 1,144,676   1,066,395   933,091 
    Goodwill 1,868,193   1,860,062   1,856,648 
    Other intangibles, net 782,426   783,031   671,585 
    Other assets 1,681,455   1,586,010   1,390,021 
    Total assets$11,941,875  $11,503,727  $10,385,480 
    LIABILITIES AND STOCKHOLDERS’ EQUITY
    LIABILITIES:   
    Client payables$2,039,140  $1,963,988  $2,266,176 
    Payables to brokers, dealers and clearing organizations 211,054   212,394   163,337 
    Accrued advisory and commission expenses payable 252,881   240,370   216,541 
    Corporate debt and other borrowings, net 4,441,913   4,442,840   3,734,111 
    Accounts payable and accrued liabilities 485,927   461,277   485,963 
    Other liabilities 1,739,209   1,667,511   1,440,373 
    Total liabilities 9,170,124   8,988,380   8,306,501 
    STOCKHOLDERS’ EQUITY:   
    Common stock, $0.001 par value; 600,000,000 shares authorized; 130,779,259, 130,746,590 shares and 130,233,328 shares issued at September 30, 2024, June 30, 2024 and December 31, 2023, respectively 131   131   130 
    Additional paid-in capital 2,059,207   2,038,216   1,987,684 
    Treasury stock, at cost — 55,968,552, 55,985,188 shares and 55,576,970 shares at September 30, 2024, June 30, 2024 and December 31, 2023, respectively (4,102,319)  (4,101,955)  (3,993,949)
    Retained earnings 4,814,732   4,578,955   4,085,114 
    Total stockholders’ equity 2,771,751   2,515,347   2,078,979 
    Total liabilities and stockholders’ equity$11,941,875  $11,503,727  $10,385,480 
                


     
    LPL Financial Holdings Inc.
    Management's Statements of Operations
    (In thousands, except per share data)
    (Unaudited)
     

    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.

     Quarterly Results
     Q3 2024
    		 Q2 2024
    		 Change
    		 Q3 2023
    		 Change
    Gross Profit(6)     
    Advisory$1,378,050  $1,288,163  7% $1,081,562  27%
    Trailing commissions 377,400   363,976  4%  331,808  14%
    Sales-based commissions 429,132   423,070  1%  311,792  38%
    Advisory fees and commissions 2,184,582   2,075,209  5%  1,725,162  27%
    Production-based payout(7) (1,910,634)  (1,812,050) 5%  (1,506,080) 27%
    Advisory fees and commissions, net of payout 273,948   263,159  4%  219,082  25%
    Client cash(8) 372,333   361,316  3%  377,782  (1%)
    Other asset-based(9) 272,336   259,533  5%  224,614  21%
    Service and fee 145,729   135,000  8%  135,648  7%
    Transaction 58,546   58,935  (1%)  50,210  17%
    Interest income, net(10) 31,428   27,618  14%  23,485  34%
    Other revenue(11) 3,392   6,621  (49%)  4,113  (18%)
    Total net advisory fees and commissions and attachment revenue 1,157,712   1,112,182  4%  1,034,934  12%
    Brokerage, clearing and exchange expense (29,636)  (32,984) (10%)  (24,793) 20%
    Gross Profit(6) 1,128,076   1,079,198  5%  1,010,141  12%
          
    G&A Expense     
    Core G&A(12) 359,134   370,912  (3%)  341,728  5%
    Regulatory charges(13) 24,879   7,594  n/m 48,083  (48%)
    Promotional (ongoing)(14)(15) 175,605   147,830  19%  140,171  25%
    Acquisition costs(15) 22,243   36,876  (40%)  5,989  n/m
    Employee share-based compensation 20,289   19,968  2%  15,748  29%
    Total G&A 602,150   583,180  3%  551,719  9%
    EBITDA(16) 525,926   496,018  6%  458,422  15%
    Depreciation and amortization 78,338   70,999  10%  64,627  21%
    Amortization of other intangibles 32,461   30,607  6%  27,760  17%
    Interest expense on borrowings 67,779   64,341  5%  48,363  40%
    INCOME BEFORE PROVISION FOR INCOME TAXES 347,348   330,071  5%  317,672  9%
    PROVISION FOR INCOME TAXES 92,045   86,271  7%  93,381  (1%)
    NET INCOME$255,303  $243,800  5% $224,291  14%
    Earnings per share, diluted$3.39  $3.23  5% $2.91  16%
    Weighted-average shares outstanding, diluted 75,405   75,548  —%  77,147  (2%)
    Adjusted EBITDA(16)$566,169  $532,894  6% $504,411  12%
    Adjusted EPS(17)$4.16  $3.88  7% $3.74  11%
                      


     
    LPL Financial Holdings Inc.
    Operating Metrics
    (Dollars in billions, except where noted)
    (Unaudited)
          
     Q3 2024
    		 Q2 2024
    		 Change
    		 Q3 2023
    		 Change
    Market Drivers     
    S&P 500 Index (end of period) 5,762   5,460  6%  4,288  34%
    Russell 2000 Index (end of period) 2,230   2,048  9%  1,785  25%
    Fed Funds daily effective rate (average bps) 527   533  (6bps) 526  1bps
          
    Advisory and Brokerage Assets(18)     
    Advisory assets$892.0  $829.1  8% $662.7  35%
    Brokerage assets 700.1   668.7  5%  575.7  22%
    Total Advisory and Brokerage Assets$1,592.1  $1,497.8  6% $1,238.4  29%
    Advisory as a % of Total Advisory and Brokerage Assets 56.0%  55.4% 60bps 53.5% 250bps
          
    Assets by Platform     
    Corporate advisory assets(19)$618.8  $567.8  9% $444.4  39%
    Independent RIA advisory assets(19) 273.2   261.3  5%  218.3  25%
    Brokerage assets 700.1   668.7  5%  575.7  22%
    Total Advisory and Brokerage Assets$1,592.1  $1,497.8  6% $1,238.4  29%
          
    Centrally Managed Assets     
    Centrally managed assets(20)$138.1  $126.9  9% $100.5  37%
    Centrally Managed as a % of Total Advisory Assets 15.5%  15.3% 20bps 15.2% 30bps
                   


     
    LPL Financial Holdings Inc.
    Operating Metrics
    (Dollars in billions, except where noted)
    (Unaudited)
           
     Q3 2024
    		 Q2 2024
    		 Change Q3 2023
    		 Change
    Organic Net New Assets (NNA)(21)      
    Organic net new advisory assets$23.2  $26.6  n/m $22.7  n/m
    Organic net new brokerage assets 3.8   2.5  n/m  10.5  n/m
    Total Organic Net New Assets$27.0  $29.0  n/m $33.2  n/m
           
    Acquired Net New Assets(21)      
    Acquired net new advisory assets$0.5  $0.3  n/m $—  n/m
    Acquired net new brokerage assets 0.1   4.8  n/m  —  n/m
    Total Acquired Net New Assets$0.6  $5.0  n/m $—  n/m
           
    Total Net New Assets(21)      
    Net new advisory assets$23.7  $26.8  n/m $22.7  n/m
    Net new brokerage assets 3.8   7.2  n/m  10.5  n/m
    Total Net New Assets$27.5  $34.0  n/m $33.2  n/m
           
    Net brokerage to advisory conversions(22)$3.5  $3.7  n/m $2.7  n/m
    Organic advisory NNA annualized growth(23) 11.2%  13.4% n/m  13.7% n/m
    Total organic NNA annualized growth(23) 7.2%  8.1% n/m  10.7% n/m
           
    Net New Advisory Assets(21)      
    Corporate RIA net new advisory assets$24.0  $23.4  n/m $17.0  n/m
    Independent RIA net new advisory assets (0.3)  3.4  n/m  5.7  n/m
    Total Net New Advisory Assets$23.7  $26.8  n/m $22.7  n/m
    Centrally managed net new advisory assets(21)$4.4  $4.4  n/m $4.4  n/m
           
    Net buy (sell) activity(24)$37.7  $39.3  n/m $35.6  n/m
                    

    Note: Totals may not foot due to rounding.

     
    LPL Financial Holdings Inc.
    Client Cash Data
    (Dollars in thousands, except where noted)
    (Unaudited)
          
     Q3 2024
    		 Q2 2024
    		 Change
    		 Q3 2023
    		 Change
    Client Cash Balances (in billions)(25)     
    Insured cash account sweep$32.1  $31.0  4% $33.6  (4%)
    Deposit cash account sweep 9.6   9.2  4%  9.1  5%
    Total Bank Sweep 41.7   40.2  4%  42.7  (2%)
    Money market sweep 2.3   2.3  —%  2.6  (12%)
    Total Client Cash Sweep Held by Third Parties 44.0   42.5  4%  45.3  (3%)
    Client cash account (CCA)(26) 1.8   1.5  20%  1.5  20%
    Total Client Cash Balances$45.8  $44.0  4% $46.9  (2%)
    Client Cash Balances as a % of Total Assets 2.9%  2.9% —bps 3.8% (90bps)
                   

    Note: Totals may not foot due to rounding.

      
     Three Months Ended
     September 30, 2024June 30, 2024September 30, 2023
    Interest-Earnings AssetsAverage Balance
    (in billions)    		RevenueNet Yield (bps)(27) Average Balance
    (in billions)    		RevenueNet Yield (bps)(27) Average Balance
    (in billions)    		RevenueNet Yield (bps)(27) 
    Insured cash account sweep$31.1 $259,503 332 $31.7 $250,804 318 $34.5 $276,944 318 
    Deposit cash account sweep 9.2  92,765 400  9.0  89,070 399  9.1  81,826 357 
    Total Bank Sweep 40.3  352,268 348  40.7  339,874 336  43.6  358,770 326 
    Money market sweep 2.3  1,587 28  2.3  1,601 28  2.4  1,748 29 
    Total Client Cash Held By Third Parties 42.6  353,855 330  43.0  341,475 320  46.0  360,518 311 
    Client cash account (CCA)(26) 1.6  18,478 472  1.7  19,841 472  1.5  17,264 454 
    Total Client Cash 44.2  372,333 335  44.7  361,316 326  47.5  377,782 315 
    Margin receivables 0.5  11,199 885  0.5  10,521 889  0.5  10,740 883 
    Other interest revenue 1.5  20,229 533  1.3  17,097 545  0.9  12,745 576 
    Total Client Cash and Interest Income, Net$46.2 $403,761 348 $46.5 $388,934 337 $48.9 $401,267 326 
                             

    Note: Totals may not foot due to rounding.

     
    LPL Financial Holdings Inc.
    Monthly Metrics
    (Dollars in billions, except where noted)
    (Unaudited)
          
     September 2024August 2024ChangeJuly 2024June 2024
    Advisory and Brokerage Assets(18)     
    Advisory assets$892.0 $869.5 3%$850.6 $829.1 
    Brokerage assets 700.1  690.6 1% 678.7  668.7 
    Total Advisory and Brokerage Assets$1,592.1 $1,560.1 2%$1,529.3 $1,497.8 
          
    Organic Net New Assets (NNA)(21)     
    Organic net new advisory assets$11.0 $5.4 n/m$6.8 $9.2 
    Organic net new brokerage assets 0.5  1.1 n/m 2.2  1.6 
    Total Organic Net New Assets$11.4 $6.6 n/m$9.0 $10.8 
          
    Acquired Net New Assets(21)     
    Acquired net new advisory assets$0.2 $0.2 n/m$— $— 
    Acquired net new brokerage assets 0.1  — n/m —  — 
    Total Acquired Net New Assets$0.3 $0.3 n/m$— $— 
          
    Total Net New Assets(21)     
    Net new advisory assets$11.2 $5.7 n/m$6.8 $9.2 
    Net new brokerage assets 0.5  1.2 n/m 2.2  1.6 
    Total Net New Assets$11.7 $6.8 n/m$9.0 $10.8 
    Net brokerage to advisory conversions(22)$1.2 $1.3 n/m$1.0 $1.2 
          
    Client Cash Balances(25)     
    Insured cash account sweep$32.1 $30.4 6%$31.1 $31.0 
    Deposit cash account sweep 9.6  9.3 3% 9.1  9.2 
    Total Bank Sweep 41.7  39.7 5% 40.2  40.2 
    Money market sweep 2.3  2.2 5% 2.3  2.3 
    Total Client Cash Sweep Held by Third Parties 44.0  41.9 5% 42.5  42.5 
    Client cash account (CCA)(26) 1.8  1.4 29% 1.5  1.5 
    Total Client Cash Balances$45.8 $43.3 6%$44.0 $44.0 
          
    Net buy (sell) activity(24)$12.2 $12.6 n/m$12.9 $12.1 
          
    Market Drivers     
    S&P 500 Index (end of period) 5,762  5,648 2% 5,522  5,460 
    Russell 2000 Index (end of period) 2,230  2,218 1% 2,254  2,048 
    Fed Funds effective rate (average bps) 513  533 (20bps) 533  533 
                  

    Note: Totals may not foot due to rounding.

     
    LPL Financial Holdings Inc.
    Financial Measures
    (Dollars in thousands, except where noted)
    (Unaudited)
          
     Q3 2024Q2 2024ChangeQ3 2023Change
    Commission Revenue by Product     
    Annuities$481,852 $469,100 3%$371,304 30%
    Mutual funds 193,451  187,432 3% 169,318 14%
    Fixed income 55,707  53,192 5% 42,286 32%
    Equities 36,786  34,434 7% 27,414 34%
    Other 38,736  42,888 (10%) 33,278 16%
    Total commission revenue$806,532 $787,046 2%$643,600 25%
          
    Commission Revenue by Sales-based and Trailing   
    Sales-based commissions     
    Annuities$265,955 $260,188 2%$183,974 45%
    Mutual funds 42,310  42,981 (2%) 34,718 22%
    Fixed income 55,707  53,192 5% 42,286 32%
    Equities 36,786  34,434 7% 27,414 34%
    Other 28,374  32,275 (12%) 23,400 21%
    Total sales-based commissions$429,132 $423,070 1%$311,792 38%
    Trailing commissions     
    Annuities$215,897 $208,912 3%$187,330 15%
    Mutual funds 151,141  144,451 5% 134,600 12%
    Other 10,362  10,613 (2%) 9,878 5%
    Total trailing commissions$377,400 $363,976 4%$331,808 14%
    Total commission revenue$806,532 $787,046 2%$643,600 25%
          
    Payout Rate(7) 87.46% 87.32%14bps 87.30%16bps
                


     
    LPL Financial Holdings Inc.
    Capital Management Measures
    (Dollars in thousands, except where noted)
    (Unaudited)
        
     Q3 2024Q2 2024Q4 2023
    Cash and equivalents$1,474,954 $1,318,894 $465,671 
    Cash at regulated subsidiaries (992,450) (828,145) (410,313)
    Excess cash at regulated subsidiaries per the Credit Agreement 225,886  193,342  128,327 
    Corporate Cash(3)$708,390 $684,091 $183,685 
        
    Corporate Cash(3)   
    Cash at the Parent$435,109 $450,505 $26,587 
    Excess cash at regulated subsidiaries per the Credit Agreement 225,886  193,342  128,327 
    Cash at non-regulated subsidiaries 47,395  40,244  28,771 
    Corporate Cash$708,390 $684,091 $183,685 
        
    Leverage Ratio   
    Total debt$4,469,175 $4,471,850 $3,757,200 
    Total corporate cash 708,390  684,091  183,685 
    Credit Agreement Net Debt$3,760,785 $3,787,759 $3,573,515 
    Credit Agreement EBITDA (trailing twelve months)(28)$2,340,886 $2,260,165 $2,194,807 
    Leverage Ratio1.61x1.68x1.63x
        


       
     September 30, 2024 
    Total DebtBalanceCurrent Applicable
    Margin    		Interest RateMaturity
    Revolving Credit Facility(a)$— ABR+37.5 bps / SOFR+147.5 bps6.321%5/20/2029
    Broker-Dealer Revolving Credit Facility — SOFR+135 bps6.310%5/19/2025
    Senior Secured Term Loan B 1,019,175 SOFR+185 bps(b)7.051%11/12/2026
    Senior Unsecured Notes 500,000 5.700% Fixed5.700%5/20/2027
    Senior Unsecured Notes 400,000 4.625% Fixed4.625%11/15/2027
    Senior Unsecured Notes 750,000 6.750% Fixed6.750%11/17/2028
    Senior Unsecured Notes 900,000 4.000% Fixed4.000%3/15/2029
    Senior Unsecured Notes 400,000 4.375% Fixed4.375%5/15/2031
    Senior Unsecured Notes 500,000 6.000% Fixed6.000%5/20/2034
    Total / Weighted Average$4,469,175  5.661% 
            

    (a) Secured borrowing capacity of $2.25 billion at LPL Holdings, Inc. (the "Parent").
    (b) The SOFR rate option is a one-month SOFR rate and subject to an interest rate floor of 0 bps.

     
    LPL Financial Holdings Inc.
    Key Business and Financial Metrics
    (Dollars in thousands, except where noted)
    (Unaudited)
          
     Q3 2024Q2 2024ChangeQ3 2023Change
    Advisors     
    Advisors 23,686  23,462 1% 22,404 6%
    Net new advisors 224  578 (61%) 462 (52%)
    Annualized advisory fees and commissions per advisor(29)$371 $358 4%$311 19%
    Average total assets per advisor ($ in millions)(30)$67.2 $63.8 5%$55.3 22%
    Transition assistance loan amortization ($ in millions)(31)$69.1 $61.9 12%$53.7 29%
    Total client accounts (in millions) 8.7  8.6 1% 8.2 6%
          
    Employees 7,342  7,451 (1%) 7,124 3%
          
    Services Group     
    Services Group subscriptions(32)     
    Professional Services 1,890  1,892 —% 1,867 1%
    Business Optimizers 3,798  3,606 5% 3,251 17%
    Planning and Advice 735  665 11% 456 61%
    Total Services Group subscriptions 6,423  6,163 4% 5,574 15%
    Services Group advisor count 4,340  4,169 4% 3,695 17%
          
    AUM retention rate (quarterly annualized)(33) 97.0% 98.4%(140bps) 98.8%(180bps)
          
    Capital Management     
    Capital expenditures ($ in millions)(34)$147.1 $128.9 14%$95.0 55%
    Acquisitions, net ($ in millions)(35)$34.1 $115.1 (70%)$60.3 (43%)
          
    Share repurchases ($ in millions)$— $— —%$250.0 (100%)
    Dividends ($ in millions) 22.4  22.4 —% 22.8 (2%)
    Total Capital Returned ($ in millions)$22.4 $22.4 —%$272.8 (92%)
                  

    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 below are appropriate for evaluating the performance of the Company.

    Adjusted EPS and Adjusted net income

    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, and certain regulatory charges, 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 regulatory 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

    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

    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; 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 and Adjusted EBITDA

    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 and certain regulatory charges. 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.

    Credit Agreement EBITDA

    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.

    Endnote Disclosures

    (1) 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.

    (2) The terms “Financial Advisors” and “Advisors” refer to registered representatives and/or investment advisor representatives affiliated with LPL Financial, an SEC-registered broker-dealer and investment advisor.

    (3) 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 and The Private Trust Company, N.A., in excess of the capital requirements of the Company's Credit Agreement (which, in the case of LPL Financial is net capital in excess of 10% of its aggregate debits, or five times the net capital required in accordance with Exchange Act Rule 15c3-1) and (3) cash and equivalents held at non-regulated subsidiaries.

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

    (5) The Company was named Top RIA custodian (Cerulli Associates, 2023 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.

    (6) 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):

     Q3 2024Q2 2024Q3 2023
    Total revenue$3,108,394 $2,931,769 $2,522,383 
    Advisory and commission expense 1,948,065  1,819,027  1,488,432 
    Brokerage, clearing and exchange expense 29,636  32,984  24,793 
    Employee deferred compensation 2,617  560  (983)
    Gross profit$1,128,076 $1,079,198 $1,010,141 
              

    (7) 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):

     Q3 2024Q2 2024Q3 2023
    Advisory and commission expense$1,948,065 $1,819,027 $1,488,432 
    (Less) Plus: Advisor deferred compensation (37,431) (6,977) 17,648 
    Production-based payout$1,910,634 $1,812,050 $1,506,080 
        
    Advisory and commission revenue$2,184,582 $2,075,209 $1,725,162 
        
    Payout rate 87.46% 87.32% 87.30%
              

    (8) 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):

     Q3 2024Q2 2024Q3 2023
    Client cash on Management's Statement of Operations 372,333 $361,316 $377,782 
    Interest income on CCA balances segregated under federal or other regulations(10) (18,478) (19,841) (17,264)
    Client cash on Condensed Consolidated Statements of Income$353,855 $341,475 $360,518 
              

    (9) 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.

    (10) During the first quarter of 2024, the Company disaggregated the activity previously reported in the interest income and other, net line item into its interest income, net and other revenue components. Prior period amounts have been reclassified to conform to the current presentation. 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):

     Q3 2024Q2 2024Q3 2023
    Interest income, net on Management's Statement of Operations$31,428 $27,618 $23,485 
    Interest income on CCA balances segregated under federal or other regulations(8) 18,478  19,841  17,264 
    Interest income on deferred compensation 17  19  24 
    Interest income, net on Condensed Consolidated Statements of Income$49,923 $47,478 $40,773 
              

    (11) During the first quarter of 2024, the Company disaggregated the activity previously reported in the interest income and other, net line item into its interest income, net and other revenue components. Prior period amounts have been reclassified to conform to the current presentation. 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):

     Q3 2024Q2 2024Q3 2023
    Other revenue on Management's Statement of Operations$3,392 $6,621 $4,113 
    Interest income on deferred compensation (17) (19) (24)
    Deferred compensation 40,048  7,537  (18,631)
    Other revenue on Condensed Consolidated Statements of Income$43,423 $14,139 $(14,542)
              

    (12) 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):

     Q3 2024Q2 2024Q3 2023
    Core G&A Reconciliation   
    Total expense$2,761,046 $2,601,698 $2,204,711 
    Advisory and commission (1,948,065) (1,819,027) (1,488,432)
    Depreciation and amortization (78,338) (70,999) (64,627)
    Interest expense on borrowings (67,779) (64,341) (48,363)
    Brokerage, clearing and exchange (29,636) (32,984) (24,793)
    Amortization of other intangibles (32,461) (30,607) (27,760)
    Employee deferred compensation (2,617) (560) 983 
    Total G&A 602,150  583,180  551,719 
    Promotional (ongoing)(14)(15) (175,605) (147,830) (140,171)
    Acquisition costs(15) (22,243) (36,876) (5,989)
    Employee share-based compensation (20,289) (19,968) (15,748)
    Regulatory charges(13) (24,879) (7,594) (48,083)
    Core G&A$359,134 $370,912 $341,728 
              

    (13) Regulatory charges for the three months ended September 30, 2024 include charges related to a potential settlement with the SEC to resolve the Company's civil investigation of certain elements of the Company’s Anti-Money Laundering ("AML") compliance program. Under the SEC's proposed resolution, the Company would pay an $18.0 million civil monetary penalty, and the Company has recorded an $18.0 million charge for the quarter ended September 30, 2024. Regulatory charges for the three months ended September 30, 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.

    (14) Promotional (ongoing) includes $13.0 million, $12.2 million and $10.8 million for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, 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 for the same periods.

    (15) 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):

     Q3 2024Q2 2024Q3 2023
    Acquisition costs   
    Fair value mark on contingent consideration(36)$5,849 $24,624 $— 
    Compensation and benefits 8,352  6,827  1,345 
    Professional services 6,685  3,567  2,199 
    Promotional(14) 1,964  539  2,260 
    Other (607) 1,319  185 
    Acquisition costs$22,243 $36,876 $5,989 
              

    (16) 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):

     Q3 2024Q2 2024Q3 2023
    EBITDA and adjusted EBITDA Reconciliation   
    Net income$255,303 $243,800 $224,291 
    Interest expense on borrowings 67,779  64,341  48,363 
    Provision for income taxes 92,045  86,271  93,381 
    Depreciation and amortization 78,338  70,999  64,627 
    Amortization of other intangibles 32,461  30,607  27,760 
    EBITDA$525,926 $496,018 $458,422 
    Regulatory charges(13) 18,000  —  40,000 
    Acquisition costs(15) 22,243  36,876  5,989 
    Adjusted EBITDA$566,169 $532,894 $504,411 
              

    (17) 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):

     Q3 2024Q2 2024Q3 2023
     AmountPer ShareAmountPer ShareAmountPer Share
    Net income / earnings per diluted share$255,303 $3.39 $243,800 $3.23 $224,291 $2.91 
    Regulatory charges(13) 18,000  0.24  —  —  40,000  0.52 
    Amortization of other intangibles 32,461  0.43  30,607  0.41  27,760  0.36 
    Acquisition costs(15) 22,243  0.29  36,876  0.49  5,989  0.08 
    Tax benefit (14,650) (0.19) (17,816) (0.24) (9,143) (0.12)
    Adjusted net income / adjusted EPS$313,357 $4.16 $293,467 $3.88 $288,897 $3.74 
    Diluted share count 75,405   75,548   77,147  
    Note: Totals may not foot due to rounding.      
           

    (18) Consists of total advisory and brokerage assets under custody at the Company's primary broker-dealer subsidiary, LPL Financial.

    (19) 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.

    (20) Consists of advisory assets in LPL Financial’s Model Wealth Portfolios, Optimum Market Portfolios, Personal Wealth Portfolios and Guided Wealth Portfolios platforms.

    (21) 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.

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

    (23) 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.

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

    (25) 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):

     Q3 2024Q2 2024Q3 2023
    Purchased money market funds$38.5 $35.7 $25.2 
              

    (26) During the first quarter of 2024, the Company updated its definition of client cash account balances to exclude other client payables. Prior period disclosures have been updated to reflect this change as applicable.

    (27) Calculated by dividing revenue for the period by the average balance during the period.

    (28) 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):

     Q3 2024Q2 2024Q4 2023
    EBITDA and Credit Agreement EBITDA Reconciliations   
    Net income$1,005,422 $974,410 $1,066,250 
    Interest expense on borrowings 246,618  227,201  186,804 
    Provision for income taxes 339,977  341,312  378,525 
    Depreciation and amortization 284,431  270,720  246,994 
    Amortization of other intangibles 121,238  116,537  107,211 
    EBITDA$1,997,686 $1,930,180 $1,985,784 
    Credit Agreement Adjustments:   
    Acquisition costs and other(15)(37)$236,007 $224,687 $110,170 
    Employee share-based compensation 78,425  73,884  66,024 
    M&A accretion(38) 26,265  28,843  30,268 
    Advisor share-based compensation 2,503  2,571  2,561 
    Credit Agreement EBITDA$2,340,886 $2,260,165 $2,194,807 
              

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

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

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

    (32) Refers to active subscriptions related to professional services offerings (CFO Solutions, Marketing Solutions, Admin Solutions, Advisor Institute, Bookkeeping, Partial Book Sales, CFO Essentials, and Digital Marketing) and business optimizer offerings (M&A Solutions, Digital Office, Resilience Plans and Assurance Plans), as well as planning and advice services (Paraplanning, Tax Planning, and High Net Worth Services) for which subscriptions are the number of advisors using the service.

    (33) 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.

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

    (35) Acquisitions, net represent cash paid for acquisitions, net of cash acquired during the period.

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

    (37) Acquisition costs and other primarily include acquisition costs, costs incurred related to the integration of the strategic relationship with Prudential, an $18.0 million regulatory charge recognized during the three months ended September 30, 2024 related to an investigation of the Company’s compliance with certain elements of the Company’s AML compliance program, and a $40.0 million regulatory charge recognized during the three months ended September 30, 2023 to reflect the amount of a penalty proposed by the SEC as part of its civil investigation of the Company's compliance with records preservation requirements for business-related electronic communications stored on personal devices that have not been approved by the Company.

    (38) 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 the transaction.


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