LPL Financial Holdings Inc 10-Q for FY2025 Q1
LPL Financial Holdings Inc. (LPLA)
10-Q
2025-05-09
For: 2025-03-31
View Original
Added on
April 08, 2026
About this 10-Q
LPL Financial Holdings Inc filed this 10-Q on May 9, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $3.67B
- up 29.6% from $2.83B a year earlier
- Net income
- $318.57M
- up 10.3% from net income of $288.76M a year earlier
- Diluted EPS
- $4.24
- up 10.7% from $3.83 a year earlier
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2025
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission File Number: 001-34963
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| x | Accelerated filer | ☐ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
The number of shares of Common Stock, par value $0.001 per share, outstanding as of May 7, 2025 was 79,975,719 .
TABLE OF CONTENTS | Page | ||||
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Note 1 - Organization and Description of the Company | |||||
Note 2 - Summary of Significant Accounting Policies | |||||
Note 3 - Revenue | |||||
Note 4 - Acquisitions | |||||
Note 5 - Fair Value Measurements | |||||
Note 6 - Investment Securities | |||||
Note 7 - Goodwill and Other Intangibles, Net | |||||
Note 9 - Corporate Debt and Other Borrowings, Net | |||||
Note 10 - Commitments and Contingencies | |||||
Note 11 - Stockholders’ Equity | |||||
Note 12 - Share-based Compensation | |||||
Note 13 - Earnings per Share | |||||
Note 14 - Net Capital and Regulatory Requirements | |||||
Note 15 - Financial Instruments with Off-Balance Sheet Credit Risk and Concentrations of Credit Risk | |||||
i
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with the Securities and Exchange Commission (“SEC”). Our SEC filings are available to the public on the SEC’s website at sec.gov.
We post the following filings to our website at lpl.com as soon as reasonably practicable after they are electronically filed with or furnished to the SEC: our annual reports on Form 10-K, our proxy statements, our quarterly reports on Form 10-Q, our current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. Copies of all such filings are available free of charge by request via email (investor.relations@lplfinancial.com), telephone ((617) 897-4574) or mail (LPL Financial Investor Relations at 1055 LPL Way, Fort Mill, SC 29715). The information contained or incorporated on our website is not a part of this Quarterly Report on Form 10-Q.
We may use our website as a means of disclosing material information and for complying with our disclosure obligations under Regulation Fair Disclosure promulgated by the SEC. These disclosures are included on our website in the “Investor Relations” or “Press Releases” sections. Accordingly, investors should monitor these portions of our website in addition to following the Company’s press releases, SEC filings, public conference calls and webcasts.
When we use the terms “LPLFH,” “LPL,” “we,” “us,” “our” and “the Company,” we mean LPL Financial Holdings Inc., a Delaware corporation, and its consolidated subsidiaries, taken as a whole, unless the context otherwise indicates.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this Quarterly Report on Form 10-Q regarding:
•the Company’s future financial and operating results, outlook, growth, plans, business strategies, liquidity, future share repurchases and dividends, including statements regarding future resolution of regulatory matters, legal proceedings and related costs;
•the Company’s future revenue and expense;
•future affiliation models and capabilities;
•the expected closing of the Company’s acquisition of Commonwealth Financial Network (“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 expected conversion, transition and onboarding of advisors, institutions and assets in connection with our acquisition and recruitment activity, including the conversion of assets of the broker-dealers and investment advisors acquired in connection with our acquisitions of Atria Wealth Solutions, Inc. (“Atria”) and Commonwealth;
•market and macroeconomic trends, including the effects of inflation and the interest rate environment;
•projected savings and anticipated improvements to the Company’s operating model, services and technologies as a result of its investments, initiatives, programs and acquisitions; and
•any other statements that are not related to present facts or current conditions, or that are not purely historical, constitute forward-looking statements.
These forward-looking statements reflect the Company’s expectations and objectives as of May 9, 2025. The words “anticipates,” “believes,” “expects,” “may,” “plans,” “predicts,” “will” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are not guarantees that expectations or objectives expressed or implied by the Company 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:
•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;
ii
•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;
•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, recruited or transitioned advisors not to open brokerage and/or advisory 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 “Credit Agreement”), the committed revolving credit facility at our primary broker-dealer subsidiary, LPL Financial LLC (the “Broker-Dealer Revolving Credit Facility”), and the indentures governing the Company’s senior unsecured notes (the “Indentures”);
•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;
•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 or Commonwealth will transition registration to the Company and whether assets reported as serviced by such financial advisors will translate into assets of the Company;
•the failure to satisfy the closing conditions applicable to the purchase agreement between the Company and Commonwealth, including regulatory approvals;
•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.
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 Quarterly Report on Form 10-Q, 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 Quarterly Report on Form 10-Q.
iii
GLOSSARY OF TERMS
Acquisition Costs: Expenses that include the costs to setup, onboard and integrate acquired entities and other costs that were incurred as a result of the acquisitions.
Adjusted EBITDA: A non-GAAP financial measure defined as EBITDA plus acquisition costs.
Adjusted EPS: A non-GAAP financial measure defined as Adjusted Net Income divided by the weighted average number of diluted shares outstanding for the applicable period.
Adjusted Net Income: A non-GAAP financial measure defined as net income plus the after-tax impact of amortization of other intangibles and acquisition costs.
Basis Point: One basis point equals 1/100th of 1%.
Core G&A: A non-GAAP financial measure defined as total expense excluding 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.
Corporate Cash: A component of cash and equivalents that includes 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 LLC, LPL Enterprise, LLC, The Private Trust Company, N.A., and certain of Atria Wealth Solutions, Inc.’s introducing broker-dealer subsidiaries, in excess of the capital requirements of the Company’s Credit Agreement and (3) cash and equivalents held at non-regulated subsidiaries.
Credit Agreement: The Company’s amended and restated credit agreement.
Credit Agreement EBITDA: A non-GAAP financial measure defined in the 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.
EBITDA: A non-GAAP financial measure defined as net income plus interest expense on borrowings, provision for income taxes, depreciation and amortization, and amortization of other intangibles.
FINRA: The Financial Industry Regulatory Authority.
GAAP: Accounting principles generally accepted in the United States of America.
Gross Profit: A non-GAAP financial measure defined as total revenue less advisory and commission expense; brokerage, clearing and exchange expense; and market fluctuations on employee deferred compensation.
Indentures: The indentures governing the Company’s senior unsecured notes.
Leverage Ratio: A financial metric from our Credit Agreement that is calculated by dividing Credit Agreement net debt, which equals consolidated total debt less Corporate Cash, by Credit Agreement EBITDA.
NFA: The National Futures Association.
OCC: The Office of the Comptroller of the Currency.
RIA: Registered investment advisor.
SEC: The U.S. Securities and Exchange Commission.
Uniform Net Capital Rule: Refers to Rule 15c3-1 under the Exchange Act, which specifies minimum capital requirements that are intended to ensure the general financial soundness and liquidity of broker-dealers.
iv
PART I — FINANCIAL INFORMATION
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Business Overview
LPL serves the financial advisor-mediated marketplace as the nation’s largest independent broker-dealer, a leading investment advisory firm and a top custodian. We support more than 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. 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 successful businesses.
We are steadfast in our commitment to the advisor-mediated model and the belief that investors deserve access to personalized guidance from a financial advisor. We believe advisors should have the freedom to choose the business model, services and technology they need and to manage their client relationships. We believe investors achieve better outcomes when working with a financial advisor, and we strive to make it easy for advisors to do what is best for their clients.
We believe that we are the only company that offers the unique combination of an integrated technology platform, comprehensive self-clearing services and access to a wide range of curated non-proprietary products all delivered in an environment unencumbered by conflicts from product manufacturing, underwriting and market-making.
Our Sources of Revenue
Our revenue is derived primarily from fees and commissions from products and advisory services offered by our advisors to their clients, a substantial portion of which we pay out to our advisors, as well as fees we receive from our advisors for the use of our technology, custody, clearing, trust and reporting platforms. We also generate asset-based revenue through our insured bank sweep vehicles, money market account balances and the access we provide to a variety of product providers with the following product lines:
• Alternative Investments | • Retirement Plan Products | |||||||
• Annuities | • Separately Managed Accounts | |||||||
• Exchange Traded Products | • Structured Products | |||||||
• Insurance Based Products | • Unit Investment Trusts | |||||||
• Mutual Funds | ||||||||
Under our self-clearing platform, we custody the majority of client assets invested in these financial products, for which we provide statements, transaction processing and ongoing account management. In return for these services, mutual funds, insurance companies, banks and other financial product sponsors pay us fees based on asset levels or number of accounts managed. We also earn interest from margin loans made to our advisors’ clients, cash and equivalents segregated under federal or other regulations, advisor repayable loans and operating cash, which is included in interest income, net in the condensed consolidated statements of income. A portion of our revenue is not asset-based or correlated with the equity financial markets.
We regularly review various aspects of our operations and service offerings, including our policies, procedures and platforms, in response to marketplace developments. We seek to continuously improve and enhance aspects of our operations and service offerings in order to position our advisors for long-term growth and to align with competitive and regulatory developments. For example, we regularly review the structure and fees of our products and services, including related disclosures, in the context of the changing regulatory environment and competitive landscape for advisory and brokerage accounts.
1
Significant Events
Entered into a definitive purchase agreement to acquire Commonwealth Financial Network (“Commonwealth”)
On March 31, 2025, the Company announced that it had entered into a definitive purchase agreement to acquire Commonwealth, a privately-held independent wealth management firm headquartered in Massachusetts, for $2.7 billion. As part of the agreement, we expect Commonwealth to transition its advisory and brokerage assets to the Company’s platform. The transaction is expected to close in the second half of 2025 and the conversion to the Company’s platform is expected to be completed in mid-2026, in each case subject to the receipt of regulatory approvals and other conditions.
The Company will finance this transaction through a combination of corporate cash and the proceeds from completed debt and equity issuances. On April 2, 2025, the Company completed a public offering of approximately 5.4 million shares of the Company’s common stock at an offering price of $320.00 per share, and on April 3, 2025, the Company completed the issuance and sale of $500.0 million in aggregate principal amount of 4.900% senior unsecured notes due 2028, $500.0 million in aggregate principal amount of 5.150% senior unsecured notes due 2030 and $500.0 million in aggregate principal amount of 5.750% senior unsecured notes due 2035. See Note 4 - Acquisitions, Note 9 - Corporate Debt and Other Borrowings, Net, and Note 11 - Stockholders’ Equity within the notes to the condensed consolidated financial statements for additional information.
Completed a $1.25 billion debt offering
On February 26, 2025, the Company completed the issuance and sale of $750.0 million in aggregate principal amount of 5.200% senior unsecured notes due 2030 and $500.0 million in aggregate principal amount of 5.650% senior unsecured notes due 2035. See Note 9 - Corporate Debt and Other Borrowings, Net, within the notes to the condensed consolidated financial statements for further detail.
Executive Summary
Financial Highlights
Results for the first quarter of 2025 included net income of $318.6 million, or $4.24 per diluted share, which compares to $288.8 million, or $3.83 per diluted share, for the first quarter of 2024.
Asset Trends
Total advisory and brokerage assets served were $1.8 trillion at March 31, 2025, compared to $1.4 trillion at March 31, 2024. Total net new assets were $78.8 billion for the three months ended March 31, 2025, compared to $16.7 billion for the same period in 2024.
Net new advisory assets were $37.6 billion for the three months ended March 31, 2025, compared to $16.2 billion for the same period in 2024. Advisory assets were $977.4 billion, or 55% of total advisory and brokerage assets served, at March 31, 2025, up 23% from $793.0 billion at March 31, 2024.
Net new brokerage assets were $41.2 billion for the three months ended March 31, 2025, compared to $0.5 billion for the same period in 2024. Brokerage assets were $817.5 billion at March 31, 2025, up 26% from $647.9 billion at March 31, 2024.
Gross Profit Trend
Gross profit, a non-GAAP financial measure, was $1.3 billion for the three months ended March 31, 2025, an increase of 19% from $1.1 billion for the three months ended March 31, 2024. See the “Key Performance Metrics” section for additional information on gross profit.
Common Stock Dividends and Share Repurchases
During the three months ended March 31, 2025, we paid stockholders cash dividends of $22.4 million and repurchased 289,371 of our outstanding shares for a total of $100.0 million.
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Key Performance Metrics
We focus on several key metrics in evaluating the success of our business relationships and our resulting financial position and operating performance. Our key operating, business and financial metrics are as follows:
| As of and for the Three Months Ended | |||||||||||
| March 31, | December 31, | March 31, | |||||||||
Operating Metrics (dollars in billions)(1) | 2025 | 2024 | 2024 | ||||||||
Advisory and Brokerage Assets(2) | |||||||||||
| Advisory assets | $ | 977.4 | $ | 957.0 | $ | 793.0 | |||||
| Brokerage assets | 817.5 | 783.7 | 647.9 | ||||||||
| Total Advisory and Brokerage Assets | $ | 1,794.9 | $ | 1,740.7 | $ | 1,440.9 | |||||
| Advisory as a % of total Advisory and Brokerage Assets | 54.5% | 55.0% | 55.0% | ||||||||
Net New Assets(3) | |||||||||||
| Net new advisory assets | $ | 37.6 | $ | 71.1 | $ | 16.2 | |||||
| Net new brokerage assets | 41.2 | 86.2 | 0.5 | ||||||||
| Total Net New Assets | $ | 78.8 | $ | 157.3 | $ | 16.7 | |||||
| Organic Net New Assets | |||||||||||
| Organic net new advisory assets | $ | 35.7 | $ | 49.3 | $ | 16.2 | |||||
| Organic net new brokerage assets | 35.2 | 18.8 | 0.5 | ||||||||
| Total Organic Net New Assets | $ | 70.9 | $ | 68.0 | $ | 16.7 | |||||
Organic advisory net new assets annualized growth(4) | 14.9% | 22.1% | 8.8% | ||||||||
Total organic net new assets annualized growth(4) | 16.3% | 17.1% | 4.9% | ||||||||
| Client Cash Balances | |||||||||||
| Insured cash account sweep | $ | 36.1 | $ | 38.3 | $ | 32.6 | |||||
| Deposit cash account sweep | 10.7 | 10.7 | 9.2 | ||||||||
| Total Bank Sweep | 46.8 | 49.0 | 41.8 | ||||||||
| Money market sweep | 4.3 | 4.3 | 2.4 | ||||||||
| Total Client Cash Sweep Held by Third Parties | 51.1 | 53.3 | 44.2 | ||||||||
Client cash account | 1.9 | 1.8 | 2.1 | ||||||||
| Total Client Cash Balances | $ | 53.1 | $ | 55.1 | $ | 46.3 | |||||
| Client Cash Balances as a % of Total Assets | 3.0% | 3.2% | 3.2% | ||||||||
Net buy (sell) activity(5) | $ | 42.0 | $ | 38.3 | $ | 37.8 | |||||
| As of and for the Three Months Ended | |||||||||||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||||||||||
| Business and Financial Metrics (dollars in millions) | 2025 | 2024 | 2024 | ||||||||||||||||||||
| Advisors | 29,493 | 28,888 | 22,884 | ||||||||||||||||||||
Average total assets per advisor(6) | $ | 60.9 | $ | 60.3 | $ | 63.0 | |||||||||||||||||
| Share repurchases | $ | 100.0 | $ | 100.0 | $ | 70.0 | |||||||||||||||||
| Dividends | $ | 22.4 | $ | 22.5 | $ | 22.4 | |||||||||||||||||
Leverage ratio(7) | 1.82 | 1.89 | 1.65 | ||||||||||||||||||||
3
| Three Months Ended March 31, | ||||||||||||||
| Financial Metrics (dollars in millions, except per share data) | 2025 | 2024 | ||||||||||||
| Total revenue | $ | 3,670.0 | $ | 2,832.6 | ||||||||||
| Net income | $ | 318.6 | $ | 288.8 | ||||||||||
| Earnings per share (“EPS”), diluted | $ | 4.24 | $ | 3.83 | ||||||||||
| Non-GAAP Financial Metrics (dollars in millions, except per share data) | ||||||||||||||
Adjusted EPS(8) | $ | 5.15 | $ | 4.21 | ||||||||||
Gross profit(9) | $ | 1,272.7 | $ | 1,066.4 | ||||||||||
Adjusted EBITDA(10) | $ | 682.4 | $ | 540.5 | ||||||||||
Core G&A(11) | $ | 413.1 | $ | 363.5 | ||||||||||
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(1)Totals may not foot due to rounding.
(2)Consists of total advisory and brokerage assets under custody at the Company’s primary broker-dealer subsidiary, LPL Financial LLC (“LPL Financial”), as well as assets under custody of a third-party custodian related to Atria’s seven introducing broker-dealer subsidiaries. Please consult the “Results of Operations” section for a tabular presentation of advisory and brokerage assets.
(3)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. We consider conversions from and to brokerage or advisory accounts as deposits and withdrawals, respectively.
(4)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.
(5)Represents the amount of securities purchased less the amount of securities sold in client accounts custodied with LPL Financial.
(6)Calculated based on the end of period total advisory and brokerage assets divided by the end of period advisor count.
(7)The leverage ratio is a financial metric from our Credit Agreement and is calculated by dividing Credit Agreement net debt, which equals consolidated total debt less Corporate Cash, by Credit Agreement EBITDA. Credit Agreement EBITDA, a non-GAAP financial measure, is defined by the 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. Please consult the “Debt and Related Covenants” section for more information. Below are reconciliations of corporate debt and other borrowings to Credit Agreement net debt as of the dates below and net income to EBITDA and Credit Agreement EBITDA for the trailing twelve-month periods presented (in millions):
| March 31, | December 31, | March 31, | |||||||||
| Credit Agreement Net Debt Reconciliation | 2025 | 2024 | 2024 | ||||||||
| Corporate debt and other borrowings | $ | 5,720.0 | $ | 5,517.0 | $ | 3,875.5 | |||||
Corporate Cash(12) | (620.6) | (479.4) | (311.1) | ||||||||
Credit Agreement Net Debt(†) | $ | 5,099.4 | $ | 5,037.6 | $ | 3,564.5 | |||||
| March 31, | December 31, | March 31, | |||||||||
| EBITDA and Credit Agreement EBITDA Reconciliation | 2025 | 2024 | 2024 | ||||||||
| Net income | $ | 1,088.4 | $ | 1,058.6 | $ | 1,016.1 | |||||
| Interest expense on borrowings | 300.0 | 274.2 | 207.7 | ||||||||
| Provision for income taxes | 347.5 | 334.3 | 358.3 | ||||||||
| Depreciation and amortization | 333.7 | 308.5 | 258.1 | ||||||||
| Amortization of other intangibles | 149.2 | 135.2 | 112.7 | ||||||||
EBITDA(†) | $ | 2,218.8 | $ | 2,110.8 | $ | 1,952.9 | |||||
| Credit Agreement Adjustments: | |||||||||||
Acquisition costs and other(13) | $ | 249.9 | $ | 223.6 | $ | 117.2 | |||||
| Employee share-based compensation | 84.7 | 89.0 | 70.7 | ||||||||
M&A accretion(14) | 237.2 | 235.0 | 17.0 | ||||||||
| Advisor share-based compensation | 2.7 | 2.6 | 2.6 | ||||||||
Loss on extinguishment of debt | 4.0 | 4.0 | — | ||||||||
Credit Agreement EBITDA(†) | $ | 2,797.3 | $ | 2,665.0 | $ | 2,160.5 | |||||
| March 31, | December 31, | March 31, | |||||||||
| 2025 | 2024 | 2024 | |||||||||
| Leverage Ratio | 1.82 | 1.89 | 1.65 | ||||||||
_______________________________
(†) Totals may not foot due to rounding.
4
(8)Adjusted EPS is a non-GAAP financial measure defined as adjusted net income, a non-GAAP financial measure defined as net income plus the after-tax impact of amortization of other intangibles and acquisition costs, 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. Below is a reconciliation of net income and earnings per diluted share to adjusted net income and adjusted EPS for the periods presented (in millions, except per share data):
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Adjusted Net Income / Adjusted EPS Reconciliation | Amount | Per Share | Amount | Per Share | ||||||||||||||||||||||
| Net income / earnings per diluted share | $ | 318.6 | $ | 4.24 | $ | 288.8 | $ | 3.83 | ||||||||||||||||||
| Amortization of other intangibles | 43.5 | 0.58 | 29.6 | 0.39 | ||||||||||||||||||||||
Acquisition costs(15) | 48.5 | 0.65 | 9.5 | 0.13 | ||||||||||||||||||||||
| Tax benefit | (23.9) | (0.32) | (10.3) | (0.14) | ||||||||||||||||||||||
Adjusted Net Income / Adjusted EPS(†) | $ | 386.7 | $ | 5.15 | $ | 317.5 | $ | 4.21 | ||||||||||||||||||
| Weighted-average shares outstanding, diluted | 75.1 | 75.5 | ||||||||||||||||||||||||
_______________________________
(†) Totals may not foot due to rounding.
(9)Gross profit is a non-GAAP financial measure defined 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 by management to be general and administrative in nature. Because our gross profit amounts do not include any depreciation and amortization expense, we consider our gross profit amounts to be non-GAAP financial measures that may not be comparable to those of others in our industry. We believe that gross profit amounts can provide investors with useful insight into our core operating performance before indirect costs that are general and administrative in nature. Below is a calculation of gross profit for the periods presented (in millions):
| Three Months Ended March 31, | ||||||||||||||
| Gross Profit | 2025 | 2024 | ||||||||||||
| Total revenue | $ | 3,670.0 | $ | 2,832.6 | ||||||||||
| Advisory and commission expense | 2,353.9 | 1,733.5 | ||||||||||||
| Brokerage, clearing and exchange expense | 44.1 | 30.5 | ||||||||||||
Employee deferred compensation | (0.7) | 2.1 | ||||||||||||
Gross Profit(†) | $ | 1,272.7 | $ | 1,066.4 | ||||||||||
_______________________________
(†) Totals may not foot due to rounding.
(10)EBITDA and adjusted EBITDA are non-GAAP financial measures. 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 plus acquisition costs. 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. Below is a reconciliation of net income to EBITDA and adjusted EBITDA for the periods presented (in millions):
| Three Months Ended March 31, | ||||||||||||||
| EBITDA Reconciliation | 2025 | 2024 | ||||||||||||
| Net income | $ | 318.6 | $ | 288.8 | ||||||||||
| Interest expense on borrowings | 85.9 | 60.1 | ||||||||||||
| Provision for income taxes | 98.7 | 85.4 | ||||||||||||
| Depreciation and amortization | 92.4 | 67.2 | ||||||||||||
| Amortization of other intangibles | 43.5 | 29.6 | ||||||||||||
| EBITDA | $ | 639.0 | $ | 531.0 | ||||||||||
Acquisition costs excluding interest(15) | 43.4 | 9.5 | ||||||||||||
Adjusted EBITDA(†) | $ | 682.4 | $ | 540.5 | ||||||||||
_______________________________
(†) Totals may not foot due to rounding.
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(11)Core G&A is a non-GAAP financial measure defined as 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 expense, 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. Below is a reconciliation of the Company’s total expense to core G&A for the periods presented (in millions):
_______________________________
| Three Months Ended March 31, | ||||||||||||||
| Core G&A Reconciliation | 2025 | 2024 | ||||||||||||
| Total expense | $ | 3,252.8 | $ | 2,458.4 | ||||||||||
| Advisory and commission | (2,353.9 | ) | (1,733.5 | ) | ||||||||||
| Depreciation and amortization | (92.4 | ) | (67.2 | ) | ||||||||||
| Interest expense on borrowings | (85.9 | ) | (60.1 | ) | ||||||||||
| Brokerage, clearing and exchange | (44.1 | ) | (30.5 | ) | ||||||||||
| Amortization of other intangibles | (43.5 | ) | (29.6 | ) | ||||||||||
Employee deferred compensation | 0.7 | (2.1) | ||||||||||||
Total G&A(†) | 633.7 | 535.4 | ||||||||||||
Promotional (ongoing)(16) | (151.9 | ) | (132.3 | ) | ||||||||||
Acquisition costs excluding interest(15) | (43.4 | ) | (9.5 | ) | ||||||||||
| Employee share-based compensation | (18.4 | ) | (22.6 | ) | ||||||||||
Regulatory charges | (6.9 | ) | (7.5 | ) | ||||||||||
Core G&A(†) | $ | 413.1 | $ | 363.5 | ||||||||||
(†) Totals may not foot due to rounding.
(12)See the “Liquidity and Capital Resources” section for additional information about Corporate Cash.
(13)Acquisition costs and other for the twelve months ending March 31, 2025 and December 31, 2024 primarily include costs related to the acquisition of Atria, the integration of the strategic relationship with Prudential Financial, Inc., a $26.4 million reduction related to the departure of the Company’s former Chief Executive Officer, and an $18.0 million regulatory charge recognized related to a penalty proposed by the SEC as part of its civil investigation of the Company’s compliance with certain elements of the Company’s anti-money laundering compliance program. Acquisition costs and other for the twelve months ending March 31, 2024 includes a $40.0 million regulatory charge related to 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.
(14)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. The increase in M&A accretion for the twelve months ending March 31, 2025 and December 31, 2024 as compared to the twelve months ending March 31, 2024 was primarily related to the impact of the Atria acquisition.
(15)Acquisition costs include the costs to setup, onboard and integrate acquired entities and other costs that were incurred as a result of acquisitions. The below table summarizes the primary components of acquisition costs for the periods presented (in millions):
| Three Months Ended March 31, | ||||||||||||||
| Acquisition costs | 2025 | 2024 | ||||||||||||
| Compensation and benefits | $ | 17.4 | $ | 3.9 | ||||||||||
Promotional(16) | 8.5 | 2.3 | ||||||||||||
| Fair value mark on contingent consideration | 6.6 | — | ||||||||||||
| Professional services | 6.1 | 3.2 | ||||||||||||
Interest | 5.1 | — | ||||||||||||
| Other | 4.7 | 0.2 | ||||||||||||
Acquisition costs(†) | $ | 48.5 | $ | 9.5 | ||||||||||
_______________________________
(†) Totals may not foot due to rounding.
(16)Promotional (ongoing) for the three months ended March 31, 2025 and 2024 includes $14.8 million and $8.0 million, respectively, of support costs related to full-time employees that are classified within compensation and benefits expense in the condensed consolidated statements of income. Promotional (ongoing) excludes costs that have been incurred as part of acquisitions, which are included in the Acquisition costs line item.
Legal and Regulatory Matters
The financial services industry is subject to extensive regulation by U.S. federal and state government agencies as well as various self-regulatory organizations. Compliance with all applicable laws and regulations involves a significant investment in time and resources, and we continue to invest in our compliance functions to monitor our adherence to the numerous legal and regulatory requirements applicable to our business. Any new laws or
6
regulations applicable to our business, any changes to existing laws or regulations, or any changes to the interpretations or enforcement of those laws or regulations may affect our operations and/or financial condition. We seek to participate in the development of significant rules and regulations that govern our industry.
As a regulated entity, we are subject to regulatory oversight and inquiries related to, among other items, our compliance and supervisory systems and procedures and other controls, as well as our disclosures, supervision and reporting. For example, in August 2024, the Company received a request for information from the SEC regarding certain elements of the Company’s cash management program for corporate advisory accounts, which based on the nature of the request we believe is part of an industry-wide inquiry. The Company has been cooperating with the request. Additional regulation and enhanced regulatory enforcement has resulted, and may result in the future, in changes to our service offerings and additional operational and compliance costs, as well as increased costs in the form of penalties and fines, investigatory and settlement costs, customer restitution and remediation related to regulatory matters. In the ordinary course of business, we periodically identify or become aware of purported inadequacies, deficiencies and other issues. It is our policy to evaluate these matters for potential legal or regulatory violations and other potential compliance issues. It is also our policy to self-report known violations and issues as required by applicable law and regulation. When deemed probable that matters may result in financial losses, we accrue for those losses based on an estimate of possible fines, customer restitution and losses related to the repurchase of sold securities and other losses, as applicable. Certain regulatory and other legal claims and losses may be covered through our wholly-owned captive insurance subsidiary, which is chartered with the insurance commissioner in the state of Tennessee.
Assessing the probability of a loss occurring and the timing and amount of any loss related to a regulatory matter or legal proceeding, whether or not covered by our captive insurance subsidiary, is inherently difficult and requires judgments based on a variety of factors and assumptions. There are particular uncertainties and complexities involved when assessing the adequacy of loss reserves for potential liabilities that are self-insured by our captive insurance subsidiary, which depends in part on historical claims experience, including the actual timing and costs of resolving matters that begin in one policy period and are resolved in a subsequent period.
Our accruals, including those established through our captive insurance subsidiary at March 31, 2025, include estimated costs for significant regulatory matters or legal proceedings, generally relating to the adequacy of our compliance and supervisory systems and procedures and other controls, for which we believe losses are both probable and reasonably estimable.
The outcome of regulatory or legal proceedings could result in legal liability, regulatory fines or monetary penalties in excess of our accruals and insurance, which could have a material adverse effect on our business, results of operations, cash flows or financial condition. For more information on management’s loss contingency policies, see Note 10 - Commitments and Contingencies, within the notes to the condensed consolidated financial statements.
Economic Overview and Impact of Financial Market Events
Our business is directly and indirectly sensitive to several macroeconomic factors and the state of the financial markets in the United States. According to the most recent estimate from the U.S. Bureau of Economic Analysis, the U.S. economy contracted at an annualized pace of 0.3% in the first quarter of 2025 after growing at an annualized pace of 2.4% in the fourth quarter of 2024.
Businesses added roughly 456,000 jobs in the first quarter of 2025, lower than the 628,000 jobs added in the fourth quarter of 2024.The unemployment rate averaged 4.1% in the first quarter of 2025, consistent with the fourth quarter of 2024. The equity markets rose during January and February, however fears over rising tariffs and potential trade wars in March created a volatile market for the remainder of the quarter. The S&P 500 fell 4.3% and the Bloomberg Barclays U.S. Aggregate Bond Index rose 2.8% respectively during the first quarter of 2025.
Our business is also sensitive to current and expected short-term interest rates, which are largely driven by Federal Reserve (“Fed”) policy. During the first quarter of 2025, Fed policymakers maintained the target federal funds rate at a range of 4.25% to 4.50%. To the extent they pursue faster easing in monetary policy, the Federal Open Market Committee members will take into account the weakening job market, the inflation trajectory, and global financial conditions.
Please consult the “Risks Related to Our Business and Industry” section within Part I, “Item 1A. Risk Factors” in our 2024 Annual Report on Form 10-K for more information about the risks associated with significant interest rate changes and the potential related effects on our profitability and financial condition.
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Results of Operations
The following discussion presents an analysis of our results of operations for the three months ended March 31, 2025 and 2024 (in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||
| 2025 | 2024 | % Change | ||||||||||||||||||
| REVENUE | ||||||||||||||||||||
| Advisory | $ | 1,689,245 | $ | 1,199,811 | 41 | % | ||||||||||||||
| Commission: | ||||||||||||||||||||
| Sales-based | 610,038 | 385,235 | 58 | % | ||||||||||||||||
| Trailing | 437,719 | 361,211 | 21 | % | ||||||||||||||||
| Total commission | 1,047,757 | 746,446 | 40 | % | ||||||||||||||||
| Asset-based: | ||||||||||||||||||||
| Client cash | 392,031 | 352,382 | 11 | % | ||||||||||||||||
| Other asset-based | 303,210 | 248,339 | 22 | % | ||||||||||||||||
| Total asset-based | 695,241 | 600,721 | 16 | % | ||||||||||||||||
| Service and fee | 145,199 | 132,172 | 10 | % | ||||||||||||||||
| Transaction | 67,864 | 57,258 | 19 | % | ||||||||||||||||
| Interest income, net | 43,851 | 43,525 | 1 | % | ||||||||||||||||
| Other | (19,150) | 52,660 | (136 | %) | ||||||||||||||||
Total revenue | 3,670,007 | 2,832,593 | 30 | % | ||||||||||||||||
| EXPENSE | ||||||||||||||||||||
| Advisory and commission | 2,353,925 | 1,733,487 | 36 | % | ||||||||||||||||
| Compensation and benefits | 305,546 | 274,369 | 11 | % | ||||||||||||||||
| Promotional | 145,645 | 126,619 | 15 | % | ||||||||||||||||
| Depreciation and amortization | 92,356 | 67,158 | 38 | % | ||||||||||||||||
| Occupancy and equipment | 77,240 | 66,264 | 17 | % | ||||||||||||||||
| Interest expense on borrowings | 85,862 | 60,082 | 43 | % | ||||||||||||||||
| Amortization of other intangibles | 43,521 | 29,552 | 47 | % | ||||||||||||||||
| Brokerage, clearing and exchange | 44,138 | 30,532 | 45 | % | ||||||||||||||||
| Professional services | 36,326 | 13,279 | 174 | % | ||||||||||||||||
| Communications and data processing | 19,506 | 19,744 | (1 | %) | ||||||||||||||||
| Other | 48,689 | 37,315 | 30 | % | ||||||||||||||||
Total expense | 3,252,754 | 2,458,401 | 32 | % | ||||||||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 417,253 | 374,192 | 12 | % | ||||||||||||||||
PROVISION FOR INCOME TAXES | 98,680 | 85,428 | 16 | % | ||||||||||||||||
NET INCOME | $ | 318,573 | $ | 288,764 | 10 | % | ||||||||||||||
8
Revenue
Advisory
Advisory revenue represents fees charged to advisors’ clients’ advisory accounts on our corporate registered investment advisor (“RIA”) advisory platform and is based on a percentage of the market value of the eligible assets in the clients’ advisory accounts. We provide ongoing investment advice and act as a custodian, providing brokerage and execution services on transactions, and perform administrative services for these accounts. Advisory fees are primarily billed to clients on a quarterly basis in advance, and are recognized as revenue ratably during the quarter. The performance obligation for advisory fees is considered a series of distinct services that are substantially the same and are satisfied daily. As the value of the eligible assets in an advisory account is susceptible to changes due to customer activity, this revenue includes variable consideration and is constrained until the date that the fees are determinable. The majority of these client accounts are on a calendar quarter and are billed using values as of the last business day of the preceding quarter. The value of the eligible assets in an advisory account on the billing date is adjusted for contributions and withdrawals during the period to determine the amount of revenue earned in the period. Advisory revenue collected on our corporate RIA advisory platform is proposed by the advisor and agreed to by the client and was approximately 1% of the underlying assets for the three months ended March 31, 2025.
We also support independent RIA firms that conduct their business through our separate registered investment advisor firms (“Independent RIAs”) advisory platform, which allows advisors to engage us for technology, clearing and custody services, as well as access the capabilities of our investment platforms. The assets held under an Independent RIA’s investment advisory accounts custodied with LPL Financial are included in total advisory assets and net new advisory assets. However, the advisory revenue generated by an Independent RIA is not included in our advisory revenue. We charge separate fees to Independent RIAs for technology, clearing, administrative, oversight and custody services, which may vary and are included in our service and fee revenue in our condensed consolidated statements of income.
The following table summarizes the composition of advisory assets for the periods presented (in billions):
| March 31, | ||||||||||||||
| 2025 | 2024 | $ Change | % Change | |||||||||||
| Corporate advisory assets | $ | 699.1 | $ | 537.6 | $ | 161.5 | 30 | % | ||||||
| Independent RIA advisory assets | 278.3 | 255.4 | 22.9 | 9 | % | |||||||||
| Total advisory assets | $ | 977.4 | $ | 793.0 | $ | 184.4 | 23 | % | ||||||
Net new advisory assets are generated throughout the quarter, therefore, the full impact of net new advisory assets to advisory revenue is not realized in the same period. The following table summarizes activity impacting advisory assets for the periods presented (in billions):
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Balance - Beginning of period | $ | 957.0 | $ | 735.8 | ||||||||||
Net new advisory assets(1) | 37.6 | 16.2 | ||||||||||||
Market impact(2) | (17.2) | 41.0 | ||||||||||||
| Balance - End of period | $ | 977.4 | $ | 793.0 | ||||||||||
_______________________________
(1)Net new advisory assets consist of total client deposits into custodied advisory accounts less total client withdrawals from custodied advisory accounts, plus dividends, plus interest, minus advisory fees. We consider conversions from and to brokerage accounts as deposits and withdrawals, respectively.
(2)Market impact is the difference between the beginning and ending asset balance less the net new asset amounts, representing the implied growth or decline in asset balances due to market changes over the same period of time.
Advisory revenue increased during the three months ended March 31, 2025 as compared to the same period in 2024 due primarily to an increase in advisory asset balances and related market impacts.
9
Commission
We generate two types of commission revenue: (1) sales-based commissions that are recognized at the point of sale on the trade date and are based on a percentage of an investment product’s current market value at the time of purchase and (2) trailing commissions that are recognized over time as earned and are generally based on the market value of investment holdings in trail-eligible assets. Sales-based commission revenue, which occurs when clients trade securities or purchase various types of investment products, primarily represents gross commissions generated by our advisors and can vary from period to period based on the overall economic environment, number of trading days in the reporting period and investment activity of our advisors’ clients. We earn trailing commission revenue primarily on mutual funds and variable annuities held by clients of our advisors. See Note 3 - Revenue, within the notes to the condensed consolidated financial statements for further detail regarding our commission revenue by product category.
The following table sets forth the components of our commission revenue for the periods presented (in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | |||||||||||||||||||||||
| Sales-based | $ | 610,038 | $ | 385,235 | $ | 224,803 | 58 | % | ||||||||||||||||||
| Trailing | 437,719 | 361,211 | 76,508 | 21 | % | |||||||||||||||||||||
Total commission revenue | $ | 1,047,757 | $ | 746,446 | $ | 301,311 | 40 | % | ||||||||||||||||||
The increase in sales-based commission revenue for the three months ended March 31, 2025 compared to 2024 was primarily driven by an increase in sales of annuities. The increase in trailing commission revenue for the three months ended March 31, 2025 compared to 2024 was primarily due to continued growth in trail earning assets held by customers.
The following table summarizes activity impacting brokerage assets for the periods presented (in billions):
_______________________________
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Balance - Beginning of period | $ | 783.7 | $ | 618.2 | ||||||||||
Net new brokerage assets(1) | 41.2 | 0.5 | ||||||||||||
Market impact(2) | (7.4) | 29.2 | ||||||||||||
| Balance - End of period | $ | 817.5 | $ | 647.9 | ||||||||||
(1) Net new brokerage assets consist of total client deposits into brokerage accounts less total client withdrawals from brokerage accounts, plus dividends, plus interest. We consider conversions from and to advisory accounts as deposits and withdrawals, respectively.
(2) Market impact is the difference between the beginning and ending asset balance less the net new asset amounts, representing the implied growth or decline in asset balances due to market changes over the same period of time.
Asset-Based
Asset-based revenue consists of fees from our client cash programs, fees from our sponsorship programs with financial product manufacturers and fees from omnibus processing and networking services (collectively referred to as “recordkeeping”). Client cash revenue is generated on advisors’ clients’ cash balances in insured bank sweep accounts and money market accounts. We also receive fees from certain financial product manufacturers in connection with sponsorship programs that support our marketing and sales force education and training efforts. Compensation for these performance obligations is either a fixed fee, a percentage of the average annual amount of product sponsor assets held in advisors’ clients’ accounts, a percentage of new sales or a combination. Omnibus processing revenue is paid to us by mutual fund product sponsors or their affiliates and is based on the value of mutual fund assets in accounts for which the Company provides omnibus processing services and the number of accounts in which the related mutual fund positions are held. Networking revenue on brokerage assets is correlated to the number of positions we administer and is paid to us by mutual fund product sponsors and annuity product manufacturers.
Asset-based revenue for the three months ended March 31, 2025 increased by $94.5 million compared to 2024, primarily due to an increase in other asset-based revenue. Client cash revenue for the three months ended March 31, 2025 increased compared to 2024 due to higher average client cash balances during the three months ended March 31, 2025 as compared to 2024. For the three months ended March 31, 2025, our average client cash balances increased to $50.4 billion compared to $44.4 billion in 2024.
Service and Fee
10
Service and fee revenue is generated from advisor and retail investor services, including technology, insurance, conferences, licensing, business services and planning and advice services, Individual Retirement Account (“IRA”) custodian and other client account fees. We charge separate fees to RIAs on our Independent RIA advisory platform for technology, clearing, administrative, oversight and custody services, which may vary. We also host certain advisor conferences that serve as training, education, sales and marketing events for which we charge sponsors a fee. Service and fee revenue for the three months ended March 31, 2025 increased compared to 2024, primarily due to increases in custodian fees, trading, licensing, and resource fees, and error and omission insurance fee.
Transaction
Transaction revenue includes transaction charges generated in both advisory and brokerage accounts from mutual funds, exchange-traded funds and fixed income products. Transaction revenue for the three months ended March 31, 2025 increased compared to 2024, primarily due to increases in the number of transactions and transaction charges for managed assets.
Other Revenue
Other revenue primarily includes unrealized gains and losses on assets held by us in our advisor non-qualified deferred compensation plan and model research portfolios and other miscellaneous revenue, which is not generated from contracts with customers. Other revenue decreased for the three months ended March 31, 2025 as compared to 2024 primarily due to an increase in unrealized losses in our deferred compensation plan assets.
Expense
Advisory and Commission
Advisory and commission expense consists of the following: payout amounts that are earned by and paid out to advisors and institutions based on advisory and commission revenue earned on each client’s account, production-based bonuses earned by advisors and institutions based on the levels of advisory and commission revenue they produce, compensation and benefits paid to employee advisors, share-based compensation expense from equity awards granted to advisors and institutions based on the fair value of the awards at grant date and the deferred advisory and commission fee expense associated with mark-to-market gains or losses on the non-qualified deferred compensation plan offered to our advisors.
The following table sets forth our payout rate, which is a statistical or operating measure, for the periods presented:
| Three Months Ended March 31, | ||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||
| Payout rate | 86.75% | 86.64% | 11 bps | |||||||||||||||||
Our payout rate for the three months ended March 31, 2025 increased compared to 2024, primarily due to
the effect of acquisitions during the prior year.
Compensation and Benefits
Compensation and benefits expense includes salaries, wages, benefits, share-based compensation and related taxes for our employees, as well as compensation for temporary workers and contractors. The following table sets forth the number of employees for the periods presented:
| March 31, | ||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||
Number of employees | 9,118 | 8,252 | 10% | |||||||||||||||||
Compensation and benefits expense for the three months ended March 31, 2025 increased by $31.2 million compared to 2024, primarily due to an increase in headcount.
Promotional
Promotional expense includes business development costs related to advisor recruitment and retention, costs related to hosting certain advisory conferences that serve as training, sales and marketing events, and other costs that support advisor business growth. Promotional expense for the three months ended March 31, 2025 increased
11
by $19.0 million compared to 2024, primarily due to increases in recruited assets and advisors that led to higher costs to support transition assistance and retention.
Depreciation and Amortization
Depreciation and amortization expense relates to the use of property and equipment, which includes internally developed software, hardware, leasehold improvements and other equipment. Depreciation and amortization expense for the three months ended March 31, 2025 increased by $25.2 million compared to 2024, primarily due to our continued investment in technology to support integrations, enhance our advisor platform and experience, and support onboarding of institutions.
Interest Expense on Borrowings
Interest expense on borrowings includes the interest associated with the Company’s senior notes, Term Loan A (“Term Loan A”) and revolving credit facilities; amortization of debt issuance costs; and fees associated with the Company’s revolving lines of credit. Interest expense on borrowings for the three months ended March 31, 2025 increased by $25.8 million compared to 2024, primarily as a result of the issuance of $1.0 billion senior unsecured notes in May 2024 and $1.25 billion senior unsecured notes in February 2025. See Note 9 - Corporate Debt and Other Borrowings, Net, within the notes to the condensed consolidated financial statements for additional information.
Occupancy and Equipment
Occupancy and equipment expense includes the costs of leasing and maintaining our office spaces, software licensing and maintenance costs, and maintenance expense on computer hardware and other equipment. Occupancy and equipment expense for the three months ended March 31, 2025 increased by $11.0 million compared to 2024, primarily due to increased expense related to software licenses and our technology portfolio.
Brokerage, Clearing and Exchange
Brokerage, clearing and exchange expense includes expenses originating from trading or clearing operations as well as any exchange membership fees. These fees fluctuate largely in line with the volume of sales and trading activity. Brokerage, clearing and exchange expense for the three months ended March 31, 2025 increased by $13.6 million compared to 2024 primarily due to an increase in the volume of trades and expenses for quote services.
Amortization of Other Intangibles
Amortization of other intangibles represents the benefits received for the use of long-lived intangible assets established through our acquisitions. Amortization of other intangibles for the three months ended March 31, 2025 increased by $14.0 million compared to 2024, primarily due to additional intangible assets acquired from acquisitions.
Professional Services
Professional services expense includes costs paid to outside firms for assistance with legal, accounting, technology, regulatory, marketing, and general corporate matters, as well as non-capitalized costs related to service and technology enhancements. Professional services expense for the three months ended March 31, 2025 increased by $23.0 million compared to 2024, primarily due to technology enhancement projects and acquisition-related support.
Other Expense
Other expense includes licensing fees, insurance, broker-dealer regulatory fees, travel-related expenses, fair value adjustments to contingent consideration liabilities, the costs of the investigation, settlement and resolution of regulatory matters (including customer restitution and remediation), and other miscellaneous expenses. Other expense increased by $11.4 million for the three months ended March 31, 2025 primarily due to increases in fair value adjustments to our contingent consideration liabilities and increases in licensing and insurance fees as compared to the same period in 2024. See Note 4 - Acquisitions, within the notes to the condensed consolidated financial statements for additional information.
Provision for Income Taxes
Our effective income tax rate was 23.6% and 22.8% for the three months ended March 31, 2025 and 2024, respectively. The Company’s effective income tax rate differs from the federal corporate tax rate of 21.0%, primarily as a result of state taxes, reserves for uncertain tax positions and non-deductible expenses. Our effective income tax rate is reduced by tax benefits received from income tax credits as well as share-based compensation vesting
12
and exercises. The increase in our effective tax rate for the three months ended March 31, 2025 was primarily driven by lower share-based compensation tax benefits through the first quarter of 2025 as compared to the prior year.
Liquidity and Capital Resources
We have established liquidity and capital policies intended to support the execution of strategic initiatives, while meeting regulatory capital requirements and maintaining ongoing and sufficient liquidity. We believe liquidity is of critical importance to the Company and, in particular, to LPL Financial, our primary broker-dealer subsidiary. The objective of our policies is to ensure that we can meet our strategic, operational and regulatory liquidity and capital requirements under both normal operating conditions and under periods of stress in the financial markets.
Liquidity
Our liquidity needs are primarily driven by capital requirements at LPL Financial, interest due on our corporate debt and other capital returns to stockholders. Our liquidity needs at LPL Financial are driven primarily by the level and volatility of our client activity. Management maintains a set of liquidity sources and monitors certain business trends and market metrics closely in an effort to ensure we have sufficient liquidity. We believe that based on current levels of cash flows from operations and anticipated growth, together with available cash balances and external liquidity sources, we have adequate liquidity to satisfy our short-term and long-term working capital needs, the payment of all of our obligations and the funding of anticipated acquisitions and other capital expenditures.
Parent Company Liquidity
LPL Holdings, Inc. (the “Parent”), the direct holding company of our operating subsidiaries, considers its primary sources of liquidity to be dividends from and excess capital generated by LPL Financial, as well as capacity for additional borrowing under its $2.25 billion unsecured revolving credit facility, which it has the ability to borrow against for working capital and general corporate purposes.
Dividends from and excess capital generated by LPL Financial are primarily generated through our cash flow from operations. Subject to regulatory approval or notification, capital generated by regulated subsidiaries can be distributed to the Parent to the extent the capital levels exceed regulatory requirements, Credit Agreement requirements and internal capital thresholds. During the three months ended March 31, 2025 and 2024, LPL Financial paid dividends of $150.0 million and $120.0 million to the Parent, respectively.
We believe Corporate Cash, a component of cash and equivalents, is a useful measure of the Parent’s liquidity as it represents the capital available for use in excess of the amount we are required to maintain pursuant to the Credit Agreement. Corporate Cash is the sum of cash and equivalents from the following: (1) cash and equivalents held at the Parent, (2) cash and equivalents held at regulated subsidiaries as defined by the Credit Agreement, which include LPL Financial, LPL Enterprise, The Private Trust Company, N.A. (“PTC”), and Atria’s introducing broker-dealer subsidiaries in excess of the capital requirements of the Credit Agreement and (3) cash and equivalents held at non-regulated subsidiaries.
The following table presents the components of Corporate Cash (in thousands):
| March 31, 2025 | December 31, 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 | $ | 620,630 | $ | 479,438 | ||||
| Corporate Cash | ||||||||
| Cash at the Parent | $ | 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 | ||||
Corporate Cash is monitored as part of our liquidity risk management strategy, and we target maintaining approximately $200 million of Corporate Cash to meet our near-term corporate debt obligations. Corporate Cash increased by $141.2 million during the three months ended March 31, 2025 primarily as a result of proceeds received from our $1.25 billion debt issuance in February 2025 offset by the repayment of balances outstanding on
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our senior unsecured revolving credit facility. See Note 9 - Corporate Debt and Other Borrowings, Net, within the notes to the condensed consolidated financial statements for additional information.
We actively monitor changes to our liquidity needs caused by general business volumes and price volatility, including higher margin requirements of clearing corporations and exchanges, and stress scenarios involving a sustained market downturn and the persistence of current interest rates. We believe that based on current levels of operations and anticipated growth, our cash flow from operations, together with other available sources of funds, which include five uncommitted lines of credit, the revolving credit facility established through our Credit Agreement and the committed revolving credit facility of LPL Financial, will provide us with adequate liquidity to satisfy our short-term and long-term working capital needs, the payment of all of our obligations and the funding of anticipated capital expenditures.
We regularly evaluate our existing indebtedness, including potential issuances and refinancing opportunities, based on a number of factors, including our capital requirements, future prospects, contractual restrictions, the availability of refinancing on attractive terms and general market conditions. As of March 31, 2025, the earliest principal maturity date for our corporate debt with outstanding balances is in 2026 and our revolving credit facilities and uncommitted lines of credit mature between 2025 and 2029.
Share Repurchases
We engage in a share repurchase program that was approved by our Board, pursuant to which we may repurchase our issued and outstanding shares of common stock from time to time. Purchases may be effected in open market or privately negotiated transactions. Our current capital deployment framework remains focused on investing in organic growth first, pursuing acquisitions where appropriate and returning excess capital to stockholders. The Company repurchased 289,371 shares for a total of $100.0 million during the three months ended March 31, 2025. As of March 31, 2025, we had $630.0 million remaining under our existing repurchase program; however, we have paused share repurchases as a result of our planned acquisition of Commonwealth. Subsequent to the expected closing of the transaction, we will evaluate resuming share repurchases, consistent with our existing capital management strategy. The timing and amount of share repurchases, if any, is determined at our discretion within the constraints of our Credit Agreement, applicable laws and consideration of our general liquidity needs. See Note 11 - Stockholders’ Equity, within the notes to the condensed consolidated financial statements for additional information regarding our share repurchases.
Common Stock Dividends
The payment, timing and amount of any dividends are subject to approval by LPLFH’s Board, as well as certain limits under our Credit Agreement. See Note 11 - Stockholders’ Equity, within the notes to the condensed consolidated financial statements for additional information regarding our dividends.
LPL Financial Liquidity
LPL Financial relies primarily on client payables to fund margin lending. LPL Financial maintains additional liquidity through external lines of credit totaling $1.2 billion at March 31, 2025. LPL Financial also maintains a line of credit with the Parent.
External Liquidity Sources
The following table presents amounts outstanding and available under our external lines of credit at March 31, 2025 (in millions):
| Description | Borrower | Maturity Date | Outstanding | Available | |||||||||||||
Senior unsecured, revolving credit facility | LPL Holdings, Inc. | May 2029 | $ | — | $ | 2,250 | |||||||||||
Broker-dealer revolving credit facility | LPL Financial LLC | May 2025 | $ | — | $ | 1,000 | |||||||||||
| Unsecured, uncommitted lines of credit | LPL Financial LLC | None | $ | — | $ | 75 | |||||||||||
| Unsecured, uncommitted lines of credit | LPL Financial LLC | September 2025 | $ | — | $ | 50 | |||||||||||
| Secured, uncommitted lines of credit | LPL Financial LLC | March 2028 | $ | — | $ | 75 | |||||||||||
| Secured, uncommitted lines of credit | LPL Financial LLC | None | $ | — | unspecified | ||||||||||||
| Secured, uncommitted lines of credit | LPL Financial LLC | None | $ | — | unspecified | ||||||||||||
Capital Resources
The Company seeks to manage capital levels in support of its business strategy of generating and effectively deploying capital for the benefit of our stockholders.
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Our primary requirement for working capital relates to funds we loan to our advisors’ clients for trading conducted on margin and funds we are required to maintain for regulatory capital and reserves based on the requirements of our regulators and clearing organizations, which also consider client balances and trading activities. We have several sources of funds that enable us to meet increases in working capital requirements that relate to increases in client margin activities and balances. These sources include cash and equivalents on hand, the committed revolving credit facility of LPL Financial and proceeds from repledging or selling client securities in margin accounts. When an advisor’s client purchases securities on margin or uses securities as collateral to borrow from us on margin, we are permitted, pursuant to the applicable securities industry regulations, to repledge, loan or sell securities, up to 140% of the client’s margin loan balance, that collateralize those margin accounts.
Our other working capital needs are primarily related to loans we are making to advisors and timing associated with receivables and payables, which we have satisfied in the past from internally generated cash flows.
We may sometimes be required to fund capital requirements necessary to effect client transactions in securities markets and cash sweep balances held at third-party banks that arise from the delayed receipt of client funds. These capital requirements are funded either with internally generated cash flows or, if needed, with funds drawn on our uncommitted lines of credit at LPL Financial or one of our revolving credit facilities.
Our broker-dealer subsidiaries are subject to the SEC’s Uniform Net Capital Rule (Rule 15c3-1 under the Exchange Act), which requires the maintenance of minimum net capital. LPL Financial, our primary broker-dealer subsidiary, computes net capital requirements under the alternative method, which requires firms to maintain minimum net capital equal to the greater of $250,000 or 2% of aggregate debit balances arising from client transactions.
The following table presents the net capital position of the Company’s primary broker-dealer subsidiary (in thousands):
| March 31, 2025 | |||||
| LPL Financial LLC | |||||
| Net capital | $ | 494,111 | |||
| Less: required net capital | 17,926 | ||||
| Excess net capital | $ | 476,185 | |||
Payment by our broker-dealer subsidiaries of dividends greater than 10% of their respective excess net capital during any 35-day rolling period requires approval from FINRA. In addition, each broker-dealer subsidiary’s ability to pay dividends would be restricted if its net capital would be less than 5% of aggregate customer debit balances.
LPL Financial also acts as an introducing broker-dealer for commodities and futures. Accordingly, its trading activities are subject to the National Futures Association’s (“NFA”) financial requirements and it is required to maintain net capital that is in excess of or equal to the greatest of NFA’s minimum financial requirements. The NFA was designated by the Commodity Futures Trading Commission as LPL Financial’s primary regulator for such activities. Currently, the highest NFA requirement is the minimum net capital calculated and required pursuant to the SEC’s Uniform Net Capital Rule.
Our other regulated subsidiaries, including LPL Enterprise, Atria’s seven introducing broker-dealer subsidiaries, and PTC, are also subject to various regulatory capital requirements. Failure to meet the respective minimum capital requirements can result in certain mandatory and discretionary actions by regulators that, if undertaken, could have substantial monetary and non-monetary impacts on their operations. As of March 31, 2025, the Company’s other regulated subsidiaries met all capital adequacy requirements to which they were subject.
Supplemental Guarantor Financial Information
LPL Holdings, Inc. (the “Issuer”), a wholly owned subsidiary of LPL Financial Holdings Inc. (“LPLFH” and together with the Issuer, the “Obligor Group”), has in the past, and may in the future, issue, among other things, non-convertible debt securities that include full and unconditional guarantees by LPLFH. The debt securities issued by the Issuer may be fully and unconditionally guaranteed by LPLFH. LPLFH is a Delaware holding corporation that manages substantially all of its operations through investments in subsidiaries. See Note 1 - Organization and Description of the Company and Note 9 - Corporate Debt and Other Borrowings, Net, within the notes to the condensed consolidated financial statements for additional information.
Pursuant to Rule 3-10 of Regulation S-X under the Securities Act of 1933, as amended, the following tables present unaudited summarized financial information for the Obligor Group on a combined basis. Balances and transactions between the Obligor Group have been eliminated. Financial information for non-guarantor subsidiaries, which includes all other subsidiaries of the Issuer, has been excluded and intercompany balances and transactions
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between the Obligor Group and non-guarantor subsidiaries are presented on separate lines. The summarized financial information below should be read in conjunction with the Company’s condensed consolidated financial statements contained herein as the summarized financial information for the Obligor Group may not be indicative of results of operations or financial position of the Issuer or LPLFH had they operated as independent entities.
The following tables present the summarized financial information for the periods presented (in thousands):
LPL Holdings, Inc. & LPL Financial Holdings Inc. | |||||||||||
| Three Months Ended March 31, | |||||||||||
Combined Summarized Statements of Income | 2025 | ||||||||||
Revenues(1) | $ | (21,115) | |||||||||
Revenues from non-guarantor subsidiaries | 4,062 | ||||||||||
Advisory and commission expense(1) | (17,237) | ||||||||||
Interest expense on borrowings | 84,871 | ||||||||||
Expenses from non-guarantor subsidiaries | 5,700 | ||||||||||
Loss before provision for income taxes | (107,914) | ||||||||||
Net loss | (82,851) | ||||||||||
(1)Revenues primarily include unrealized gains and losses on assets held in the non-qualified deferred compensation plan offered to advisors and employees, while advisory and commission expense includes the deferred advisory and commission fee expense associated with mark-to-market gains or losses on the non-qualified deferred compensation plan offered to advisors.
LPL Holdings, Inc. & LPL Financial Holdings Inc. | |||||||||||
Combined Summarized Statements of Financial Condition | March 31, 2025 | December 31, 2024 | |||||||||
| Cash and equivalents | $ | 104,080 | $ | 39,782 | |||||||
Other receivables, net | 2,202 | 15,032 | |||||||||
Property and equipment, net | 161,611 | 161,845 | |||||||||
Goodwill | 1,251,908 | 1,251,908 | |||||||||
Other intangibles, net | 60,493 | 67,486 | |||||||||
Receivables from non-guarantor subsidiaries | 154,871 | 148,855 | |||||||||
Other assets | 1,297,517 | 1,333,061 | |||||||||
Corporate debt and other borrowings, net | 5,686,678 | 5,494,724 | |||||||||
Accounts payable and accrued liabilities | 95,964 | 66,818 | |||||||||
Payables to non-guarantor subsidiaries | 79,066 | 101,400 | |||||||||
Other liabilities | 1,369,569 | 1,247,792 | |||||||||
Debt and Related Covenants
The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, our ability to:
•incur additional indebtedness or issue disqualified stock or preferred stock;
•declare dividends, or other distributions to stockholders;
•repurchase equity interests;
•redeem indebtedness that is subordinated in right of payment to certain debt instruments;
•make investments or acquisitions;
•create liens;
•sell assets;
•guarantee indebtedness;
•engage in certain transactions with affiliates;
•enter into agreements that restrict dividends or other payments from subsidiaries; and
•consolidate, merge or transfer all or substantially all of our assets.
Our Credit Agreement allows us to pay dividends and distributions or repurchase our common stock only when certain conditions are met. In addition, our revolving credit facility requires us to be in compliance with certain financial covenants as of the last day of each fiscal quarter. The financial covenants require the calculation of Credit Agreement EBITDA, as defined in, and calculated by management in accordance with, the Credit Agreement. The Credit Agreement defines Credit Agreement EBITDA as “Consolidated EBITDA,” which is Consolidated Net Income
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(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.
As of March 31, 2025, we were in compliance with our Credit Agreement financial covenants, which include a maximum Consolidated Total Debt to Consolidated EBITDA Ratio (as defined in the Credit Agreement) or “Leverage Ratio” and a minimum Consolidated EBITDA to Consolidated Interest Expense Ratio (as defined in the Credit Agreement) or “Interest Coverage”. The breach of these financial covenants would be subject to certain equity cure rights. The required ratios under our financial covenants and actual ratios were as follows:
| March 31, 2025 | ||||||||
| Financial Ratio | Covenant Requirement | Actual Ratio | ||||||
Leverage Ratio (Maximum) | 4.0 | 1.82 | ||||||
| Interest Coverage (Minimum) | 3.0 | 9.84 | ||||||
Certain restrictive covenants under certain of our Indentures are currently suspended. However, a credit rating downgrade to a below investment grade rating could cause currently suspended restrictive covenants under certain of our Indentures to be automatically reinstated.
See Note 9 - Corporate Debt and Other Borrowings, Net, within the notes to the condensed consolidated financial statements for additional information regarding the Credit Agreement.
Contractual Obligations
During the three months ended March 31, 2025, there were no material changes in our contractual obligations, other than in the ordinary course of business, from those disclosed in our 2024 Annual Report on Form 10-K. See Note 4 - Acquisitions, Note 9 - Corporate Debt and Other Borrowings, Net and Note 10 - Commitments and Contingencies, within the notes to the condensed consolidated financial statements, as well as the Contractual Obligations section within Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Annual Report on Form 10-K, for further detail.
Risk Management
Risk is an inherent part of our business activities. To manage risk, we have implemented an enterprise risk management (“ERM”) framework that supports a resilient and adaptive risk-focused organization, designed to enable us to navigate uncertainties, make informed and consistent decisions, and seize growth opportunities. This framework facilitates the incorporation of risk assessment into decision-making processes, enables execution of our business strategy, and protects the Company and our franchise.
Our Company-wide risk appetite statement is a crucial component of our risk governance framework. It defines the overall level and types of risk we are prepared to accept in order to achieve our strategic objectives and business plan. This statement categorizes risks into strategic, technology, regulatory compliance, operational, liquidity, reputational, credit, interest rate, and market risks.
Additionally, this framework aims to ensure policies and procedures are in place and appropriately designed to identify and manage risk at appropriate levels throughout the Company and within various departments. We have established advisor-facing and internal written policies and procedures that govern the conduct of our advisors and employees. Our advisor-facing policies are specifically designed to provide guidelines and procedures that ensure advisors adhere to regulatory requirements and maintain ethical standards in their professional conduct while our internal policies cover a wide range of topics designed to promote compliance, consistency, risk management, and culture and values across the Company. Please consult the “Risks Related to Our Technology” and the “Risks Related to Our Business and Industry” sections within Part I, “Item 1A. Risk Factors” and the “Risk Management” section within Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Annual Report on Form 10-K for more information about our risks, our risk management policies and procedures, the potential related effects on our operations, and our ERM framework.
Operational Risk
Operational risk refers to the risk of loss resulting from inadequate or failed processes and/or systems as a result of external events and is inherent in all Company activities. Please consult the “Risk Management” section within Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 Annual Report on Form 10-K for more information about the operational risks that we face.
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Regulatory and Compliance Risk
The regulatory environment in which we operate is discussed in detail within Part I, “Item 1. Business” in our 2024 Annual Report on Form 10-K. In recent years, and during the periods presented in this Quarterly Report on Form 10-Q, we have observed the SEC, FINRA, the U.S. Department of Labor and state regulators broaden the scope, frequency and depth of their examinations and inquiries to include greater emphasis on the quality, consistency and oversight of our compliance systems and programs. Please consult the “Risks Related to Our Regulatory Environment” and the “Risks Related to Our Business and Industry” sections within Part I, “Item 1A. Risk Factors” in our 2024 Annual Report on Form 10-K for more information about the risks associated with operating within our regulatory environment, pending regulatory matters and the potential related effects on our operations.
Critical Accounting Policies and Estimates
In the notes to our consolidated financial statements and in Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 Annual Report on Form 10-K, we have disclosed those accounting policies that we consider to be most significant in determining our results of operations and financial condition and involve a higher degree of judgment and complexity. There have been no changes to those policies that we consider to be material since the filing of our 2024 Annual Report on Form 10-K. The accounting principles used in preparing our condensed consolidated financial statements conform in all material respects to GAAP.
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Item 1. Financial Statements (unaudited)
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| REVENUE | ||||||||||||||
| Advisory | $ | $ | ||||||||||||
| Commission: | ||||||||||||||
| Sales-based | ||||||||||||||
| Trailing | ||||||||||||||
| Total commission | ||||||||||||||
| Asset-based: | ||||||||||||||
| Client cash | ||||||||||||||
| Other asset-based | ||||||||||||||
| Total asset-based | ||||||||||||||
| Service and fee | ||||||||||||||
| Transaction | ||||||||||||||
| Interest income, net | ||||||||||||||
| Other | ( | |||||||||||||
| Total revenue | ||||||||||||||
| EXPENSE | ||||||||||||||
| Advisory and commission | ||||||||||||||
| Compensation and benefits | ||||||||||||||
| Promotional | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Interest expense on borrowings | ||||||||||||||
| Occupancy and equipment | ||||||||||||||
| Brokerage, clearing and exchange | ||||||||||||||
| Amortization of other intangibles | ||||||||||||||
| Professional services | ||||||||||||||
| Communications and data processing | ||||||||||||||
| Other | ||||||||||||||
| Total expense | ||||||||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | ||||||||||||||
| PROVISION FOR INCOME TAXES | ||||||||||||||
| NET INCOME | $ | $ | ||||||||||||
| EARNINGS PER SHARE | ||||||||||||||
| Earnings per share, basic | $ | $ | ||||||||||||
| Earnings per share, diluted | $ | $ | ||||||||||||
| Weighted-average shares outstanding, basic | ||||||||||||||
| Weighted-average shares outstanding, diluted | ||||||||||||||
See notes to unaudited condensed consolidated financial statements.
19
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Condition
(In thousands, except share data)
(Unaudited)
| ASSETS | March 31, 2025 | December 31, 2024 | ||||||
| Cash and equivalents | $ | $ | ||||||
| Cash and equivalents segregated under federal or other regulations | ||||||||
| Restricted cash | ||||||||
| Receivables from clients, net | ||||||||
| Receivables from brokers, dealers and clearing organizations | ||||||||
| Advisor loans, net | ||||||||
| Other receivables, net | ||||||||
| Investment securities | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Other intangibles, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| LIABILITIES: | ||||||||
| Client payables | $ | $ | ||||||
| Payables to brokers, dealers and clearing organizations | ||||||||
| Accrued advisory and commission expenses payable | ||||||||
| Corporate debt and other borrowings, net | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Other liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 10) | ||||||||
Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
Treasury stock, at cost — | ( | ( | ||||||
| Retained earnings | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements.
20
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands)
(Unaudited)
| Three Months Ended March 31, 2024 | |||||||||||||||||||||||
| Additional Paid-In Capital | Retained Earnings | Total Stockholders’ Equity | |||||||||||||||||||||
| Common Stock | Treasury Stock | ||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||
| BALANCE — December 31, 2023 | $ | $ | $ | ( | $ | $ | |||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||
| Issuance of common stock to settle restricted stock units | — | — | ( | — | ( | ||||||||||||||||||
| Treasury stock purchases | — | — | — | ( | — | ( | |||||||||||||||||
Cash dividends on common stock - $ | — | — | — | — | — | ( | ( | ||||||||||||||||
| Stock option exercises and other | ( | ||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | ||||||||||||||||||
| BALANCE — March 31, 2024 | $ | $ | $ | ( | $ | $ | |||||||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||
| Additional Paid-In Capital | Retained Earnings | Total Stockholders’ Equity | |||||||||||||||||||||
| Common Stock | Treasury Stock | ||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||
| BALANCE — December 31, 2024 | $ | $ | $ | ( | $ | $ | |||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||
| Issuance of common stock to settle restricted stock units | — | — | ( | — | ( | ||||||||||||||||||
| Treasury stock purchases | — | — | — | ( | — | ( | |||||||||||||||||
Cash dividends on common stock - $ | — | — | — | — | — | ( | ( | ||||||||||||||||
| Stock option exercises and other | — | ( | |||||||||||||||||||||
| Share-based compensation | — | — | — | — | |||||||||||||||||||
| BALANCE — March 31, 2025 | $ | $ | $ | ( | $ | $ | |||||||||||||||||
See notes to unaudited condensed consolidated financial statements.
21
| LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | $ | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of other intangibles | ||||||||
| Amortization of debt issuance costs | ||||||||
| Share-based compensation | ||||||||
| Provision for credit losses | ( | |||||||
| Deferred benefit for income taxes | ( | |||||||
Change in estimated fair value of contingent consideration | — | |||||||
| Loan forgiveness | ||||||||
| Other | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables from clients, net | ( | |||||||
| Receivables from brokers, dealers and clearing organizations | ( | ( | ||||||
| Advisor loans, net | ( | ( | ||||||
| Other receivables, net | ( | ( | ||||||
| Investment securities - trading | ( | |||||||
| Other assets | ( | ( | ||||||
| Client payables | ||||||||
| Payables to brokers, dealers and clearing organizations | ||||||||
| Accrued advisory and commission expenses payable | ( | |||||||
| Accounts payable and accrued liabilities | ( | ( | ||||||
| Other liabilities | ||||||||
Operating leases | ( | |||||||
Net cash provided by operating activities | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Capital expenditures | ( | ( | ||||||
| Acquisitions, net of cash acquired | ( | ( | ||||||
| Purchases of securities classified as held-to-maturity | ( | |||||||
| Proceeds from maturities of securities classified as held-to-maturity | ||||||||
Capitalized interest | ( | |||||||
| Net cash used in investing activities | ( | ( | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from revolving credit facilities | ||||||||
| Repayments of revolving credit facilities | ( | ( | ||||||
| Repayment of senior secured term loans | ( | |||||||
Continued on following page | ||||||||
22
| LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Proceeds from senior unsecured notes | ||||||||
| Payment of debt issuance costs | ( | |||||||
| Payment of contingent consideration | ( | ( | ||||||
| Tax payments related to settlement of restricted stock units | ( | ( | ||||||
| Repurchase of common stock | ( | ( | ||||||
| Dividends on common stock | ( | ( | ||||||
| Proceeds from stock option exercises and other | ||||||||
| Principal payment of finance leases and obligations | ( | ( | ||||||
Net cash provided by (used in) financing activities | ( | |||||||
NET INCREASE IN CASH AND EQUIVALENTS, CASH AND EQUIVALENTS SEGREGATED UNDER FEDERAL OR OTHER REGULATIONS AND RESTRICTED CASH | ||||||||
| CASH AND EQUIVALENTS, CASH AND EQUIVALENTS SEGREGATED UNDER FEDERAL OR OTHER REGULATIONS AND RESTRICTED CASH — Beginning of period | ||||||||
| CASH AND EQUIVALENTS, CASH AND EQUIVALENTS SEGREGATED UNDER FEDERAL OR OTHER REGULATIONS AND RESTRICTED CASH — End of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | $ | ||||||
| Cash paid for amounts included in the measurement of finance lease liabilities | $ | $ | ||||||
| NONCASH DISCLOSURES: | ||||||||
| Capital expenditures included in accounts payable and accrued liabilities | $ | $ | ||||||
| Lease assets obtained in exchange for operating lease liabilities | $ | $ | ||||||
Prefunded acquisition | $ | $ | ||||||
Contingent consideration liabilities recognized at acquisition date | $ | $ | ||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash and equivalents | $ | $ | ||||||
| Cash and equivalents segregated under federal or other regulations | ||||||||
| Restricted cash | ||||||||
| Total cash and equivalents, cash and equivalents segregated under federal or other regulations and restricted cash shown in the statements of cash flows | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements.
23
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
NOTE 1 - ORGANIZATION AND DESCRIPTION OF THE COMPANY
LPL Financial Holdings Inc. (“LPLFH”), a Delaware holding corporation, together with its consolidated subsidiaries (collectively, the “Company”), provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at institutions (collectively, “advisors”) in the United States. Through its custody and clearing platform, using both proprietary and third-party technology, the Company provides access to diversified financial products and services, enabling its advisors to offer personalized financial advice and brokerage services to retail investors (their “clients”). The Company’s most significant, wholly owned subsidiaries are described below:
•LPL Holdings, Inc. (“LPLH” or “Parent”) is an intermediate holding company and directly or indirectly owns 100 % of the issued and outstanding common equity interests of all of LPLFH’s indirect subsidiaries, including a captive insurance subsidiary that underwrites insurance for various legal and regulatory risks of the Company.
•LPL Financial LLC (“LPL Financial”), with primary offices in San Diego, California; Fort Mill, South Carolina; Tempe, Arizona; Boston, Massachusetts; and Austin, Texas, is a clearing broker-dealer and an investment advisor that principally transacts business for its advisors and institutions on behalf of their clients in a broad array of financial products and services. LPL Financial is licensed to operate in all 50 states, Washington D.C., Puerto Rico and the U.S. Virgin Islands.
•LPL Enterprise, LLC (“LPL Enterprise”) is a limited product shelf introducing broker-dealer and registered investment advisor that supports a portion of the Company’s institutional business, providing brokerage and investment advisory services to the clients of those institutional businesses.
•LPL Insurance Associates, Inc. operates as an insurance brokerage general agency that offers life and disability insurance products and services for LPL Financial advisors.
•Atria Wealth Solutions, Inc. (“Atria”) is a holding company for the registered broker-dealers and investment advisors that the Company acquired in connection with the acquisition of Atria. Atria has seven introducing broker-dealer subsidiaries, which clear transactions through third-party clearing and carrying firms. The Company expects to complete the conversion of assets from these acquired broker-dealers and investment advisors in 2025 and withdraw the related registrations of these entities thereafter.
•AW Subsidiary, Inc. is a holding company for AdvisoryWorld and Blaze Portfolio Systems LLC (“Blaze”). AdvisoryWorld offers technology products, including proposal generation, investment analytics and portfolio modeling, to both the Company’s advisors and external clients in the wealth management industry. Blaze provides an advisor-facing trading and portfolio rebalancing platform.
•PTC Holdings, Inc. (“PTCH”) is a holding company for The Private Trust Company, N.A. (“PTC”). PTC is chartered as a non-depository limited purpose national bank, providing a wide range of trust, investment management oversight, and custodial services for estates and families. PTC also provides Individual Retirement Account (“IRA”) custodial services for LPL Financial.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These unaudited condensed consolidated financial statements (“condensed consolidated financial statements”) are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), which require the Company to make estimates and assumptions regarding the valuation of certain financial instruments, acquisitions, contingent consideration, goodwill and other intangibles, allowance for credit losses on receivables, share-based compensation, accruals for liabilities, income taxes, revenue and expense accruals and other matters
24
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
that affect the condensed consolidated financial statements and related disclosures. The condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly the results of operations for the interim periods presented. Actual results could differ from those estimates under different assumptions or conditions and the differences may be material to the condensed consolidated financial statements.
The condensed consolidated financial statements include the accounts of LPLFH and its subsidiaries. Intercompany transactions and balances have been eliminated. The condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the related notes for the year ended December 31, 2024, contained in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”).
Recently Issued or Adopted Accounting Pronouncements
There are no relevant recently issued accounting pronouncements that would materially impact the Company’s condensed consolidated financial statements and related disclosures. There were no new accounting pronouncements adopted during the three months ended March 31, 2025 that materially impacted the Company’s condensed consolidated financial statements and related disclosures.
NOTE 3 - REVENUE
Commission
The following table presents total commission revenue disaggregated by product category (in thousands):
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Commission revenue | ||||||||||||||
| Annuities | $ | $ | ||||||||||||
| Mutual funds | ||||||||||||||
| Fixed income | ||||||||||||||
| Equities | ||||||||||||||
| Other | ||||||||||||||
Total commission revenue | $ | $ | ||||||||||||
25
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
The following table presents sales-based and trailing commission revenue disaggregated by product category (in thousands):
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Commission revenue | ||||||||||||||
| Sales-based | ||||||||||||||
Annuities | $ | $ | ||||||||||||
Fixed income | ||||||||||||||
Mutual funds | ||||||||||||||
Equities | ||||||||||||||
Other | ||||||||||||||
Total sales-based revenue | $ | $ | ||||||||||||
| Trailing | ||||||||||||||
| Annuities | $ | $ | ||||||||||||
| Mutual funds | ||||||||||||||
| Other | ||||||||||||||
| Total trailing revenue | $ | $ | ||||||||||||
Total commission revenue | $ | $ | ||||||||||||
Asset-Based
The following table sets forth asset-based revenue disaggregated by product category (in thousands):
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Asset-based revenue | ||||||||||||||
Client cash | $ | $ | ||||||||||||
Sponsorship programs | ||||||||||||||
Recordkeeping | ||||||||||||||
| Total asset-based revenue | $ | $ | ||||||||||||
Service and Fee
The following table sets forth service and fee revenue disaggregated by recognition pattern (in thousands):
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Service and fee revenue | ||||||||||||||
Over time(1) | $ | $ | ||||||||||||
Point-in-time(2) | ||||||||||||||
| Total service and fee revenue | $ | $ | ||||||||||||
_______________________________
(1)Service and fee revenue recognized over time includes revenue such as error and omission insurance fees, IRA custodian fees, and technology fees.
(2)Service and fee revenue recognized at a point-in-time includes revenue such as IRA termination fees, registration fees, and confirmation fees.
26
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
Unearned Revenue
The Company records unearned revenue when cash payments are received or due in advance of the Company’s performance obligations, including amounts which are refundable. Unearned revenue increased from $207.6 million as of December 31, 2024 to $270.0 million as of March 31, 2025. The increase in unearned revenue for the three months ended March 31, 2025 is primarily driven by cash payments received or due in advance of satisfying the Company’s performance obligations, partially offset by $206.9 million of revenue recognized during the three months ended March 31, 2025 that was included in the unearned revenue balance as of December 31, 2024.
The Company receives cash in advance for advisory services to be performed and conferences to be held in future periods. For advisory services, revenue is recognized as the Company provides the administration, brokerage and execution services over time to satisfy the performance obligations. For conference revenue, the Company recognizes revenue as the conferences are held.
NOTE 4 - ACQUISITIONS
Entered into a definitive purchase agreement to acquire Commonwealth Financial Network (“Commonwealth”)
On March 31, 2025, the Company announced that it had entered into a definitive purchase agreement to acquire Commonwealth, a privately-held independent wealth management firm headquartered in Massachusetts, for $2.7 billion. As part of the agreement, the Company expects Commonwealth to transition its advisory and brokerage assets to the Company’s platform. The transaction is expected to close in the second half of 2025, and the conversion to the Company’s platform is expected to be completed in mid-2026, subject to the receipt of regulatory approvals and other conditions.
The Company will finance this transaction through a combination of corporate cash and the proceeds from completed debt and equity issuances. On April 2, 2025, the Company completed a public offering of approximately 5.4 million shares of the Company’s common stock at an offering price of $320.00 per share, and on April 3, 2025, the Company completed the issuance of $500.0 million in aggregate principal amount of 4.900 % senior unsecured notes due 2028, $500.0 million in aggregate principal amount of 5.150 % senior unsecured notes due 2030 and $500.0 million in aggregate principal amount of 5.750 % senior unsecured notes due 2035. See Note 9 - Corporate Debt and Other Borrowings, Net, and Note 11 - Stockholders’ Equity within the notes to the condensed consolidated financial statements for additional information.
Acquisitions Completed in the Current Period
During the three months ended March 31, 2025, the Company completed eleven acquisitions, nine of which were completed under the Liquidity & Succession solution in which the Company buys advisor practices. Two of these acquisitions have been accounted for as business combinations and nine have been accounted for as asset acquisitions.
Business Combinations
Acquisition of The Investment Center, Inc. (“The Investment Center”)
In March 2025, the Company acquired The Investment Center for total consideration of $76.7 million, which included $70.2 million of cash and liabilities of $6.5 million for contingent consideration. The Company was introduced to The Investment Center as part of the Atria acquisition, and the cash consideration was prefunded in 2024 in conjunction with the close of the Atria acquisition. The Company expects to transition The Investment Center’s brokerage and advisory assets to the Company’s platform in the next several months. The transaction also includes potential contingent consideration of up to $10.4 million based on revenue growth in the years following the acquisition. The Company accounted for the acquisition under the acquisition method of accounting for business combinations and, at March 31, 2025, had provisionally allocated $43.9 million of the consideration to advisor relationships and $32.8 million to goodwill. The advisor relationships were assigned a useful life of 18 years. See Note 7 - Goodwill and Other Intangibles, Net for additional information.
27
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
Other Business Combinations
The Company accounted for one other acquisition under the acquisition method of accounting for business combinations. Total consideration for this transaction was $3.8 million, which included $1.8 million of cash, and liabilities of $2.0 million for contingent consideration, which represents the acquisition date fair value of the additional cash consideration that may be transferred to the sellers if certain asset growth is achieved in the years following the closing. This contingent consideration may be settled for amounts up to $3.7 million in the years following the closing. At March 31, 2025, the Company had provisionally allocated $3.0 million of the consideration to client relationships, which were assigned a useful life of 14 years, and $0.8 million to goodwill.
Asset Acquisitions
The Company accounted for nine other acquisitions as asset acquisitions. These transactions included total initial consideration of $95.8 million, including $93.8 million which was allocated to client relationships and $2.0 million which was allocated to advisor relationships. These relationships were assigned useful lives of 14 years to 15 years, respectively, and the related transactions include potential contingent payments of up to $62.9 million in the years following the closing if certain asset growth is achieved. The Company has not recognized a liability for these contingent payments as the amounts to be paid will be uncertain until a future measurement date. See Note 7 – Goodwill and Other Intangibles, Net, for additional information.
Acquisitions Completed in Prior Periods
Acquisition of Atria Wealth Solutions, Inc.
On October 1, 2024 ("acquisition date"), the Company acquired 100 % of the outstanding common shares of Atria, a wealth management solutions holding company headquartered in New York, in order to expand its addressable markets and complement organic growth. As part of the acquisition, the Company acquired Atria's seven introducing broker-dealer subsidiaries and expects to transition the related brokerage and advisory assets to the Company's platform in 2025.
During the three months ended March 31, 2025, the Company recorded purchase accounting adjustments that resulted in a $13.5 million decrease in advisor relationships, a $6.3 million decrease in institutional relationships, a $6.5 million decrease in other receivables, an $8.7 million decrease in other liabilities, a $4.9 million decrease in deferred tax liabilities, and a $0.9 million decrease in accounts payable and accrued liabilities. These cumulative adjustments resulted in a $6.7 million increase to goodwill.
The Company accounted for the acquisition under the acquisition method of accounting for business combinations. The following table summarizes the total consideration for the transaction at the acquisition date (dollars in thousands):
| Total Consideration | October 1, 2024 | ||||
| Cash | $ | ||||
| Fair value of contingent consideration | |||||
| Total consideration | $ | ||||
The contingent consideration, which may be settled for amounts up to $330 million, represents the estimated fair value of the additional cash consideration that may be paid to the sellers if certain asset conversion, retention and other milestones are achieved in the year following the closing. The Company determined the fair value for each of its contingent consideration obligations using probability weighted or Monte-Carlo simulation models. These methods use significant unobservable inputs, including forecasted conversion rates and discount rates which are based on the cost of debt and equity. See Note 5 - Fair Value Measurements for additional information.
28
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
The following table summarizes the Company's provisional purchase price allocation at the acquisition date (dollars in thousands):
Provisional Purchase Price Allocation | October 1, 2024 | |||||||
Fair value of consideration transferred | $ | |||||||
Assets | ||||||||
| Cash and equivalents | $ | |||||||
| Restricted cash | ||||||||
| Receivables from brokers, dealers and clearing organizations | ||||||||
| Other receivables | ||||||||
| Other intangibles | ||||||||
| Other assets | ||||||||
| Total identifiable assets acquired | $ | |||||||
Liabilities | ||||||||
Accrued advisory and commission expenses payable | ||||||||
| Accounts payable and accrued liabilities | ||||||||
Deferred tax liabilities | ||||||||
| Other liabilities | ||||||||
| Total liabilities assumed | $ | |||||||
Net assets acquired | ||||||||
| Goodwill | $ | |||||||
The goodwill primarily includes synergies expected to result from combining operations. Other intangible assets comprised $195.4 million of institutional relationships and $424.7 million of advisor relationships which were each assigned useful lives of 16 years. These intangible assets were valued using the income approach and are included in the Advisor and institution relationships line item in Note 7 - Goodwill and Other Intangibles, Net. The fair value determination of institutional and advisor relationships required the Company to make significant estimates and assumptions related to future net cash flows and discount rates. Given the recent date of closing, the purchase accounting analysis is ongoing and may result in changes to the value of assets acquired and liabilities recorded, including other intangible assets and liabilities for contingent consideration.
Acquisition related costs incurred as part of the Atria acquisition during the three months ended March 31, 2025 were $12.0 million and primarily comprised amounts related to professional services, which were classified as professional services expense in the Company's condensed consolidated statements of income. Atria's results were included in the Company's condensed consolidated statements of income during the three months ended March 31, 2025. For this period, total revenues attributable to Atria were approximately $185.4 million and net income was not material.
The following table presents unaudited pro forma results as if the acquisition of Atria had occurred on January 1, 2024 (dollars in thousands):
Three Months Ended March 31, | |||||||||||
| LPL Financial and Atria Pro Forma Combined Financial Information (unaudited) | 2024 | ||||||||||
| Total revenue | $ | ||||||||||
| Net income | $ | ||||||||||
The unaudited pro forma results above were prepared by combining the historical financial information of the Company and Atria and making certain adjustments. Pro forma adjustments include the impact of amortization of intangible assets recognized as part of the acquisition, amortization of transition assistance loans made to advisors and institutions that will convert to the Company's platform in 2025, and the related interest impact of financing the
29
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
transaction. The unaudited pro forma information does not reflect the potential benefits of cost and funding synergies, opportunities to earn additional revenues or other factors, and, therefore, does not represent the actual results that would have occurred had the companies actually been combined as of January 1, 2024.
Other Acquisitions
During the twelve months ended December 31, 2024, the Company completed 23 other acquisitions, 22 of which were completed under the Liquidity & Succession solution in which the Company buys advisor practices. Certain of these acquisitions have been accounted for as business combinations and certain have been accounted for as asset acquisitions.
Business Combinations
The Company accounted for seven of these acquisitions under the acquisition method of accounting for business combinations. Total consideration for these transactions was $113.2 million, which included $64.4 million of cash, and liabilities of $48.8 million for contingent consideration. At December 31, 2024, the Company allocated $34.3 million of the purchase price to goodwill and $78.9 million to client relationships acquired as part of these acquisitions, which included a provisional allocation of $3.8 million to goodwill and $11.3 million to client relationships for acquisitions completed in the fourth quarter for which purchase accounting is not yet complete. The goodwill primarily includes synergies expected to result from combining operations and is deductible for tax purposes. See Note 7 – Goodwill and Other Intangibles, Net, for additional information.
Asset Acquisitions
NOTE 5 - FAIR VALUE MEASUREMENTS
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Inputs used to measure fair value are prioritized within a three-level fair value hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
There have been no transfers of assets or liabilities between these fair value measurement classifications during the three months ended March 31, 2025 or 2024.
The Company’s fair value measurements are evaluated within the fair value hierarchy, based on the nature of inputs used to determine the fair value at the measurement date. At March 31, 2025 and December 31, 2024, the Company had the following financial assets and liabilities that are measured at fair value on a recurring basis:
Cash Equivalents — The Company’s cash equivalents primarily include money market funds and U.S. government obligations, which are short term in nature with readily determinable values derived from active markets.
30
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
Cash Equivalents Segregated Under Federal or Other Regulations — The Company’s cash equivalents segregated under federal or other regulations include U.S. treasury bills, which are short term in nature with readily determinable values derived from active markets.
Restricted Cash — The Company’s restricted cash is primarily composed of U.S. government obligations and money market funds which are short term in nature with readily determinable values derived from active markets.
Trading Securities and Securities Sold, But Not Yet Purchased — The Company’s trading securities consist of house account model portfolios established and managed for the purpose of benchmarking the performance of its fee-based advisory platforms and temporary positions resulting from the processing of client transactions.
The Company uses prices obtained from independent third-party pricing services to measure the fair value of its trading securities. Prices received from the pricing services are validated when security prices move beyond a certain deviation threshold using various methods including comparison to prices received from additional pricing services, comparison to available quoted market prices and review of other relevant market data including implied yields of major categories of securities. In general, these quoted prices are derived from active markets for identical assets or liabilities. When quoted prices in active markets for identical assets and liabilities are not available, the quoted prices are based on similar assets and liabilities or inputs other than the quoted prices that are observable, either directly or indirectly. For negotiable certificates of deposit and treasury securities, the Company utilizes market-based inputs, including observable market interest rates that correspond to the remaining maturities or the next interest reset dates. At March 31, 2025 and December 31, 2024, the Company did not adjust prices received from the independent third-party pricing services.
Other Assets — The Company’s other assets include: (1) deferred compensation plan assets that are invested in life insurance, money market and other mutual funds, which are actively traded and valued based on quoted market prices; and (2) certain non-traded real estate investment trusts, which are valued using quoted prices for identical or similar securities and other inputs that are observable or can be corroborated by observable market data.
Fractional Shares — The Company’s investment in fractional shares held by customers is reflected in other assets while the related purchase obligation for such shares is reflected in other liabilities. The Company uses prices obtained from independent third-party pricing services to measure the fair value of its investment in fractional shares held by customers and the related repurchase obligation. Prices received from the pricing services are validated when security prices move beyond a certain deviation threshold using various methods including comparison to prices received from additional pricing services, comparison to available quoted market prices and review of other relevant market data including implied yields of major categories of securities. At March 31, 2025 and December 31, 2024, the Company did not adjust prices received from the independent third-party pricing services.
Contingent Consideration — The Company measures contingent consideration liabilities at fair value at the acquisition date, as applicable, and thereafter on a recurring basis using unobservable (Level 3) inputs. These contingent consideration liabilities are reflected in other liabilities. See Note 4 - Acquisitions for additional information.
Level 3 Recurring Fair Value Measurements
The Company determines the fair value for its contingent consideration obligations using probability weighted and Monte-Carlo simulation models. Contingent payments are estimated by applying significant unobservable inputs, including forecasted growth rates applied to project future revenue or asset growth, conversion or retention rates, and discount rates which are based on the cost of debt and equity. These projections are measured against the performance targets specified in each respective acquisition agreement, which may include growth in assets under management, net new assets, asset conversion or retention, or revenue growth. Significant increases or decreases in the Company’s forecasted growth rates over the measurement period or discount rates would result in a higher or lower fair value measurement.
31
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
The following tables summarize inputs used in the measurement of contingent consideration (dollars in thousands):
Quantitative Information About Level 3 Fair Value Measurements | ||||||||||||||||||||
| March 31, 2025 | Type | Valuation Techniques | Unobservable Inputs | Range | ||||||||||||||||
| $ | Contingent Consideration | Monte-Carlo Simulation Model | Forecasted Growth Rates | % | - | % | ||||||||||||||
| Discount Rate | % | - | % | |||||||||||||||||
Equivalency Rate(1) | % | - | % | |||||||||||||||||
Contingent Consideration | Probability Weighted Expected Return Method | Equivalency Rate(1) | % | - | % | |||||||||||||||
Conversion Rate | % | - | % | |||||||||||||||||
| $ | ||||||||||||||||||||
____________________
(1)Equivalency rate is defined as the prevailing market interest rate used to discount future payments.
Quantitative Information About Level 3 Fair Value Measurements | ||||||||||||||||||||
| December 31, 2024 | Type | Valuation Techniques | Unobservable Inputs | Range | ||||||||||||||||
| $ | Contingent Consideration | Monte-Carlo Simulation Model | Forecasted Growth Rates | % | - | % | ||||||||||||||
| Discount Rate | % | - | % | |||||||||||||||||
Equivalency Rate(1) | % | - | % | |||||||||||||||||
Contingent Consideration | Probability Weighted Expected Return Method | Equivalency Rate(1) | % | - | % | |||||||||||||||
Conversion Rate | % | - | % | |||||||||||||||||
| $ | ||||||||||||||||||||
____________________
(1)Equivalency rate is defined as the prevailing market interest rate used to discount future payments.
The following table summarizes the changes in fair value for the Company’s Level 3 liabilities during the periods presented (in thousands):
Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
Balance - Beginning of period | $ | $ | ||||||||||||
Additions and purchase accounting adjustments | ||||||||||||||
Payments | ( | ( | ||||||||||||
Fair value adjustments | ||||||||||||||
Balance - End of period | $ | $ | ||||||||||||
32
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
Recurring Fair Value Measurements
The following table summarizes the Company’s financial assets and financial liabilities measured at fair value on a recurring basis (in thousands):
| March 31, 2025 | Level 1 | Level 2 | Level 3 | Total | ||||||||||
| Assets | ||||||||||||||
| Cash equivalents | $ | $ | $ | $ | ||||||||||
| Cash equivalents segregated under federal or other regulations | ||||||||||||||
Restricted cash | ||||||||||||||
| Investment securities — trading: | ||||||||||||||
| U.S. treasury obligations | ||||||||||||||
| Mutual funds | ||||||||||||||
| Money market funds | ||||||||||||||
| Equity securities | ||||||||||||||
| Debt securities | ||||||||||||||
| Total investment securities — trading | ||||||||||||||
| Other assets: | ||||||||||||||
| Deferred compensation plan | ||||||||||||||
Fractional shares — investment(1) | ||||||||||||||
| Other investments | ||||||||||||||
| Total other assets: | ||||||||||||||
| Total assets at fair value | $ | $ | $ | $ | ||||||||||
| Liabilities | ||||||||||||||
| Other liabilities: | ||||||||||||||
| Securities sold, but not yet purchased: | ||||||||||||||
| Equity securities | $ | $ | $ | $ | ||||||||||
Mutual funds | ||||||||||||||
| Total securities sold, but not yet purchased | ||||||||||||||
Fractional shares — repurchase obligation(1) | ||||||||||||||
Contingent consideration | ||||||||||||||
| Total other liabilities | ||||||||||||||
| Total liabilities at fair value | $ | $ | $ | $ | ||||||||||
____________________
(1)Investment in and related repurchase obligation for fractional shares resulting from the Company’s dividend reinvestment program (“DRIP”).
33
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
The following table summarizes the Company’s financial assets and financial liabilities measured at fair value on a recurring basis (in thousands):
| December 31, 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||
| Assets | ||||||||||||||
| Cash equivalents | $ | $ | $ | $ | ||||||||||
| Cash equivalents segregated under federal or other regulations | ||||||||||||||
Restricted cash | ||||||||||||||
| Investment securities — trading: | ||||||||||||||
| Mutual funds | ||||||||||||||
| U.S. treasury obligations | ||||||||||||||
| Money market funds | ||||||||||||||
| Equity securities | ||||||||||||||
| Debt securities | ||||||||||||||
| Total investment securities — trading | ||||||||||||||
| Other assets: | ||||||||||||||
| Deferred compensation plan | ||||||||||||||
Fractional shares — investment(1) | ||||||||||||||
| Other investments | ||||||||||||||
| Total other assets | ||||||||||||||
| Total assets at fair value | $ | $ | $ | $ | ||||||||||
| Liabilities | ||||||||||||||
| Other liabilities: | ||||||||||||||
| Securities sold, but not yet purchased: | ||||||||||||||
| Equity securities | $ | $ | $ | $ | ||||||||||
Debt Securities | ||||||||||||||
| Total securities sold, but not yet purchased | ||||||||||||||
Fractional shares — repurchase obligation(1) | ||||||||||||||
Contingent consideration | ||||||||||||||
| Total other liabilities | ||||||||||||||
| Total liabilities at fair value | $ | $ | $ | $ | ||||||||||
____________________
34
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
Fair Value of Financial Instruments Not Measured at Fair Value
The following tables summarize the carrying values, fair values and fair value hierarchy level classification of financial instruments that are not measured at fair value (in thousands):
| March 31, 2025 | Carrying Value | Level 1 | Level 2 | Level 3 | Total Fair Value | ||||||||||||
| Assets | |||||||||||||||||
| Cash | $ | $ | $ | $ | $ | ||||||||||||
| Cash segregated under federal or other regulations | |||||||||||||||||
| Restricted cash | |||||||||||||||||
| Receivables from clients, net | |||||||||||||||||
| Receivables from brokers, dealers and clearing organizations | |||||||||||||||||
Advisor repayable loans, net(1) | |||||||||||||||||
| Other receivables, net | |||||||||||||||||
| Investment securities — held-to-maturity securities | |||||||||||||||||
| Other assets: | |||||||||||||||||
| Securities borrowed | |||||||||||||||||
Deferred compensation plan(2) | |||||||||||||||||
Other investments(3) | |||||||||||||||||
| Total other assets | |||||||||||||||||
| Liabilities | |||||||||||||||||
| Client payables | $ | $ | $ | $ | $ | ||||||||||||
| Payables to brokers, dealers and clearing organizations | |||||||||||||||||
| Corporate debt and other borrowings, net | |||||||||||||||||
| December 31, 2024 | Carrying Value | Level 1 | Level 2 | Level 3 | Total Fair Value | ||||||||||||
| Assets | |||||||||||||||||
| Cash | $ | $ | $ | $ | $ | ||||||||||||
| Cash segregated under federal or other regulations | |||||||||||||||||
| Restricted cash | |||||||||||||||||
| Receivables from clients, net | |||||||||||||||||
| Receivables from brokers, dealers and clearing organizations | |||||||||||||||||
Advisor repayable loans, net(1) | |||||||||||||||||
| Other receivables, net | |||||||||||||||||
| Investment securities - held-to-maturity securities | |||||||||||||||||
| Other assets: | |||||||||||||||||
Deferred compensation plan(2) | |||||||||||||||||
| Securities borrowed | |||||||||||||||||
Other investments(3) | |||||||||||||||||
| Total other assets | |||||||||||||||||
| Liabilities | |||||||||||||||||
| Client payables | $ | $ | $ | $ | $ | ||||||||||||
| Payables to brokers, dealers and clearing organizations | |||||||||||||||||
| Corporate debt and other borrowings, net | |||||||||||||||||
(1)Includes repayable loans and forgivable loans which have converted to repayable upon advisor termination or change in agreed upon terms.
(2)Includes cash balances awaiting investment or distribution to plan participants.
(3)Other investments include Depository Trust Company common shares and Federal Reserve stock.
35
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
NOTE 6 - INVESTMENT SECURITIES
The Company’s investment securities include debt and equity securities that the Company has classified as trading securities, which are carried at fair value, as well as investments in U.S. government notes, which are held by PTC to satisfy minimum capital requirements of the Office of the Comptroller of the Currency. These securities are recorded at amortized cost and classified as held-to-maturity as the Company has both the intent and ability to hold these investments to maturity.
The following table summarizes investment securities (in thousands):
| March 31, 2025 | December 31, 2024 | |||||||
| Trading securities — at fair value: | ||||||||
| U.S. treasury obligations | $ | $ | ||||||
| Mutual funds | ||||||||
| Money market funds | ||||||||
| Equity securities | ||||||||
| Debt securities | ||||||||
| Total trading securities | $ | $ | ||||||
| Held-to-maturity securities — at amortized cost: | ||||||||
| U.S. government notes | $ | $ | ||||||
| Total held-to-maturity securities | $ | $ | ||||||
| Total investment securities | $ | $ | ||||||
At March 31, 2025, the held-to-maturity securities were scheduled to mature as follows (in thousands):
| Within one year | After one but within five years | After five but within ten years | After ten years | Total | |||||||||||||
| U.S. government notes — at amortized cost | $ | $ | $ | $ | $ | ||||||||||||
| U.S. government notes — at fair value | $ | $ | $ | $ | $ | ||||||||||||
NOTE 7 - GOODWILL AND OTHER INTANGIBLES, NET
A summary of the activity impacting goodwill is presented below (in thousands):
| Balance at December 31, 2023 | $ | ||||
Purchase accounting adjustments | ( | ||||
| Goodwill acquired | |||||
| Balance at December 31, 2024 | |||||
| Purchase accounting adjustments | |||||
| Goodwill acquired | |||||
| Balance at March 31, 2025 | $ | ||||
The Company completed various acquisitions, which were accounted for under the acquisition method of accounting for business combinations and as asset acquisitions, and recorded purchase accounting adjustments during the periods presented. See Note 4 - Acquisitions, for additional information.
36
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
The components of other intangibles, net were as follows at March 31, 2025 (in thousands):
| Weighted-Average Life Remaining (in years) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | |||||||||||
Definite-lived intangibles, net(1): | ||||||||||||||
Advisor and institution relationships | $ | $ | ( | $ | ||||||||||
| Client relationships | ( | |||||||||||||
| Product sponsor relationships | ( | |||||||||||||
| Technology | ( | |||||||||||||
| Total definite-lived intangible assets, net | $ | $ | ( | $ | ||||||||||
| Other indefinite-lived intangibles: | ||||||||||||||
| Trademark and trade name | ||||||||||||||
| Total other intangibles, net | $ | |||||||||||||
_______________________________
(1)During the three months ended March 31, 2025, the Company completed various acquisitions. See Note 4 - Acquisitions, for additional information.
The components of other intangibles, net were as follows at December 31, 2024 (in thousands):
| Weighted-Average Life Remaining (in years) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | |||||||||||
Definite-lived intangibles, net(1): | ||||||||||||||
Advisor and institution relationships | $ | $ | ( | $ | ||||||||||
Client relationships | ( | |||||||||||||
| Product sponsor relationships | ( | |||||||||||||
| Technology | ( | |||||||||||||
| Total definite-lived intangibles, net | $ | $ | ( | $ | ||||||||||
| Other indefinite-lived intangibles: | ||||||||||||||
| Trademark and trade name | ||||||||||||||
| Total other intangibles, net | $ | |||||||||||||
_______________________________
(1) During the year ended December 31, 2024, the Company completed various acquisitions. See Note 4 - Acquisitions, for additional information.
Total amortization of other intangibles was $43.5 million and $29.6 million for the three months ended March 31, 2025 and 2024, respectively. Future amortization is estimated as follows (in thousands):
| 2025 - remainder | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
Total | $ | ||||
37
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
NOTE 8 - OTHER ASSETS AND OTHER LIABILITIES
The components of other assets and other liabilities were as follows (dollars in thousands):
| March 31, 2025 | December 31, 2024 | |||||||
| Other assets: | ||||||||
| Deferred compensation | $ | $ | ||||||
| Prepaid assets | ||||||||
Fractional shares — investment | ||||||||
| Deferred tax assets, net | ||||||||
Referral fee | ||||||||
| Debt issuance costs, net | ||||||||
| Other | ||||||||
| Total other assets | $ | $ | ||||||
| Other liabilities: | ||||||||
| Deferred compensation | $ | $ | ||||||
Unearned revenue | ||||||||
Fractional shares — repurchase obligation | ||||||||
Taxes payable | ||||||||
Contingent consideration | ||||||||
| Other | ||||||||
| Total other liabilities | $ | $ | ||||||
38
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
NOTE 9 - CORPORATE DEBT AND OTHER BORROWINGS, NET
The Company’s outstanding corporate debt and other borrowings, net were as follows (in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Corporate Debt | Balance | Applicable Margin | Interest Rate | Balance | Applicable Margin | Interest rate | Maturity | ||||||||||||||||
Term Loan A(1) | $ | SOFR+ | % | $ | SOFR+147.5 bps | % | 12/5/2026 | ||||||||||||||||
2027 Senior Notes(1) | Fixed Rate | % | Fixed Rate | % | 5/20/2027 | ||||||||||||||||||
2027 Senior Notes(1) | Fixed Rate | % | Fixed Rate | % | 11/15/2027 | ||||||||||||||||||
2028 Senior Notes(1) | Fixed Rate | % | Fixed Rate | % | 11/17/2028 | ||||||||||||||||||
2029 Senior Notes(1) | Fixed Rate | % | Fixed Rate | % | 3/15/2029 | ||||||||||||||||||
2030 Senior Notes(1) | Fixed Rate | % | Fixed Rate | % | 3/15/2030 | ||||||||||||||||||
2031 Senior Notes(1) | Fixed Rate | % | Fixed Rate | % | 5/15/2031 | ||||||||||||||||||
2034 Senior Notes(1) | Fixed Rate | % | Fixed Rate | % | 5/20/2034 | ||||||||||||||||||
2035 Senior Notes(1) | Fixed Rate | % | Fixed Rate | % | 3/15/2035 | ||||||||||||||||||
| Total Corporate Debt | |||||||||||||||||||||||
| Less: Unamortized Debt Issuance Cost | ( | ( | |||||||||||||||||||||
| Corporate debt, net | $ | $ | |||||||||||||||||||||
| Other Borrowings | |||||||||||||||||||||||
Revolving Credit Facility | ABR+ | % | ABR+37.5 bps / SOFR+147.5 bps | % | 5/20/2029 | ||||||||||||||||||
| Total other borrowings | $ | $ | |||||||||||||||||||||
| Corporate Debt and Other Borrowings, Net | $ | $ | |||||||||||||||||||||
_______________________________
(1)No leverage or interest coverage maintenance covenants.
The following table presents amounts outstanding and available under the Company’s external lines of credit at March 31, 2025 (in millions):
| Description | Borrower | Maturity Date | Outstanding | Available | ||||||||||
Senior unsecured, revolving credit facility | LPL Holdings, Inc. | May 2029 | $ | $ | ||||||||||
| Broker-dealer revolving credit facility | LPL Financial LLC | May 2025 | $ | $ | ||||||||||
| Unsecured, uncommitted lines of credit | LPL Financial LLC | None | $ | $ | ||||||||||
| Unsecured, uncommitted lines of credit | LPL Financial LLC | September 2025 | $ | $ | ||||||||||
| Secured, uncommitted lines of credit | LPL Financial LLC | March 2028 | $ | $ | ||||||||||
| Secured, uncommitted lines of credit | LPL Financial LLC | None | $ | unspecified | ||||||||||
| Secured, uncommitted lines of credit | LPL Financial LLC | None | $ | unspecified | ||||||||||
39
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
Issuance of 2030 Senior Notes and 2035 Senior Notes
On February 26, 2025, LPLH issued $750.0 million in aggregate principal amount of 5.200 % senior notes due 2030 (“2030 Senior Notes”) and $500.0 million in aggregate principal amount of 5.650 % senior notes due 2035 (the “2035 Senior Notes”). The 2030 Senior Notes and 2035 Senior Notes are unsecured obligations of the Company and are fully and unconditionally guaranteed on a senior unsecured basis by LPLFH. The Company used a portion of the proceeds from the issuance to repay borrowings made under its senior unsecured revolving credit facility and for general corporate purposes.
The 2030 Senior Notes will mature on March 15, 2030, and interest is payable semi-annually. The Company may redeem all or part of the 2030 Senior Notes on or prior to February 15, 2030 at a redemption price that is equal to the greater of: (i) the remaining scheduled payments of principal and interest discounted at the Treasury Rate (as defined in the Fourth Supplemental Indenture dated February 26, 2025) plus 15 basis points less interest accrued to the redemption date, and (ii) 100 % of the principal amount of the 2030 Senior Notes to be redeemed plus accrued interest. On or after February 15, 2030, the Company may redeem the 2030 Senior Notes at 100 % of the principal amount of the notes to be redeemed plus accrued and unpaid interest.
The 2035 Senior Notes will mature on March 15, 2035, and interest is payable semi-annually. The Company may redeem all or part of the 2035 Senior Notes on or prior to December 15, 2034 at a redemption price that is equal to the greater of: (i) the remaining scheduled payments of principal and interest discounted at the Treasury Rate (as defined in the Fifth Supplemental Indenture dated February 26, 2025) plus 20 basis points less interest accrued to the redemption date, and (ii) 100 % of the principal amount of the 2035 Senior Notes to be redeemed plus accrued interest. On or after December 15, 2034, the Company may redeem the 2035 Senior Notes at 100 % of the principal amount of the notes to be redeemed plus accrued and unpaid interest.
In connection with the issuance of the 2030 Senior Notes and 2035 Senior Notes, the Company incurred $10.4 million in costs, which were capitalized as debt issuance costs in the condensed consolidated statements of financial condition.
Refinanced Existing Term Loan B Facility with Term Loan A Facility
On December 5, 2024, LPLH refinanced its existing $1.0 billion Term Loan B facility with a new $1.0 billion Term Loan A facility (the “Term Loan A”) that will mature on December 5, 2026.
Issuance of 2027 Senior Notes and 2034 Senior Notes
On May 20, 2024, LPLH issued $500.0 million in aggregate principal amount of 5.700 % senior notes due 2027 (“2027 Senior Notes”) and $500.0 million in aggregate principal amount of 6.000 % senior notes due 2034 (the “2034 Senior Notes”). In connection with the issuance of the 2027 Senior Notes and 2034 Senior Notes, the Company incurred $7.1 million in costs, which were capitalized as debt issuance costs in the condensed consolidated statements of financial condition.
Credit Agreement and Parent Revolving Credit Facility
On May 20, 2024, LPLH amended its revolving credit facility to, among other things, increase the maximum borrowing from $2.0 billion to $2.25 billion and extend the maturity of the revolving credit facility to May 2029. In connection with the amendment of the credit facility, LPLH incurred $8.6 million in costs, which were capitalized as debt issuance costs in the condensed consolidated statements of financial condition.
The Credit Agreement subjects the Company to certain financial and non-financial covenants. As of March 31, 2025, the Company was in compliance with such covenants.
Broker-Dealer Revolving Credit Facility
On May 20, 2024, LPL Financial, the Company’s broker-dealer subsidiary, renewed its revolving credit facility to extend the maturity of the revolving credit facility to May 2025. The revolving credit facility allows for a maximum borrowing of up to $1.0 billion and borrowings under the credit facility bear interest at a rate per annum equal to 1.25 % per annum plus the greatest of (i) SOFR plus 0.10 %, (ii) the effective federal funds rate and (iii) the overnight bank funding rate, in each case, as such rate is administered or determined by the Federal Reserve Bank of New York from time to time. In connection with the renewal of the credit facility, LPL Financial incurred $1.6 million in costs, which were capitalized as debt issuance costs in the condensed consolidated statements of financial condition. The broker-dealer credit agreement subjects LPL Financial to certain financial and non-financial covenants. LPL Financial was in compliance with such covenants as of March 31, 2025.
40
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
Other External Lines of Credit
LPL Financial maintained five uncommitted lines of credit as of March 31, 2025. Two of the lines have unspecified limits, which are primarily dependent on LPL Financial’s ability to provide sufficient collateral. The other three lines have a total limit of $200.0 million, of which $125.0 million is uncollateralized. There were no
Issuance of 2028 Senior Notes, 2030 Senior Notes, and 2035 Senior Notes
On April 3, 2025, the Company completed the issuance and sale of $500.0 million in aggregate principal amount of 4.900 % senior unsecured notes due 2028, $500.0 million in aggregate principal amount of 5.150 % senior unsecured notes due 2030 and $500.0 million in aggregate principal amount of 5.750 % senior unsecured notes due 2035. The proceeds of the issuance will be utilized to fund the acquisition of Commonwealth. See Note 4 - Acquisitions within the notes to the condensed consolidated financial statements for additional information.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Service and Development Contracts
The Company is party to certain long-term contracts for systems and services that enable back-office trade processing and clearing for its product and service offerings.
Guarantees
The Company occasionally enters into contracts that contingently require it to indemnify certain parties against third-party claims. The terms of these obligations vary and, because a maximum obligation is not explicitly stated, the Company has determined that it is not possible to make an estimate of the amount that it could be obligated to pay under such contracts.
LPL Financial provides guarantees to securities clearing houses and exchanges under their standard membership agreements, which require a member to guarantee the performance of other members. Under these agreements, if a member becomes unable to satisfy its obligations to the clearing houses and exchanges, all other members would be required to meet any shortfall. The Company’s liability under these arrangements is not quantifiable and could exceed the cash and securities it has posted as collateral. However, the potential requirement for the Company to make payments under these agreements is remote. Accordingly, no liability has been recognized for these transactions.
Loan Commitments
From time to time, LPL Financial makes loans to advisors and institutions, primarily to newly recruited advisors and institutions to assist in the transition process, which may be forgivable. Due to timing differences, LPL Financial may make commitments to issue such loans prior to actually funding them. These commitments are generally contingent upon certain events occurring, including the advisor or institution joining LPL Financial. LPL Financial had no significant unfunded loan commitments at March 31, 2025 or December 31, 2024.
Legal and Regulatory Matters
The Company is subject to extensive regulation and supervision by U.S. federal and state agencies and various self-regulatory organizations. The Company and its advisors periodically engage with such agencies and organizations, in the context of examinations or otherwise, to respond to inquiries, informational requests and investigations. From time to time, such engagements result in regulatory complaints or other matters, the resolution of which has in the past and may in the future include fines, customer restitution and other remediation. Assessing the probability of a loss occurring and the timing and amount of any loss related to a legal proceeding or regulatory matter is inherently difficult. While the Company exercises significant and complex judgments to make certain estimates presented in its condensed consolidated financial statements, there are particular uncertainties and complexities involved when assessing the potential outcomes of legal proceedings and regulatory matters. The Company’s assessment process considers a variety of factors and assumptions, which may include: the procedural status of the matter and any recent developments; prior experience and the experience of others in similar matters; the size and nature of potential exposures; available defenses; the progress of fact discovery; the opinions of counsel and experts; or the potential opportunities for settlement and the status of any settlement discussions. The Company monitors these factors and assumptions for new developments and re-assesses the likelihood that a loss
41
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
will occur and the estimated range or amount of loss, if those amounts can be reasonably determined. The Company has established an accrual for those legal proceedings and regulatory matters for which a loss is both probable and the amount can be reasonably estimated.
In February 2023, the Company received a request for information from the SEC in connection with an investigation of certain elements of the Company’s Anti-Money Laundering compliance program. In 2024, the SEC proposed a resolution, under which the Company would pay an $18.0 million civil monetary penalty. As a result, the Company recorded $18.0
In July 2024, putative class action lawsuits were filed against LPL Financial in federal district court alleging certain violations of law in connection with its cash sweep programs. The Company intends to defend vigorously against the lawsuits.
In August 2024, the Company received a request for information from the SEC regarding certain elements of the Company’s cash management program for corporate advisory accounts. The Company has been cooperating with the request.
Third-Party Insurance
The Company maintains third-party insurance coverage for certain potential legal proceedings, including those involving certain client claims. With respect to such client claims, the estimated losses on many of the pending matters are less than the applicable deductibles of the insurance policies.
Self-Insurance
The Company has self-insurance for certain potential liabilities through its captive insurance subsidiary. Liabilities associated with the risks that are retained by the Company are not discounted and are estimated by considering, in part, historical claims experience, severity factors, and actuarial assumptions and estimates. The estimated accruals for these potential liabilities could be significantly affected if future occurrences and claims differ from such assumptions and historical trends, so there are particular complexities and uncertainties involved when assessing the adequacy of loss reserves for potential liabilities that are self-insured. Self-insurance liabilities are included in accounts payable and accrued liabilities in the condensed consolidated statements of financial condition. Self-insurance related charges are included in other expense in the condensed consolidated statements of income.
The following table provides a reconciliation of the beginning and ending balances of self-insurance liabilities for the periods presented (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Beginning balance — January 1 | $ | $ | |||||||||
| Losses incurred | |||||||||||
| Losses paid | ( | ( | |||||||||
| Ending balance — March 31 | $ | $ | |||||||||
Other Commitments
As of March 31, 2025, the Company had approximately $566.2 million of client margin loans that were collateralized with securities having a fair value of approximately $792.7 million that LPL Financial can repledge, loan or sell. Of these securities, approximately $332.2 million were client-owned securities pledged to the Options Clearing Corporation as collateral to secure client obligations related to options positions. As of March 31, 2025, there were no restrictions that materially limited the Company’s ability to repledge, loan or sell the remaining $460.5 million of client collateral.
Investment securities on the condensed consolidated statements of financial condition include $9.9 million and $8.5 million of trading securities pledged to the Options Clearing Corporation at March 31, 2025 and December 31, 2024, respectively, and $24.7 million and $20.0 million of trading securities pledged to the National Securities Clearing Corporation at March 31, 2025 and December 31, 2024, respectively.
42
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
NOTE 11 - STOCKHOLDERS’ EQUITY
Dividends
The payment, timing and amount of any dividends are subject to approval by the Company’s Board of Directors (the “Board”) as well as certain limits under the Credit Agreement. Cash dividends per share of common stock and total cash dividends paid on a quarterly basis were as follows (in millions, except per share data):
| 2025 | 2024 | |||||||||||||
| Dividend per Share | Total Cash Dividend | Dividend per Share | Total Cash Dividend | |||||||||||
| First quarter | $ | $ | $ | $ | ||||||||||
Share Repurchases
The Company engages in a share repurchase program that was approved by the Board, pursuant to which LPLFH may repurchase its issued and outstanding shares of common stock from time to time. Repurchased shares are included in treasury stock on the condensed consolidated statements of financial condition. On September 21, 2022, the Board authorized a $2.1 billion increase to the amount available for repurchases of the Company’s issued and outstanding common shares.
During the three months ended March 31, 2025 LPLFH repurchased 289,371 shares of common stock at a weighted-average price of $345.59 for a total of $100.0 million. As of March 31, 2025, the Company had $630.0 million remaining under the existing share repurchase program. As a result of the Company’s planned acquisition of Commonwealth, we paused share repurchases. Future share repurchases may be effected in open market or privately negotiated transactions, including transactions with affiliates, with the timing of purchases and the amount of stock purchased generally determined at the discretion of the Company within the constraints of the Credit Agreement and the Company’s general working capital needs.
Equity Offering
On April 2, 2025, the Company completed a public offering of approximately 5.4 million shares of the Company’s common stock at an offering price of $320.00 per share. The Company received proceeds of approximately $1.7 billion, which will be utilized to fund the acquisition of Commonwealth. See Note 4 - Acquisitions within the notes to the condensed consolidated financial statements for additional information.
NOTE 12 - SHARE-BASED COMPENSATION
In May 2021, the Company adopted its 2021 Omnibus Equity Incentive Plan (the “2021 Plan”), which provides for the granting of stock options, warrants, restricted stock awards, restricted stock units, deferred stock units, performance stock units and other equity-based compensation to the Company’s employees, non-employee directors and other service providers. The 2021 Plan serves as the successor to the Company’s 2010 Omnibus Equity Incentive Plan (the “2010 Plan”). Following the adoption of the 2021 Plan, the Company is no longer making grants under the 2010 Plan, and the 2021 Plan is the only plan under which equity awards are granted. However, awards previously granted under the 2010 Plan will remain outstanding until vested, exercised or forfeited, as applicable.
There were 17,754,197 shares authorized for grant under the 2021 Plan and 11,601,353 shares remaining available for future issuance at March 31, 2025.
43
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
Stock Options and Warrants
The Company has not granted stock options or warrants since 2019. The following table summarizes the Company’s stock option and warrant activity as of and for the three months ended March 31, 2025:
| Number of Shares | Weighted- Average Exercise Price | Weighted-Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (In thousands) | |||||||||||
| Outstanding — December 31, 2024 | $ | |||||||||||||
| Granted | $ | |||||||||||||
| Exercised | ( | $ | ||||||||||||
| Forfeited and Expired | $ | |||||||||||||
| Outstanding — March 31, 2025 | $ | $ | ||||||||||||
| Exercisable — March 31, 2025 | $ | $ | ||||||||||||
| Exercisable and expected to vest — March 31, 2025 | $ | $ | ||||||||||||
The following table summarizes information about outstanding stock options and warrants as of March 31, 2025:
| Outstanding | Exercisable | ||||||||||||||||
| Range of Exercise Prices | Number of Shares | Weighted- Average Exercise Price | Weighted-Average Remaining Life (Years) | Number of Shares | Weighted- Average Exercise Price | ||||||||||||
$ | $ | $ | |||||||||||||||
$ | $ | $ | |||||||||||||||
$ | $ | $ | |||||||||||||||
$ | $ | $ | |||||||||||||||
$ | $ | $ | |||||||||||||||
$ | $ | $ | |||||||||||||||
| $ | $ | ||||||||||||||||
The Company recognized no
Restricted Stock and Stock Units
The following summarizes the Company’s activity in its restricted stock awards and stock units, which include restricted stock units, deferred stock units and performance stock units, as of and for the three months ended March 31, 2025:
| Restricted Stock Awards | Stock Units | ||||||||||||||||
| Number of Shares | Weighted-Average Grant-Date Fair Value | Number of Units | Weighted-Average Grant-Date Fair Value | ||||||||||||||
| Outstanding — December 31, 2024 | $ | $ | |||||||||||||||
| Granted | $ | $ | |||||||||||||||
| Vested | $ | ( | $ | ||||||||||||||
| Forfeited | $ | ( | $ | ||||||||||||||
| Outstanding — March 31, 2025 | $ | (1) | $ | ||||||||||||||
| Expected to vest — March 31, 2025 | $ | $ | |||||||||||||||
_______________________________
(1) Includes 96,182 vested and undistributed deferred stock units.
44
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
The Company grants restricted stock awards and deferred stock units to its directors and restricted stock units and performance stock units to its employees and officers. Restricted stock awards and stock units must vest or are subject to forfeiture; however, restricted stock awards are included in shares outstanding upon grant and have the same dividend and voting rights as the Company’s common stock. The Company recognized $15.8 million and $20.3 million of share-based compensation expense related to the vesting of these restricted stock awards and stock units during the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, total unrecognized compensation cost for restricted stock awards and stock units was $149.6 million, which is expected to be recognized over a weighted-average remaining period of 2.4 years.
The Company also grants restricted stock units to its advisors and to institutions. The Company recognized share-based compensation expense of $0.9 million and $0.7 million related to the vesting of these awards during the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, total unrecognized compensation cost for restricted stock units granted to advisors and institutions was $6.1 million, which is expected to be recognized over a weighted-average remaining period of 2.1 years.
NOTE 13 - EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if dilutive potential shares of common stock had been issued. The calculation of basic and diluted earnings per share for the periods noted was as follows (in thousands, except per share data):
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Net income | $ | $ | ||||||||||||
| Basic weighted-average number of shares outstanding | ||||||||||||||
| Dilutive common share equivalents | ||||||||||||||
| Diluted weighted-average number of shares outstanding | ||||||||||||||
| Basic earnings per share | $ | $ | ||||||||||||
| Diluted earnings per share | $ | $ | ||||||||||||
NOTE 14 - NET CAPITAL AND REGULATORY REQUIREMENTS
The Company’s broker-dealer subsidiaries are subject to the SEC’s Uniform Net Capital Rule (Rule 15c3-1 under the Exchange Act), which requires the maintenance of minimum net capital. The net capital rules also provide that a broker-dealer’s capital may not be withdrawn if the resulting net capital would be less than minimum requirements. Additionally, certain withdrawals require the approval of the SEC and the Financial Industry Regulatory Authority (“FINRA”) to the extent they exceed defined levels, even though such withdrawals would not cause net capital to be less than minimum requirements. Net capital and the related net capital requirement may fluctuate on a daily basis.
45
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
The following table presents the net capital position of the Company’s primary broker-dealer subsidiary (in thousands):
| March 31, 2025 | |||||
| LPL Financial LLC | |||||
| Net capital | $ | ||||
| Less: required net capital | |||||
| Excess net capital | $ | ||||
Our other regulated subsidiaries, including LPL Enterprise, Atria’s seven introducing broker-dealer subsidiaries, and PTC, are also subject to various regulatory capital requirements. Failure to meet the respective minimum capital requirements can result in certain mandatory and discretionary actions by regulators that, if undertaken, could have substantial monetary and non-monetary impacts on their operations. As of March 31, 2025, the Company’s other regulated subsidiaries met all capital adequacy requirements to which they were subject.
NOTE 15 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET CREDIT RISK
AND CONCENTRATIONS OF CREDIT RISK
LPL Financial may offer loans to new and existing advisors and institutions to facilitate their relationship with LPL Financial, transition to LPL Financial’s platform or fund business development activities. LPL Financial may incur losses if advisors or institutions do not fulfill their obligations with respect to these loans. To mitigate this risk, LPL Financial evaluates the performance and creditworthiness of the advisor or institution prior to offering repayable loans.
LPL Financial’s client securities activities are transacted on either a cash or margin basis. In margin transactions, LPL Financial extends credit to the advisor’s client, subject to various regulatory and internal margin requirements, which is collateralized by cash and securities in the client’s account. As clients write options contracts or sell securities short, LPL Financial may incur losses if the clients do not fulfill their obligations and the collateral in the clients’ accounts is not sufficient to fully cover losses that clients may incur from these strategies. To control this risk, LPL Financial monitors margin levels daily and clients are required to deposit additional collateral, or reduce positions, when necessary.
LPL Financial is obligated to settle transactions with brokers and other financial institutions even if its advisors’ clients fail to meet their obligation to LPL Financial. Clients are required to complete their transactions on the settlement date, generally one business day after the trade date. If clients do not fulfill their contractual obligations, LPL Financial may incur losses. In addition, the Company occasionally enters into certain types of contracts to fulfill its sale of when-issued securities. When-issued securities have been authorized but are contingent upon the actual issuance of the security. LPL Financial has established procedures to reduce this risk by generally requiring that clients deposit cash or securities into their account prior to placing an order.
LPL Financial may at times hold equity securities on both a long and short basis that are recorded on the condensed consolidated statements of financial condition at market value. While long inventory positions represent LPL Financial’s ownership of securities, short inventory positions represent obligations of LPL Financial to deliver specified securities at a contracted price, which may differ from market prices prevailing at the time of completion of the transaction. Accordingly, both long and short inventory positions may result in losses or gains to LPL Financial as market values of securities fluctuate. To mitigate the risk of losses, long and short positions are marked-to-market daily and are continuously monitored by LPL Financial.
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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
NOTE 16 - SEGMENT INFORMATION
The Company's Chief Operating Decision Maker (“CODM”) is the group that includes the Chief Executive Officer and the President and Chief Financial Officer of the Company.
The Company determined that it has one reportable segment, given the common nature of the Company’s operations, products and services, production and distribution process, and regulatory environment. The Company provides an integrated platform of brokerage and investment advisory services to independent financial advisors and advisors at financial institutions from which the Company derives its revenues and incurs expenses. For additional information, see Note 3 - Revenue.
The CODM regularly reviews pre-tax net income as presented on the Company’s condensed consolidated statements of income for purposes of assessing performance and making decisions about resource allocation. Expenses regularly reviewed by the CODM include those line items reported on the Company’s condensed consolidated statements of income, the most significant of which include advisory and commission, compensation and benefits, and promotional expenses.
NOTE 17 - SUBSEQUENT EVENTS
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market Risk
We maintain trading securities and securities sold, but not yet purchased in order to facilitate client transactions, to meet a portion of our clearing deposit requirements at various clearing organizations, to track the performance of our research models and in connection with our dividend reinvestment program. Trading securities are included in investment securities while securities sold, but not yet purchased are included in other liabilities on the condensed consolidated statements of financial condition and can include mutual funds, money market funds, debt securities and equity securities. We enter into market risk sensitive instruments for purposes other than trading, which are included in other assets on the condensed consolidated statements of financial condition and can include deferred compensation plan assets invested in life insurance, money market and other mutual funds, investments in fractional shares held by customers, and other non-traded real estate investment trusts. Changes in the value of our market risk sensitive instruments may result from fluctuations in interest rates, credit ratings of the issuer, equity prices or a combination of these factors.
In facilitating client transactions, our trading securities and securities sold, but not yet purchased generally involve mutual funds, including dividend reinvestments. Our positions held are based upon the settlement of client transactions, which are monitored by our Trading and Operations department.
Positions held to meet clearing deposit requirements consist of U.S. government securities and equity securities. The amount of securities deposited depends upon the requirements of the clearing organization. The level of securities deposited is monitored by the settlements group within our Trading and Operations department.
Our Research department develops model portfolios that are used by advisors in developing client portfolios. We maintain securities owned in internal accounts based on these model portfolios to track the performance of our Research department. At the time a portfolio is developed, we purchase the securities in that model portfolio in an amount equal to the account minimum, which varies by product.
In addition, we are subject to market risk resulting from operational risk events, which can require customer trade corrections. We also bear market risk on the fees we earn that are based on the market value of advisory and brokerage assets, as well as assets on which trailing commissions are paid and assets eligible for sponsor payments.
As of March 31, 2025, the fair value of our trading securities was $122.7 million and securities sold, but not yet purchased were not material. The fair value of market risk sensitive instruments entered into for other than trading purposes included within other assets was $1.1 billion as of March 31, 2025. See Note 5 - Fair Value Measurements, within the notes to the condensed consolidated financial statements for information regarding the fair value of trading securities; securities sold, but not yet purchased; and other assets associated with our client facilitation activities.
Interest Rate Risk
We are exposed to risk associated with changes in interest rates. As of March 31, 2025, $1.0 billion of our outstanding debt was subject to floating interest rate risk. While our term loan is subject to increases in interest rates, we do not believe that a short-term change in interest rates would have a material impact on our net income given revenue generated by our client cash balances, which is generally subject to the same, but off-setting, interest rate risk.
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The following table summarizes the impact of increasing interest rates on our interest expense from the variable portion of our debt outstanding, calculated using the projected average outstanding balance over the subsequent twelve-month period (in thousands):
____________________
Outstanding Balance at March 31, 2025 | Annual Impact of an Interest Rate(†) Increase of | ||||||||||||||||
| 10 Basis | 25 Basis | 50 Basis | 100 Basis | ||||||||||||||
| Corporate Debt and Other Borrowings | Points | Points | Points | Points | |||||||||||||
Term Loan A | $ | 1,020,000 | $ | 1,020 | $ | 2,550 | $ | 5,100 | $ | 10,200 | |||||||
| Revolving Credit Facility | — | — | — | — | — | ||||||||||||
| Variable Rate Debt Outstanding | $ | 1,020,000 | $ | 1,020 | $ | 2,550 | $ | 5,100 | $ | 10,200 | |||||||
(†) Our interest rate for our Term Loan A is locked in for one, two, three, six or twelve months as allowed under the Credit Agreement. At the end of the selected periods, the rates will be locked in at the then current rate. The effect of these interest rate locks are not included in the table above.
See Note 9 - Corporate Debt and Other Borrowings, Net, within the notes to the condensed consolidated financial statements for additional information.
We offer our advisors and their clients two FDIC insured bank sweep vehicles and a client cash account (“CCA”) that are interest rate sensitive. Our FDIC insured sweep vehicles include an (1) insured cash account (“ICA”) for individuals, trusts, sole proprietorships and entities organized or operated to make a profit, such as corporations, partnerships, associations, business trusts and other organizations and (2) an insured deposit cash account (“DCA”) for advisory individual retirement accounts. Clients earn interest on deposits in the ICA and the DCA while we earn a fee. The fees we earn from cash held in the ICA are based primarily on prevailing interest rates in the current interest rate environment, and are therefore subject to interest rate risk. The fees we earn from the DCA are calculated as a per account fee, and such fees increase as the federal funds target rate increases, subject to a cap.
The Company places ICA sweep overflow into the CCA. These deposits are either used to fund client margin lending or placed in third-party bank or investment accounts, both of which are segregated under federal or other regulations, where they are held as cash or invested in short-term U.S. treasury bills. We earn interest income on these bank deposits and investments in short-term U.S. treasury bills and pay interest to clients on these CCA balances, which are sensitive to prevailing interest rates. This interest income and expense is included in interest income, net in the condensed consolidated statements of income. Changes in interest rates and fees for the deposit sweep vehicles are monitored by our Rate Setting Committee (the “RSC”), which governs and approves any changes to our fees. By meeting promptly around the time of Federal Open Market Committee meetings, or for other market or non-market reasons, the RSC considers financial risk of the deposit sweep vehicles relative to other products into which clients may move cash balances.
Credit Risk
Credit risk is the risk of loss due to adverse changes in a borrower’s, issuer’s or counterparty’s ability to meet its financial obligations under contractual or agreed upon terms. We are subject to credit risk from certain loans extended to advisors and institutions when we extend loans with repayment terms to facilitate advisors’ and institutions’ transition to our platform or to fund business development activities. We are also subject to credit risk when a forgivable loan to an advisor or institution converts to repayable upon advisor or institution termination or change in agreed upon terms.
Credit risk also arises when collateral posted with LPL Financial by clients to support margin lending or derivative trading is insufficient to meet clients’ contractual obligations to LPL Financial. Our credit exposure in these transactions consists primarily of margin accounts, through which we extend credit to advisors’ clients collateralized by securities in the clients’ accounts. Under many of these agreements, we are permitted to sell, repledge or loan these securities held as collateral and use these securities to enter into securities lending arrangements or to deliver to counterparties to cover short positions.
As our advisors execute margin transactions on behalf of their clients, we may incur losses if clients do not fulfill their obligations, the collateral in the clients’ accounts is insufficient to fully cover losses from such investments and our advisors fail to reimburse us for such losses. Our losses on margin accounts were not material during the three months ended March 31, 2025 or 2024. We monitor exposure to industry sectors and individual securities and perform analyses on a regular basis in connection with our margin lending activities. We adjust our margin requirements if we believe our risk exposure is not appropriate based on market conditions.
We are subject to concentration risk if we extend large loans to or have large commitments with a single counterparty, borrower or group of similar counterparties or borrowers, or if we accept a concentrated position as
49
collateral for a margin loan. Receivables from and payables to clients and stock borrowing and lending activities are conducted with a large number of clients and counterparties and potential concentration is monitored. We seek to limit this risk through review of the underlying business and the use of limits established by senior management taking into consideration factors including current market conditions, the financial strength of the counterparty, the size of the position or commitment, the expected duration of the position or commitment and other positions or commitments outstanding.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective.
Change in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the first quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we have been subjected to and are currently subject to legal and regulatory proceedings arising out of our business operations, including lawsuits, arbitration claims, and inquiries, investigations and enforcement proceedings initiated by the SEC, FINRA and state securities regulators, as well as other actions and claims. See Note 10 - Commitments and Contingencies, within the notes to the condensed consolidated financial statements for additional information.
Item 1A. Risk Factors
There have been no material changes in the information regarding the Company’s risks, as set forth under Part I, “Item 1A. Risk Factors” in the Company’s 2024 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The table below sets forth information regarding repurchases, reported on a trade date basis, during the three months ended March 31, 2025:
| Period | Total Number of Shares Purchased | Weighted-Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (millions)(1) | ||||||||||
| January 1, 2025 through January 31, 2025 | 107,838 | $ | 344.29 | 107,838 | $ | 692.9 | ||||||||
| February 1, 2025 through February 28, 2025 | 87,107 | $ | 369.03 | 87,107 | $ | 660.7 | ||||||||
| March 1, 2025 through March 31, 2025 | 94,426 | $ | 325.46 | 94,426 | $ | 630.0 | ||||||||
| Total | 289,371 | 289,371 | ||||||||||||
(1) On September 21, 2022, the Board authorized a $2.1 billion increase to the amount available for repurchases of LPLFH’s issued and outstanding common shares. See Note 11 - Stockholders’ Equity, within the notes to the condensed consolidated financial statements for additional information.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
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Item 5. Other Information
During the three months ended March 31, 2025, certain of our officers (as defined in Rule 16a-1(f) under the Exchange Act) entered into terminated
| Officer | Date of Plan Adoption | Commencement of Trading Period | Termination of Trading Period(1) | Maximum Number of Securities to be Purchased or Sold Pursuant to the Rule 10b5-1 Trading Arrangements | Purchase or Sale | ||||||||||||
| June 5, 2025 | Sale | ||||||||||||||||
Item 6. Exhibits
| 2.1 | |||||||||||
| 3.1 | |||||||||||
| 3.2 | |||||||||||
| 3.3 | |||||||||||
| 3.4 | |||||||||||
| 4.1 | |||||||||||
| 4.2 | |||||||||||
| 10.1 | |||||||||||
| 22.1 | |||||||||||
| 31.1 | |||||||||||
| 31.2 | |||||||||||
| 32.1 | |||||||||||
| 32.2 | |||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema* | ||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation* | ||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label* | ||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation* | ||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition* | ||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | ||||||||||
51
| * | Filed herewith. | |||||||
| ** | Furnished herewith. | |||||||
52
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
LPL Financial Holdings Inc. | |||||||||||
| Date: | May 9, 2025 | By: | /s/ RICHARD STEINMEIER | ||||||||
Richard Steinmeier | |||||||||||
Chief Executive Officer | |||||||||||
| Date: | May 9, 2025 | By: | /s/ MATTHEW AUDETTE | ||||||||
Matthew Audette | |||||||||||
President and Chief Financial Officer | |||||||||||
| Date: | May 9, 2025 | By: | /s/ KATHARINE REEPING | ||||||||
Katharine Reeping | |||||||||||
Chief Accounting Officer | |||||||||||
53
Name: | [●] | ||||
Target Number of PSUs: | [●] | ||||
Date of Grant: | [●] | ||||
EMPLOYEE Performance STOCK UNIT AWARD
granted under the
LPL Financial Holdings Inc. 2021 OMNIBUS EQUITY INCENTIVE PLAN
This agreement (the “Agreement”) evidences the grant of an award by LPL Financial Holdings Inc., a Delaware corporation (the “Company”), to the individual named above (the “Participant”) pursuant to and subject to the terms of the Company’s 2021 Omnibus Equity Incentive Plan (as amended from time to time, the “Plan”). Capitalized terms used and not otherwise defined herein have the meanings provided in the Plan.
1.Performance Stock Unit Award.
The Company hereby grants to the Participant on the date of grant set forth above (the “Date of Grant”) an award (the “Award”) consisting of that target number of performance-based Restricted Stock Units set forth above (the “Target Award” and such Restricted Stock Units, the “PSUs”), giving the Participant the conditional right to receive, without payment and subject to the conditions and limitations set forth in this Agreement and in the Plan, one share of Stock per PSU (the “Shares”), subject to adjustment pursuant to the provisions of Section 7 of the Plan.
1.Vesting; Termination of Employment.
a.Determination of Earned PSUs. The percentage of the Target Award that may be earned by the Participant and the corresponding number of PSUs that may become Earned PSUs (as defined in Appendix A) following the end of the Performance Period will be determined in accordance with Appendix A hereto, which Appendix A is incorporated by reference and made part of this Agreement.
b.Vesting. Unless earlier terminated, forfeited, relinquished or expired, and subject to the Participant’s continued Employment through the applicable vesting date, the Earned PSUs (if any) shall vest on the later of (i) the Determination Date (as defined in Appendix A) and (ii) the third anniversary of the Date of Grant (such later date, the “Vesting Date”).
c.Termination of Employment. Automatically and immediately upon the cessation of the Participant’s Employment prior to the Determination Date, the Award shall terminate and be forfeited for no consideration. Notwithstanding the foregoing, in the event of a termination of the Participant’s Employment due to his or her death or Disability (as defined in the LPL Financial LLC Executive Severance Plan (the “Severance Plan”)) or Retirement, in each case, prior to the Determination Date, or as expressly provided otherwise in the Severance Plan or in any other written agreement then in effect between the Company and the Participant or under the terms of any employee benefit plan or program sponsored by the Company in which the Participant then participates, the Award shall not terminate upon such termination of Employment and instead shall remain outstanding and eligible to become Earned PSUs in accordance with the terms of Appendix A and to vest on the Determination Date or such earlier date as otherwise provided for in the Severance Plan; or such agreement, plan or program it being understood that, if the Administrator determines on the Determination Date that 0% of the Target Award has been earned, the entire Award shall terminate automatically and immediately. In such case, other than in the case of a Designated Retirement (as defined below), the number of Earned PSUs, if any, will be prorated based on the
number of days that have elapsed in the Performance Period from the first day of the Performance Period to the date of such termination of Employment; notwithstanding the foregoing, in the event of a Designated Retirement, the number of Earned PSUs, if any, will not be subject to proration as described in the immediately preceding sentence. Further, (i) if such termination of Employment occurs after the Determination Date but prior to the Vesting Date, the Earned PSUs will vest on the date of the termination of Employment; and (ii) if a Change of Control occurs following such termination of Employment and prior to the Determination Date, the PSUs shall become Earned PSUs upon the consummation of such Change of Control based on the extent to which the applicable performance vesting conditions have been achieved as of the consummation of such Change of Control (or the end of the Performance Period, if earlier), as determined by the Administrator in its sole discretion in accordance with the terms of Section 7(a)(1)(A) of the Plan. For purposes of this Agreement, “Designated Retirement” means a termination of the Participant’s Employment other than for Cause, including for the avoidance of doubt due to death or Disability, following (x) attainment of age sixty (60) and (y) completion of ten (10) years of continuous service with the Company.
2.Delivery of Shares.
Subject to Section 8 of this Agreement, the Company shall effect delivery of Shares in respect of Earned PSUs to the Participant (or, in the event of the Participant’s death, to the person to whom the Award has passed by will or the laws of descent and distribution) as soon as reasonably practicable following the Vesting Date, or such earlier date on which the PSUs become Earned PSUs in accordance with Section 2(c) above, but in no event later than the March 15 of the year following the year in which the Performance Period End Date (as defined in Appendix A) occurs (or any earlier date, after vesting, as may be required to avoid characterization as non-qualified deferred compensation under Section 409A).
1.Dividends; Other Rights.
The Award shall not be interpreted to bestow upon the Participant any equity interest or ownership in the Company or any Affiliate prior to the date on which the Company delivers Shares to the Participant. The Participant is not entitled to vote any Shares by reason of the granting of this Award or to receive or be credited with any dividends declared and payable on any Share prior to the payment date with respect to such Share. The Participant shall have the rights of a shareholder only as to those Shares, if any, that are actually delivered under this Award.
1.Withholding; Certain Tax Matters.
a.No Shares will be delivered pursuant to this Award unless and until the Participant shall have remitted to the Company in cash or by check an amount sufficient to satisfy any federal, state or local withholding tax requirements or tax payments, or shall have made other arrangements satisfactory to the Administrator with respect to such taxes. The Administrator may, in its sole discretion, hold back Shares from an award or permit the Participant to tender previously owned shares of Stock in satisfaction of tax withholding or tax payment requirements (but not in excess of the applicable minimum statutory withholding rate).
b.Notwithstanding anything to the contrary in this Award, if at the time of the Participant’s termination of Employment, the Participant is a “specified employee,” as defined below, any and all amounts payable under this Award on account of such separation from service that constitute deferred compensation and
would (but for this provision) be payable within six (6) months following the date of termination, shall instead be paid on the next business day following the expiration of such six (6) month period or, if earlier, upon the Participant’s death; except (A) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Treasury Regulation Section 1.409A-1(b) or (B) other amounts or benefits that are not subject to the requirements of Section 409A. For purposes of this Award, all references to “termination of employment” and correlative phrases shall be construed to require a “separation from service” (as defined in Section 1.409A-1(h) of the Treasury Regulations after giving effect to the presumptions contained therein), and the term “specified employee” means an individual determined by the Company to be a specified employee under Treasury Regulation Section 1.409A-1(i). In no event shall the Company have any liability relating to the failure or alleged failure of any payment or benefit under this Agreement to comply with, or be exempt from, the requirements of Section 409A. To the extent that discretion may be exercised by the Administrator regarding the treatment of the Award in connection with a Change of Control or Covered Transaction, it shall not be exercised if it would cause the Award to violate the terms of Section 409A.
2.Restrictions on Transfer.
No portion of the Award may be transferred except as expressly permitted under Section 6(a)(3) of the Plan.
1.Effect on Employment.
This Award shall not confer upon the Participant any right to be retained in the employ or service of the Company or any of its Affiliates and shall not affect in any way the right of the Company or any of its Affiliates to terminate the Participant’s Employment at any time.
1.Forfeiture; Recovery of Compensation.
a.The Award, and the proceeds from the delivery and/or disposition of the Shares, are subject to forfeiture and disgorgement to the Company, with interest and other related earnings, if at any time the Participant is not in compliance with all applicable provisions of this Agreement and the Plan, including, without limitation, if the Participant engages in conduct that would constitute grounds for termination of the Participant’s Employment for Cause or upon the Participant’s breach of any non-competition, non-solicitation, no-hire, non-disparagement, confidentiality, invention assignment or other restrictive covenant by which the Participant is bound or if the Participant engages in Competitive Activity. Without limiting the foregoing, if the Participant no longer holds the Shares, the Administrator may require the Participant remit or deliver to the Company (i) the amount of any gain realized upon the sale of any Shares under this Award, (ii) any consideration received upon the exchange of any Shares under this Award (or to the extent that such consideration was not received in the form of cash, the cash equivalent thereof valued at the time of the exchange) and (iii) to the extent that the Shares were transferred by gift or without consideration, the value of the Shares determined at the time of gift or transfer.
b.By accepting, or being deemed to have accepted, the Award, the Participant expressly acknowledges and agrees that his or her rights under the Award (and those of any transferee of the Award), including the right to any Stock acquired under the Award or proceeds from the disposition thereof, are subject to Section 6(a)(5) and Section 6(a)(6) of the Plan (including any successor provision). The
Participant further agrees to be bound by the terms of any clawback or recoupment policy of the Company that applies to incentive compensation that includes awards such as the Award; provided, however, that the foregoing shall not be construed to limit the general application of Section 9 of this Agreement.
2.Provisions of the Plan.
This Agreement is subject in its entirety to the provisions of the Plan, which are incorporated herein by reference. A copy of the Plan as in effect on the date of the grant of the Award has been furnished or made available to the Participant. By accepting, or being deemed to have accepted, all or any part of the Award, the Participant agrees to be bound by the terms of the Plan and this Agreement. In the event of any conflict between the terms of this Agreement and the Plan, the terms of this Agreement shall control.
1.General.
The Participant acknowledges and agrees that all determinations of the Administrator made with respect to the Plan and the Award are conclusive and shall be binding upon the Participant and any permitted transferee. This Agreement may be executed in counterparts (which may be delivered in .pdf format or by other electronic means), each of which shall be an original and all of which together shall constitute one and the same instrument.
[Signature page follows.]
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed under its corporate seal by its duly authorized officer. This Agreement shall take effect as a sealed instrument.
LPL FINANCIAL HOLDINGS INC.
By:
Name:
Title:
Acknowledged and Agreed:
Signature:
Print Name:
Date:
Exhibit 22.1
List of Subsidiary Guarantors and Issuers of Guaranteed Securities
As of May 9, 2025, LPL Financial Holdings Inc., a Delaware corporation, has fully and unconditionally guaranteed the 5.700% Senior Notes due 2027, the 4.900% and 6.750% Senior Notes due 2028, the 5.150% and 5.200% Senior Notes due 2030, the 6.000% Senior Notes due 2034 and the 5.650% and 5.750% Senior Notes due 2035 issued by LPL Holdings, Inc., a Massachusetts corporation, pursuant to offerings registered under the Securities Act of 1933, as amended.
Exhibit 31.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
I, Richard Steinmeier, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of LPL Financial Holdings Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 9, 2025
| /s/ Richard Steinmeier | |||||||||||
| Richard Steinmeier | |||||||||||
| Chief Executive Officer | |||||||||||
| (principal executive officer) | |||||||||||
Exhibit 31.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
I, Matthew Audette, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of LPL Financial Holdings Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 9, 2025
| /s/ Matthew Audette | |||||||||||
| Matthew Audette | |||||||||||
President and Chief Financial Officer (principal financial officer) | |||||||||||
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of LPL Financial Holdings Inc. (the “Company”) for the period ending March 31, 2025 as filed with the Securities and Exchange Commission (“SEC”) on the date hereof (the “Report”), I, Richard Steinmeier, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.
Date: May 9, 2025
| /s/ Richard Steinmeier | |||||||||||
| Richard Steinmeier | |||||||||||
Chief Executive Officer | |||||||||||
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of LPL Financial Holdings Inc. (the “Company”) for the period ending March 31, 2025 as filed with the Securities and Exchange Commission (“SEC”) on the date hereof (the “Report”), I, Matthew Audette, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.
Date: May 9, 2025
| /s/ Matthew Audette | |||||||||||
| Matthew Audette | |||||||||||
| President and Chief Financial Officer | |||||||||||