LPL Financial Holdings Inc. [LPLA] Filings

10-Q 1 lpla-20240930.htm 10-Q lpla-20240930

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 September 30, 2024


☐			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

LPL Financial Holdings Inc.

(Exact name of registrant as specified in its charter)


Delaware			20-3717839
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


4707 Executive Drive,			San Diego,			California			92121

(Address of principal executive offices) (Zip Code)


(800)			877-7210

(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
Common Stock - $0.001 par value per share	LPLA	The Nasdaq Global Select Market

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.


Large accelerated filer	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).

☐ Yes x No

The number of shares of Common Stock, par value $0.001 per share, outstanding as of October 31, 2024 was 74,879,579.


TABLE OF CONTENTS			Page

WHERE YOU CAN FIND MORE INFORMATION			ii
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS			ii
Glossary of Terms			iv
PART I — FINANCIAL INFORMATION			1
1. Financial Statements (unaudited)			19
Condensed Consolidated Statements of Income (unaudited)			19

Condensed Consolidated Statements of Financial Condition (unaudited)			20
Condensed Consolidated Statements of Stockholders’ Equity (unaudited)			21
Condensed Consolidated Statements of Cash Flows (unaudited)			22
Notes to Condensed Consolidated Financial Statements (unaudited)			24
Note 1 - Organization and Description of the Company			24
Note 2 - Summary of Significant Accounting Policies			24
Note 3 - Revenue			25
Note 4 - Acquisitions			26
Note 5 - Fair Value Measurements			28
Note 6 - Investment Securities			34
Note 7 - Goodwill and Other Intangibles, Net			34
Note 8 - Other Assets and Other Liabilities			36
Note 9 - Corporate Debt and Other Borrowings, Net			37

Note 10 - Commitments and Contingencies			39
Note 11 - Stockholders’ Equity			41
Note 12 - Share-based Compensation			41
Note 13 - Earnings per Share			44


Note 14 - Net Capital and Regulatory Requirements			44
Note 15 - Financial Instruments with Off-Balance Sheet Credit Risk and Concentrations of Credit Risk			45
Note 16 - Subsequent Events			45
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			1
Business Overview			1
Our Sources of Revenue			1
Significant Events			2
Executive Summary			2


Key Performance Metrics			3
Legal and Regulatory Matters			6

Economic Overview and Impact of Financial Market Events			7
Results of Operations			8
Liquidity and Capital Resources			13
Debt and Related Covenants			17

Contractual Obligations			18

Risk Management			18
Critical Accounting Policies and Estimates			18
3. Quantitative and Qualitative Disclosures About Market Risk			46
4. Controls and Procedures			48
PART II — OTHER INFORMATION			48
1. Legal Proceedings			48
1A. Risk Factors			48
2. Unregistered Sales of Equity Securities and Use of Proceeds			48
3. Defaults Upon Senior Securities			48
4. Mine Safety Disclosures			48
5. Other Information			48
6. Exhibits			49
SIGNATURES			50

Table of Contents

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 transition and onboarding of advisors, institutions and assets in connection with our acquisition and recruitment activity;

•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 November 4, 2024. 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;

•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;

Table of Contents

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

•disruptions in the businesses of the Company that could make it more difficult to maintain relationships with advisors and their clients;

•the choice by clients of acquired or recruited advisors not to open brokerage and/or advisory accounts at the Company;

•changes in 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 Wealth Solutions, Inc. (“Atria”) or Prudential Financial, Inc. (“Prudential”) 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 strategic relationship agreement between the Company and Prudential, including regulatory approval;

•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

Table of Contents

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 and certain regulatory charges.

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, acquisition costs, and certain regulatory charges.

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 and The Private Trust Company, N.A., in excess of the capital requirements of the Company’s Credit Agreement, which, in the case of LPL Financial LLC is net capital in excess of 10% of its aggregate debits, or five times the net capital required in accordance with the Uniform Net Capital Rule, 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.

Table of Contents

PART I — FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Business Overview

LPL serves the advisor-mediated marketplace as the nation’s largest independent broker-dealer, a leading investment advisory firm and a top custodian. We serve more than 23,000 financial advisors, including advisors at approximately 1,000 institutions and at approximately 580 registered investment advisor (“RIA”) firms nationwide, providing the front-, middle- and back-office support our advisors need. Through our comprehensive platform, we offer integrated technology solutions; brokerage and advisory platforms; clearing, compliance, business and planning and advice services; consultative practice management programs and training; and in-house research to help our advisors deliver advice to their clients and 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.

Table of Contents

Significant Events

Executive departure and appointments

On October 1, 2024, the Company announced that the Board of Directors (“Board”) had terminated Dan H. Arnold, President and Chief Executive Officer of the Company, for “Cause” as defined under the Company’s Executive Severance Plan, the Company’s 2010 Omnibus Equity Incentive Plan, and the Company’s 2021 Omnibus Equity Incentive Plan. On October 21, 2024, the Company announced that the Board had confirmed Rich Steinmeier as Chief Executive Officer and elected him to the Board. The Company also named Matt Audette as President and Chief Financial Officer. See Note 16 - Subsequent Events, within the notes to the condensed consolidated financial statements for additional information.

Closed on the acquisition of Atria Wealth Solutions, Inc.

On February 13, 2024, the Company announced that it had entered into a definitive purchase agreement to acquire Atria, a wealth management solutions holding company headquartered in New York. The transaction closed on October 1, 2024, for an initial cash payment of approximately $835 million and potential contingent consideration of up to $230 million based on future retention and up to approximately $100 million if other milestones, including the conversion of off-platform assets to the Company’s platform, are achieved. See Note 4 - Acquisitions, within the notes to the condensed consolidated financial statements for additional information.

Executive Summary

Financial Highlights

Results for the third quarter of 2024 included net income of $255.3 million, or $3.39 per diluted share, which compares to $224.3 million, or $2.91 per diluted share, for the third quarter of 2023.

Asset Trends

Total advisory and brokerage assets served were $1.6 trillion at September 30, 2024, compared to $1.2 trillion at September 30, 2023. Total net new assets were $27.5 billion for the three months ended September 30, 2024, compared to $33.2 billion for the same period in 2023.

Net new advisory assets were $23.7 billion for the three months ended September 30, 2024, compared to $22.7 billion for the same period in 2023. Advisory assets were $892.0 billion, or 56% of total advisory and brokerage assets served, at September 30, 2024, up 35% from $662.7 billion at September 30, 2023.

Net new brokerage assets were $3.8 billion for the three months ended September 30, 2024, compared to $10.5 billion for the same period in 2023. Brokerage assets were $700.1 billion at September 30, 2024, up 22% from $575.7 billion at September 30, 2023.

Gross Profit Trend

Gross profit, a non-GAAP financial measure, was $1.1 billion for the three months ended September 30, 2024, an increase of 12% from $1.0 billion for the three months ended September 30, 2023. See the “Key Performance Metrics” section for additional information on gross profit.

Common Stock Dividends

During the three months ended September 30, 2024, we paid stockholders cash dividends of $22.4 million.

Table of Contents

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
	September 30,		June 30,		September 30,
Operating Metrics (dollars in billions)(1)	2024		2024		2023
Advisory and Brokerage Assets(2)
Advisory assets	$	892.0	$	829.1	$	662.7
Brokerage assets	700.1		668.7		575.7
Total Advisory and Brokerage Assets	$	1,592.1	$	1,497.8	$	1,238.4
Advisory as a % of total Advisory and Brokerage Assets	56.0%		55.4%		53.5%

Net New Assets(3)
Net new advisory assets	$	23.7	$	26.8	$	22.7
Net new brokerage assets	3.8		7.2		10.5
Total Net New Assets	$	27.5	$	34.0	$	33.2

Organic Net New Assets
Organic net new advisory assets	$	23.2	$	26.6	$	22.7
Organic net new brokerage assets	3.8		2.5		10.5
Total Organic Net New Assets	$	27.0	$	29.0	$	33.2

Organic advisory net new assets annualized growth(4)	11.2%		13.4%		13.7%
Total organic net new assets annualized growth(4)	7.2%		8.1%		10.7%

Client Cash Balances
Insured cash account sweep	$	32.1	$	31.0	$	33.6
Deposit cash account sweep	9.6		9.2		9.1
Total Bank Sweep	41.7		40.2		42.7
Money market sweep	2.3		2.3		2.6
Total Client Cash Sweep Held by Third Parties	44.0		42.5		45.3
Client cash account(5)	1.8		1.5		1.5
Total Client Cash Balances	$	45.8	$	44.0	$	46.9
Client Cash Balances as a % of Total Assets	2.9%		2.9%		3.8%

Net buy (sell) activity(6)	$	37.7	$	39.3	$	35.6


	As of and for the Three Months Ended
	September 30,		June 30,		September 30,
Business and Financial Metrics (dollars in millions)	2024		2024		2023
Advisors	23,686		23,462		22,404
Average total assets per advisor(7)	$	67.2	$	63.8	$	55.3

Share repurchases	$	—	$	—	$	250.0
Dividends	$	22.4	$	22.4	$	22.8
Leverage ratio(8)	1.61		1.68		1.26

Table of Contents


	Three Months Ended September 30,				Nine Months Ended September 30,
Financial Metrics (dollars in millions, except per share data)	2024		2023		2024		2023
Total revenue	$	3,108.4	$	2,522.4	$	8,872.8	$	7,409.0
Net income	$	255.3	$	224.3	$	787.9	$	848.7
Earnings per share (“EPS”), diluted	$	3.39	$	2.91	$	10.45	$	10.82
Non-GAAP Financial Metrics (dollars in millions, except per share data)
Adjusted EPS(9)	$	4.16	$	3.74	$	12.25	$	12.18
Gross profit(10)	$	1,128.1	$	1,010.1	$	3,273.7	$	3,019.9
Adjusted EBITDA(11)	$	566.2	$	504.4	$	1,639.6	$	1,594.2
Core G&A(12)	$	359.1	$	341.7	$	1,093.6	$	1,004.9

_______________________________

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

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

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

(8)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):


	September 30,		June 30,		September 30,
Credit Agreement Net Debt Reconciliation	2024		2024		2023
Corporate debt and other borrowings	$	4,469.2	$	4,471.9	$	3,141.9
Corporate Cash(13)	(708.4)		(684.1)		(308.7)
Credit Agreement Net Debt(†)	$	3,760.8	$	3,787.8	$	2,833.2

	September 30,		June 30,		September 30,
EBITDA and Credit Agreement EBITDA Reconciliation	2024		2024		2023
Net income	$	1,005.4	$	974.4	$	1,167.8
Interest expense on borrowings	246.6		227.2		169.5
Provision for income taxes	340.0		341.3		402.4
Depreciation and amortization	284.4		270.7		233.3
Amortization of other intangibles	121.2		116.5		101.1
EBITDA(†)	$	1,997.7	$	1,930.2	$	2,074.1
Credit Agreement Adjustments:
Acquisition costs and other(14)(15)	$	236.0	$	224.7	$	77.4
Employee share-based compensation	78.4		73.9		62.7
M&A accretion(16)	26.3		28.8		32.0
Advisor share-based compensation	2.5		2.6		2.6
Credit Agreement EBITDA(†)	$	2,340.9	$	2,260.2	$	2,248.9

	September 30,		June 30,		September 30,
	2024		2024		2023
Leverage Ratio	1.61		1.68		1.26

_______________________________

(†) Totals may not foot due to rounding.

Table of Contents

(9)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, acquisition costs, and certain regulatory charges, divided by the weighted average number of diluted shares outstanding for the applicable period. The Company presents adjusted net income and adjusted EPS because management believes that these metrics can provide investors with useful insight into the Company’s core operating performance by excluding non-cash items, acquisition costs, and certain regulatory charges that management does not believe impact the Company’s ongoing operations. Adjusted net income and adjusted EPS are not measures of the Company's financial performance under GAAP and should not be considered as alternatives to net income, earnings per diluted share or any other performance measure derived in accordance with GAAP. 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 September 30,								Nine Months Ended September 30,
	2024				2023				2024				2023
Adjusted Net Income / Adjusted EPS Reconciliation	Amount		Per Share		Amount		Per Share		Amount		Per Share		Amount		Per Share
Net income / earnings per diluted share	$	255.3	$	3.39	$	224.3	$	2.91	$	787.9	$	10.45	$	848.7	$	10.82
Regulatory charge(15)	18.0		0.24		40.0		0.52		18.0		0.24		40.0		0.51
Amortization of other intangibles	32.5		0.43		27.8		0.36		92.6		1.23		78.6		1.00
Acquisition costs(17)	22.2		0.29		6.0		0.08		68.6		0.91		13.2		0.17
Tax benefit	(14.6)		(0.19)		(9.1)		(0.12)		(43.2)		(0.57)		(24.9)		(0.32)
Adjusted Net Income / Adjusted EPS(†)	$	313.4	$	4.16	$	288.9	$	3.74	$	923.9	$	12.25	$	955.6	$	12.18
Weighted-average shares outstanding, diluted	75.4				77.1				75.4				78.4

_______________________________

(†) Totals may not foot due to rounding.

(10)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 September 30,				Nine Months Ended September 30,
Gross Profit	2024		2023		2024		2023
Total revenue	$	3,108.4	$	2,522.4	$	8,872.8	$	7,409.0
Advisory and commission expense	1,948.1		1,488.4		5,500.6		4,307.8
Brokerage, clearing and exchange expense	29.6		24.8		93.2		80.1
Employee deferred compensation	2.6		(1.0)		5.3		1.2
Gross Profit(†)	$	1,128.1	$	1,010.1	$	3,273.7	$	3,019.9

_______________________________

(†) Totals may not foot due to rounding.

(11)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 and certain regulatory charges. The Company presents EBITDA and adjusted EBITDA because management believes that they can be useful financial metrics in understanding the Company’s earnings from operations. EBITDA and adjusted EBITDA are not measures of the Company's financial performance under GAAP and should not be considered as an alternative 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 September 30,				Nine Months Ended September 30,
EBITDA Reconciliation	2024		2023		2024		2023
Net income	$	255.3	$	224.3	$	787.9	$	848.7
Interest expense on borrowings	67.8		48.4		192.2		132.4
Provision for income taxes	92.0		93.4		263.7		302.3
Depreciation and amortization	78.3		64.6		216.5		179.1
Amortization of other intangibles	32.5		27.8		92.6		78.6
EBITDA	$	525.9	$	458.4	$	1,552.9	$	1,541.0
Regulatory charge(15)	18.0		40.0		18.0		40.0
Acquisition costs(17)	22.2		6.0		68.6		13.2
Adjusted EBITDA(†)	$	566.2	$	504.4	$	1,639.6	$	1,594.2

_______________________________

(†) Totals may not foot due to rounding.

Table of Contents

(12)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 September 30,						Nine Months Ended September 30,
Core G&A Reconciliation	2024			2023			2024			2023
Total expense	$	2,761.0		$	2,204.7		$	7,821.1		$	6,258.0
Advisory and commission	(1,948.1		)	(1,488.4		)	(5,500.6		)	(4,307.8		)
Depreciation and amortization	(78.3		)	(64.6		)	(216.5		)	(179.1		)
Interest expense on borrowings	(67.8		)	(48.4		)	(192.2		)	(132.4		)
Brokerage, clearing and exchange	(29.6		)	(24.8		)	(93.2		)	(80.1		)
Amortization of other intangibles	(32.5		)	(27.8		)	(92.6		)	(78.6		)
Employee deferred compensation	(2.6)			1.0			(5.3		)	(1.2)
Total G&A(†)	602.1			551.7			1,720.7			1,478.8
Promotional (ongoing)(17)(18)	(175.6		)	(140.2		)	(455.7		)	(347.9		)
Employee share-based compensation	(20.3		)	(15.7		)	(62.9		)	(50.5		)
Acquisition costs(17)	(22.2		)	(6.0		)	(68.6		)	(13.2		)
Regulatory charges(15)	(24.9		)	(48.1		)	(39.9		)	(62.4		)
Core G&A(†)	$	359.1		$	341.7		$	1,093.6		$	1,004.9

_______________________________

(†) Totals may not foot due to rounding.

(13)See the “Liquidity and Capital Resources” section for additional information about Corporate Cash.

(14)Acquisition costs and other primarily include acquisition costs, costs incurred related to the integration of the strategic relationship with Prudential, and certain regulatory charges.

(15)The Company recorded an $18.0 million regulatory charge for the three and nine months ended September 30, 2024 related to an investigation of the Company’s compliance with certain elements of the Company’s Anti-Money Laundering compliance program. The Company recorded a $40.0 million regulatory charge for the three and nine months ended September 30, 2023 related to an investigation of the Company’s compliance with records preservation requirements for business-related electronic communications stored on personal devices or messaging platforms that have not been approved by the Company. See Note 10 - Commitments and Contingencies, within the notes to the condensed consolidated financial statements for additional information.

(16)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.

(17)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 September 30,				Nine Months Ended September 30,
Acquisition costs	2024		2023		2024		2023
Fair value mark on contingent consideration	$	5.9	$	—	$	30.5	$	—
Compensation and benefits	8.3		1.3		19.0		3.2
Professional services	6.7		2.2		13.5		6.4
Promotional(18)	2.0		2.3		4.8		2.7
Other	(0.7)		0.2		0.8		0.8
Acquisition costs(†)	$	22.2	$	6.0	$	68.6	$	13.2

_______________________________

(†) Totals may not foot due to rounding.

(18)Promotional (ongoing) for the three and nine months ended September 30, 2024 includes $13.0 million and $33.2 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 compared to $10.8 million and $18.2 million for the same periods in 2023. 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 regulations applicable to our business, any changes to existing laws or regulations, or any changes to the

Table of Contents

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 September 30, 2024, 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 grew at an annualized pace of 2.8% in the third quarter of 2024 after growing at an annualized pace of 3.0% in the second quarter of 2024. Continued growth during the third quarter of 2024 was driven by strong consumer spending and real GDP growth resulting from the replenishment of inventories that had been drawn down earlier in the year. Businesses added roughly 557,000 jobs in the third quarter of this year, lower than the 802,000 jobs added in the first quarter but more than the 442,000 jobs added in the second quarter. The unemployment rate averaged 4.2% in the third quarter of 2024, up from 4.0% in the second quarter and 3.8% in the first quarter of 2024. The equity markets rose modestly as risk appetite increased after the Federal Reserve (“Fed”) cut rates in mid-September by a half of a percentage point. The S&P 500 rose 5.9% and the Bloomberg Barclays U.S. Aggregate Bond Index rose 5.2% respectively during the third quarter of 2024.

Our business is also sensitive to current and expected short-term interest rates, which are largely driven by Fed policy. By the end of the third quarter of 2024, Fed policymakers reduced the target federal funds rate to a range of 4.75% to 5.00%. 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 2023 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.

Table of Contents

Results of Operations

The following discussion presents an analysis of our results of operations for the three and nine months ended September 30, 2024 and 2023 (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024		2023		% Change		2024		2023		% Change
REVENUE
Advisory	$	1,378,050	$	1,081,562	27	%	$	3,866,024	$	3,050,184	27	%
Commission:
Sales-based	429,132		311,792		38	%	1,237,437		896,825		38	%
Trailing	377,400		331,808		14	%	1,102,587		973,386		13	%

Total commission	806,532		643,600		25	%	2,340,024		1,870,211		25	%
Asset-based:
Client cash	353,855		360,518		(2	%)	1,047,712		1,157,208		(9	%)
Other asset-based	272,336		224,614		21	%	780,208		639,387		22	%
Total asset-based	626,191		585,132		7	%	1,827,920		1,796,595		2	%
Service and fee	145,729		135,648		7	%	412,901		377,757		9	%
Transaction	58,546		50,210		17	%	174,739		146,081		20	%
Interest income, net	49,923		40,773		22	%	140,926		116,103		21	%
Other	43,423		(14,542)		n/m		110,222		52,088		112	%
Total revenue	3,108,394		2,522,383		23	%	8,872,756		7,409,019		20	%
EXPENSE
Advisory and commission	1,948,065		1,488,432		31	%	5,500,579		4,307,829		28	%
Compensation and benefits	266,415		243,759		9	%	814,784		708,972		15	%
Promotional	164,538		131,645		25	%	427,282		332,433		29	%
Depreciation and amortization	78,338		64,627		21	%	216,495		179,058		21	%
Occupancy and equipment	69,879		61,339		14	%	205,672		186,517		10	%
Interest expense on borrowings	67,779		48,363		40	%	192,202		132,389		45	%
Amortization of other intangibles	32,461		27,760		17	%	92,620		78,593		18	%
Brokerage, clearing and exchange	29,636		24,793		20	%	93,152		80,067		16	%

Professional services	26,295		18,699		41	%	61,674		51,011		21	%
Communications and data processing	17,916		19,634		(9	%)	57,066		57,903		(1	%)
Other	59,724		75,660		(21	%)	159,619		143,259		11	%
Total expense	2,761,046		2,204,711		25	%	7,821,145		6,258,031		25	%
INCOME BEFORE PROVISION FOR INCOME TAXES	347,348		317,672		9	%	1,051,611		1,150,988		(9	%)
PROVISION FOR INCOME TAXES	92,045		93,381		(1	%)	263,744		302,293		(13	%)
NET INCOME	$	255,303	$	224,291	14	%	$	787,867	$	848,695	(7	%)

Table of Contents

Revenue

Advisory

Advisory revenue represents fees charged to advisors’ clients’ advisory accounts on our corporate 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 estimates of contributions and withdrawals to determine the amount billed, and accordingly, the revenue earned in the following three-month 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 nine months ended September 30, 2024.

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):


	September 30,
	2024		2023		$ Change		% Change
Corporate advisory assets	$	618.8	$	444.4	$	174.4	39	%
Independent RIA advisory assets	273.2		218.3		54.9		25	%
Total advisory assets	$	892.0	$	662.7	$	229.3	35	%

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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Balance - Beginning of period	$	829.1	$	661.6	$	735.8	$	583.1
Net new advisory assets(1)	23.7		22.7		66.6		55.4
Market impact(2)	39.2		(21.6)		89.6		24.2
Balance - End of period	$	892.0	$	662.7	$	892.0	$	662.7

_______________________________

(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 and nine months ended September 30, 2024 as compared to the same periods in 2023 due primarily to an increase in advisory asset balances and related market impacts.

Table of Contents

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 September 30,								Nine Months Ended September 30,
	2024		2023		$ Change		% Change		2024		2023		$ Change		% Change
Sales-based	$	429,132	$	311,792	$	117,340	38	%	$	1,237,437	$	896,825	$	340,612	38	%
Trailing	377,400		331,808		45,592		14	%	1,102,587		973,386		129,201		13	%
Total commission revenue	$	806,532	$	643,600	$	162,932	25	%	$	2,340,024	$	1,870,211	$	469,813	25	%

The increase in sales-based commission revenue for the three and nine months ended September 30, 2024 compared to 2023 was primarily driven by an increase in sales of annuities and fixed income securities as a result of the higher interest rate environment. The increase in trailing commission revenue for the three and nine months ended September 30, 2024 compared to 2023 was primarily due to an increase in sales of annuities and mutual funds in prior periods.

The following table summarizes activity impacting brokerage assets for the periods presented (in billions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Balance - Beginning of period	$	668.7	$	578.6	$	618.2	$	527.7
Net new brokerage assets(1)	3.8		10.5		11.5		24.0
Market impact(2)	27.6		(13.4)		70.4		24.0
Balance - End of period	$	700.1	$	575.7	$	700.1	$	575.7

_______________________________

(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 increased by $41.1 million and $31.3 million for the three and nine months ended September 30, 2024, respectively, as compared to 2023, primarily due to increases in other asset-based revenues that offset the decreases in client cash revenues for both the three and nine month periods. Client cash revenue for the three and nine months ended September 30, 2024 decreased compared to 2023 due to lower average client

Table of Contents

cash balances during the three and nine months ended September 30, 2024 as compared to 2023. For the three months ended September 30, 2024, our average client cash balances decreased to $42.6 billion compared to $46.0 billion in 2023. For the nine months ended September 30, 2024, our average client cash balances decreased to $43.3 billion compared to $50.2 billion in 2023.

Service and Fee

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 and nine months ended September 30, 2024 increased compared to 2023, primarily due to increases in IRA custodian fees, business services and planning and advice services fees, FINRA fees, and fees relating to error and omission insurance.

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 and nine months ended September 30, 2024 increased compared to 2023, primarily due to increases in the number of transactions and transaction charges for managed assets.

Interest Income, Net

Interest income is primarily generated from bank deposits, client margin loans, client cash account (“CCA”) balances segregated under federal or other regulations and advisor repayable loans. Interest income, net for the three and nine months ended September 30, 2024 increased compared to 2023 primarily due to increases in interest earned on bank deposits, short-term U.S treasury bills, and margin loans as a result of increases in the related interest-earning asset balances during the periods.

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 increased for the three and nine months ended September 30, 2024 as compared to 2023 primarily due to higher realized and unrealized gains in our deferred compensation plan.

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 September 30,			Nine Months Ended September 30,
	2024	2023	Change	2024	2023	Change
Payout rate	87.46%	87.30%	16 bps	87.16%	86.75%	41 bps

Our payout rate for the three and nine months ended September 30, 2024 increased compared to 2023, primarily due to the effect of changes in product mix, large bank integrations and pricing changes as compared to the prior periods.

Table of Contents

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 our average number of employees for the periods presented:


	Three Months Ended September 30,			Nine Months Ended September 30,
	2024	2023	Change	2024	2023	Change
Average number of employees	9,064	7,825	16%	8,787	7,469	18%

Compensation and benefits expense for the three and nine months ended September 30, 2024 increased by $22.7 million and $105.8 million, respectively, compared to 2023, primarily due to an increase in average 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 and nine months ended September 30, 2024 increased by $32.9 million and $94.8 million, respectively, compared to 2023, primarily due to increases in recruited assets and advisors that led to higher costs to support transition assistance and retention and increases in large institutional onboarding costs.

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 and nine months ended September 30, 2024 increased by $13.7 million and $37.4 million, respectively, compared to 2023, primarily due to our continued investment in technology to support integrations, enhance our advisor platform and experience, and support onboarding of institutions.

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 and nine months ended September 30, 2024 increased by $8.5 million and $19.2 million, respectively, compared to 2023, primarily due to increased expense related to software licenses and our technology portfolio.

Interest Expense on Borrowings

Interest expense on borrowings includes the interest associated with the Company’s senior notes, senior secured Term Loan B (“Term Loan B”) 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 and nine months ended September 30, 2024 increased by $19.4 million and $59.8 million, respectively, compared to 2023, primarily due to increases as a result of the issuance of $750.0 million senior notes in November 2023 and $1.0 billion senior notes in May 2024. See Note 9 - Corporate Debt and Other Borrowings, Net, within the notes to the condensed consolidated financial statements for additional information.

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 and nine months ended September 30, 2024 increased by $4.7 million and $14.0 million, respectively, compared to 2023, primarily due to additional intangible assets acquired from acquisitions.

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 and nine months ended September 30, 2024 increased by $4.8 million and $13.1 million, respectively, compared to 2023 primarily due to an increase in the volume of trades and expenses for quote services.

Table of Contents

Other Expense

Other expense includes the costs of the investigation, settlement and resolution of regulatory matters (including customer restitution and remediation), licensing fees, insurance, broker-dealer regulatory fees, travel-related expenses, fair value adjustments to contingent consideration liabilities, and other miscellaneous expenses. Other expense depends in part on the size and timing of resolving regulatory matters and the availability of self-insurance coverage, which depends in part on the amount and timing of resolving historical claims. Other expense decreased by $15.9 million for the three months ended September 30, 2024 primarily as a result of a decrease in regulatory charges recognized in the current period as compared to the same period in 2023. Other expense increased by $16.4 million for the nine months ended September 30, 2024 primarily due to increases in fair value adjustments to our contingent consideration liabilities offset by a decrease in regulatory charges as compared to the same period in 2023. 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 26.5% and 29.4% for the three months ended September 30, 2024 and 2023, respectively, and 25.1% and 26.3% for the nine months ended September 30, 2024 and 2023, 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 and exercises. The decrease in our effective tax rate for the three and nine months ended September 30, 2024 was primarily driven by lower non-deductible expenses through the third quarter of 2024 as compared to the same periods in 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 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 secured 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 nine months ended September 30, 2024 and 2023, LPL Financial paid dividends of $410.0 million and $605.0 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 and The Private Trust Company, N.A. (“PTC”), in excess of the capital requirements of the Credit Agreement (which, in the case of LPL Financial, is net capital in excess of 10% of its aggregate debits, or five times the net capital required in accordance with Exchange Act Rule 15c3-1) and (3) cash and equivalents held at non-regulated subsidiaries.

Table of Contents

The following table presents the components of Corporate Cash (in thousands):


	September 30, 2024		December 31, 2023
Cash and equivalents	$	1,474,954	$	465,671
Cash at regulated subsidiaries	(992,450)		(410,313)
Excess cash at regulated subsidiaries per the Credit Agreement	225,886		128,327
Corporate Cash	$	708,390	$	183,685

Corporate Cash
Cash at the Parent	$	435,109	$	26,587
Excess cash at regulated subsidiaries per the Credit Agreement	225,886		128,327
Cash at non-regulated subsidiaries	47,395		28,771
Corporate Cash	$	708,390	$	183,685

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 $524.7 million during the nine months ended September 30, 2024 primarily as a result of proceeds received from our $1.0 billion debt issuance in May 2024 offset by the repayment of balances outstanding on our senior secured revolving credit facility. On October 1, 2024, we used a combination of corporate cash on hand and borrowings under our secured revolving credit facility to fund the acquisition of Atria. See Note 4 - Acquisitions and 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 September 30, 2024, 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. As a result of our planned acquisition of Atria, we paused share repurchases beginning in the first quarter of 2024. We expect to resume share repurchases in the fourth quarter of 2024. As of September 30, 2024, we had $830.0 million remaining under our existing share repurchase program. 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.

Table of Contents

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 September 30, 2024. 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 September 30, 2024 (in millions):


Description	Borrower	Maturity Date	Outstanding		Available
Senior secured, revolving credit facility(1)	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 2025	$	—	$	75
Secured, uncommitted lines of credit	LPL Financial LLC	None	$	—	unspecified
Secured, uncommitted lines of credit	LPL Financial LLC	None	$	—	unspecified

_______________________________

(1) The Company borrowed $910.0 million under its senior secured revolving credit facility on October 1, 2024 to fund the acquisition of Atria. See Note 4 - Acquisitions, within the notes to the condensed consolidated financial statements for additional information.

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.

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):


	September 30, 2024
LPL Financial LLC
Net capital	$	313,331
Less: required net capital	19,441
Excess net capital	$	293,890

Table of Contents

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 subsidiary PTC is 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 PTC’s operations.

Supplemental Guarantor Financial Information

The Company filed a registration statement on Form S-3 to register, among other things, non-convertible debt securities that may be offered by LPL Holdings, Inc. (the “Issuer”), a wholly owned subsidiary of LPL Financial Holdings Inc. (“LPLFH” and together with the Issuer, the “Obligor Group”), and full and unconditional guarantees by LPLFH of such debt securities. The debt securities issued by the Issuer pursuant to such registration statement are 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 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.
	Nine Months Ended September 30,
Combined Summarized Statements of Income	2024
Revenues(1)	$	105,009
Revenues from non-guarantor subsidiaries	16,005
Advisory and commission expense(1)	98,342
Interest expense on borrowings	189,303
Expenses from non-guarantor subsidiaries	10,526
Loss before provision for income taxes	(224,486)
Net loss	(168,573)

____________________

(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.

Table of Contents


	LPL Holdings, Inc. & LPL Financial Holdings Inc.
Combined Summarized Statements of Financial Condition	September 30, 2024		December 31, 2023
Cash and equivalents	$	435,109	$	26,587
Other receivables, net	2,406		2,793
Property and equipment, net	160,420		154,920
Goodwill	1,251,908		1,251,908
Other intangibles, net	74,480		95,461
Receivables from non-guarantor subsidiaries	162,569		153,377
Other assets	1,220,812		1,017,289
Corporate debt and other borrowings, net	4,441,913		3,734,111
Accounts payable and accrued liabilities	87,108		53,817
Payables to non-guarantor subsidiaries	77,638		76,683
Other liabilities	1,111,700		986,274

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 (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 September 30, 2024, 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:


	September 30, 2024
Financial Ratio	Covenant Requirement	Actual Ratio
Leverage Ratio (Maximum)	4.0	1.61
Interest Coverage (Minimum)	3.0	9.89

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.

Table of Contents

Contractual Obligations

During the nine months ended September 30, 2024, there were no material changes in our contractual obligations, other than in the ordinary course of business, from those disclosed in our 2023 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 2023 Annual Report on Form 10-K, for further detail.

Risk Management

Risk is an inherent part of our business and activities. To effectively manage these risks, we have an enterprise risk management (“ERM”) framework that is designed to facilitate the incorporation of risk assessment into decision-making processes across the Company, enable execution our business strategy, and protect our Company and its franchise. This framework aims to ensure policies and procedures are in place and appropriately designed to identify and manage risk at appropriate levels throughout our organization and within various departments. These control mechanisms attempt to ensure that operational policies and procedures are being followed and that our employees and advisors operate within established corporate policies and limits. 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 2023 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 is reviewed, monitored and challenged by the Operational Risk Oversight Committee. Operational risk is defined as the risk of loss resulting from failed or inadequate processes or systems, actions by people or external events. 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 2023 Annual Report on Form 10-K for more information about the operational risks that we face.

Regulatory and Compliance Risk

The regulatory environment in which we operate is discussed in detail within Part I, “Item 1. Business” in our 2023 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 2023 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 2023 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 2023 Annual Report on Form 10-K. The accounting principles used in preparing our condensed consolidated financial statements conform in all material respects to GAAP.

Table of Contents

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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
REVENUE
Advisory	$	1,378,050	$	1,081,562	$	3,866,024	$	3,050,184
Commission:
Sales-based	429,132		311,792		1,237,437		896,825
Trailing	377,400		331,808		1,102,587		973,386
Total commission	806,532		643,600		2,340,024		1,870,211
Asset-based:
Client cash	353,855		360,518		1,047,712		1,157,208
Other asset-based	272,336		224,614		780,208		639,387
Total asset-based	626,191		585,132		1,827,920		1,796,595
Service and fee	145,729		135,648		412,901		377,757
Transaction	58,546		50,210		174,739		146,081
Interest income, net	49,923		40,773		140,926		116,103
Other	43,423		(14,542)		110,222		52,088
Total revenue	3,108,394		2,522,383		8,872,756		7,409,019
EXPENSE
Advisory and commission	1,948,065		1,488,432		5,500,579		4,307,829
Compensation and benefits	266,415		243,759		814,784		708,972
Promotional	164,538		131,645		427,282		332,433
Depreciation and amortization	78,338		64,627		216,495		179,058
Occupancy and equipment	69,879		61,339		205,672		186,517
Interest expense on borrowings	67,779		48,363		192,202		132,389
Amortization of other intangibles	32,461		27,760		92,620		78,593
Brokerage, clearing and exchange	29,636		24,793		93,152		80,067
Professional services	26,295		18,699		61,674		51,011
Communications and data processing	17,916		19,634		57,066		57,903
Other	59,724		75,660		159,619		143,259
Total expense	2,761,046		2,204,711		7,821,145		6,258,031
INCOME BEFORE PROVISION FOR INCOME TAXES	347,348		317,672		1,051,611		1,150,988
PROVISION FOR INCOME TAXES	92,045		93,381		263,744		302,293
NET INCOME	$	255,303	$	224,291	$	787,867	$	848,695
EARNINGS PER SHARE
Earnings per share, basic	$	3.41	$	2.95	$	10.55	$	10.97
Earnings per share, diluted	$	3.39	$	2.91	$	10.45	$	10.82
Weighted-average shares outstanding, basic	74,776		76,062		74,688		77,339
Weighted-average shares outstanding, diluted	75,405		77,147		75,424		78,439

See notes to unaudited condensed consolidated financial statements.

Table of Contents

LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Financial Condition

(In thousands, except share data)

(Unaudited)


ASSETS	September 30, 2024		December 31, 2023
Cash and equivalents	$	1,474,954	$	465,671
Cash and equivalents segregated under federal or other regulations	1,382,867		2,007,312
Restricted cash	104,881		108,180
Receivables from clients, net	622,015		588,585
Receivables from brokers, dealers and clearing organizations	53,763		50,069
Advisor loans, net	1,913,363		1,479,690
Other receivables, net	802,186		743,317
Investment securities	111,096		91,311
Property and equipment, net	1,144,676		933,091
Goodwill	1,868,193		1,856,648
Other intangibles, net	782,426		671,585
Other assets	1,681,455		1,390,021
Total assets	$	11,941,875	$	10,385,480
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Client payables	$	2,039,140	$	2,266,176
Payables to brokers, dealers and clearing organizations	211,054		163,337
Accrued advisory and commission expenses payable	252,881		216,541
Corporate debt and other borrowings, net	4,441,913		3,734,111
Accounts payable and accrued liabilities	485,927		485,963
Other liabilities	1,739,209		1,440,373
Total liabilities	9,170,124		8,306,501

Commitments and contingencies (Note 10)
Common stock, $0.001 par value; 600,000,000 shares authorized; 130,779,259 shares and 130,233,328 shares issued at September 30, 2024 and December 31, 2023, respectively	131		130
Additional paid-in capital	2,059,207		1,987,684
Treasury stock, at cost — 55,968,552 shares and 55,576,970 shares at September 30, 2024 and December 31, 2023, respectively	(4,102,319)		(3,993,949)
Retained earnings	4,814,732		4,085,114
Total stockholders’ equity	2,771,751		2,078,979
Total liabilities and stockholders’ equity	$	11,941,875	$	10,385,480

See notes to unaudited condensed consolidated financial statements.

Table of Contents

LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)


	Three Months Ended September 30, 2023
				Additional Paid-In Capital					Retained Earnings		Total Stockholders’ Equity
	Common Stock					Treasury Stock
	Shares	Amount				Shares	Amount
BALANCE — June 30, 2023	130,142	$	130	$	1,952,828	53,515	$	(3,514,364)	$	3,683,472	$	2,122,066
Net income	—	—		—		—	—		224,291		224,291
Issuance of common stock to settle restricted stock units	43	—		—		4	(820)		—		(820)
Treasury stock purchases	—