Lpl Financial Holdings Inc. · NASDAQ:LPLA
Lpl Financial — Q1 2025 Earnings Presentation
27 slides from Lpl Financial's earnings presentation, May 8, 2025
Slide 1: LPL Financial Holdings Inc. Q1 2025 Key Metrics
LPL Financial Holdings Inc. Q1 2025 Key Metrics May 8, 2025 Member FINRA/SIPC
Slide 2: Notice to Investors: Safe Harbor Statement
Notice to Investors: Safe Harbor Statement Statements in this presentation regarding LPL Financial Holdings Inc.’s (together with its subsidiaries, the “Company”) future financial and operating results, growth, plans, priorities, business strategies, capabilities and outlook, including forecasts and
Slide 3: Notice to Investors: Non-GAAP Financial Measures
Notice to Investors: Non-GAAP Financial Measures Management believes that presenting certain non-GAAP financial measures by excluding or including certain items can be helpful to investors and analysts who may wish to use this information to analyze the Company’s current performance, prospects and v
Slide 4: Operating Metrics
Operating Metrics Total Advisory and Brokerage Assets ($B) Total Net New Assets (“NNA”)(1) ($B) ◼ Total Advisory and Brokerage Assets Advisory Assets % of Total Assets YOY ◼ Organic Total NNA ◼ Acquired Total NNA ◼ Organic Annualized Growth Rate Change $157.3 $78.8 $1,741 $1,795 25% $33.2 $34.0 $1,4
Slide 5: Financial Results
Financial Results Gross Profit* ($M) Adjusted Pre-Tax Income* ($M) YOY YOY $1,273 Change Change $1,228 $509 19% $472 23% $1,128 $1,066 $1,079 $420 $413 $398 $420 $411 $1,020 $1,010 $1,007 $391 $990 $357 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 † Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2023 2024 2025 2023 2024 2025 Adjusted Pr
Slide 6: Organic Net New Asset growth rate was ~16% in Q1 and ~14% over the past 4 quarters
Organic Net New Asset growth rate was ~16% in Q1 and ~14% over the past 4 quarters Total Organic Net New Assets(1) ($B) Organic Net New Advisory Assets(1)(5) ($B) Organic Net New Brokerage Assets(1)(5) ($B) ◼ Organic Total NNA ◼ Organic Advisory NNA ◼ Organic Brokerage NNA Organic Annualized Growth
Slide 7: Centrally Managed Assets grew at a 33% organic growth rate over the past 4 quarters
Centrally Managed Assets grew at a 33% organic growth rate over the past 4 quarters Centrally Managed Assets(7) ($B) Organic Net New Centrally Managed Assets(8) ($B) ◼ Centrally Managed Assets YOY ◼ Organic Centrally Managed NNA Centrally Managed Assets % of Total Advisory Assets Organic Annualized
Slide 8: Net Buy (Sell) Activity was $42B in Q1; the Payout Rate was 86.8%
Net Buy (Sell) Activity was $42B in Q1; the Payout Rate was 86.8% Net Buy (Sell) Activity(9) ($B) Payout Rate (%) ◼ Net Buy (Sell) Activity Client Cash % of Total Advisory and Brokerage Assets $42.0 87.8 $39.3 87.6 $37.8 $37.7 $38.3 87.5 $36.9 87.3 87.3 $35.6 $32.8 86.7 86.8 $32.3 86.6 86.2 4.6% 4.0
Slide 9: Service and Fee Revenue grew 10% year-over-year
Service and Fee Revenue grew 10% year-over-year, as our advisor and account base continued to grow Service and Fee Revenue ($M) Transaction Revenue ($M) YOY Change $146 $145 10% $68 $139 $62 $136 $57 $59 $59 $135 $54 $132 $50 $131 $49 $47 $123 $119 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 10: EBIT ROA declined slightly
EBIT ROA declined slightly Average Total Advisory & Brokerage Assets ($B) ◼ Average Total Advisory & Brokerage Assets(10) YOY SEQ Gross Profit* ROA(11) Change Change OPEX ROA(12) $1,638 27% 7% $1,537 $1,428 $1,354 $1,290 $1,231 $1,142 $1,186 $1,114 33.4 bps 33.6 bps 32.8 bps 31.8 bps 31.6 bps 30.7 b
Slide 11: Q1 Gross Profit ROA decreased sequentially, driven by a decrease in client cash revenue
Q1 Gross Profit* ROA decreased sequentially, driven by a decrease in client cash revenue Gross Profit* ROA(11) (bps) ◼ Client Cash ◼ Interest Income, net and Other Revenue ◼ Service and Fee ◼ Transaction, Net of BC&E ◼ Other Asset-Based(14) ◼ Net Advisory Fees and Commissions 33.4 33.6 32.8 31.8 31.
Slide 12: OPEX ROA decreased sequentially in Q1
OPEX ROA decreased sequentially in Q1 Total OPEX % of Assets(12) (bps) ◼ Amortization of Other Intangible Assets ◼ D&A Expense (ex Amortization of Other Intangible Assets) ◼ Employee Share-based Compensation ◼ Promotional ◼ Regulatory ◼ Core G&A* 18.2 18.5 18.8 18.5 18.3 17.9 17.9 17.6 0.8 0.9 0.9 0
Slide 13: Our client cash balances are largely operational and decreased to 3.0% of total assets
Our client cash balances are largely operational and decreased to 3.0% of total assets in Q1 We generate economics on client cash through a Client Cash Balances(15) ($B) third-party bank network ◼ Client Cash as percent of Total Assets • By establishing sweep relationships across our ICA and DCA pro
Slide 14: We generate compelling economics on client cash balances
We generate compelling economics on client cash balances Client Cash Balances(15) (end of period, $B) Interest Rate Impact ◼ ICA Sweep • Since Q1 2022, as the Fed increased interest rates, our deposit beta ◼ DCA Sweep ◼ Money Market Sweep averaged ~15% ◼ Client Cash Account “CCA” − Deposit betas ave
Slide 15: Fixed rate balances make up ~60% of the ICA portfolio
Fixed rate balances make up ~60% of the ICA portfolio, reducing our sensitivity to movement in short-term interest rates ICA Balances (end of period, $B) ◼ Variable ICA Balances ◼ Fixed Rate ICA Balances Variable balances are primarily indexed to Fed Funds ◼ Fixed Rate ICA Balance % • Our variable I
Slide 16: We remain focused on investing to drive organic growth while delivering operating leverage
We remain focused on investing to drive organic growth while delivering long-term operating leverage in our core business Long-term cost strategy 2025 Core G&A* Context • Our 2024 Core G&A* was $1,475M prior to Prudential† and Atria, translating to ~8% year-over-year growth • Deliver operating lever
Slide 17: Our balance sheet remains strong…
Our balance sheet remains strong… Corporate Cash(17) ($M) Leverage Ratio(18) • Our strategy is to maintain a strong balance sheet that can • A long-term target leverage range of 1.5x to 2.5x positions our absorb market volatility while having the capacity to invest for balance sheet well over a rang
Slide 18: ...And we have continued to return capital to shareholders
...And we have continued to return capital to shareholders Share Repurchases and Dividends ($M) ◼ Share Repurchases ◼ Dividends $373 $2B share repurchase authorization† $299 $273 Paused share $248 repurchases Paused share repurchases following the following the announcement of announcement of the th
Slide 19: Appendix
SS Appendix wi a ed
Slide 20: Corporate and Independent RIA Advisory assets
Corporate and Independent RIA† Advisory assets Corporate and Independent RIA† Advisory Asset Mix ($B) Corporate and Independent RIA† Advisory NNA Mix ($B) ◼ Independent RIA† Advisory Assets(19) YOY ◼ Organic Independent RIA† Advisory NNA(20) ◼ Corporate RIA Assets(19) Change ◼ Organic Corporate RIA
Slide 21: Monthly Metrics Dashboard through March 2025
Monthly Metrics Dashboard through March 2025 Total Advisory and Brokerage Assets ($B) Total Net New Assets ($B) ◼ Total Advisory and Brokerage Assets Advisory Assets % of Total Assets YOY SEQ ◼ Organic Total NNA ◼ Acquired Total NNA ◼ Organic Annualized Growth Rate Change Change 1,812 1,823 1,795 1,
Slide 22: Reconciliation
Reconciliation Gross Profit* Gross profit* is a non-GAAP financial measure. Please see a description of gross profit* under “Non-GAAP Financial Measures” on page 3 of this presentation for additional information. Below is a calculation of gross profit* for the periods presented herein: $ in millions
Slide 23: Reconciliation
Reconciliation Adjusted EPS* and Adjusted Net Income* Adjusted EPS* and adjusted net income* are non-GAAP financial measures. Please see a description of adjusted EPS* and adjusted net income* under “Non-GAAP Financial Measures” on page 3 of this presentation for additional information. Below are th
Slide 24: Reconciliation
Reconciliation Core G&A* to Total Expense Core G&A* is a non-GAAP financial measure. Please see a description of Core G&A* under “Non-GAAP Financial Measures” on page 3 of this presentation for additional information. Below is a reconciliation of total expense to Core G&A* for the periods presented
Slide 25: Endnotes
Endnotes (1) Organic Net New Assets include assets from Large Institutions. Below are Net New Assets from Large Institutions for the periods presented: $ in billions Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Net new organic advisory assets 6.8 18.4 - - - - 2.3 - - Net n
Slide 26: Endnotes
Endnotes (17) Corporate cash, a component of cash and equivalents, is the sum of cash and equivalents from the following: (1) cash and equivalents held at LPL Holdings, Inc., (2) cash and equivalents held at regulated subsidiaries as defined by the Company's Credit Agreement, which include LPL Finan
Slide 27: Endnotes
Endnotes (27) Below is a reconciliation of interest expense on borrowings per Management's Statements of Operations to interest expense on borrowings on the Company's condensed consolidated statements of income for the periods presented: $ in millions Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024 Q4 2023
LPL Financial Holdings — Q1 2025 Earnings Presentation on 6ix