Core Insights - LPL Financial has appointed Emily Field as group managing director and chief people officer to enhance employee experience and scale the firm's high-performance culture [1][4] - Field brings extensive experience in organizational performance and workforce transformation from her previous roles at McKinsey & Company and Accenture [2][4] - LPL Financial supports over 29,000 financial advisors and manages approximately $1.9 trillion in brokerage and advisory assets for around 7 million Americans [6] Company Overview - LPL Financial Holdings Inc. is one of the fastest-growing wealth management firms in the U.S., providing a variety of advisor affiliation models, investment solutions, fintech tools, and practice management services [6] - The firm services and custody approximately $1.9 trillion in assets, catering to the needs of financial advisors and institutions [6] Leadership and Strategy - Emily Field will oversee all Human Resources departments, including Talent Management, Total Rewards, Learning, Culture and Engagement, and HR Business Partners [3] - LPL CEO Rich Steinmeier emphasized Field's data-driven, people-first approach to talent strategy, aligning with the company's priorities [4] - Field is recognized as a thought leader in the future of work and management, co-authoring a book and contributing to various research reports [4][5]

[Cover Page](index=1&type=section&id=UNITED%20STATES%20SECURITIES%20AND%20EXCHANGE%20COMMISSION) [Table of Contents](index=2&type=section&id=Table%20of%20Contents) [Where You Can Find More Information](index=3&type=section&id=WHERE%20YOU%20CAN%20FIND%20MORE%20INFORMATION) [Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Glossary of Terms](index=5&type=section&id=Glossary%20of%20Terms) Part I — Financial Information [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=6&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes LPL Financial Holdings Inc.'s financial condition and operational results for periods ended June 30, 2025, including business, revenue, key metrics, and risk management [Business Overview](index=6&type=section&id=Business%20Overview) LPL Financial Holdings Inc. is a top independent broker-dealer and custodian, supporting 29,000+ advisors and $1.9 trillion in assets - LPL Financial Holdings Inc. is the nation's largest independent broker-dealer, a leading investment advisory firm, and a top custodian, supporting over **29,000 financial advisors** and approximately **1,100 financial institutions**[27](index=27&type=chunk) - The company services and custodies approximately **$1.9 trillion** in brokerage and advisory assets[27](index=27&type=chunk) - LPL offers an integrated technology platform, comprehensive self-clearing services, and access to a wide range of curated non-proprietary products, free from conflicts of product manufacturing, underwriting, and market-making[29](index=29&type=chunk) [Our Sources of Revenue](index=6&type=section&id=Our%20Sources%20of%20Revenue) Revenue is primarily from advisor fees and commissions, supplemented by technology, custody, and asset-based fees - Primary revenue sources include fees and commissions from products and advisory services, with a substantial portion paid to advisors[30](index=30&type=chunk) - Additional revenue comes from fees for technology, custody, clearing, trust, and reporting platforms, as well as asset-based revenue from insured bank sweep vehicles, money market accounts, and product provider access[30](index=30&type=chunk) - The company custodies the majority of client assets on its self-clearing platform, earning fees from mutual funds, insurance companies, banks, and other financial product sponsors based on asset levels or accounts managed[30](index=30&type=chunk) [Significant Events](index=7&type=section&id=Significant%20Events) LPL Financial completed the **$2.7 billion** Commonwealth acquisition, financed by recent equity and debt offerings - Closed acquisition of Commonwealth Financial Network on August 1, 2025, for approximately **$2.7 billion cash**, with asset conversion expected in Q4 2026[33](index=33&type=chunk) - Completed a **$1.7 billion equity offering** on April 2, 2025, by issuing approximately 5.4 million shares at $320.00 per share[34](index=34&type=chunk) - Completed a **$1.5 billion debt offering** on April 3, 2025, consisting of $500.0 million in 4.900% senior unsecured notes due 2028, $500.0 million in 5.150% senior unsecured notes due 2030, and $500.0 million in 5.750% senior unsecured notes due 2035[35](index=35&type=chunk) [Executive Summary](index=7&type=section&id=Executive%20Summary) Q2 2025 net income was **$273.2 million**, total assets **$1.9 trillion**, with net new assets at **$20.5 billion** Financial Highlights (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $273.2 million | $243.8 million | +12.1% | | Diluted EPS | $3.40 | $3.23 | +5.3% | | Gross Profit | $1.3 billion | $1.1 billion | +21% | Asset Trends (June 30, 2025 vs. June 30, 2024) | Metric | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Advisory & Brokerage Assets | $1.9 trillion | $1.5 trillion | +26.7% | | Advisory Assets | $1.1 trillion | $829.1 billion | +28% | | Brokerage Assets | $858.5 billion | $668.7 billion | +28% | | Total Net New Assets (3 months) | $20.5 billion | $34.0 billion | -39.7% | | Net New Advisory Assets (3 months) | $23.1 billion | $26.8 billion | -13.8% | | Net New Brokerage Assets (3 months) | -$2.6 billion | $7.2 billion | N/A (outflow) | - Paid cash dividends of **$24.0 million** during the three months ended June 30, 2025[41](index=41&type=chunk) [Key Performance Metrics](index=8&type=section&id=Key%20Performance%20Metrics) Q2 2025 metrics show **$1.9 trillion** in total assets, **29,353** advisors, and strong growth in Adjusted EPS and EBITDA Operating Metrics (Q2 2025 vs. Q2 2024) | Metric (dollars in billions) | June 30, 2025 | June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Advisory assets | $1,060.7 | $829.1 | 28.0% | | Brokerage assets | $858.5 | $668.7 | 28.4% | | Total Advisory and Brokerage Assets | $1,919.2 | $1,497.8 | 28.1% | | Advisory as a % of total | 55.3% | 55.4% | -0.1 pp | | Net new advisory assets | $23.1 | $26.8 | -13.8% | | Net new brokerage assets | $(2.6) | $7.2 | N/A | | Total Net New Assets | $20.5 | $34.0 | -39.7% | | Total Client Cash Balances | $50.6 | $44.0 | 15.0% | Business and Financial Metrics (Q2 2025 vs. Q2 2024) | Metric | June 30, 2025 | June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Advisors | 29,353 | 23,462 | 25.1% | | Average total assets per advisor | $65.4 | $63.8 | 2.5% | | Dividends | $24.0 | $22.4 | 7.1% | | Leverage ratio | 1.23 | 1.68 | -26.9% | | Total revenue (3 months) | $3,835.0 | $2,931.8 | 30.8% | | Net income (3 months) | $273.2 | $243.8 | 12.1% | | Diluted EPS (3 months) | $3.40 | $3.23 | 5.3% | | Adjusted EPS (3 months) | $4.51 | $3.88 | 16.2% | | Gross profit (3 months) | $1,304.3 | $1,079.2 | 20.9% | | Adjusted EBITDA (3 months) | $688.3 | $532.9 | 29.2% | | Core G&A (3 months) | $425.6 | $370.9 | 14.7% | - Share repurchases were **$100.0 million** for the six months ended June 30, 2025, with no repurchases in Q2 2025[42](index=42&type=chunk) [Legal and Regulatory Matters](index=11&type=section&id=Legal%20and%20Regulatory%20Matters) The company faces extensive regulatory oversight, with potential impacts on operations, costs, and financial results - The financial services industry is subject to extensive regulation, requiring significant investment in compliance functions[59](index=59&type=chunk) - New laws, regulations, or changes in their interpretation/enforcement can affect operations, costs, and financial condition[61](index=61&type=chunk) - The company accrues for probable and reasonably estimable losses related to regulatory matters and legal proceedings, but outcomes could result in liabilities exceeding accruals and insurance, materially impacting financial results[64](index=64&type=chunk)[65](index=65&type=chunk) [Economic Overview and Impact of Financial Market Events](index=12&type=section&id=Economic%20Overview%20and%20Impact%20of%20Financial%20Market%20Events) The U.S. economy grew 3.0% in Q2 2025, with equity and bond markets rising, while the Federal Reserve maintained stable rates - U.S. economy grew at an annualized pace of **3.0%** in Q2 2025, following a 0.5% contraction in Q1 2025[66](index=66&type=chunk) - Equity markets (S&P 500) rose **10

Core Insights - LPL Financial reported stronger-than-expected profitability for Q2 2025, with non-GAAP EPS of $4.51 and revenue of $3.84 billion, both exceeding analyst estimates [1][5] - The company experienced robust asset growth, although organic net new assets and advisor recruitment slowed compared to the previous period [1][7] Financial Performance - Non-GAAP EPS increased by 16% year-over-year from $3.88 to $4.51, while GAAP EPS rose by 5% from $3.23 to $3.40 [2] - Revenue grew by 31% year-over-year from $2.93 billion to $3.84 billion, driven by higher advisory and commission income [2][5] - Gross profit (non-GAAP) increased by 21% year-over-year, reflecting operational leverage and expansion [2][5] Business Overview and Strategy - LPL Financial is the largest independent broker-dealer in the U.S., providing financial advisors with investment solutions, custody, clearing services, compliance support, and technology tools [3] - The company's strategy focuses on scale and market leadership, a comprehensive suite of services, and flexibility in its advisor business model [4] Asset Growth and Client Metrics - Total advisory and brokerage assets reached $1.92 trillion, a 28% increase from the prior year, supported by equity market gains and onboarding of newly acquired platforms [6] - Advisory assets rose by 28% year-over-year to $1.06 trillion, while client cash balances increased by $7 billion year-over-year to $51 billion [6] Organic Growth and Advisor Recruitment - Organic net new assets were $21 billion, reflecting a 5% annualized growth rate, with a $4 billion outflow related to planned separation from large advisor organizations [7] - The previous quarter's organic net new assets were significantly higher at $71 billion, indicating a slowdown in advisor recruiting activity [7] Capital Allocation and Financial Health - The company allocated $105 million across nine merger and acquisition deals during the quarter, maintaining a debt-to-earnings ratio of 1.23x [9] - Fitch Ratings assigned a BBB credit rating to the company, which may improve future borrowing costs [9] Dividend and Future Guidance - A quarterly dividend of $0.30 per share was declared, payable on August 29, 2025 [10] - The company updated its full-year Core G&A expense outlook to a range of $1,730 million to $1,765 million for fiscal 2025, with a focus on operational efficiencies and integration of acquired businesses [11]

Core Insights - LPL Financial (LPLA) reported better-than-expected second-quarter results, with adjusted earnings of $4.51 per share, exceeding the Zacks Consensus Estimate of $4.21 and reflecting a 16% year-over-year growth [1][8] - Total net revenues reached $3.84 billion, a 31% increase year over year, surpassing the Zacks Consensus Estimate of $3.77 billion [3][8] - Total expenses rose 33% to $3.47 billion, driven by increases across all cost components except other expenses [3] Financial Performance - Net income was reported at $273.2 million or $3.40 per share, up from $243.8 million or $3.23 per share in the prior-year quarter, exceeding the estimate of $254.6 million [2] - Total brokerage and advisory assets as of June 30, 2025, were $1,919.2 billion, a 28% increase, with total net new assets of $20.5 billion [4] - Client cash balances increased by 15% year over year to $50.6 billion [4] Balance Sheet Strength - Total assets as of June 30, 2025, were $17.47 billion, a 25% sequential increase, with cash and cash equivalents rising to $4.19 billion from $1.23 billion in the last quarter [5] - Total stockholders' equity reached $5.07 billion, up 62% sequentially [5] Strategic Outlook - The company's recruiting efforts and strong advisor productivity are expected to continue supporting advisory revenues [6] - Strategic acquisitions and a robust balance sheet are anticipated to bolster financial performance, although rising expenses and capital market uncertainties may negatively impact commission revenues [6] Peer Comparisons - Interactive Brokers (IBKR) reported adjusted earnings per share of $1.51, surpassing estimates and reflecting a 15.9% year-over-year growth, driven by increased trading volume and customer accounts [7] - Charles Schwab (SCHW) posted adjusted earnings of $1.14 per share, exceeding estimates and surging 56% year over year, supported by strong asset management performance and higher net interest revenues [9]

Core Insights - LPL Financial Holdings Inc. has successfully completed the acquisition of Commonwealth Financial Network, which supports approximately 3,000 advisors managing $305 billion in assets [1][4]. Company Overview - LPL Financial is among the fastest-growing wealth management firms in the U.S., supporting over 29,000 financial advisors and approximately 1,100 financial institutions, with around $1.9 trillion in brokerage and advisory assets [6]. - Commonwealth Financial Network has been recognized for its premium service, ranking 1 in Independent Advisor Satisfaction Among Financial Investment Firms by J.D. Power for 12 consecutive years [2][5]. Management and Integration - Rich Steinmeier, CEO of LPL Financial, emphasized the commitment to creating a best-in-class firm for financial advisors through customized experiences and a broad range of wealth management solutions [2]. - Wayne Bloom, CEO of Commonwealth, will join LPL's management committee while continuing to lead Commonwealth, ensuring the preservation of its award-winning advisor experience [2][3]. Future Plans - The onboarding of Commonwealth advisors to LPL's platform is expected to be completed in the fourth quarter of 2026, with LPL aiming for a 90% retention target [3].

Core Insights - LPL Financial Holdings Inc. reported a revenue of $3.75 billion for the quarter ended June 2025, reflecting a year-over-year increase of 28.1% and an EPS of $4.51, up from $3.88 in the same quarter last year [1] - The revenue was slightly below the Zacks Consensus Estimate of $3.77 billion, resulting in a surprise of -0.29%, while the EPS exceeded the consensus estimate of $4.21 by +7.13% [1] Financial Performance Metrics - Total Advisory and Brokerage Assets reached $1,919.20 billion, surpassing the average estimate of $1,893.67 billion [4] - Brokerage Assets were reported at $858.50 billion, exceeding the average estimate of $851.46 billion [4] - Advisory Assets totaled $1,060.70 billion, compared to the average estimate of $1,042.21 billion [4] - The number of advisors decreased to 29,353, below the average estimate of 29,894 [4] Revenue Breakdown - Revenue from commissions was $1.04 billion, slightly below the average estimate of $1.05 billion, but showed a year-over-year increase of +31.9% [4] - Service and fee revenue was reported at $151.84 million, exceeding the average estimate of $149.76 million, with a year-over-year change of +12.5% [4] - Asset-based fees generated $702.35 million, slightly below the average estimate of $712.84 million, reflecting a year-over-year increase of +16.9% [4] - Advisory revenue was $1.72 billion, matching the average estimate and showing a year-over-year increase of +33.4% [4] - Transaction revenue was $60.54 million, below the estimated $66.54 million, with a year-over-year change of +2.7% [4] - Other asset-based revenue was $305.02 million, slightly above the average estimate of $302.9 million [4] - Client cash revenue was $397.33 million, below the average estimate of $404.8 million [4] - Trailing commission revenue was $418.3 million, below the average estimate of $425.84 million, with a year-over-year increase of +14.9% [4] Stock Performance - LPL Financial's shares returned +6% over the past month, outperforming the Zacks S&P 500 composite's +2.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Insights - LPL Financial Holdings Inc. (LPLA) reported quarterly earnings of $4.51 per share, exceeding the Zacks Consensus Estimate of $4.21 per share, and showing an increase from $3.88 per share a year ago, resulting in an earnings surprise of +7.13% [1] - The company posted revenues of $3.75 billion for the quarter ended June 2025, which was slightly below the Zacks Consensus Estimate by 0.29%, but an increase from $2.93 billion year-over-year [2] - LPL Financial shares have appreciated approximately 22.2% year-to-date, significantly outperforming the S&P 500's gain of 8.2% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $4.74, with expected revenues of $3.98 billion, and for the current fiscal year, the EPS estimate is $18.62 on revenues of $15.7 billion [7] - The estimate revisions trend for LPL Financial was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Financial - Investment Bank industry, to which LPL Financial belongs, is currently ranked in the top 7% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Total assets increased to a record $1,900 billion, with organic net new assets of $21 billion representing a 5% annualized growth rate [6][15] - Adjusted EPS for the quarter was $4.51, an increase of 16% from a year ago [7][17] - Adjusted pretax margin was approximately 38%, with gross profit at $1,304 million, up $32 million sequentially [17][18] Business Line Data and Key Metrics Changes - Recruited assets for Q2 were $18 billion, contributing to a total of $161 billion over the trailing twelve months [10][15] - Traditional independent market added approximately $15 billion in assets during Q2, maintaining industry-leading capture rates [10] - Total Advisory and Brokerage assets were $1,900 billion, up 7% from Q1 [15] Market Data and Key Metrics Changes - Overall asset retention remained industry-leading at 98% for Q2 [11] - Client cash revenue was $414 million, up $5 million from Q1, while client cash balances ended the quarter at $51 billion, down $2 billion sequentially [18][19] Company Strategy and Development Direction - The company aims to be the best firm in wealth management, focusing on pursuing novel strategies, creating an extraordinary employee experience, and leading with operational excellence [8][9] - The acquisition of Commonwealth Financial Network is expected to enhance the firm's scale and capabilities, with a retention target of 90% for advisors [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate macroeconomic uncertainties and market volatility, highlighting strong business performance despite challenges [5][6] - The company anticipates continued organic growth and improved operating leverage, with a focus on enhancing advisor experience and technology [14][25] Other Important Information - The company completed the conversion of Atria Wealth Solutions, which had seven distinct broker-dealers [11][12] - Corporate cash at the end of Q2 was $3.6 billion, up $3 billion from Q1, with expectations to return to a target range of approximately $200 million post-acquisition [23][24] Q&A Session Summary Question: Update on Commonwealth acquisition and advisor retention - Management highlighted strong engagement with Commonwealth advisors and expressed confidence in achieving the 90% retention target, emphasizing the unique culture and support offered [28][29][30] Question: Expense optimization and long-term targets - Management noted good momentum in efficiency efforts, indicating potential for further improvements in operating margins and client experience [39][40][41] Question: Modest outflows in the independent RIA channel - Management attributed modest outflows to regulatory ambiguity and noted a shift towards corporate RIAs, with ongoing efforts to strengthen offerings for independent RIAs [44][47][48] Question: Capital allocation post-acquisition - Management reiterated plans to maintain a leverage ratio of 2.25 times post-close, with a focus on organic growth and M&A opportunities [76][78] Question: Volatility in sweep cash and yield-seeking behavior - Management explained that cash volatility was driven by seasonal factors and overall AUM growth, with expectations for organic growth to remain stable [84][86][88]

Financial Data and Key Metrics Changes - Total assets increased to a record $1,900 billion, with organic net new assets of $21 billion, representing a 5% annualized growth rate [5][15] - Adjusted EPS for Q2 was $4.51, an increase of 16% from the previous year [6][16] - Adjusted pretax margin was approximately 38%, with gross profit of $1,304 million, up $32 million sequentially [16][17] Business Line Data and Key Metrics Changes - Recruited assets in Q2 were $18 billion, contributing to a total of $161 billion over the trailing twelve months [8][15] - Traditional independent market added approximately $15 billion in assets during Q2, maintaining industry-leading capture rates [8][10] - Institutional services platform announced the transition of First Horizon's wealth management business, expected to onboard later in Q3 [9][10] Market Data and Key Metrics Changes - Overall asset retention remained industry-leading at 98% for Q2 [10] - Client cash balances ended the quarter at $51 billion, down $2 billion sequentially, primarily due to elevated net buying activity [17][18] - The mix of fixed-rate balances in the ICA portfolio ended at roughly 65%, slightly above the target range [18] Company Strategy and Development Direction - The company aims to be the best firm in wealth management, focusing on novel strategies, employee experience, and operational excellence [6][7] - The acquisition of Commonwealth Financial Network is expected to enhance capabilities and support long-term growth [12][16] - The company is committed to maintaining a strong capital position while focusing on organic growth and M&A opportunities [23][76] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate macroeconomic uncertainties and market volatility [4][6] - The company anticipates a continued focus on efficiency and operational improvements, with a long runway for driving efficiencies [38] - Management remains optimistic about the partnership with Commonwealth and the retention of advisors [32][58] Other Important Information - The company completed the conversion of Atria Wealth Solutions, enhancing its transition capabilities [10][11] - Corporate cash at the end of Q2 was $3.6 billion, expected to decrease post-acquisition [22][23] - The leverage ratio was 1.23 times at the end of Q2, expected to rise to approximately 2.25 times post-acquisition [23] Q&A Session Summary Question: Update on Commonwealth acquisition and advisor retention - Management highlighted strong engagement with Commonwealth advisors and expressed confidence in achieving a 90% retention target [26][32] Question: Expense optimization and long-term targets - Management noted good momentum in efficiency efforts and indicated that 5% G&A growth could be sustainable long-term [36][38] Question: Modest outflows in the independent RIA channel - Management attributed the modest outflows to regulatory ambiguity and noted that corporate RIA growth remains strong [41][46] Question: Recruiting backdrop and advisor movement - Management observed a reduction in advisor movement due to macroeconomic uncertainty but maintained confidence in recruiting capabilities [60][66] Question: Gross profit ROA decline - Management explained that the decline in gross profit ROA is influenced by cash balances and not solely AUM growth [68][71] Question: Capital allocation post-Commonwealth acquisition - Management reiterated plans to maintain a leverage ratio of 2 times by 2026 and continue investing in organic growth and M&A [74][76]

LPL Financial Overview - LPL Financial has ~$1.9 trillion in assets, serving ~29,400 advisors [13] - The company's advisory and brokerage assets reached $1.919 trillion in Q2'25 [16] - LPL's adjusted EPS* is $18.07 [16] Market Position and Growth - LPL Financial is an industry leader with scale advantages and structural tailwinds [12] - The company's total organic net new assets (NNA) annualized growth is 12.4% [16] - The independent channel is gaining market share in the U.S retail advisor-mediated market [19] Strategic Initiatives - LPL Financial is expanding its market share by providing industry-leading flexibility and value-added capabilities [21] - The company's horizontal expansion strategy enables it to meet all ~300,000 advisors where they are [23] - LPL Financial is extending its vertical integration by solving for the needs of advisors at every stage of their practice [36] Financial Performance and Capital Management - LPL Financial's gross profit* contribution is $4.9 billion [16] - The company's leverage ratio is 1.23x [16] - LPL Financial estimates an annual EBITDA* benefit of ~$415 million from the Commonwealth Financial Network acquisition when fully ramped [120]