UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to

Commission File Number: 001-34963

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 April 29, 2024 was 74,708,931.

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)	18
Condensed Consolidated Statements of Income (unaudited)	18
Condensed Consolidated Statements of Financial Condition (unaudited)	19
Condensed Consolidated Statements of Stockholders’ Equity (unaudited)	20
Condensed Consolidated Statements of Cash Flows (unaudited)	21
Notes to Condensed Consolidated Financial Statements (unaudited)	23
Note 1 - Organization and Description of the Company	23
Note 2 - Summary of Significant Accounting Policies	23
Note 3 - Revenue	24
Note 4 - Acquisitions	26
Note 5 - Fair Value Measurements	27
Note 6 - Investment Securities	33
Note 7 - Goodwill and Other Intangibles, Net	33
Note 8 - Other Assets and Other Liabilities	35
Note 9 - Corporate Debt and Other Borrowings, Net	36
Note 10 - Commitments and Contingencies	37
Note 11 - Stockholders’ Equity	39
Note 12 - Share-based Compensation	39
Note 13 - Earnings per Share	41
Note 14 - Net Capital and Regulatory Requirements	41
Note 15 - Financial Instruments with Off-Balance Sheet Credit Risk and Concentrations of Credit Risk	42
Note 16 - Subsequent Events	42
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1
Business Overview	1
Our Sources of Revenue	1
Significant Events	1
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	12
Debt and Related Covenants	16
Contractual Obligations	17
Risk Management	17
Critical Accounting Policies and Estimates	17
3. Quantitative and Qualitative Disclosures About Market Risk	43
4. Controls and Procedures	45
PART II — OTHER INFORMATION	45
1. Legal Proceedings	45
1A. Risk Factors	45
2. Unregistered Sales of Equity Securities and Use of Proceeds	45
3. Defaults Upon Senior Securities	46
4. Mine Safety Disclosures	46
5. Other Information	46
6. Exhibits	46
SIGNATURES	47

i

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with the Securities and Exchange Commission (“SEC”). Our SEC filings are available to the public on the SEC’s website at sec.gov.

We post the following filings to our website at lpl.com as soon as reasonably practicable after they are electronically filed with or furnished to the SEC: our annual reports on Form 10-K, our proxy statements, our quarterly reports on Form 10-Q, our current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. Copies of all such filings are available free of charge by request via email (investor.relations@lplfinancial.com), telephone ((617) 897-4574) or mail (LPL Financial Investor Relations at 1055 LPL Way, Fort Mill, SC 29715). The information contained or incorporated on our website is not a part of this Quarterly Report on Form 10-Q.

We may use our website as a means of disclosing material information and for complying with our disclosure obligations under Regulation Fair Disclosure promulgated by the SEC. These disclosures are included on our website in the “Investor Relations” or “Press Releases” sections. Accordingly, investors should monitor these portions of our website in addition to following the Company’s press releases, SEC filings, public conference calls and webcasts.

When we use the terms “LPLFH”, “LPL”, “we”, “us”, “our” and “the Company”, we mean LPL Financial Holdings Inc., a Delaware corporation, and its consolidated subsidiaries, taken as a whole, unless the context otherwise indicates.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this Quarterly Report on Form 10-Q regarding:

•the Company’s future financial and operating results, outlook, growth, plans, business strategies, liquidity, future share repurchases and dividends, including statements regarding future resolution of regulatory matters, legal proceedings and related costs;

•a potential settlement with the SEC related to its civil investigation into the Company’s compliance with records preservation requirements for business-related electronic communications stored on personal devices in connection with an industry-wide review of off-platform communications (the “Off-Channel Investigation”);

•the Company’s future revenue and expense;

•future affiliation models and capabilities;

•the expected closing of the Company’s acquisition of Atria Wealth Solutions, Inc. (“Atria”);

•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 May 2, 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;

ii

•effects of competition in the financial services industry and the success of the Company in attracting and retaining financial advisors and institutions, and their ability to market financial products and services effectively;

•whether retail investors served by newly-recruited advisors choose to move their respective assets to new accounts at the Company;

•difficulties and delays in onboarding the assets of acquired 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;

•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 settling and remediating issues related to regulatory matters or legal proceedings, including actual costs of reimbursing customers for losses in excess of our reserves;

•the negotiation of the definitive documentation in connection with the settlement of the Off-Channel Investigation;

•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 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

GLOSSARY OF TERMS

Acquisition Costs: Expenses that include the costs to setup, onboard and integrate acquired entities and other costs that were incurred as a result of the acquisitions.

Adjusted EBITDA: A non-GAAP financial measure defined as EBITDA plus acquisition costs.

Adjusted EPS: A non-GAAP financial measure defined as Adjusted Net Income divided by the weighted average number of diluted shares outstanding for the applicable period.

Adjusted Net Income: A non-GAAP financial measure defined as net income plus the after-tax impact of amortization of other intangibles and acquisition costs.

Basis Point: One basis point equals 1/100th of 1%.

Core G&A: A non-GAAP financial measure defined as total expense excluding the following expenses: advisory and commission; depreciation and amortization; interest expense on borrowings; brokerage, clearing and exchange; amortization of other intangibles; market fluctuations on employee deferred compensation; promotional (ongoing); employee share-based compensation; regulatory charges; and acquisition costs.

Corporate Cash: A component of cash and equivalents that includes the sum of cash and equivalents from the following: (1) cash and equivalents held at LPL Holdings, Inc., (2) cash and equivalents held at regulated subsidiaries as defined by the Company’s Credit Agreement, which include LPL Financial LLC 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.

iv

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 nearly 23,000 financial advisors, including advisors at approximately 1,100 institutions and at approximately 570 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.

Significant Events

Entered into a definitive purchase agreement to acquire Atria Wealth Solutions, Inc. (“Atria”)

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. As part of the agreement, Atria will transition its brokerage and advisory assets, currently custodied with its network of broker-dealers, to the Company’s platform. The Company expects to close the transaction in the second half of 2024 for an initial purchase price of approximately $805 million with the conversion expected to be completed in mid-2025, subject to receipt of regulatory approval and other closing conditions.

1

Executive Summary

Financial Highlights

Results for the first quarter of 2024 included net income of $288.8 million, or $3.83 per diluted share, which compares to $338.9 million, or $4.24 per diluted share, for the first quarter of 2023.

Asset Trends

Total advisory and brokerage assets served were $1.4 trillion at March 31, 2024, compared to $1.2 trillion at March 31, 2023. Total net new assets were $16.7 billion for the three months ended March 31, 2024, compared to $24.5 billion for the same period in 2023.

Net new advisory assets were $16.2 billion for the three months ended March 31, 2024, compared to $14.6 billion for the same period in 2023. Advisory assets were $793.0 billion, or 55.0% of total advisory and brokerage assets served, at March 31, 2024, up 28% from $620.9 billion at March 31, 2023.

Net new brokerage assets were $0.5 billion for the three months ended March 31, 2024, compared to $9.9 billion for the same period in 2023. Brokerage assets were $647.9 billion at March 31, 2024, up 17% from $554.3 billion at March 31, 2023.

Gross Profit Trend

Gross profit, a non-GAAP financial measure, was $1.1 billion for the three months ended March 31, 2024, an increase of 5% from $1.0 billion for the three months ended March 31, 2023. See the “Key Performance Metrics” section for additional information on gross profit.

Common Stock Dividends and Share Repurchases

During the three months ended March 31, 2024, we paid stockholders cash dividends of $22.4 million and repurchased 296,145 of our outstanding shares for a total of $70.0 million.

2

Key Performance Metrics

We focus on several key metrics in evaluating the success of our business relationships and our resulting financial position and operating performance. Our key operating, business and financial metrics are as follows:

	As of and for the Three Months Ended
	March 31,		December 31,		March 31,
Operating Metrics (dollars in billions)(1)	2024		2023		2023
Advisory and Brokerage Assets(2)
Advisory assets	$	793.0	$	735.8	$	620.9
Brokerage assets	647.9		618.2		554.3
Total Advisory and Brokerage Assets	$	1,440.9	$	1,354.1	$	1,175.2
Advisory as a % of total Advisory and Brokerage Assets	55.0%		54.3%		52.8%
Net New Assets(3)
Net new advisory assets	$	16.2	$	20.5	$	14.6
Net new brokerage assets	0.5		4.2		9.9
Total Net New Assets	$	16.7	$	24.7	$	24.5
Organic Net New Assets
Organic net new advisory assets	$	16.2	$	20.5	$	13.7
Organic net new brokerage assets	0.5		4.2		7.1
Total Organic Net New Assets	$	16.7	$	24.7	$	20.8
Organic advisory net new assets annualized growth(4)	8.8%		12.4%		9.4%
Total organic net new assets annualized growth(4)	4.9%		8.0%		7.5%
Client Cash Balances
Insured cash account sweep	$	32.6	$	34.5	$	39.7
Deposit cash account sweep	9.2		9.3		10.2
Total Bank Sweep	41.8		43.8		49.9
Money market sweep	2.4		2.4		2.6
Total Client Cash Sweep Held by Third Parties	44.2		46.2		52.5
Client cash account(5)	2.1		2.0		1.6
Total Client Cash Balances	$	46.3	$	48.2	$	54.0
Client Cash Balances as a % of Total Assets	3.2%		3.6%		4.6%
Net buy (sell) activity(6)	$	37.8	$	32.8	$	36.9

	As of and for the Three Months Ended
	March 31,		December 31,		March 31,
Business and Financial Metrics (dollars in millions)	2024		2023		2023
Advisors	22,884		22,660		21,521
Average total assets per advisor(7)	$	63.0	$	59.8	$	54.6
Share repurchases	$	70.0	$	225.0	$	275.0
Dividends	$	22.4	$	22.7	$	23.6
Leverage ratio(8)	1.65		1.63		1.34

3

	Three Months Ended March 31,
Financial Metrics (dollars in millions, except per share data)	2024		2023
Total revenue	$	2,832.6	$	2,417.8
Net income	$	288.8	$	338.9
Earnings per share (“EPS”), diluted	$	3.83	$	4.24
Non-GAAP Financial Metrics (dollars in millions, except per share data)
Adjusted EPS(9)	$	4.21	$	4.49
Gross profit(10)	$	1,066.4	$	1,020.0
Adjusted EBITDA(11)	$	540.5	$	566.9
Core G&A(12)	$	363.5	$	326.2

_______________________________

(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):

	March 31,		December 31,		March 31,
Credit Agreement Net Debt Reconciliation	2024		2023		2023
Corporate debt and other borrowings	$	3,875.5	$	3,757.2	$	2,870.2
Corporate Cash(13)	(311.1)		(183.7)		(234.2)
Credit Agreement Net Debt(†)	$	3,564.5	$	3,573.5	$	2,636.0
	March 31,		December 31,		March 31,
EBITDA and Credit Agreement EBITDA Reconciliation	2024		2023		2023
Net income	$	1,016.1	$	1,066.3	$	1,050.8
Interest expense on borrowings	207.7		186.8		138.2
Provision for income taxes	358.3		378.5		331.9
Depreciation and amortization	258.1		247.0		210.4
Amortization of other intangibles	112.7		107.2		90.5
EBITDA(†)	$	1,952.9	$	1,985.8	$	1,821.9
Credit Agreement Adjustments:
Acquisition costs and other(14)(15)	$	117.2	$	110.2	$	42.0
Employee share-based compensation	70.7		66.0		55.3
M&A accretion(16)	17.0		30.3		42.0
Advisor share-based compensation	2.6		2.6		2.6
Credit Agreement EBITDA(†)	$	2,160.5	$	2,194.8	$	1,963.7
	March 31,		December 31,		March 31,
	2024		2023		2023
Leverage Ratio	1.65		1.63		1.34

_______________________________

(†)    Totals may not foot due to rounding.

4

(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 and acquisition costs, divided by the weighted average number of diluted shares outstanding for the applicable period. The Company presents adjusted net income and adjusted EPS because management believes that these metrics can provide investors with useful insight into the Company’s core operating performance by excluding non-cash items and acquisition costs that management does not believe impact the Company’s ongoing operations. Adjusted net income and adjusted EPS are not measures of the Company's financial performance under GAAP and should not be considered as alternatives to net income, earnings per diluted share or any other performance measure derived in accordance with GAAP. Below is a reconciliation of net income and earnings per diluted share to adjusted net income and adjusted EPS for the periods presented (in millions, except per share data):

	Three Months Ended March 31,
	2024				2023
Adjusted Net Income / Adjusted EPS Reconciliation	Amount		Per Share		Amount		Per Share
Net income / earnings per diluted share	$	288.8	$	3.83	$	338.9	$	4.24
Amortization of other intangibles	29.6		0.39		24.1		0.30
Acquisition costs(14)	9.5		0.13		3.1		0.04
Tax benefit	(10.3)		(0.14)		(7.2)		(0.09)
Adjusted Net Income / Adjusted EPS(†)	$	317.5	$	4.21	$	358.9	$	4.49
Weighted-average shares outstanding, diluted	75.5				80.0

_______________________________

(†)    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 March 31,
Gross Profit	2024		2023
Total revenue	$	2,832.6	$	2,417.8
Advisory and commission expense	1,733.5		1,370.6
Brokerage, clearing and exchange expense	30.5		26.1
Employee deferred compensation	2.1		1.1
Gross Profit(†)	$	1,066.4	$	1,020.0

_______________________________

(†)    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. 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 March 31,
EBITDA Reconciliation	2024		2023
Net income	$	288.8	$	338.9
Interest expense on borrowings	60.1		39.2
Provision for income taxes	85.4		105.6
Depreciation and amortization	67.2		56.1
Amortization of other intangibles	29.6		24.1
EBITDA	$	531.0	$	563.8
Acquisition costs(14)	9.5		3.1
Adjusted EBITDA(†)	$	540.5	$	566.9

_______________________________

(†)    Totals may not foot due to rounding.

5

(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 March 31,
Core G&A Reconciliation	2024			2023
Total expense	$	2,458.4		$	1,973.3
Advisory and commission	(1,733.5		)	(1,370.6		)
Depreciation and amortization	(67.2		)	(56.1		)
Interest expense on borrowings	(60.1		)	(39.2		)
Brokerage, clearing and exchange	(30.5		)	(26.1		)
Amortization of other intangibles	(29.6		)	(24.1		)
Employee deferred compensation	(2.1)			(1.1		)
Total G&A(†)	535.4			456.1
Promotional (ongoing)(14)(17)	(132.3		)	(101.2		)
Employee share-based compensation	(22.6		)	(18.0		)
Acquisition costs(14)	(9.5		)	(3.1		)
Regulatory charges	(7.5		)	(7.7		)
Core G&A(†)	$	363.5		$	326.2

_______________________________

(†)    Totals may not foot due to rounding.

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

(14)Acquisition costs include the costs to setup, onboard and integrate acquired entities and other costs that were incurred as a result of acquisitions. The below table summarizes the primary components of acquisition costs for the periods presented (in millions):

	Three Months Ended March 31,
Acquisition costs	2024		2023
Compensation and benefits	$	3.9	$	0.9
Professional services	3.2		1.6
Promotional(17)	2.3		0.2
Other	0.2		0.4
Acquisition costs(†)	$	9.5	$	3.1

_______________________________

(†)    Totals may not foot due to rounding.

(15)In March 2024, the Company and the SEC reached a settlement in principle to resolve the SEC’s civil 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. As a result of this settlement, the Company would pay a $50.0 million civil monetary penalty. The Company recorded $40.0 million in regulatory charges during the three months ended September 30, 2023 to reflect the amount of the penalty that is not covered by the Company's captive insurance subsidiary. See Note 10 - Commitments and Contingencies, within the notes to the condensed consolidated financial statements for further detail.

(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)Promotional (ongoing) for the three months ended March 31, 2024 and 2023 includes $8.0 million and $3.2 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. Promotional (ongoing) for the three months ended March 31, 2024 and 2023 excludes $2.3 million and $0.2 million, respectively, of expenses incurred as a result 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 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.

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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. We review these items in the ordinary course of business in our effort to adhere to legal and regulatory requirements applicable to our operations. Nevertheless, additional regulation and enhanced regulatory enforcement has resulted, and may result in the future, in additional operational and compliance costs, as well as increased costs in the form of penalties and fines, investigatory and settlement costs, customer restitution and remediation related to regulatory matters. In the ordinary course of business, we periodically identify or become aware of purported inadequacies, deficiencies and other issues. It is our policy to evaluate these matters for potential legal or regulatory violations and other potential compliance issues. It is also our policy to self-report known violations and issues as required by applicable law and regulation. When deemed probable that matters may result in financial losses, we accrue for those losses based on an estimate of possible fines, customer restitution and losses related to the repurchase of sold securities and other losses, as applicable. Certain regulatory and other legal claims and losses may be covered through our wholly-owned captive insurance subsidiary, which is chartered with the insurance commissioner in the state of Tennessee.

Assessing the probability of a loss occurring and the timing and amount of any loss related to a regulatory matter or legal proceeding, whether or not covered by our captive insurance subsidiary, is inherently difficult and requires judgments based on a variety of factors and assumptions. There are particular uncertainties and complexities involved when assessing the adequacy of loss reserves for potential liabilities that are self-insured by our captive insurance subsidiary, which depends in part on historical claims experience, including the actual timing and costs of resolving matters that begin in one policy period and are resolved in a subsequent period.

Our accruals, including those established through our captive insurance subsidiary at March 31, 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 1.6% in the first quarter of 2024 after growing at an annualized pace of 3.4% in the fourth quarter of last year. Although inflation, rising interest rates and volatile global markets were all headwinds, the U.S. economy added roughly 829,000 jobs in the first quarter of 2024. The unemployment rate averaged 3.8% in the first quarter of 2024, up slightly from the 3.7% average in the prior quarter, but still historically low, indicating a tight labor market. The equity markets rebounded as the Federal Reserve (“Fed”) held rates unchanged and prepared markets for future rate cuts. As a result, the S&P 500 returned 10.6% during the first quarter of 2024.

Our business is also sensitive to current and expected short-term interest rates, which are largely driven by Fed policy. During the first quarter of 2024, Fed policymakers maintained the target range for the federal funds rate of 5.25% to 5.50%. To the extent they pursue tighter monetary policy, the Federal Open Market Committee members are expected to take into account the cumulative impacts from higher rates, 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.

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Results of Operations

The following discussion presents an analysis of our results of operations for the three months ended March 31, 2024 and 2023 (in thousands):

	Three Months Ended March 31,
	2024		2023		% Change
REVENUE
Advisory	$	1,199,811	$	954,057	26	%
Commission:
Sales-based	385,235		286,072		35	%
Trailing	361,211		317,653		14	%
Total commission	746,446		603,725		24	%
Asset-based:
Client cash	352,382		418,275		(16	%)
Other asset-based	248,339		203,473		22	%
Total asset-based	600,721		621,748		(3	%)
Service and fee	132,172		118,987		11	%
Transaction	57,258		48,935		17	%
Interest income, net	43,525		37,358		17	%
Other	52,660		33,022		59	%
Total revenue	2,832,593		2,417,832		17	%
EXPENSE
Advisory and commission	1,733,487		1,370,634		26	%
Compensation and benefits	274,369		233,533		17	%
Promotional	126,619		98,223		29	%
Depreciation and amortization	67,158		56,054		20	%
Occupancy and equipment	66,264		60,173		10	%
Interest expense on borrowings	60,082		39,184		53	%
Brokerage, clearing and exchange	30,532		26,126		17	%
Amortization of other intangibles	29,552		24,092		23	%
Communications and data processing	19,744		17,675		12	%
Professional services	13,279		14,220		(7	%)
Other	37,315		33,421		12	%
Total expense	2,458,401		1,973,335		25	%
INCOME BEFORE PROVISION FOR INCOME TAXES	374,192		444,497		(16	%)
PROVISION FOR INCOME TAXES	85,428		105,613		(19	%)
NET INCOME	$	288,764	$	338,884	(15	%)

8

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 three months ended March 31, 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):

	March 31,
	2024		2023		$ Change		% Change
Corporate advisory assets	$	537.6	$	415.3	$	122.3	29	%
Independent RIA advisory assets	255.4		205.6		49.8		24	%
Total advisory assets	$	793.0	$	620.9	$	172.1	28	%

Net new advisory assets are generated throughout the quarter, therefore, the full impact of net new advisory assets to advisory revenue is not realized in the same period. The following table summarizes activity impacting advisory assets for the periods presented (in billions):

	Three Months Ended March 31,
	2024		2023
Balance - Beginning of period	$	735.8	$	583.1
Net new advisory assets(1)	16.2		14.6
Market impact(2)	41.0		23.2
Balance - End of period	$	793.0	$	620.9

_______________________________

(1)Net new advisory assets consist of total client deposits into custodied advisory accounts less total client withdrawals from custodied advisory accounts, plus dividends, plus interest, minus advisory fees. We consider conversions from and to brokerage accounts as deposits and withdrawals, respectively.

(2)Market impact is the difference between the beginning and ending asset balance less the net new asset amounts, representing the implied growth or decline in asset balances due to market changes over the same period of time.

Advisory revenue increased during the three months ended March 31, 2024 as compared to the same period in 2023, due primarily to continued organic growth, which increased advisory asset balances during the period.

9

Commission

We generate two types of commission revenue: (1) sales-based commissions that are recognized at the point of sale on the trade date and are based on a percentage of an investment product’s current market value at the time of purchase and (2) trailing commissions that are recognized over time as earned and are generally based on the market value of investment holdings in trail-eligible assets. Sales-based commission revenue, which occurs when clients trade securities or purchase various types of investment products, primarily represents gross commissions generated by our advisors and can vary from period to period based on the overall economic environment, number of trading days in the reporting period and investment activity of our advisors’ clients. We earn trailing commission revenue primarily on mutual funds and variable annuities held by clients of our advisors. See Note 3 - Revenue, within the notes to the condensed consolidated financial statements for further detail regarding our commission revenue by product category.

The following table sets forth the components of our commission revenue for the periods presented (in thousands):

	Three Months Ended March 31,
	2024		2023		$ Change		% Change
Sales-based	$	385,235	$	286,072	$	99,163	35	%
Trailing	361,211		317,653		43,558		14	%
Total commission revenue	$	746,446	$	603,725	$	142,721	24	%

The increase in trailing commission revenue for the three months ended March 31, 2024 compared to 2023 was primarily due to an increase in sales of annuities during the period. The increase in sales-based commission revenue for the three months ended March 31, 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 following table summarizes activity impacting brokerage assets for the periods presented (in billions):

	Three Months Ended March 31,
	2024		2023
Balance - Beginning of period	$	618.2	$	527.7
Net new brokerage assets(1)	0.5		9.9
Market impact(2)	29.2		16.7
Balance - End of period	$	647.9	$	554.3

_______________________________

(1) Net new brokerage assets consist of total client deposits into brokerage accounts less total client withdrawals from brokerage accounts, plus dividends, plus interest. We consider conversions from and to advisory accounts as deposits and withdrawals, respectively.

(2) Market impact is the difference between the beginning and ending asset balance less the net new asset amounts, representing the implied growth or decline in asset balances due to market changes over the same period of time.

Asset-Based

Asset-based revenue consists of fees from our client cash programs, fees from our sponsorship programs with financial product manufacturers and fees from omnibus processing and networking services (collectively referred to as “recordkeeping”). Client cash revenue is generated on advisors’ clients’ cash balances in insured bank sweep accounts and money market accounts. We also receive fees from certain financial product manufacturers in connection with sponsorship programs that support our marketing and sales force education and training efforts. Compensation for these performance obligations is either a fixed fee, a percentage of the average annual amount of product sponsor assets held in advisors’ clients’ accounts, a percentage of new sales or a combination. Omnibus processing revenue is paid to us by mutual fund product sponsors or their affiliates and is based on the value of mutual fund assets in accounts for which the Company provides omnibus processing services and the number of accounts in which the related mutual fund positions are held. Networking revenue on brokerage assets is correlated to the number of positions we administer and is paid to us by mutual fund product sponsors and annuity product manufacturers.

Asset-based revenue for the three months ended March 31, 2024 decreased by $21.0 million compared to 2023, primarily due to a decrease in client cash revenue. Client cash revenue for the three months ended March 31, 2024 decreased compared to 2023 due to lower average client cash balances during the three months ended March 31, 2024 as compared to 2023. For the three months ended March 31, 2024, our average client cash balances decreased to $44.4 billion compared to $55.7 billion in 2023.

10

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 months ended March 31, 2024 increased compared to 2023, primarily due to increases in IRA custodian fees, business services and planning and advice services fees, and fees relating to confirmations and 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 months ended March 31, 2024 increased compared to 2023, primarily due to increases in the number of transactions and transaction charges for fixed income products, partially offset by a decrease in charges for managed assets.

Other

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 for the three months ended March 31, 2024 increased compared to 2023, primarily due to unrealized gains on assets held in our advisor non-qualified deferred compensation plan, which are based on the market performance of the underlying investment allocations chosen by advisors in the plan, and a related increase in dividend income on assets held in our advisor non-qualified 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 March 31,
	2024	2023	Change
Payout rate	86.64%	86.19%	45 bps

Our payout rate for the three months ended March 31, 2024 increased slightly compared to 2023, primarily due to the effect of acquisitions during the prior year.

Compensation and Benefits

Compensation and benefits expense includes salaries, wages, benefits, share-based compensation and related taxes for our employees, as well as compensation for temporary workers and contractors. The following table sets forth our average number of employees for the periods presented:

	Three Months Ended March 31,
	2024	2023	Change
Average number of employees	8,724	7,124	22%

Compensation and benefits expense for the three months ended March 31, 2024 increased by $40.8 million compared to 2023, primarily due to an increase in average headcount.

11

Promotional

Promotional expense includes business development costs related to advisor recruitment and retention, costs related to hosting certain advisory conferences that serve as training, sales and marketing events, and other costs that support advisor business growth. Promotional expense for the three months ended March 31, 2024 increased by $28.4 million compared to 2023, primarily due to increases in recruited assets and advisors that led to higher costs to support transition assistance and retention.

Depreciation and Amortization

Depreciation and amortization expense relates to the use of property and equipment, which includes internally developed software, hardware, leasehold improvements and other equipment. Depreciation and amortization expense for the three months ended March 31, 2024 increased by $11.1 million 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.

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 months ended March 31, 2024 increased by $20.9 million compared to 2023, primarily due to increased interest rates on our Term Loan B and revolving credit facilities and higher outstanding debt balances. See Note 9 - Corporate Debt and Other Borrowings, Net, within the notes to the condensed consolidated financial statements for further detail.

Provision for Income Taxes

Our effective income tax rate was 22.8% and 23.8% for the three months ended March 31, 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 months ended March 31, 2024 was primarily driven by lower pre-tax income during the first quarter of 2024 as compared to the prior year.

Liquidity and Capital Resources

We have established liquidity and capital policies intended to support the execution of strategic initiatives, while meeting regulatory capital requirements and maintaining ongoing and sufficient liquidity. We believe liquidity is of critical importance to the Company and, in particular, to LPL Financial, our primary broker-dealer subsidiary. The objective of our policies is to ensure that we can meet our strategic, operational and regulatory liquidity and capital requirements under both normal operating conditions and under periods of stress in the financial markets.

Liquidity

Our liquidity needs are primarily driven by capital requirements at LPL Financial, interest due on our corporate debt and other capital returns to stockholders. Our liquidity needs at LPL Financial are driven primarily by the level and volatility of our client activity. Management maintains a set of liquidity sources and monitors certain business trends and market metrics closely in an effort to ensure we have sufficient liquidity. We believe that based on current levels of cash flows from operations and anticipated growth, together with available cash balances and external liquidity sources, we have adequate liquidity to satisfy our short-term and long-term working capital needs, the payment of all of our obligations and the funding of anticipated 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 $2.0 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 and internal capital thresholds. During the three months ended March 31, 2024, LPL Financial paid dividends of $120.0 million to the Parent. No such dividends were paid during the three months ended March 31, 2023.

12

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.

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

	March 31, 2024		December 31, 2023
Cash and equivalents	$	1,102,270	$	465,671
Cash at regulated subsidiaries	(1,038,241)		(410,313)
Excess cash at regulated subsidiaries per the Credit Agreement	247,033		128,327
Corporate Cash	$	311,062	$	183,685
Corporate Cash
Cash at the Parent	$	30,781	$	26,587
Excess cash at regulated subsidiaries per the Credit Agreement	247,033		128,327
Cash at non-regulated subsidiaries	33,248		28,771
Corporate Cash	$	311,062	$	183,685

Corporate Cash is monitored as part of our liquidity risk management. We target maintaining approximately $200 million in Corporate Cash, which covers approximately 12 months of principal and interest due on our corporate debt.

We actively monitor changes to our liquidity needs caused by general business volumes and price volatility, including higher margin requirements of clearing corporations and exchanges, and stress scenarios involving a sustained market downturn and the persistence of current interest rates. We believe that based on current levels of operations and anticipated growth, our cash flow from operations, together with other available sources of funds, which include five uncommitted lines of credit, the revolving credit facility established through our Credit Agreement and the committed revolving credit facility of LPL Financial, will provide us with adequate liquidity to satisfy our short-term and long-term working capital needs, the payment of all of our obligations and the funding of anticipated capital expenditures.

We regularly evaluate our existing indebtedness, including potential issuances and refinancing opportunities, based on a number of factors, including our capital requirements, future prospects, contractual restrictions, the availability of refinancing on attractive terms and general market conditions. As of March 31, 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 2024 and 2026.

Share Repurchases

We engage in a share repurchase program that was approved by our Board of Directors (the “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. We repurchased 296,145 shares for a total of $70.0 million during the three months ended March 31, 2024. As of March 31, 2024, we had $830.0 million remaining under our existing repurchase program. As a result of our planned acquisition of Atria, we paused share repurchases during the quarter. Subsequent to closing of the transaction, we will evaluate resuming share repurchases, consistent with our existing capital management strategy. The timing and amount of share repurchases, if any, is determined at our discretion within the constraints of our Credit Agreement, applicable laws and consideration of our general liquidity needs. See Note 11 - Stockholders’ Equity, within the notes to the condensed consolidated financial statements for additional information regarding our share repurchases.

Common Stock Dividends

The payment, timing and amount of any dividends are subject to approval by LPLFH’s Board of Directors (the “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.

13

LPL Financial Liquidity

LPL Financial relies primarily on client payables to fund margin lending. LPL Financial maintains additional liquidity through external lines of credit totaling $1.2 billion at March 31, 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 March 31, 2024 (in millions):

Description	Borrower	Maturity Date	Outstanding		Available
Senior secured, revolving credit facility	LPL Holdings, Inc.	March 2026	$	401	$	1,599
Broker-dealer revolving credit facility	LPL Financial LLC	July 2024	$	—	$	1,000
Unsecured, uncommitted lines of credit	LPL Financial LLC	None	$	—	$	75
Unsecured, uncommitted lines of credit	LPL Financial LLC	September 2024	$	—	$	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

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):

	March 31, 2024
LPL Financial LLC
Net capital	$	328,479
Less: required net capital	18,070
Excess net capital	$	310,409

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.

14

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.
	Three Months Ended March 31,
Combined Summarized Statements of Income	2024
Revenues(1)	$	49,734
Revenues from non-guarantor subsidiaries	5,335
Advisory and commission expense(1)	49,140
Interest expense on borrowings	59,158
Expenses from non-guarantor subsidiaries	3,509
Loss before provision for income taxes	(68,692)
Net loss	(53,128)

____________________

(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.

15

	LPL Holdings, Inc. & LPL Financial Holdings Inc.
Combined Summarized Statements of Financial Condition	March 31, 2024		December 31, 2023
Cash and equivalents	$	30,781	$	26,587
Other receivables, net	3,330		2,793
Property and equipment, net	155,133		154,920
Goodwill	1,251,908		1,251,908
Other intangibles, net	88,467		95,461
Receivables from non-guarantor subsidiaries	152,179		153,377
Other assets	1,050,215		1,017,289
Corporate debt and other borrowings, net	3,853,794		3,734,111
Accounts payable and accrued liabilities	64,793		53,817
Payables to non-guarantor subsidiaries	77,292		76,683
Other liabilities	1,091,363		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 March 31, 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:

	March 31, 2024
Financial Ratio	Covenant Requirement	Actual Ratio
Leverage Ratio (Maximum)	4.0	1.65
Interest Coverage (Minimum)	3.0	11.02

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 further detail regarding the Credit Agreement.

16

Contractual Obligations

During the three months ended March 31, 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 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.

17

Item 1. Financial Statements (unaudited)

LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2024		2023
REVENUE
Advisory	$	1,199,811	$	954,057
Commission:
Sales-based	385,235		286,072
Trailing	361,211		317,653
Total commission	746,446		603,725
Asset-based:
Client cash	352,382		418,275
Other asset-based	248,339		203,473
Total asset-based	600,721		621,748
Service and fee	132,172		118,987
Transaction	57,258		48,935
Interest income, net	43,525		37,358
Other	52,660		33,022
Total revenue	2,832,593		2,417,832
EXPENSE
Advisory and commission	1,733,487		1,370,634
Compensation and benefits	274,369		233,533
Promotional	126,619		98,223
Depreciation and amortization	67,158		56,054
Occupancy and equipment	66,264		60,173
Interest expense on borrowings	60,082		39,184
Brokerage, clearing and exchange	30,532		26,126
Amortization of other intangibles	29,552		24,092
Communications and data processing	19,744		17,675
Professional services	13,279		14,220
Other	37,315		33,421
Total expense	2,458,401		1,973,335
INCOME BEFORE PROVISION FOR INCOME TAXES	374,192		444,497
PROVISION FOR INCOME TAXES	85,428		105,613
NET INCOME	$	288,764	$	338,884
EARNINGS PER SHARE
Earnings per share, basic	$	3.87	$	4.30
Earnings per share, diluted	$	3.83	$	4.24
Weighted-average shares outstanding, basic	74,562		78,750
Weighted-average shares outstanding, diluted	75,463		79,974

See notes to unaudited condensed consolidated financial statements.

18

LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Financial Condition

(In thousands, except share data)

(Unaudited)

ASSETS	March 31, 2024		December 31, 2023
Cash and equivalents	$	1,102,270	$	465,671
Cash and equivalents segregated under federal or other regulations	1,610,996		2,007,312
Restricted cash	114,006		108,180
Receivables from clients, net	591,503		588,585
Receivables from brokers, dealers and clearing organizations	103,236		50,069
Advisor loans, net	1,573,774		1,479,690
Other receivables, net	863,119		743,317
Investment securities	57,451		91,311
Property and equipment, net	987,308		933,091
Goodwill	1,840,972		1,856,648
Other intangibles, net	690,767		671,585
Other assets	1,482,137		1,390,021
Total assets	$	11,017,539	$	10,385,480
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Client payables	$	2,486,605	$	2,266,176
Payables to brokers, dealers and clearing organizations	190,419		163,337
Accrued advisory and commission expenses payable	232,084		216,541
Corporate debt and other borrowings, net	3,853,794		3,734,111
Accounts payable and accrued liabilities	369,244		485,963
Other liabilities	1,615,512		1,440,373
Total liabilities	8,747,658		8,306,501
Commitments and contingencies (Note 10)
Common stock, $0.001 par value; 600,000,000 shares authorized; 130,704,541 shares and 130,233,328 shares issued at March 31, 2024 and December 31, 2023, respectively	131		130
Additional paid-in capital	2,016,666		1,987,684
Treasury stock, at cost — 55,998,999 shares and 55,576,970 shares at March 31, 2024 and December 31, 2023, respectively	(4,101,055)		(3,993,949)
Retained earnings	4,354,139		4,085,114
Total stockholders’ equity	2,269,881		2,078,979
Total liabilities and stockholders’ equity	$	11,017,539	$	10,385,480

See notes to unaudited condensed consolidated financial statements.

19

LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

	Three Months Ended March 31, 2023
				Additional Paid-In Capital					Retained Earnings		Total Stockholders’ Equity
	Common Stock					Treasury Stock
	Shares	Amount				Shares	Amount
BALANCE — December 31, 2022	129,656	$	130	$	1,912,886	50,408	$	(2,846,536)	$	3,101,072	$	2,167,552
Net income	—	—		—		—	—		338,884		338,884
Issuance of common stock to settle restricted stock units	368	—		—		148	(36,602)		—		(36,602)
Treasury stock purchases	—	—		—		1,206	(277,053)		—		(277,053)
Cash dividends on common stock - $0.30 per share	—	—		—		—	—		(23,584)		(23,584)
Stock option exercises and other	62	—		2,466		(13)	477		2,157		5,100
Share-based compensation	—	—		18,636		—	—		—		18,636
BALANCE — March 31, 2023	130,086	$	130	$	1,933,988	51,749	$	(3,159,714)	$	3,418,529	$	2,192,933
	Three Months Ended March 31, 2024
				Additional Paid-In Capital					Retained Earnings		Total Stockholders’ Equity
	Common Stock					Treasury Stock
	Shares	Amount				Shares	Amount
BALANCE — December 31, 2023	130,233	$	130	$	1,987,684	55,577	$	(3,993,949)	$	4,085,114	$	2,078,979
Net income	—	—		—		—	—		288,764		288,764
Issuance of common stock to settle restricted stock units	353	—		—		144	(37,729)		—		(37,729)
Treasury stock purchases	—	—		—		296	(70,005)		—		(70,005)
Cash dividends on common stock - $0.30 per share	—	—		—		—	—		(22,411)		(22,411)
Stock option exercises and other	119	1		5,647		(18)	628		2,672		8,948
Share-based compensation	—	—		23,335		—	—		—		23,335
BALANCE — March 31, 2024	130,705	$	131	$	2,016,666	55,999	$	(4,101,055)	$	4,354,139	$	2,269,881

See notes to unaudited condensed consolidated financial statements.

20

LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
	Three Months Ended March 31,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	288,764	$	338,884
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	67,158		56,054
Amortization of other intangibles	29,552		24,092
Amortization of debt issuance costs	2,675		2,026
Share-based compensation	23,335		18,636
Provision for credit losses	2,668		3,347
Deferred benefit for income taxes	4		(96)
Loan forgiveness	64,605		49,036
Other	9,126		10,218
Changes in operating assets and liabilities:
Receivables from clients, net	(2,754)		(20,580)
Receivables from brokers, dealers and clearing organizations	(53,167)		4,680
Advisor loans, net	(159,839)		(84,418)
Other receivables, net	(121,596)		(16,457)
Investment securities - trading	32,902		461
Other assets	(59,125)		(52,258)
Client payables	220,429		(562,308)
Payables to brokers, dealers and clearing organizations	27,082		(35,046)
Accrued advisory and commission expenses payable	15,543		(9,513)
Accounts payable and accrued liabilities	(115,129)		(90,011)
Other liabilities	154,473		158,098
Operating lease assets	(805)		(765)
Net cash provided by (used in) operating activities	425,901		(205,920)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(121,024)		(101,252)
Acquisitions, net of cash acquired	(10,171)		(251,338)
Proceeds from maturities of securities classified as held-to-maturity	1,250		1,750
Net cash used in investing activities	(129,945)		(350,840)
Continued on following page

21

LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
	Three Months Ended March 31,
	2024		2023
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facilities	245,000		135,000
Repayments of revolving credit facilities	(124,000)		—
Repayment of senior secured term loans	(2,675)		(2,675)
Payment of contingent consideration	(46,887)		—
Tax payments related to settlement of restricted stock units	(37,729)		(36,602)
Repurchase of common stock	(70,005)		(275,024)
Dividends on common stock	(22,411)		(23,584)
Proceeds from stock option exercises and other	8,948		5,100
Principal payment of finance leases and obligations	(88)		(70)
Net cash used in financing activities	(49,847)		(197,855)
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS, CASH AND EQUIVALENTS SEGREGATED UNDER FEDERAL OR OTHER REGULATIONS AND RESTRICTED CASH	246,109		(754,615)
CASH AND EQUIVALENTS, CASH AND EQUIVALENTS SEGREGATED UNDER FEDERAL OR OTHER REGULATIONS AND RESTRICTED CASH — Beginning of period	2,581,163		3,137,270
CASH AND EQUIVALENTS, CASH AND EQUIVALENTS SEGREGATED UNDER FEDERAL OR OTHER REGULATIONS AND RESTRICTED CASH — End of period	$	2,827,272	$	2,382,655
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid	$	43,542	$	39,870
Income taxes paid	$	9,205	$	10,404
Cash paid for amounts included in the measurement of operating lease liabilities	$	7,055	$	6,436
Cash paid for amounts included in the measurement of finance lease liabilities	$	2,175	$	2,138
NONCASH DISCLOSURES:
Capital expenditures included in accounts payable and accrued liabilities	$	24,448	$	23,753
Lease assets obtained in exchange for operating lease liabilities	$	3,484	$	1,700
Contingent consideration liabilities recognized at acquisition date	$	19,918	$	41,334
	March 31,
	2024		2023
Cash and equivalents	$	1,102,270	$	469,785
Cash and equivalents segregated under federal or other regulations	1,610,996		1,807,283
Restricted cash	114,006		105,587
Total cash and equivalents, cash and equivalents segregated under federal or other regulations and restricted cash shown in the statements of cash flows	$	2,827,272	$	2,382,655

See notes to unaudited condensed consolidated financial statements.

22

LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1 - ORGANIZATION AND DESCRIPTION OF THE COMPANY

LPL Financial Holdings Inc. (“LPLFH”), a Delaware holding corporation, together with its consolidated subsidiaries (collectively, the “Company”), provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at institutions (collectively, “advisors”) in the United States. Through its custody and clearing platform, using both proprietary and third-party technology, the Company provides access to diversified financial products and services, enabling its advisors to offer personalized financial advice and brokerage services to retail investors (their “clients”). The Company’s most significant, wholly owned subsidiaries are described below:

•LPL Holdings, Inc. (“LPLH” or “Parent”) is an intermediate holding company and directly or indirectly owns 100% of the issued and outstanding common equity interests of all of LPLFH’s indirect subsidiaries, including a captive insurance subsidiary that underwrites insurance for various legal and regulatory risks of the Company.

•LPL Financial LLC (“LPL Financial”), with primary offices in San Diego, California; Fort Mill, South Carolina; Boston, Massachusetts; and Austin, Texas is a clearing broker-dealer and an investment advisor that principally transacts business for its advisors and institutions on behalf of their clients in a broad array of financial products and services. LPL Financial is licensed to operate in all 50 states, Washington D.C., Puerto Rico and the U.S. Virgin Islands.

•LPL Insurance Associates, Inc. operates as an insurance brokerage general agency that offers life and disability insurance products and services for LPL Financial advisors.

•AW Subsidiary, Inc. is a holding company for AdvisoryWorld and Blaze Portfolio Systems LLC (“Blaze”). AdvisoryWorld offers technology products, including proposal generation, investment analytics and portfolio modeling, to both the Company’s advisors and external clients in the wealth management industry. Blaze provides an advisor-facing trading and portfolio rebalancing platform.

•PTC Holdings, Inc. (“PTCH”) is a holding company for The Private Trust Company, N.A. (“PTC”). PTC is chartered as a non-depository limited purpose national bank, providing a wide range of trust, investment management oversight and custodial services for estates and families. PTC, together with its affiliate Fiduciary Trust Company of New Hampshire, also provides Individual Retirement Account (“IRA”) custodial services for LPL Financial.

•LPL Employee Services, LLC and its subsidiary, Allen & Company of Florida, LLC, along with their affiliate Financial Resources Group Investment Services, LLC (“FRGIS”), provide primary support for the Company’s employee advisor affiliation model.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These unaudited condensed consolidated financial statements (“condensed consolidated financial statements”) are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), which require the Company to make estimates and assumptions regarding the valuation of certain financial instruments, acquisitions, goodwill and other intangibles, allowance for credit losses on receivables, share-based compensation, accruals for liabilities, income taxes, revenue and expense accruals and other matters that affect the condensed consolidated financial statements and related disclosures. The condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly the results of operations for the interim periods presented. Actual results could differ from those estimates under different assumptions or conditions and the differences may be material to the condensed consolidated financial statements.

The condensed consolidated financial statements include the accounts of LPLFH and its subsidiaries. Intercompany transactions and balances have been eliminated. The condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the related notes for the year

23

LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

ended December 31, 2023, contained in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”).

Recently Issued or Adopted Accounting Pronouncements

There are no relevant recently issued accounting pronouncements that would materially impact the Company’s condensed consolidated financial statements and related disclosures. There were no new accounting pronouncements adopted during the three months ended March 31, 2024 that materially impacted the Company’s condensed consolidated financial statements and related disclosures.

NOTE 3 - REVENUE

Commission

The following table presents total commission revenue disaggregated by product category (in thousands):

	Three Months Ended March 31,
	2024		2023
Commission revenue
Annuities	$	436,473	$	344,061
Mutual funds	186,540		165,038
Fixed income	48,641		35,267
Equities	35,451		25,890
Other	39,341		33,469
Total commission revenue	$	746,446	$	603,725

24

LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents sales-based and trailing commission revenue disaggregated by product category (in thousands):

	Three Months Ended March 31,
	2024		2023
Commission revenue
Sales-based
Annuities	$	229,077	$	162,176
Fixed income	48,641		35,267
Mutual funds	43,496		37,477
Equities	35,451		25,890
Other	28,570		25,262
Total sales-based revenue	$	385,235	$	286,072
Trailing
Annuities	$	207,396	$	181,885
Mutual funds	143,044		127,561
Other	10,771		8,207
Total trailing revenue	$	361,211	$	317,653
Total commission revenue	$	746,446	$	603,725

Asset-Based

The following table sets forth asset-based revenue disaggregated by product category (in thousands):

	Three Months Ended March 31,
	2024		2023
Asset-based revenue
Client cash	$	352,382	$	418,275
Sponsorship programs	134,101		102,470
Recordkeeping	114,238		101,003
Total asset-based revenue	$	600,721	$	621,748

Service and Fee

The following table sets forth service and fee revenue disaggregated by recognition pattern (in thousands):

	Three Months Ended March 31,
	2024		2023
Service and fee revenue
Over time(1)	$	102,536	$	93,029