Fourth Quarter 2024
Key Financial Results:
- Net Income was $271 million, translating to diluted earnings per share ("EPS") of $3.59, up 26% from a year ago
- Adjusted EPS* increased 21% year-over-year to $4.25
- Gross profit* increased 22% year-over-year to $1,228 million
- Core G&A* increased 16% year-over-year to $422 million
- Adjusted EBITDA* increased 22% year-over-year to $585 million
Key Business Results:
- Total advisory and brokerage assets increased 29% year-over-year to $1.7 trillion
- Advisory assets increased 30% year-over-year to $957 billion
- Advisory assets as a percentage of total assets increased to 55.0%, up from 54.3% a year ago
- Total organic net new assets were $68 billion, representing 17% annualized growth
- This included $40 billion of assets from Prudential Advisors ("Prudential"), and $2 billion of assets that off-boarded as part of the previously disclosed planned separation from misaligned large OSJs. Prior to these impacts, organic net new assets were $30 billion, translating to an 8% annualized growth rate
- Recruited assets(1) were a record of $79 billion
- This included $63 billion of assets from Prudential
- Advisor count(2) was 28,888, up 5,202 sequentially and 6,228 year-over-year
- This included approximately 2,200 advisors from Atria Wealth Solutions, Inc. ("Atria"), and approximately 2,800 advisors from Prudential
- Total client cash balances were $55 billion, an increase of $9 billion sequentially and $7 billion year-over-year
- Client cash balances as a percentage of total assets were 3.2%, up from 2.9% in the prior quarter and down from 3.6% a year ago
- Client cash balances as a percentage of total assets were 3.2%, up from 2.9% in the prior quarter and down from 3.6% a year ago
Key Capital and Liquidity Results:
- Corporate cash(3) was $479 million
- Leverage ratio(4) was 1.89x
- Share repurchases were $100 million and dividends paid were $23 million
Full Year 2024
Key Financial Results:
- Net Income was $1.1 billion, translating to diluted EPS of $14.03, up 2% from a year ago
- Adjusted EPS* increased 5% year-over-year to $16.51
- Gross profit* increased 12% year-over-year to $4.50 billion
- Core G&A* increased 11% year-over-year to $1.52 billion
- Adjusted EBITDA* increased 7% year-over-year to $2.22 billion
Key Business & Capital and Liquidity Results:
- Total organic net new assets were $141 billion, representing a 10% growth rate, up from 9% in 2023
- Recruited assets for the year were a record of $149 billion, up approximately 86% from a year ago
- Share repurchases were $170 million and dividends paid were $90 million
Key Updates
Large Institutions:
- Prudential: Onboarded the retail wealth management business of Prudential, with $63 billion of total assets, of which $40 billion transitioned onto our platform in Q4
- Wintrust Financial Corporation: In January 2025, onboarded the wealth management business of Wintrust Investments, LLC and certain private client business at Great Lakes Advisors, LLC (collectively, "Wintrust"), with $16 billion of brokerage and advisory assets, of which $15 billion transitioned onto our platform to-date
M&A:
- Atria: Closed the acquisition of Atria, and expect to complete the conversion in mid-2025
- The Investment Center, Inc. ("The Investment Center"): On track to close and convert the acquisition of The Investment Center in the first half of 2025
- Liquidity & Succession: Deployed approximately $81 million of capital to close 8 deals in Q4, including two external practices
Corporate Debt:
- Completed leverage-neutral refinancing of existing $1.0 billion Senior Secured Term Loan B with a new $1.0 billion Senior Unsecured Term Loan A
Core G&A:
- 2024 Core G&A* was $1,515 million, within our outlook range of $1,510 million to $1,525 million
- Prior to the impact of Prudential and Atria, 2024 Core G&A* increased by approximately 8%
- In 2025, we plan to slow the growth of Core G&A*, as our ongoing investments to scale our business are driving greater efficiencies
- Our 2025 Core G&A* outlook range prior to Prudential and Atria is 6% to 8% year-over-year growth, or $1,560 million to $1,600 million
- Including expenses related to Prudential and Atria, our 2025 Core G&A* outlook range is $1,730 million to $1,780 million
SAN DIEGO, Jan. 30, 2025 (GLOBE NEWSWIRE) -- LPL Financial Holdings Inc. (Nasdaq: LPLA) (the "Company") today announced results for its fourth quarter ended December 31, 2024, reporting net income of $271 million, or $3.59 per share. This compares with $218 million, or $2.85 per share, in the fourth quarter of 2023 and $255 million, or $3.39 per share, in the prior quarter.
"2024 marked another milestone year for LPL," said Rich Steinmeier, CEO. "We delivered double-digit organic asset growth, including the onboarding of one of our largest institutional partners, closed on our acquisition of Atria, continued to advance our pioneering Liquidity & Succession program, and reported record adjusted earnings per share. Looking ahead to 2025, our business momentum and financial strength position us well to continue expanding our leadership across the advisor-mediated marketplace and delivering long-term shareholder value."
"In Q4, we delivered solid business and financial results," said Matt Audette, President and CFO. "As we look ahead, we remain excited about the opportunities we have to continue to drive growth, deliver operating leverage, and create long-term shareholder value."
Dividend Declaration
The Company's Board of Directors declared a $0.30 per share dividend to be paid on March 25, 2025 to all stockholders of record as of March 11, 2025.
Conference Call and Additional Information
The Company will hold a conference call to discuss its results at 5:00 p.m. ET on Thursday, January 30, 2025. The conference call will be accessible and available for replay at investor.lpl.com/events.
Contacts
Investor Relations
investor.relations@lplfinancial.com
Media Relations
media.relations@lplfinancial.com
About LPL Financial
LPL Financial Holdings Inc. (Nasdaq: LPLA) is among the fastest growing wealth management firms in the U.S. As a leader in the financial advisor-mediated marketplace(5), LPL supports nearly 29,000 financial advisors and the wealth management practices of approximately 1,200 financial institutions, servicing and custodying approximately $1.7 trillion in brokerage and advisory assets on behalf of approximately 6 million Americans. The firm provides a wide range of advisor affiliation models, investment solutions, fintech tools and practice management services, ensuring that advisors and institutions have the flexibility to choose the business model, services, and technology resources they need to run thriving businesses. For further information about LPL, please visit www.lpl.com.
Securities and Advisory services offered through LPL Financial LLC ("LPL Financial") or its affiliate LPL Enterprise, LLC ("LPL Enterprise"), both registered investment advisers and broker-dealers. Members FINRA/SIPC. LPL Financial serves as the clearing and carrying firm for accounts LPL Enterprise introduces to it.
LPL Financial and LPL Enterprise provide financial services only from the United States.
Throughout this communication, the terms "financial advisors" and "advisors" are used to refer to registered representatives and/or investment advisor representatives affiliated with LPL Financial.
We routinely disclose information that may be important to shareholders in the "Investor Relations" or "Press Releases" section of our website.
Forward-Looking Statements
This press release contains statements regarding:
- the amount and timing of the onboarding of acquired, recruited or transitioned brokerage and advisory assets, including Atria, Prudential, The Investment Center and Wintrust;
- the Company's future financial and operating results, growth, plans, priorities and business strategies, including forecasts and statements related to the Company's ICA yield, service and fee revenue, transaction revenue, core G&A expense, promotional expense, share-based compensation expense, depreciation and amortization and share repurchases; and
- future capabilities, future advisor service experience, future investments and capital deployment, including share repurchase activity and dividends, if any, and long-term shareholder value.
These and any other statements that are not related to present facts or current conditions, or that are not purely historical, constitute forward-looking statements. They reflect the Company's expectations and objectives as of January 30, 2025 and are not guarantees that expectations or objectives expressed or implied 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:
- the failure to satisfy the closing conditions applicable to the Company's purchase agreement with The Investment Center, including regulatory approvals;
- difficulties and delays in onboarding the assets of acquired, recruited or transitioned advisors, including the receipt and timing of regulatory approvals that may be required;
- disruptions in the businesses of the Company that could make it more difficult to maintain relationships with advisors and their clients;
- the choice by clients of acquired or recruited advisors not to open brokerage and/or advisory accounts at the Company;
- changes in general economic and financial market conditions, including retail investor sentiment;
- changes in interest rates and fees payable by banks participating in the Company's client cash programs, including the Company's success in negotiating agreements with current or additional counterparties;
- the Company's strategy and success in managing client cash program fees;
- fluctuations in the levels of advisory and brokerage assets, including net new assets, and the related impact on revenue;
- effects of competition in the financial services industry and the success of the Company in attracting and retaining financial advisors and institutions, and their ability to provide financial products and services effectively;
- whether retail investors served by newly-recruited advisors choose to move their respective assets to new accounts at the Company;
- changes in the growth and profitability of the Company's fee-based offerings and asset-based revenues;
- the effect of current, pending and future legislation, regulation and regulatory actions, including disciplinary actions imposed by federal and state regulators and self-regulatory organizations;
- the cost of defending, settling and remediating issues related to regulatory matters or legal proceedings, including civil monetary penalties or actual costs of reimbursing customers for losses in excess of our reserves or insurance;
- changes made to the Company's services and pricing, including in response to competitive developments and current, pending and future legislation, regulation and regulatory actions, and the effect that such changes may have on the Company's gross profit streams and costs;
- the execution of the Company's capital management plans, including its compliance with the terms of the Company's amended and restated credit agreement, the committed revolving credit facilities of the Company and LPL Financial, and the indentures governing the Company's senior unsecured notes;
- 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;
- the execution of the Company's plans and its success in realizing the synergies, expense savings, service improvements or efficiencies expected to result from its investments, initiatives and acquisitions, expense plans and technology initiatives;
- whether advisors affiliated with Atria, Prudential, The Investment Center, and Wintrust will transition registration to the Company and whether assets reported as serviced by such financial advisors will translate into assets of the Company;
- 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 or other filings with the Securities and Exchange Commission.
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 earnings release, 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 press release.
| LPL Financial Holdings Inc. | ||||||||||||||
| Consolidated Statements of Income | ||||||||||||||
| (In thousands, except per share data) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||
| December 31, | September 30, | December 31, | ||||||||||||
| 2024 | 2024 | Change | 2023 | Change | ||||||||||
| REVENUE | ||||||||||||||
| Advisory | $ | 1,595,834 | $ | 1,378,050 | 16 | % | $ | 1,085,497 | 47 | % | ||||
| Commission: | ||||||||||||||
| Sales-based | 525,795 | 429,132 | 23 | % | 355,958 | 48 | % | |||||||
| Trailing | 439,668 | 377,400 | 16 | % | 326,454 | 35 | % | |||||||
| Total commission | 965,463 | 806,532 | 20 | % | 682,412 | 41 | % | |||||||
| Asset-based: | ||||||||||||||
| Client cash | 378,816 | 353,855 | 7 | % | 352,661 | 7 | % | |||||||
| Other asset-based | 290,962 | 272,336 | 7 | % | 228,473 | 27 | % | |||||||
| Total asset-based | 669,778 | 626,191 | 7 | % | 581,134 | 15 | % | |||||||
| Service and fee | 139,119 | 145,729 | (5 | %) | 130,680 | 6 | % | |||||||
| Transaction | 61,535 | 58,546 | 5 | % | 53,858 | 14 | % | |||||||
| Interest income, net | 46,680 | 49,923 | (6 | %) | 43,312 | 8 | % | |||||||
| Other | 33,942 | 43,423 | (22 | %) | 66,936 | (49 | %) | |||||||
| Total revenue | 3,512,351 | 3,108,394 | 13 | % | 2,643,829 | 33 | % | |||||||
| EXPENSE | ||||||||||||||
| Advisory and commission | 2,250,427 | 1,948,065 | 16 | % | 1,607,978 | 40 | % | |||||||
| Compensation and benefits | 321,933 | 266,415 | 21 | % | 270,709 | 19 | % | |||||||
| Promotional | 162,057 | 164,538 | (2 | %) | 126,800 | 28 | % | |||||||
| Depreciation and amortization | 92,032 | 78,338 | 17 | % | 67,936 | 35 | % | |||||||
| Interest expense on borrowings | 81,979 | 67,779 | 21 | % | 54,415 | 51 | % | |||||||
| Occupancy and equipment | 75,538 | 69,879 | 8 | % | 62,103 | 22 | % | |||||||
| Amortization of other intangibles | 42,614 | 32,461 | 31 | % | 28,618 | 49 | % | |||||||
| Brokerage, clearing and exchange | 34,789 | 29,636 | 17 | % | 25,917 | 34 | % | |||||||
| Professional services | 32,055 | 26,295 | 22 | % | 21,572 | 49 | % | |||||||
| Communications and data processing | 18,772 | 17,916 | 5 | % | 17,814 | 5 | % | |||||||
| Other | 58,874 | 59,724 | (1 | %) | 66,180 | (11 | %) | |||||||
| Total expense | 3,171,070 | 2,761,046 | 15 | % | 2,350,042 | 35 | % | |||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 341,281 | 347,348 | (2 | %) | 293,787 | 16 | % | |||||||
| PROVISION FOR INCOME TAXES | 70,532 | 92,045 | (23 | %) | 76,232 | (7 | %) | |||||||
| NET INCOME | $ | 270,749 | $ | 255,303 | 6 | % | $ | 217,555 | 24 | % | ||||
| EARNINGS PER SHARE | ||||||||||||||
| Earnings per share, basic | $ | 3.62 | $ | 3.41 | 6 | % | $ | 2.89 | 25 | % | ||||
| Earnings per share, diluted | $ | 3.59 | $ | 3.39 | 6 | % | $ | 2.85 | 26 | % | ||||
| Weighted-average shares outstanding, basic | 74,785 | 74,776 | - | % | 75,228 | (1 | %) | |||||||
| Weighted-average shares outstanding, diluted | 75,337 | 75,405 | - | % | 76,240 | (1 | %) | |||||||
| LPL Financial Holdings Inc. | |||||||||
| Consolidated Statements of Income | |||||||||
| (In thousands, except per share data) | |||||||||
| (Unaudited) | |||||||||
| Years Ended | |||||||||
| December 31, | |||||||||
| 2024 | 2023 | Change | |||||||
| REVENUE | |||||||||
| Advisory | $ | 5,461,858 | $ | 4,135,681 | 32 | % | |||
| Commission: | |||||||||
| Sales-based | 1,763,232 | 1,252,783 | 41 | % | |||||
| Trailing | 1,542,255 | 1,299,840 | 19 | % | |||||
| Total commission | 3,305,487 | 2,552,623 | 29 | % | |||||
| Asset-based: | |||||||||
| Client cash | 1,426,528 | 1,509,869 | (6 | %) | |||||
| Other asset-based | 1,071,170 | 867,860 | 23 | % | |||||
| Total asset-based | 2,497,698 | 2,377,729 | 5 | % | |||||
| Service and fee | 552,020 | 508,437 | 9 | % | |||||
| Transaction | 236,274 | 199,939 | 18 | % | |||||
| Interest income, net | 187,606 | 159,415 | 18 | % | |||||
| Other | 144,164 | 119,024 | 21 | % | |||||
| Total revenue | 12,385,107 | 10,052,848 | 23 | % | |||||
| EXPENSE | |||||||||
| Advisory and commission | 7,751,006 | 5,915,807 | 31 | % | |||||
| Compensation and benefits | 1,136,717 | 979,681 | 16 | % | |||||
| Promotional | 589,339 | 459,233 | 28 | % | |||||
| Depreciation and amortization | 308,527 | 246,994 | 25 | % | |||||
| Occupancy and equipment | 281,210 | 248,620 | 13 | % | |||||
| Interest expense on borrowings | 274,181 | 186,804 | 47 | % | |||||
| Amortization of other intangibles | 135,234 | 107,211 | 26 | % | |||||
| Brokerage, clearing and exchange | 127,941 | 105,984 | 21 | % | |||||
| Professional services | 93,729 | 72,583 | 29 | % | |||||
| Communications and data processing | 75,838 | 75,717 | - | % | |||||
| Other | 218,493 | 209,439 | 4 | % | |||||
| Total expense | 10,992,215 | 8,608,073 | 28 | % | |||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 1,392,892 | 1,444,775 | (4 | %) | |||||
| PROVISION FOR INCOME TAXES | 334,276 | 378,525 | (12 | %) | |||||
| NET INCOME | $ | 1,058,616 | $ | 1,066,250 | (1 | %) | |||
| EARNINGS PER SHARE | |||||||||
| Earnings per share, basic | $ | 14.17 | $ | 13.88 | 2 | % | |||
| Earnings per share, diluted | $ | 14.03 | $ | 13.69 | 2 | % | |||
| Weighted-average shares outstanding, basic | 74,713 | 76,807 | (3 | %) | |||||
| Weighted-average shares outstanding, diluted | 75,427 | 77,861 | (3 | %) | |||||
| LPL Financial Holdings Inc. | ||||||||||
| Consolidated Statements of Financial Condition | ||||||||||
| (In thousands, except share data) | ||||||||||
| (Unaudited) | ||||||||||
| December 31, 2024 | September 30, 2024 | December 31, 2023 | ||||||||
| ASSETS | ||||||||||
| Cash and equivalents | $ | 967,079 | $ | 1,474,954 | $ | 465,671 | ||||
| Cash and equivalents segregated under federal or other regulations | 1,597,249 | 1,382,867 | 2,007,312 | |||||||
| Restricted cash | 119,724 | 104,881 | 108,180 | |||||||
| Receivables from clients, net | 633,834 | 622,015 | 588,585 | |||||||
| Receivables from brokers, dealers and clearing organizations | 76,545 | 53,763 | 50,069 | |||||||
| Advisor loans, net | 2,281,088 | 1,913,363 | 1,479,690 | |||||||
| Other receivables, net | 902,777 | 802,186 | 743,317 | |||||||
| Investment securities ($42,267, $94,694 and $76,088 at fair value at December 31, 2024, September 30, 2024 and December 31, 2023, respectively) | 57,481 | 111,096 | 91,311 | |||||||
| Property and equipment, net | 1,210,027 | 1,144,676 | 933,091 | |||||||
| Goodwill | 2,172,873 | 1,868,193 | 1,856,648 | |||||||
| Other intangibles, net | 1,482,988 | 782,426 | 671,585 | |||||||
| Other assets | 1,815,739 | 1,681,455 | 1,390,021 | |||||||
| Total assets | $ | 13,317,404 | $ | 11,941,875 | $ | 10,385,480 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| LIABILITIES: | ||||||||||
| Client payables | $ | 1,898,665 | $ | 2,039,140 | $ | 2,266,176 | ||||
| Payables to brokers, dealers and clearing organizations | 129,228 | 211,054 | 163,337 | |||||||
| Accrued advisory and commission expenses payable | 323,996 | 252,881 | 216,541 | |||||||
| Corporate debt and other borrowings, net | 5,494,724 | 4,441,913 | 3,734,111 | |||||||
| Accounts payable and accrued liabilities | 588,450 | 485,927 | 485,963 | |||||||
| Other liabilities | 1,951,739 | 1,739,209 | 1,440,373 | |||||||
| Total liabilities | 10,386,802 | 9,170,124 | 8,306,501 | |||||||
| STOCKHOLDERS' EQUITY: | ||||||||||
| Common stock, $0.001 par value; 600,000,000 shares authorized; 130,914,541, 130,779,259 shares and 130,233,328 shares issued at December 31, 2024, September 30, 2024 and December 31, 2023, respectively | 131 | 131 | 130 | |||||||
| Additional paid-in capital | 2,066,268 | 2,059,207 | 1,987,684 | |||||||
| Treasury stock, at cost - 56,253,909, 55,968,552 shares and 55,576,970 shares at December 31, 2024, September 30, 2024 and December 31, 2023, respectively | (4,202,322 | ) | (4,102,319 | ) | (3,993,949 | ) | ||||
| Retained earnings | 5,066,525 | 4,814,732 | 4,085,114 | |||||||
| Total stockholders' equity | 2,930,602 | 2,771,751 | 2,078,979 | |||||||
| Total liabilities and stockholders' equity | $ | 13,317,404 | $ | 11,941,875 | $ | 10,385,480 | ||||
| LPL Financial Holdings Inc. | ||||||||||||||
| Management's Statements of Operations | ||||||||||||||
| (In thousands, except per share data) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Certain information in this release is presented as reviewed by the Company's management and includes information derived from the Company's consolidated statements of income, non-GAAP financial measures and operational and performance metrics. For information on non-GAAP financial measures, please see the section titled"Non-GAAP Financial Measures"in this release. | ||||||||||||||
| Quarterly Results | ||||||||||||||
| Q4 2024 | Q3 2024 | Change | Q4 2023 | Change | ||||||||||
| Gross Profit(6) | ||||||||||||||
| Advisory | $ | 1,595,834 | $ | 1,378,050 | 16 | % | $ | 1,085,497 | 47 | % | ||||
| Trailing commissions | 439,668 | 377,400 | 16 | % | 326,454 | 35 | % | |||||||
| Sales-based commissions | 525,795 | 429,132 | 23 | % | 355,958 | 48 | % | |||||||
| Advisory fees and commissions | 2,561,297 | 2,184,582 | 17 | % | 1,767,909 | 45 | % | |||||||
| Production-based payout(7) | (2,248,674 | ) | (1,910,634 | ) | 18 | % | (1,548,540 | ) | 45 | % | ||||
| Advisory fees and commissions, net of payout | 312,623 | 273,948 | 14 | % | 219,369 | 43 | % | |||||||
| Client cash(8) | 397,001 | 372,333 | 7 | % | 373,979 | 6 | % | |||||||
| Other asset-based(9) | 290,962 | 272,336 | 7 | % | 228,473 | 27 | % | |||||||
| Service and fee | 139,119 | 145,729 | (5 | %) | 130,680 | 6 | % | |||||||
| Transaction | 61,535 | 58,546 | 5 | % | 53,858 | 14 | % | |||||||
| Interest income, net(10) | 28,481 | 31,428 | (9 | %) | 21,975 | 30 | % | |||||||
| Other revenue(11) | 32,705 | 3,392 | n/m | 4,636 | n/m | |||||||||
| Total net advisory fees and commissions and attachment revenue | 1,262,426 | 1,157,712 | 9 | % | 1,032,970 | 22 | % | |||||||
| Brokerage, clearing and exchange expense | (34,789 | ) | (29,636 | ) | 17 | % | (25,917 | ) | 34 | % | ||||
| Gross Profit(6) | 1,227,637 | 1,128,076 | 9 | % | 1,007,053 | 22 | % | |||||||
| G&A Expense | ||||||||||||||
| Core G&A(12) | 421,894 | 359,134 | 17 | % | 364,469 | 16 | % | |||||||
| Regulatory charges(13) | 7,335 | 24,879 | (71 | %) | 8,905 | (18 | %) | |||||||
| Promotional (ongoing)(14)(15) | 173,191 | 175,605 | (1 | %) | 138,457 | 25 | % | |||||||
| Acquisition costs(15) | 37,261 | 22,243 | 68 | % | 34,931 | 7 | % | |||||||
| Employee share-based compensation | 26,067 | 20,289 | 28 | % | 15,535 | 68 | % | |||||||
| Total G&A | 665,748 | 602,150 | 11 | % | 562,297 | 18 | % | |||||||
| Loss on extinguishment of debt | 3,983 | - | 100 | % | - | 100 | % | |||||||
| EBITDA(16) | 557,906 | 525,926 | 6 | % | 444,756 | 25 | % | |||||||
| Depreciation and amortization | 92,032 | 78,338 | 17 | % | 67,936 | 35 | % | |||||||
| Amortization of other intangibles | 42,614 | 32,461 | 31 | % | 28,618 | 49 | % | |||||||
| Interest expense on borrowings | 81,979 | 67,779 | 21 | % | 54,415 | 51 | % | |||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 341,281 | 347,348 | (2 | %) | 293,787 | 16 | % | |||||||
| PROVISION FOR INCOME TAXES | 70,532 | 92,045 | (23 | %) | 76,232 | (7 | %) | |||||||
| NET INCOME | $ | 270,749 | $ | 255,303 | 6 | % | $ | 217,555 | 24 | % | ||||
| Earnings per share, diluted | $ | 3.59 | $ | 3.39 | 6 | % | $ | 2.85 | 26 | % | ||||
| Weighted-average shares outstanding, diluted | 75,337 | 75,405 | - | % | 76,240 | (1 | %) | |||||||
| Adjusted EBITDA(16) | $ | 584,783 | $ | 566,169 | 3 | % | $ | 479,687 | 22 | % | ||||
| Adjusted EPS(17) | $ | 4.25 | $ | 4.16 | 2 | % | $ | 3.51 | 21 | % | ||||
| LPL Financial Holdings Inc. | ||||||||||||
| Operating Metrics | ||||||||||||
| (Dollars in billions, except where noted) | ||||||||||||
| (Unaudited) | ||||||||||||
| Q4 2024 | Q3 2024 | Change | Q4 2023 | Change | ||||||||
| Market Drivers | ||||||||||||
| S&P 500 Index (end of period) | 5,882 | 5,762 | 2% | 4,770 | 23% | |||||||
| Russell 2000 Index (end of period) | 2,230 | 2,230 | -% | 2,027 | 10% | |||||||
| Fed Funds daily effective rate (average bps) | 466 | 527 | (61bps) | 533 | (67bps) | |||||||
| Advisory and Brokerage Assets(18) | ||||||||||||
| Advisory assets | $ | 957.0 | $ | 892.0 | 7% | $ | 735.8 | 30% | ||||
| Brokerage assets | 783.7 | 700.1 | 12% | 618.2 | 27% | |||||||
| Total Advisory and Brokerage Assets | $ | 1,740.7 | $ | 1,592.1 | 9% | $ | 1,354.1 | 29% | ||||
| Advisory as a % of Total Advisory and Brokerage Assets | 55.0 | % | 56.0 | % | (100bps) | 54.3 | % | 70bps | ||||
| Assets by Platform | ||||||||||||
| Corporate advisory assets(19) | $ | 678.3 | $ | 618.8 | 10% | $ | 496.5 | 37% | ||||
| Independent RIA advisory assets(19) | 278.7 | 273.2 | 2% | 239.3 | 16% | |||||||
| Brokerage assets | 783.7 | 700.1 | 12% | 618.2 | 27% | |||||||
| Total Advisory and Brokerage Assets | $ | 1,740.7 | $ | 1,592.1 | 9% | $ | 1,354.1 | 29% | ||||
| Centrally Managed Assets | ||||||||||||
| Centrally managed assets(20) | $ | 160.0 | $ | 138.1 | 16% | $ | 112.1 | 43% | ||||
| Centrally Managed as a % of Total Advisory Assets | 16.7 | % | 15.5 | % | 120bps | 15.2 | % | 150bps | ||||
| LPL Financial Holdings Inc. | ||||||||||||
| Operating Metrics | ||||||||||||
| (Dollars in billions, except where noted) | ||||||||||||
| (Unaudited) | ||||||||||||
| Q4 2024 | Q3 2024 | Change | Q4 2023 | Change | ||||||||
| Organic Net New Assets (NNA)(21) | ||||||||||||
| Organic net new advisory assets | $ | 49.3 | $ | 23.2 | n/m | $ | 20.5 | n/m | ||||
| Organic net new brokerage assets | 18.8 | 3.8 | n/m | 4.2 | n/m | |||||||
| Total Organic Net New Assets | $ | 68.0 | $ | 27.0 | n/m | $ | 24.7 | n/m | ||||
| Acquired Net New Assets(21) | ||||||||||||
| Acquired net new advisory assets | $ | 21.8 | $ | 0.5 | n/m | $ | - | n/m | ||||
| Acquired net new brokerage assets | 67.5 | 0.1 | n/m | - | n/m | |||||||
| Total Acquired Net New Assets | $ | 89.3 | $ | 0.6 | n/m | $ | - | n/m | ||||
| Total Net New Assets(21) | ||||||||||||
| Net new advisory assets | $ | 71.1 | $ | 23.7 | n/m | $ | 20.5 | n/m | ||||
| Net new brokerage assets | 86.2 | 3.8 | n/m | 4.2 | n/m | |||||||
| Total Net New Assets | $ | 157.3 | $ | 27.5 | n/m | $ | 24.7 | n/m | ||||
| Net brokerage to advisory conversions(22) | $ | 4.8 | $ | 3.5 | n/m | $ | 2.6 | n/m | ||||
| Organic advisory NNA annualized growth(23) | 22.1 | % | 11.2 | % | n/m | 12.4 | % | n/m | ||||
| Total organic NNA annualized growth(23) | 17.1 | % | 7.2 | % | n/m | 8.0 | % | n/m | ||||
| Net New Advisory Assets(21) | ||||||||||||
| Corporate RIA net new advisory assets | $ | 64.5 | $ | 24.0 | n/m | $ | 15.9 | n/m | ||||
| Independent RIA net new advisory assets | 6.6 | (0.3 | ) | n/m | 4.6 | n/m | ||||||
| Total Net New Advisory Assets | $ | 71.1 | $ | 23.7 | n/m | $ | 20.5 | n/m | ||||
| Centrally managed net new advisory assets(21) | $ | 24.9 | $ | 4.4 | n/m | $ | 3.0 | n/m | ||||
| Net buy (sell) activity(24) | $ | 38.3 | $ | 37.7 | n/m | $ | 32.8 | n/m | ||||
| Note: Totals may not foot due to rounding. | ||||||||||||
| LPL Financial Holdings Inc. | ||||||||||||
| Client Cash Data | ||||||||||||
| (Dollars in thousands, except where noted) | ||||||||||||
| (Unaudited) | ||||||||||||
| Q4 2024 | Q3 2024 | Change | Q4 2023 | Change | ||||||||
| Client Cash Balances (in billions)(25) | ||||||||||||
| Insured cash account sweep | $ | 38.3 | $ | 32.1 | 19% | $ | 34.5 | 11% | ||||
| Deposit cash account sweep | 10.7 | 9.6 | 11% | 9.3 | 15% | |||||||
| Total Bank Sweep | 49.0 | 41.7 | 18% | 43.8 | 12% | |||||||
| Money market sweep | 4.3 | 2.3 | 87% | 2.4 | 79% | |||||||
| Total Client Cash Sweep Held by Third Parties | 53.3 | 44.0 | 21% | 46.2 | 15% | |||||||
| Client cash account (CCA)(26) | 1.8 | 1.8 | -% | 2.0 | (10%) | |||||||
| Total Client Cash Balances | $ | 55.1 | $ | 45.8 | 20% | $ | 48.2 | 14% | ||||
| Client Cash Balances as a % of Total Assets | 3.2 | % | 2.9 | % | 30bps | 3.6 | % | (40bps) | ||||
| Note: Totals may not foot due to rounding. | ||||||||||||
| Three Months Ended | |||||||||||||||
| December 31, 2024 | September 30, 2024 | December 31, 2023 | |||||||||||||
| Interest-Earnings Assets | Average Balance (in billions) | Revenue | Net Yield (bps)(27) | Average Balance (in billions) | Revenue | Net Yield (bps)(27) | Average Balance (in billions) | Revenue | Net Yield (bps)(27) | ||||||
| Insured cash account sweep | $ | 34.8 | $ | 292,661 | 335 | $ | 31.1 | $ | 259,503 | 332 | $ | 33.3 | $ | 266,058 | 317 |
| Deposit cash account sweep | 9.8 | 83,879 | 340 | 9.2 | 92,765 | 400 | 8.9 | 84,901 | 379 | ||||||
| Total Bank Sweep | 44.6 | 376,540 | 336 | 40.3 | 352,268 | 348 | 42.2 | 350,959 | 330 | ||||||
| Money market sweep | 3.3 | 2,277 | 28 | 2.3 | 1,587 | 28 | 2.4 | 1,702 | 28 | ||||||
| Total Client Cash Held By Third Parties | 47.9 | 378,817 | 315 | 42.6 | 353,855 | 330 | 44.6 | 352,661 | 314 | ||||||
| Client cash account (CCA)(26) | 1.8 | 18,184 | 407 | 1.6 | 18,478 | 472 | 1.8 | 21,318 | 475 | ||||||
| Total Client Cash | 49.7 | 397,001 | 318 | 44.2 | 372,333 | 335 | 46.4 | 373,979 | 320 | ||||||
| Margin receivables | 0.6 | 11,506 | 829 | 0.5 | 11,199 | 885 | 0.5 | 10,874 | 878 | ||||||
| Other interest revenue | 1.3 | 16,975 | 524 | 1.5 | 20,229 | 533 | 0.9 | 11,101 | 507 | ||||||
| Total Client Cash and Interest Income, Net | $ | 51.6 | $ | 425,482 | 329 | $ | 46.2 | $ | 403,761 | 348 | $ | 47.7 | $ | 395,954 | 329 |
| Note: Totals may not foot due to rounding. | |||||||||||||||
| LPL Financial Holdings Inc. | ||||||||||||||
| Monthly Metrics | ||||||||||||||
| (Dollars in billions, except where noted) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| December 2024 | November 2024 | Change | October 2024 | September 2024 | ||||||||||
| Advisory and Brokerage Assets(18) | ||||||||||||||
| Advisory assets | $ | 957.0 | $ | 973.8 | (2%) | $ | 910.6 | $ | 892.0 | |||||
| Brokerage assets | 783.7 | 785.6 | -% | 762.7 | 700.1 | |||||||||
| Total Advisory and Brokerage Assets | $ | 1,740.7 | $ | 1,759.3 | (1%) | $ | 1,673.3 | $ | 1,592.1 | |||||
| Organic Net New Assets (NNA)(21) | ||||||||||||||
| Organic net new advisory assets | $ | 12.5 | $ | 27.9 | n/m | $ | 8.8 | $ | 11.0 | |||||
| Organic net new brokerage assets | 12.9 | 6.3 | n/m | (0.5 | ) | 0.5 | ||||||||
| Total Organic Net New Assets | $ | 25.5 | $ | 34.2 | n/m | $ | 8.3 | $ | 11.4 | |||||
| Acquired Net New Assets(21) | ||||||||||||||
| Acquired net new advisory assets | $ | - | $ | 0.5 | n/m | $ | 21.3 | $ | 0.2 | |||||
| Acquired net new brokerage assets | 0.2 | 0.3 | n/m | 67.0 | $ | 0.1 | ||||||||
| Total Acquired Net New Assets | $ | 0.3 | $ | 0.8 | n/m | $ | 88.3 | $ | 0.3 | |||||
| Total Net New Assets(21) | ||||||||||||||
| Net new advisory assets | $ | 12.6 | $ | 28.4 | n/m | $ | 30.1 | $ | 11.2 | |||||
| Net new brokerage assets | 13.2 | 6.6 | n/m | 66.5 | 0.5 | |||||||||
| Total Net New Assets | $ | 25.8 | $ | 35.0 | n/m | $ | 96.6 | $ | 11.7 | |||||
| Net brokerage to advisory conversions(22) | $ | 2.0 | $ | 1.7 | n/m | $ | 1.1 | $ | 1.2 | |||||
| Client Cash Balances(25) | ||||||||||||||
| Insured cash account sweep | $ | 38.3 | $ | 34.8 | 10% | $ | 34.7 | $ | 32.1 | |||||
| Deposit cash account sweep | 10.7 | 9.9 | 8% | 9.7 | 9.6 | |||||||||
| Total Bank Sweep | 49.0 | 44.7 | 10% | 44.4 | 41.7 | |||||||||
| Money market sweep | 4.3 | 4.3 | -% | 2.6 | 2.3 | |||||||||
| Total Client Cash Sweep Held by Third Parties | 53.3 | 49.0 | 9% | 47.0 | 44.0 | |||||||||
| Client cash account (CCA)(26) | 1.8 | 1.5 | 20% | 1.3 | 1.8 | |||||||||
| Total Client Cash Balances | 55.1 | 50.5 | 9% | 48.3 | 45.8 | |||||||||
| Net buy (sell) activity(24) | $ | 13.5 | $ | 12.4 | n/m | $ | 12.5 | $ | 12.2 | |||||
| Market Drivers | ||||||||||||||
| S&P 500 Index (end of period) | 5,882 | 6,032 | (2%) | 5,705 | 5,762 | |||||||||
| Russell 2000 Index (end of period) | 2,230 | 2,435 | (8%) | 2,197 | 2,230 | |||||||||
| Fed Funds effective rate (average bps) | 448 | 465 | (17bps) | 483 | 513 | |||||||||
| Note: Totals may not foot due to rounding. | ||||||||||||||
| LPL Financial Holdings Inc. | ||||||||||||
| Financial Measures | ||||||||||||
| (Dollars in thousands, except where noted) | ||||||||||||
| (Unaudited) | ||||||||||||
| Q4 2024 | Q3 2024 | Change | Q4 2023 | Change | ||||||||
| Commission Revenue by Product | ||||||||||||
| Annuities | $ | 561,918 | $ | 481,852 | 17% | $ | 408,480 | 38% | ||||
| Mutual funds | 232,529 | 193,451 | 20% | 167,392 | 39% | |||||||
| Fixed income | 59,332 | 55,707 | 7% | 40,441 | 47% | |||||||
| Equities | 45,829 | 36,786 | 25% | 29,920 | 53% | |||||||
| Other | 65,855 | 38,736 | 70% | 36,179 | 82% | |||||||
| Total commission revenue | $ | 965,463 | $ | 806,532 | 20% | $ | 682,412 | 41% | ||||
| Commission Revenue by Sales-based and Trailing | ||||||||||||
| Sales-based commissions | ||||||||||||
| Annuities | $ | 314,591 | $ | 265,955 | 18% | $ | 221,070 | 42% | ||||
| Mutual funds | 52,908 | 42,310 | 25% | 37,016 | 43% | |||||||
| Fixed income | 59,332 | 55,707 | 7% | 40,441 | 47% | |||||||
| Equities | 45,829 | 36,786 | 25% | 29,920 | 53% | |||||||
| Other | 53,135 | 28,374 | 87% | 27,511 | 93% | |||||||
| Total sales-based commissions | $ | 525,795 | $ | 429,132 | 23% | $ | 355,958 | 48% | ||||
| Trailing commissions | ||||||||||||
| Annuities | $ | 247,327 | $ | 215,897 | 15% | $ | 187,410 | 32% | ||||
| Mutual funds | 179,621 | 151,141 | 19% | 130,376 | 38% | |||||||
| Other | 12,720 | 10,362 | 23% | 8,668 | 47% | |||||||
| Total trailing commissions | $ | 439,668 | $ | 377,400 | 16% | $ | 326,454 | 35% | ||||
| Total commission revenue | $ | 965,463 | $ | 806,532 | 20% | $ | 682,412 | 41% | ||||
| Payout Rate(7) | 87.79 | % | 87.46 | % | 33bps | 87.59 | % | 20bps | ||||
| LPL Financial Holdings Inc. | ||||||||||
| Capital Management Measures | ||||||||||
| (Dollars in thousands, except where noted) | ||||||||||
| (Unaudited) | ||||||||||
| Q4 2024 | Q3 2024 | Q4 2023 | ||||||||
| Cash and equivalents | $ | 967,079 | $ | 1,474,954 | $ | 465,671 | ||||
| Cash at regulated subsidiaries | (884,779 | ) | (992,450 | ) | (410,313 | ) | ||||
| Excess cash at regulated subsidiaries per the Credit Agreement | 397,138 | 225,886 | 128,327 | |||||||
| Corporate Cash(3) | $ | 479,438 | $ | 708,390 | $ | 183,685 | ||||
| Corporate Cash(3) | ||||||||||
| Cash at the Parent | $ | 39,782 | $ | 435,109 | $ | 26,587 | ||||
| Excess cash at regulated subsidiaries per the Credit Agreement | 397,138 | 225,886 | 128,327 | |||||||
| Cash at non-regulated subsidiaries | 42,518 | 47,395 | 28,771 | |||||||
| Corporate Cash | $ | 479,438 | $ | 708,390 | $ | 183,685 | ||||
| Leverage Ratio | ||||||||||
| Total debt | $ | 5,517,000 | $ | 4,469,175 | $ | 3,757,200 | ||||
| Total corporate cash | 479,438 | 708,390 | 183,685 | |||||||
| Credit Agreement Net Debt | $ | 5,037,562 | $ | 3,760,785 | $ | 3,573,515 | ||||
| Credit Agreement EBITDA (trailing twelve months)(28) | $ | 2,665,033 | $ | 2,340,886 | $ | 2,194,807 | ||||
| Leverage Ratio | 1.89x | 1.61x | 1.63x | |||||||
| December 31, 2024 | ||||||||
| Total Debt | Balance | Current Applicable Margin | Interest Rate | Maturity | ||||
| Revolving Credit Facility(a) | $ | 1,047,000 | ABR+37.5 bps / SOFR+147.5 bps | 6.007 | % | 5/20/2029 | ||
| Broker-Dealer Revolving Credit Facility | - | SOFR+135 bps | 5.840 | % | 5/19/2025 | |||
| Senior Unsecured Term Loan A | 1,020,000 | SOFR+147.5 bps(b) | 6.000 | % | 12/5/2026 | |||
| Senior Unsecured Notes | 500,000 | 5.700% Fixed | 5.700 | % | 5/20/2027 | |||
| Senior Unsecured Notes | 400,000 | 4.625% Fixed | 4.625 | % | 11/15/2027 | |||
| Senior Unsecured Notes | 750,000 | 6.750% Fixed | 6.750 | % | 11/17/2028 | |||
| Senior Unsecured Notes | 900,000 | 4.000% Fixed | 4.000 | % | 3/15/2029 | |||
| Senior Unsecured Notes | 400,000 | 4.375% Fixed | 4.375 | % | 5/15/2031 | |||
| Senior Unsecured Notes | 500,000 | 6.000% Fixed | 6.000 | % | 5/20/2034 | |||
| Total / Weighted Average | $ | 5,517,000 | 5.532 | % | ||||
| (a) Secured borrowing capacity of $2.25 billion at LPL Holdings, Inc. (the "Parent"). | ||||||||
| (b) The SOFR rate option is a one-month SOFR rate and subject to an interest rate floor of 0 bps. | ||||||||
| LPL Financial Holdings Inc. | ||||||||||||
| Key Business and Financial Metrics | ||||||||||||
| (Dollars in thousands, except where noted) | ||||||||||||
| (Unaudited) | ||||||||||||
| Q4 2024 | Q3 2024 | Change | Q4 2023 | Change | ||||||||
| Advisors | ||||||||||||
| Advisors | 28,888 | 23,686 | 22% | 22,660 | 27% | |||||||
| Net new advisors | 5,202 | 224 | n/m | 256 | n/m | |||||||
| Annualized advisory fees and commissions per advisor(29) | $ | 390 | $ | 371 | 5% | $ | 314 | 24% | ||||
| Average total assets per advisor ($ in millions)(30) | $ | 60.3 | $ | 67.2 | (10%) | $ | 59.8 | 1% | ||||
| Transition assistance loan amortization ($ in millions)(31) | $ | 76.3 | $ | 69.1 | 10% | $ | 55.1 | 38% | ||||
| Total client accounts (in millions) | 10.0 | 8.7 | 15% | 8.3 | 20% | |||||||
| Employees | 7,780 | 7,342 | 6% | 7,372 | 6% | |||||||
| Services Group | ||||||||||||
| Services Group subscriptions(32) | ||||||||||||
| Professional Services | 1,925 | 1,890 | 2% | 1,895 | 2% | |||||||
| Business Optimizers | 3,980 | 3,798 | 5% | 3,363 | 18% | |||||||
| Planning and Advice | 799 | 735 | 9% | 548 | 46% | |||||||
| Total Services Group subscriptions | 6,704 | 6,423 | 4% | 5,806 | 15% | |||||||
| Services Group advisor count | 4,521 | 4,340 | 4% | 3,850 | 17% | |||||||
| AUM retention rate (quarterly annualized)(33) | 97.3 | % | 97.0 | % | 30bps | 98.4 | % | (110bps) | ||||
| Capital Management | ||||||||||||
| Capital expenditures ($ in millions)(34) | $ | 165.5 | $ | 147.1 | 13% | $ | 105.9 | 56% | ||||
| Acquisitions, net ($ in millions)(35) | $ | 847.9 | $ | 34.1 | n/m | $ | 92.9 | n/m | ||||
| Share repurchases ($ in millions) | $ | 100.0 | $ | - | 100% | $ | 225.0 | (56%) | ||||
| Dividends ($ in millions) | 22.5 | 22.4 | -% | 22.6 | -% | |||||||
| Total Capital Returned ($ in millions) | $ | 122.5 | $ | 22.4 | n/m | $ | 247.6 | (51%) | ||||
Non-GAAP Financial Measures
Management believes that presenting certain non-GAAP financial measures by excluding or including certain items can be helpful to investors and analysts who may wish to use this information to analyze the Company's current performance, prospects and valuation. Management uses this non-GAAP information internally to evaluate operating performance and in formulating the budget for future periods. Management believes that the non-GAAP financial measures and metrics discussed below are appropriate for evaluating the performance of the Company.
Adjusted EPS and Adjusted net income
Adjusted EPS is defined as adjusted net income, a non-GAAP measure defined as net income plus the after-tax impact of amortization of other intangibles, acquisition costs, certain regulatory charges, losses on extinguishment of debt, and amounts related to the departure of the Company's former Chief Executive Officer, divided by the weighted average number of diluted shares outstanding for the applicable period. The Company presents adjusted net income and adjusted EPS because management believes that these metrics can provide investors with useful insight into the Company's core operating performance by excluding non-cash items, acquisition costs, and certain other charges that management does not believe impact the Company's ongoing operations. Adjusted net income and adjusted EPS are not measures of the Company's financial performance under GAAP and should not be considered as alternatives to net income, earnings per diluted share or any other performance measure derived in accordance with GAAP. For a reconciliation of net income and earnings per diluted share to adjusted net income and adjusted EPS, please see the endnote disclosures in this release.
Gross profit
Gross profit is calculated 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 general and administrative in nature. Because the Company's gross profit amounts do not include any depreciation and amortization expense, the Company considers gross profit to be a non-GAAP financial measure that may not be comparable to similar measures used by others in its industry. Management believes that gross profit can provide investors with useful insight into the Company's core operating performance before indirect costs that are general and administrative in nature. For a calculation of gross profit, please see the endnote disclosures in this release.
Core G&A
Core G&A consists of 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; losses on extinguishment of debt; 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, 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. For a reconciliation of the Company's total expense to core G&A, please see the endnote disclosures in this release. The Company does not provide an outlook for its total expense because it contains expense components, such as advisory and commission, that are market-driven and over which the Company cannot exercise control. Accordingly, a reconciliation of the Company's outlook for total expense to an outlook for core G&A cannot be made available without unreasonable effort.
EBITDA and Adjusted EBITDA
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, a non-GAAP measure, plus acquisition costs, certain regulatory charges, amounts related to the departure of the Company's former Chief Executive Officer, and losses on extinguishment of debt. The Company presents EBITDA and adjusted EBITDA because management believes that they can be useful financial metrics in understanding the Company's earnings from operations. EBITDA and adjusted EBITDA are not measures of the Company's financial performance under GAAP and should not be considered as alternatives to net income or any other performance measure derived in accordance with GAAP. For a reconciliation of net income to EBITDA and adjusted EBITDA, please see the endnote disclosures in this release.
Credit Agreement EBITDA
Credit Agreement EBITDA is defined in, and calculated by management in accordance with, the Company's amended and restated credit agreement ("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. The Company presents Credit Agreement EBITDA because management believes that it can be a useful financial metric in understanding the Company's debt capacity and covenant compliance under its Credit Agreement. Credit Agreement EBITDA is not a measure 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. For a reconciliation of net income to Credit Agreement EBITDA, please see the endnote disclosures in this release.
Endnote Disclosures
(1) Represents the estimated total advisory and brokerage assets expected to transition to the Company's primary broker-dealer subsidiary, LPL Financial, in connection with advisors who transferred their licenses to LPL Financial during the period. The estimate is based on prior business reported by the advisors, which has not been independently and fully verified by LPL Financial. The actual transition of assets to LPL Financial generally occurs over several quarters and the actual amount transitioned may vary from the estimate.
(2) The terms "Financial Advisors" and "Advisors" refer to registered representatives and/or investment advisor representatives affiliated with LPL Financial, an SEC-registered broker-dealer and investment advisor, or one of Atria's seven introducing broker-dealer subsidiaries.
(3) Corporate cash, a component of cash and equivalents, is the sum of cash and equivalents from the following: (1) cash and equivalents held at LPL Holdings, Inc., (2) cash and equivalents held at regulated subsidiaries as defined by the Company's Credit Agreement, which include LPL Financial, LPL Enterprise, LLC, The Private Trust Company, N.A. and certain of Atria's introducing broker-dealer subsidiaries, in excess of the capital requirements of the Company's Credit Agreement and (3) cash and equivalents held at non-regulated subsidiaries.
(4) Compliance with the Leverage Ratio is only required under the Company's revolving credit facility.
(5) The Company was named a Top RIA custodian (Cerulli Associates, 2024 U.S. RIA Marketplace Report); No. 1 Independent Broker-Dealer in the U.S. (based on total revenues, Financial Planning magazine 1996-2022); and, among third-party providers of brokerage services to banks and credit unions, No. 1 in AUM Growth from Financial Institutions; No. 1 in Market Share of AUM from Financial Institutions; No. 1 in Market Share of Revenue from Financial Institutions; No. 1 on Financial Institution Market Share; No. 1 on Share of Advisors (2021-2022 Kehrer Bielan Research and Consulting Annual TPM Report). Fortune 500 as of June 2021.
(6) Gross profit is a non-GAAP financial measure. Please see a description of gross profit under the "Non-GAAP Financial Measures" section of this release for additional information. Below is a calculation of gross profit for the periods presented (in thousands):
| Q4 2024 | Q3 2024 | Q4 2023 | ||||||||
| Total revenue(a) | $ | 3,512,351 | $ | 3,108,394 | $ | 2,643,829 | ||||
| Advisory and commission expense | 2,250,427 | 1,948,065 | 1,607,978 | |||||||
| Brokerage, clearing and exchange expense | 34,789 | 29,636 | 25,917 | |||||||
| Employee deferred compensation | (502 | ) | 2,617 | 2,881 | ||||||
| Gross profit(a) | $ | 1,227,637 | $ | 1,128,076 | $ | 1,007,053 | ||||
(a) The departure of the Company's former Chief Executive Officer resulted in other income of $26.4 million during the three months ended December 31, 2024 related to the clawback of share-based compensation awards.
Below is a calculation of gross profit for the years presented (in thousands):
| Years Ended December 31, | |||||||
| 2024 | 2023 | ||||||
| Total revenue(a) | $ | 12,385,107 | $ | 10,052,848 | |||
| Advisory and commission expense | 7,751,006 | 5,915,807 | |||||
| Brokerage, clearing and exchange expense | 127,941 | 105,984 | |||||
| Employee deferred compensation | 4,815 | 4,101 | |||||
| Gross profit(a) | $ | 4,501,345 | $ | 4,026,956 | |||
(a) The departure of the Company's former Chief Executive Officer resulted in other income of $26.4 million during the three months ended December 31, 2024 related to the clawback of share-based compensation awards.
(7) Production-based payout is a financial measure calculated as advisory and commission expense plus (less) advisor deferred compensation. The payout rate is calculated by dividing the production-based payout by total advisory and commission revenue. Below is a reconciliation of the Company's advisory and commission expense to the production-based payout and a calculation of the payout rate for the periods presented (in thousands, except payout rate):
| Q4 2024 | Q3 2024 | Q4 2023 | ||||||||
| Advisory and commission expense | $ | 2,250,427 | $ | 1,948,065 | $ | 1,607,978 | ||||
| Less: Advisor deferred compensation | (1,753 | ) | (37,431 | ) | (59,438 | ) | ||||
| Production-based payout | $ | 2,248,674 | $ | 1,910,634 | $ | 1,548,540 | ||||
| Advisory and commission revenue | $ | 2,561,297 | $ | 2,184,582 | $ | 1,767,909 | ||||
| Payout rate | 87.79 | % | 87.46 | % | 87.59 | % | ||||
(8) Below is a reconciliation of client cash revenue per Management's Statements of Operations to client cash revenue, a component of asset-based revenue, on the Company's consolidated statements of income for the periods presented (in thousands):
| Q4 2024 | Q3 2024 | Q4 2023 | ||||||||
| Client cash on Management's Statement of Operations | $ | 397,001 | $ | 372,333 | $ | 373,979 | ||||
| Interest income on CCA balances segregated under federal or other regulations(10) | (18,185 | ) | (18,478 | ) | (21,318 | ) | ||||
| Client cash on Consolidated Statements of Income | $ | 378,816 | $ | 353,855 | $ | 352,661 | ||||
(9) Consists of revenue from the Company's sponsorship programs with financial product manufacturers, omnibus processing and networking services but does not include fees from client cash programs.
(10) During the first quarter of 2024, the Company disaggregated the activity previously reported in the interest income and other, net line item into its interest income, net and other revenue components. Prior period amounts have been reclassified to conform to the current presentation. Below is a reconciliation of interest income, net per Management's Statements of Operations to interest income, net on the Company's consolidated statements of income for the periods presented (in thousands):
| Q4 2024 | Q3 2024 | Q4 2023 | ||||||||
| Interest income, net on Management's Statement of Operations | $ | 28,481 | $ | 31,428 | $ | 21,975 | ||||
| Interest income on CCA balances segregated under federal or other regulations(8) | 18,185 | 18,478 | 21,318 | |||||||
| Interest income on deferred compensation | 14 | 17 | 19 | |||||||
| Interest income, net on Consolidated Statements of Income | $ | 46,680 | $ | 49,923 | $ | 43,312 | ||||
(11) During the first quarter of 2024, the Company disaggregated the activity previously reported in the interest income and other, net line item into its interest income, net and other revenue components. Prior period amounts have been reclassified to conform to the current presentation. Below is a reconciliation of other revenue per Management's Statements of Operations to other revenue on the Company's consolidated statements of income for the periods presented (in thousands):
| Q4 2024 | Q3 2024 | Q4 2023 | ||||||||
| Other revenue on Management's Statement of Operations(a) | $ | 32,705 | $ | 3,392 | $ | 4,636 | ||||
| Interest income on deferred compensation | (14 | ) | (17 | ) | (19 | ) | ||||
| Deferred compensation | 1,251 | 40,048 | 62,319 | |||||||
| Other revenue on Consolidated Statements of Income | $ | 33,942 | $ | 43,423 | $ | 66,936 | ||||
(a) The departure of the Company's former Chief Executive Officer resulted in other income of $26.4 million during the three months ended December 31, 2024 related to the clawback of share-based compensation awards.
(12) Core G&A is a non-GAAP financial measure. Please see a description of core G&A under the "Non-GAAP Financial Measures" section of this release for additional information. Below is a reconciliation of the Company's total expense to core G&A for the periods presented (in thousands):
| Q4 2024 | Q3 2024 | Q4 2023 | ||||||||
| Core G&A Reconciliation | ||||||||||
| Total expense | $ | 3,171,070 | $ | 2,761,046 | $ | 2,350,042 | ||||
| Advisory and commission | (2,250,427 | ) | (1,948,065 | ) | (1,607,978 | ) | ||||
| Depreciation and amortization | (92,032 | ) | (78,338 | ) | (67,936 | ) | ||||
| Interest expense on borrowings | (81,979 | ) | (67,779 | ) | (54,415 | ) | ||||
| Brokerage, clearing and exchange | (34,789 | ) | (29,636 | ) | (25,917 | ) | ||||
| Amortization of other intangibles | (42,614 | ) | (32,461 | ) | (28,618 | ) | ||||
| Employee deferred compensation | 502 | (2,617 | ) | (2,881 | ) | |||||
| Loss on extinguishment of debt | (3,983 | ) | (- | ) | (- | ) | ||||
| Total G&A | 665,748 | 602,150 | 562,297 | |||||||
| Promotional (ongoing)(14)(15) | (173,191 | ) | (175,605 | ) | (138,457 | ) | ||||
| Acquisition costs(15) | (37,261 | ) | (22,243 | ) | (34,931 | ) | ||||
| Employee share-based compensation | (26,067 | ) | (20,289 | ) | (15,535 | ) | ||||
| Regulatory charges(13) | (7,335 | ) | (24,879 | ) | (8,905 | ) | ||||
| Core G&A | $ | 421,894 | $ | 359,134 | $ | 364,469 | ||||
Below is a reconciliation of the Company's total expense to core G&A for the years presented (in thousands):
| Years Ended December 31, | |||||||
| 2024 | 2023 | ||||||
| Core G&A Reconciliation | |||||||
| Total expense | $ | 10,992,215 | $ | 8,608,073 | |||
| Advisory and commission | (7,751,006 | ) | (5,915,807 | ) | |||
| Depreciation and amortization | (308,527 | ) | (246,994 | ) | |||
| Interest expense on borrowings | (274,181 | ) | (186,804 | ) | |||
| Amortization of other intangibles | (135,234 | ) | (107,211 | ) | |||
| Brokerage, clearing and exchange | (127,941 | ) | (105,984 | ) | |||
| Employee deferred compensation | (4,815 | ) | (4,101 | ) | |||
| Loss on extinguishment of debt | (3,983 | ) | - | ||||
| Total G&A | 2,386,528 | 2,041,172 | |||||
| Promotional (ongoing)(14)(15) | (628,938 | ) | (486,326 | ) | |||
| Regulatory charges(13) | (47,278 | ) | (71,320 | ) | |||
| Employee share-based compensation | (88,957 | ) | (66,024 | ) | |||
| Acquisition costs(15) | (105,905 | ) | (48,103 | ) | |||
| Core G&A | $ | 1,515,450 | $ | 1,369,399 | |||
(13) Regulatory charges for the three months ended September 30, 2024 and year ended December 31, 2024 include charges related to a settlement with the SEC to resolve the Company's civil investigation of certain elements of the Company's Anti-Money Laundering ("AML") compliance program. The Company has recorded an $18.0 million charge for the quarter ended September 30, 2024 and reached a settlement with the staff of the SEC and paid the civil monetary penalty in January 2025. Regulatory charges for the year ended December 31, 2023 include a $40.0 million charge to reflect the amount of the penalty related to the SEC's civil investigation of the Company's compliance with records preservation requirements for business-related electronic communications that was not covered by the Company's captive insurance subsidiary. The Company reached a settlement with the staff of the SEC and paid the civil monetary penalty of $50.0 million in August 2024.
(14) Promotional (ongoing) includes $13.4 million, $13.0 million and $12.5 million for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023, respectively, of support costs related to full-time employees that are classified within Compensation and benefits expense in the consolidated statements of income and excludes costs that have been incurred as part of acquisitions that have been classified within acquisition costs. Promotional (ongoing) includes $46.6 million and $30.7 million of such support costs for the twelve months ended December 31, 2024 and 2023, respectively.
(15) Acquisition costs include the costs to setup, onboard and integrate acquired entities and other costs that were incurred as a result of the acquisitions. The below table summarizes the primary components of acquisition costs for the periods presented (in thousands):
| Q4 2024 | Q3 2024 | Q4 2023 | ||||||||
| Acquisition costs | ||||||||||
| Fair value mark on contingent consideration(36) | $ | 11,249 | $ | 5,849 | $ | 26,712 | ||||
| Compensation and benefits | 15,950 | 8,352 | 2,829 | |||||||
| Professional services | 7,357 | 6,685 | 3,664 | |||||||
| Promotional(14) | 2,235 | 1,964 | 863 | |||||||
| Other | 470 | (607 | ) | 863 | ||||||
| Acquisition costs | $ | 37,261 | $ | 22,243 | $ | 34,931 | ||||
The below table summarizes the primary components of acquisition costs for the years presented (in thousands):
| Years Ended December 31, | |||||||
| 2024 | 2023 | ||||||
| Acquisition costs | |||||||
| Fair value mark on contingent consideration(36) | $ | 41,721 | $ | 26,712 | |||
| Professional services | 20,855 | 10,044 | |||||
| Compensation and benefits | 34,980 | 6,069 | |||||
| Promotional(14) | 7,006 | 3,593 | |||||
| Other | 1,343 | 1,685 | |||||
| Acquisition costs | $ | 105,905 | $ | 48,103 | |||
(16) EBITDA and adjusted EBITDA are non-GAAP financial measures. Please see a description of EBITDA and adjusted EBITDA under the "Non-GAAP Financial Measures" section of this release for additional information. Below is a reconciliation of net income to EBITDA and adjusted EBITDA for the periods presented (in thousands):
| Q4 2024 | Q3 2024 | Q4 2023 | ||||||||
| EBITDA and adjusted EBITDA Reconciliation | ||||||||||
| Net income | $ | 270,749 | $ | 255,303 | $ | 217,555 | ||||
| Interest expense on borrowings | 81,979 | 67,779 | 54,415 | |||||||
| Provision for income taxes | 70,532 | 92,045 | 76,232 | |||||||
| Depreciation and amortization | 92,032 | 78,338 | 67,936 | |||||||
| Amortization of other intangibles | 42,614 | 32,461 | 28,618 | |||||||
| EBITDA | $ | 557,906 | $ | 525,926 | $ | 444,756 | ||||
| Regulatory charges(13) | - | 18,000 | - | |||||||
| Acquisition costs(15) | 37,261 | 22,243 | 34,931 | |||||||
| Departure of former Chief Executive Officer(a) | (14,367 | ) | - | - | ||||||
| Loss on extinguishment of debt | 3,983 | - | - | |||||||
| Adjusted EBITDA | $ | 584,783 | $ | 566,169 | $ | 479,687 | ||||
(a) The departure of the Company's former Chief Executive Officer resulted in other income of $26.4 million during the three months ended December 31, 2024 related to the clawback of share-based compensation awards which was offset by share-based compensation expense of $12.0 million related to the modification of certain stock options that were retained as per the settlement agreement that the Company reached with the former Chief Executive Officer.
The below table is a reconciliation of net income to EBITDA and adjusted EBITDA for the years presented (in thousands):
| 2024 | 2023 | ||||||
| EBITDA and adjusted EBITDA Reconciliation | |||||||
| Net income | $ | 1,058,616 | $ | 1,066,250 | |||
| Interest expense on borrowings | 274,181 | 186,804 | |||||
| Provision for income taxes | 334,276 | 378,525 | |||||
| Depreciation and amortization | 308,527 | 246,994 | |||||
| Amortization of other intangibles | 135,234 | 107,211 | |||||
| EBITDA | $ | 2,110,834 | $ | 1,985,784 | |||
| Regulatory charges(13) | 18,000 | 40,000 | |||||
| Acquisition costs(15) | 105,905 | 48,103 | |||||
| Departure of former Chief Executive Officer(a) | (14,367 | ) | - | ||||
| Loss on extinguishment of debt | 3,983 | - | |||||
| Adjusted EBITDA | $ | 2,224,355 | $ | 2,073,887 | |||
(a) The departure of the Company's former Chief Executive Officer resulted in other income of $26.4 million during the three months ended December 31, 2024 related to the clawback of share-based compensation awards which was offset by share-based compensation expense of $12.0 million related to the modification of certain stock options that were retained as per the settlement agreement that the Company reached with the former Chief Executive Officer.
(17) Adjusted net income and adjusted EPS are non-GAAP financial measures. Please see a description of adjusted net income and adjusted EPS under the "Non-GAAP Financial Measures" section of this release for additional information. Below is a reconciliation of net income and earnings per diluted share to adjusted net income and adjusted EPS for the periods presented (in thousands, except per share data):
| Q4 2024 | Q3 2024 | Q4 2023 | |||||||||||||||||
| Amount | Per Share | Amount | Per Share | Amount | Per Share | ||||||||||||||
| Net income / earnings per diluted share | $ | 270,749 | $ | 3.59 | $ | 255,303 | $ | 3.39 | $ | 217,555 | $ | 2.85 | |||||||
| Regulatory charges(13) | - | - | 18,000 | 0.24 | - | - | |||||||||||||
| Amortization of other intangibles | 42,614 | 0.57 | 32,461 | 0.43 | 28,618 | 0.38 | |||||||||||||
| Acquisition costs(15) | 37,261 | 0.49 | 22,243 | 0.29 | 34,931 | 0.46 | |||||||||||||
| Departure of former Chief Executive Officer(a) | (14,367 | ) | (0.19 | ) | - | - | - | - | |||||||||||
| Loss on extinguishment of debt | 3,983 | 0.05 | - | - | - | - | |||||||||||||
| Tax benefit | (19,978 | ) | (0.27 | ) | (14,650 | ) | (0.19 | ) | (13,789 | ) | (0.18 | ) | |||||||
| Adjusted net income / adjusted EPS | $ | 320,262 | $ | 4.25 | $ | 313,357 | $ | 4.16 | $ | 267,315 | $ | 3.51 | |||||||
| Diluted share count | 75,337 | 75,405 | 76,240 | ||||||||||||||||
| Note: Totals may not foot due to rounding. | |||||||||||||||||||
(a) The departure of the Company's former Chief Executive Officer resulted in other income of $26.4 million during the three months ended December 31, 2024 related to the clawback of share-based compensation awards which was offset by share-based compensation expense of $12.0 million related to the modification of certain stock options that were retained as per the settlement agreement that the Company reached with the former Chief Executive Officer.
Below is a reconciliation of net income and earnings per diluted share to adjusted net income and adjusted EPS for the years presented (in thousands, except per share data):
| Years Ended December 31, | |||||||||||||
| 2024 | 2023 | ||||||||||||
| Amount | Per Share | Amount | Per Share | ||||||||||
| Net income / earnings per diluted share | $ | 1,058,616 | $ | 14.03 | $ | 1,066,250 | $ | 13.69 | |||||
| Regulatory charges(13) | 18,000 | 0.24 | 40,000 | 0.51 | |||||||||
| Amortization of other intangibles | 135,234 | 1.79 | 107,211 | 1.38 | |||||||||
| Acquisition costs(15) | 105,905 | 1.40 | 48,103 | 0.62 | |||||||||
| Departure of former Chief Executive Officer(a) | (14,367 | ) | (0.19 | ) | - | - | |||||||
| Loss on extinguishment of debt | 3,983 | 0.05 | - | - | |||||||||
| Tax benefit | (62,089 | ) | (0.82 | ) | (37,418 | ) | (0.48 | ) | |||||
| Adjusted net income / adjusted EPS | $ | 1,245,282 | $ | 16.51 | $ | 1,224,146 | $ | 15.72 | |||||
| Diluted share count | 75,427 | 77,861 | |||||||||||
| Note: Totals may not foot due to rounding. | |||||||||||||
(a) The departure of the Company's former Chief Executive Officer resulted in other income of $26.4 million during the three months ended December 31, 2024 related to the clawback of share-based compensation awards which was offset by share-based compensation expense of $12.0 million related to the modification of certain stock options that were retained as per the settlement agreement that the Company reached with the former Chief Executive Officer.
(18) Consists of total advisory and brokerage assets under custody at the Company's primary broker-dealer subsidiary, LPL Financial, as well as assets under custody of a third-party custodian related to Atria's seven introducing broker-dealer subsidiaries.
(19) Assets on the Company's corporate advisory platform are serviced by investment advisor representatives of LPL Financial. Assets on the Company's independent RIA advisory platform are serviced by investment advisor representatives of separate registered investment advisor firms rather than representatives of LPL Financial.
(20) Consists of advisory assets in LPL Financial's Model Wealth Portfolios, Optimum Market Portfolios, Personal Wealth Portfolios and Guided Wealth Portfolios platforms.
(21) 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. The Company considers conversions from and to brokerage or advisory accounts as deposits and withdrawals, respectively.
(22) Consists of existing custodied assets that converted from brokerage to advisory, less existing custodied assets that converted from advisory to brokerage.
(23) 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.
(24) Represents the amount of securities purchased less the amount of securities sold in client accounts custodied with LPL Financial.
(25) Client cash balances include CCA and exclude purchased money market funds. CCA balances include cash that clients have deposited with LPL Financial that is included in Client payables in the consolidated balance sheets. The following table presents purchased money market funds for the periods presented (in billions):
| Q4 2024 | Q3 2024 | Q4 2023 | ||||||||
| Purchased money market funds | $ | 41.0 | $ | 38.5 | $ | 29.5 | ||||
(26) 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.
(27) Calculated by dividing revenue for the period by the average balance during the period.
(28) EBITDA and Credit Agreement EBITDA are non-GAAP financial measures. Please see a description of EBITDA and Credit Agreement EBITDA under the "Non-GAAP Financial Measures" section of this release for additional information. Under the Credit Agreement, management calculates Credit Agreement EBITDA for a trailing twelve month period at the end of each fiscal quarter and in doing so may make further adjustments to prior quarters. Below are reconciliations of trailing twelve month net income to trailing twelve month EBITDA and Credit Agreement EBITDA for the periods presented (in thousands):
| Q4 2024 | Q3 2024 | Q4 2023 | ||||||||
| EBITDA and Credit Agreement EBITDA Reconciliations | ||||||||||
| Net income | $ | 1,058,616 | $ | 1,005,422 | $ | 1,066,250 | ||||
| Interest expense on borrowings | 274,181 | 246,618 | 186,804 | |||||||
| Provision for income taxes | 334,276 | 339,977 | 378,525 | |||||||
| Depreciation and amortization | 308,527 | 284,431 | 246,994 | |||||||
| Amortization of other intangibles | 135,234 | 121,238 | 107,211 | |||||||
| EBITDA | $ | 2,110,834 | $ | 1,997,686 | $ | 1,985,784 | ||||
| Credit Agreement Adjustments: | ||||||||||
| Acquisition costs and other(15)(37) | $ | 223,614 | $ | 236,007 | $ | 110,170 | ||||
| Employee share-based compensation | 88,957 | 78,425 | 66,024 | |||||||
| M&A accretion(38) | 235,048 | 26,265 | 30,268 | |||||||
| Advisor share-based compensation | 2,597 | 2,503 | 2,561 | |||||||
| Loss on extinguishment of debt | 3,983 | - | - | |||||||
| Credit Agreement EBITDA | $ | 2,665,033 | $ | 2,340,886 | $ | 2,194,807 | ||||
(29) Calculated based on the average advisor count from the current period and prior periods.
(30) Calculated based on the end of period total advisory and brokerage assets divided by end of period advisor count.
(31) Represents amortization expense on forgivable loans for transition assistance to advisors and institutions.
(32) Refers to active subscriptions related to professional services offerings (CFO Solutions, Marketing Solutions, Admin Solutions, Advisor Institute, Bookkeeping, Partial Book Sales, CFO Essentials, Digital Marketing, Payroll Services and HR Solutions) and business optimizer offerings (M&A Solutions, Digital Office, Resilience Plans and Assurance Plans), as well as planning and advice services (Paraplanning, Tax Planning, and High Net Worth Services) for which subscriptions are the number of advisors using the service.
(33) Reflects retention of total advisory and brokerage assets, calculated by deducting quarterly annualized attrition from total advisory and brokerage assets, divided by the prior quarter total advisory and brokerage assets.
(34) Capital expenditures represent cash payments for property and equipment during the period.
(35) Acquisitions, net represent cash paid for acquisitions, net of cash acquired during the period.
(36) Represents a fair value adjustment to our contingent consideration liabilities that is reflected in other expense in the consolidated statements of income.
(37) Acquisition costs and other primarily include acquisition costs, costs incurred related to the integration of the strategic relationship with Prudential, a $26.4 million reduction related to the departure of the Company's former Chief Executive Officer and related clawback of share-based compensation awards, an $18.0 million regulatory charge recognized during the three months ended September 30, 2024 reflecting the amount of a penalty proposed by the SEC as part of its civil investigation of the Company's compliance with certain elements of the Company's AML compliance program, and a $40.0 million regulatory charge recognized during the three months ended September 30, 2023 to reflect the amount of a penalty proposed by the SEC as part of its civil investigation of the Company's compliance with records preservation requirements for business-related electronic communications stored on personal devices that have not been approved by the Company.
(38) 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 the transaction.
