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LPL Financial Holdings Inc. (LPLA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered strong financials: total revenue $3.512B, net income $271M, diluted EPS $3.59, and adjusted EPS $4.25; adjusted EPS rose 21% YoY and 2% sequentially .
  • Business momentum accelerated: record recruited assets $79B (incl. Prudential $63B), organic NNA $68B (17% annualized), advisory/brokerage assets reached $1.741T, client cash balances increased to $55.1B .
  • 2025 expense framework shifts toward operating leverage: Core G&A growth slowed to 6–8% ex Prudential/Atria ($1.560–$1.600B), and $1.730–$1.780B including them; Q1 Core G&A guided to $420–$430M .
  • Capital returns and catalysts: $100M buybacks in Q4 with plan for another $100M in Q1; $0.30 dividend declared (payable Mar 25, 2025); remaining Prudential assets ($23B) and Wintrust ($15–$16B) onboarding in Q1 provide near-term flow catalysts .

What Went Well and What Went Wrong

What Went Well

  • Record recruiting and flows: “In the fourth quarter, recruited assets were $79 billion… record organic net new assets of $68 billion” .
  • Institutional onboarding traction: “We onboarded $40 billion of assets in Q4 [Prudential] and expect the remaining $23 billion to onboard in Q1” .
  • Operating leverage focus: “We remain excited about the opportunities we have to continue to drive growth, deliver operating leverage, and create long-term shareholder value” .
  • Cash yield tailwind: ICA yield was 335 bps in Q4; “we expect our ICA yield to increase by a few basis points” in Q1 .
  • Centrally managed assets surge: “Centrally managed NNA was $25B in the quarter… $18B from Prudential; ~$6.5B core growth, a record” .

What Went Wrong

  • Expense intensification: Interest expense rose to $81.979M (+21% QoQ), D&A to $92.032M (+17% QoQ), and amortization of intangibles to $42.614M (+31% QoQ) .
  • Net income margin compressed QoQ as revenue mix shifted; service and fee revenue declined to $139.119M (−$6.610M QoQ) .
  • Payout rate increased 33 bps QoQ to 87.79%, pressuring commission/advisory margin .
  • Promotional expense remained elevated at $162.057M (though −$2.481M QoQ), reflecting onboarding support and recruiting transition assistance .
  • Wall Street consensus estimates from S&P Global were unavailable via our data access today; estimate beat/miss context could not be validated (see Estimates Context).

Financial Results

Headline P&L and Profitability

MetricQ4 2023Q3 2024Q4 2024
Total Revenue ($USD Billions)$2.644 $3.108 $3.512
Net Income ($USD Millions)$217.6 $255.3 $270.7
Diluted EPS ($)$2.85 $3.39 $3.59
Adjusted EPS ($)$3.51 $4.16 $4.25
EBITDA ($USD Millions)$444.8 $525.9 $557.9
Adjusted EBITDA ($USD Millions)$479.7 $566.2 $584.8
Gross Profit ($USD Millions)$1,007.1 $1,128.1 $1,227.6

Margins (calculated from reported figures)

MetricQ4 2023Q3 2024Q4 2024
Net Income Margin %8.2% (217.6/2,643.8) 8.2% (255.3/3,108.4) 7.7% (270.7/3,512.4)
EBIT Margin %13.2% ((217.6+76.2+54.4)/2,643.8) 13.4% ((255.3+92.0+67.8)/3,108.4) 12.1% ((270.7+70.5+82.0)/3,512.4)
EBITDA Margin %16.8% (444.8/2,643.8) 16.9% (525.9/3,108.4) 15.9% (557.9/3,512.4)
Adjusted EBITDA Margin %18.1% (479.7/2,643.8) 18.2% (566.2/3,108.4) 16.6% (584.8/3,512.4)

Revenue Composition

Revenue Component ($USD Millions)Q4 2023Q3 2024Q4 2024
Advisory$1,085.5 $1,378.1 $1,595.8
Commission (Total)$682.4 $806.5 $965.5
– Sales-based$356.0 $429.1 $525.8
– Trailing$326.5 $377.4 $439.7
Asset-based (Total)$581.1 $626.2 $669.8
– Client cash$352.7 $353.9 $378.8
– Other asset-based$228.5 $272.3 $291.0
Service and fee$130.7 $145.7 $139.1
Transaction$53.9 $58.5 $61.5
Interest income, net$43.3 $49.9 $46.7
Other$66.9 $43.4 $33.9

KPIs and Balance Indicators

KPIQ4 2023Q3 2024Q4 2024
Total Advisory & Brokerage Assets ($USD Trillions)$1.354 $1.592 $1.741
Advisory Assets ($USD Billions)$735.8 $892.0 $957.0
Brokerage Assets ($USD Billions)$618.2 $700.1 $783.7
Advisor Count22,660 23,686 28,888
Organic Net New Assets ($USD Billions)$24.7 $27.0 $68.0
Client Cash Balances ($USD Billions)$48.2 $45.8 $55.1
Payout Rate (%)87.59% 87.46% 87.79%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core G&A (ex Prudential/Atria)FY 2025N/A$1,560–$1,600M (6–8% YoY growth) Set
Core G&A (incl Prudential/Atria)FY 2025N/A$1,730–$1,780M Set
Core G&AQ1 2025N/A$420–$430M Set
Promotional ExpenseQ1 2025N/A≈$160M Lower vs Q4 2024
Share-based CompensationQ1 2025N/A≈$20M (normalize post CEO departure effect) Lower vs Q4 2024
Depreciation & AmortizationQ1 2025N/AIncrease by “a few millions” sequentially Slightly higher
Interest ExpenseFY 2025N/A≈$5M annual benefit from leverage-neutral refinancing Lower vs prior run-rate
ICA YieldQ1 2025N/A“Increase by a few basis points” QoQ Raised
Service & Fee RevenueQ1 2025N/ARoughly flat QoQ (Prudential offset by lower conference/OSJ termination) Maintained
Transaction RevenueQ1 2025N/ADecline by “a few million” due to 3 fewer trading days Lower
Share RepurchasesQ1 2025N/APlan to repurchase ≈$100M Active
DividendQ1 2025N/A$0.30/share payable Mar 25, 2025 (record Mar 11, 2025) Declared
Prudential OnboardingQ1 2025Remaining $23B to onboard Confirmed Timing affirmed
Wintrust OnboardingQ1 2025N/AOnboarded $15–$16B in January Completed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Operating leverage & core G&A disciplineTightened 2024 Core G&A; focus on efficiency; planning 2025 range TBD 2025 Core G&A 6–8% ex Prudential/Atria; Q1 guide $420–$430M Improving leverage
Institutional partnerships (Prudential, Wintrust)Preparing to onboard; raised expected EBITDA run-rate (Pru to $70M) $40B onboarded; $23B remaining in Q1; Wintrust onboarded in Jan Execution momentum
ICA yield & cash balancesICA mix fixed ~65–70%; Q3 yield +14 bps QoQ ICA yield 335 bps; expected to rise a few bps; client cash up to $55.1B Modest tailwind
Centrally managed assetsBuilding platform; early progress Record $25B NNA; ~$6.5B core, $18B from Prudential Strong adoption
Alternative investments platformExpanding agreements; building order entry; diligence resources >80 selling agreements; digital subscription process piloting, broad rollout 1H25 Scaling
Banking & lending capabilitiesMentioned as roadmap Launch cash management accounts 1H25; build internal securities-based lending Product expansion
Regulatory/legalAML-related charge in Q3; records preservation settlement paid Aug 2024 No new charges; Q4 commentary reiterates risk disclosures Stabilizing
OSJ ecosystem alignmentSeparation of misaligned OSJs; lower returns/growth Prior impacts referenced in Q4 service & fee guidance Tail risk wound down

Management Commentary

  • “In the quarter, total assets increased to a new high of $1.7 trillion… record organic net new assets of $68 billion… adjusted EPS of $4.25.” — CEO Rich Steinmeier .
  • “We onboarded $40 billion of assets in Q4 [Prudential] and expect the remaining $23 billion to onboard in Q1.” — President & CFO Matt Audette .
  • “Within our ICA portfolio… we expect our ICA yield to increase by a few basis points [in Q1],” despite rate cuts .
  • “Our 2025 Core G&A outlook… prior to Prudential and Atria is 6% to 8%… including them, $1.730B to $1.780B.” — Company press release .
  • “We expect to repurchase another $100 million of shares [in Q1].” — President & CFO Matt Audette .

Q&A Highlights

  • Organic growth durability: Management confident sustaining 7–13% organic NNA range over larger asset base; pipeline supports continued recruiting strength .
  • Centrally managed adoption: $25B NNA in Q4 (record); $18B from Prudential, ~$6.5B core; continued investment in pricing/capabilities .
  • ICA mix/yield strategy: Maintain 50–75% fixed-rate balance, target midpoint; expect Q1 ICA yield to rise modestly despite rate cuts .
  • Expense trajectory: Q1 promotional ≈$160M; share-based comp normalizing; D&A up a few million; interest expense benefiting ≈$5M annually from refinancing .
  • Alternatives and HNW push: >80 selling agreements; digitized subscription workflows; broader shelf and custody to support private wealth strategy .
  • January flows/cash: January organic NNA seasonally lower but boosted by Prudential/Wintrust; cash balances around $51.5B after redeployment .
  • Pricing adjustments: DCA fee change adds $4–$5M quarterly run-rate; production bonus aligned to “pricing for value” philosophy .

Estimates Context

  • S&P Global Wall Street consensus (EPS, revenue, EBITDA) data was unavailable via our access today; we cannot provide beat/miss versus consensus for Q4 2024 or prior quarters. As a result, estimate comparisons and revisions commentary are not included in this recap.
  • Based on company-reported figures, adjusted EPS increased YoY and sequentially, and gross profit rose sequentially; however, margins modestly compressed QoQ given higher interest and D&A—analyst models may revisit EBITDA/EPS mix and expense assumptions accordingly .

Key Takeaways for Investors

  • Near-term catalysts: Remaining Prudential ($23B) and Wintrust onboarding in Q1, plus record recruiting, support elevated organic flows and asset growth; expect modest ICA yield tailwinds to earnings in Q1 .
  • Operating leverage inflection: Core G&A growth slows in 2025 (6–8% ex Prudential/Atria) while business scales, signaling potential margin expansion over medium term .
  • Margins mixed: Adjusted EPS and gross profit up, but EBITDA/EBIT margins eased QoQ on higher D&A/interest; watch expense normalization and mix in coming quarters .
  • Capital deployment: Active buybacks ($100M Q4, plan $100M Q1) and $0.30 dividend provide ongoing shareholder return support within target leverage range .
  • Strategic expansion: Alternatives platform, centrally managed programs, and banking/lending capabilities (cash management, SBL) broaden monetization and advisor value proposition .
  • Institutional leadership: Successful Prudential integration strengthens LPL’s enterprise offering, likely a reference win for additional large institutions; onboarding capabilities now handling multiple major conversions monthly .
  • Risk watch: Regulatory backdrop stabilized, but continued monitoring warranted; payout rate drift and promotional/transition costs remain variables for near-term profitability .

Additional Relevant Press Releases (Q4 2024 window)

  • LPL announced Q3 results (Oct 30, 2024) and subsequent CEO transition to Rich Steinmeier (Oct 21, 2024), highlighting leadership continuity into Q4 .
  • Monthly activity updates for October and November 2024 provided asset and cash context ahead of Q4 reporting .

All figures, quotes, and guidance above are sourced from LPL Financial’s Q4 2024 8-K, accompanying press release, and earnings call transcript: .