LPL Financial (LPLA) Q2 2024 earnings summary

Executive summary

• Total advisory and brokerage assets reached $1.5 trillion at June 30, 2024, up 21% year-over-year, with strong organic net new assets of $29 billion in Q2 and a record $93 billion recruited over the trailing 12 months.

• Net income for Q2 2024 was $244 million ($3.23 per diluted share), down 12% year-over-year; adjusted EPS was $3.88, down 2% year-over-year.

• Gross profit for Q2 2024 was $1.1 billion, up 9% year-over-year, with gross profit margin improvement.

• The firm is executing horizontal and vertical expansion strategies, including onboarding Prudential and Wintrust, and acquiring Atria Wealth Solutions and Crown Capital.

• Asset retention remained high at approximately 98% for both the quarter and trailing 12 months.

Financial highlights

• Total revenue for Q2 2024 was $2.93 billion, up 19% year-over-year; gross profit reached $1.079 billion, up $13 million sequentially.

• Adjusted EBITDA for Q2 2024 was $533 million, up 2% year-over-year; core G&A expense increased 10% to $371 million.

• Client cash balances were $44 billion, representing 2.9% of total assets, with ICA yield at 318 bps.

• Payout rate for Q2 2024 was 87.32%, up 62 bps year-over-year.

• Leverage ratio was 1.68x at quarter-end, within the target range of 1.5x–2.5x.

Outlook and guidance

• Preparing to onboard Prudential and Wintrust wealth management businesses; Atria acquisition expected to close in H2 2024 and onboard by mid-2025.

• Core G&A expense growth projected at 6.25%–8.75% year-over-year for 2024, prior to Prudential and Atria onboarding.

• Promotional expense expected to rise to $170–$180 million in Q3, driven by conference spend and Prudential onboarding.

• Share repurchases paused following Atria acquisition announcement; to be reevaluated post-close.

• Declared a $0.30 per share dividend payable August 23, 2024.