LPL Financial Holdings Inc (LPLA, Financial) released its third quarter 2023 earnings on October 26, 2023. The company reported a net income of $224 million, translating to diluted earnings per share ("EPS") of $2.91, up 2% from a year ago. Adjusted EPS increased 19% year-over-year to $3.74. Gross profit increased 21% year-over-year to $1,010 million.
Financial Performance
The company's total advisory and brokerage assets increased 19% year-over-year to $1.24 trillion. Advisory assets increased 22% year-over-year to $663 billion. Advisory assets as a percentage of total assets increased to 53.5%, up from 52.3% a year ago. Total organic net new assets were $33 billion, representing 10.7% annualized growth. Organic net new advisory assets were $23 billion, representing 14% annualized growth. Organic net new brokerage assets were $10 billion, representing 7% annualized growth.
Business Highlights
LPLA's advisor count was 22,404, up 462 sequentially and 1,360 year-over-year. Total client cash balances were $47 billion, a decrease of $3 billion sequentially and $19 billion year-over-year. Client cash balances as a percentage of total assets were 3.8%, down from 4.0% in the prior quarter and down from 6.4% a year ago.
Capital and Liquidity Results
The company's corporate cash was $309 million. The leverage ratio was 1.26x. Share repurchases were $250 million and dividends paid were $23 million.
Key Updates
LPLA announced a strategic relationship agreement with Prudential Financial to transition support of the retail brokerage and investment advisory assets of Prudential Advisors to LPL's Institution Services platform, expected to onboard in the latter part of 2024. The company also onboarded the retail brokerage and advisory business of Commerce Bank and BancWest Investment Services in Q3.
Outlook
LPLA raised the low end of its 2023 Core G&A outlook range by $5 million, resulting in an updated range of $1,350 million to $1,370 million. The company also recorded a $40.0 million regulatory charge in anticipation of a settlement with the U.S. Securities and Exchange Commission related to the industry-wide civil investigation into compliance with records preservation requirements for business-related electronic communications stored on personal devices applicable to broker-dealer firms and investment advisors.
Explore the complete 8-K earnings release (here) from LPL Financial Holdings Inc for further details.
