LPL Financial Holdings Inc.

Previous wording

The following discussion presents an analysis of our results of operations for the three and six months ended June 30, 2025 and 2024 (in thousands):

Current wording

The following discussion presents an analysis of our results of operations for the three and nine months ended September 30, 2025 and 2024 (in thousands):

Previous wording

Advisory revenue represents fees charged to advisors’ clients’ advisory accounts on our corporate registered investment advisor (“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 contributions and withdrawals during the period to determine the amount of revenue earned in the period. Advisory revenue collected on our corporate RIA advisory platform is proposed by the advisor and agreed to by the client and was approximately 1.0% of the underlying assets for the six months ended June 30, 2025.

Current wording

Advisory revenue represents fees charged to advisors’ clients’ advisory accounts on our corporate registered investment advisor (“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 contributions and withdrawals during the period to determine the amount of revenue earned in the period. Advisory revenue collected on our corporate RIA advisory platform is proposed by the advisor and agreed to by the client and was approximately 1.0% of the underlying assets for the nine months ended September 30, 2025.

Previous wording

Advisory revenue increased during the three and six months ended June 30, 2025 as compared to the same periods in 2024 due primarily to an increase in advisory asset balances and related market impacts.

Current wording

Advisory revenue increased during the three and nine months ended September 30, 2025 as compared to the same periods in 2024 due primarily to an increase in advisory asset balances and related market impacts.

Previous wording

The increase in sales-based commission revenue for the three and six months ended June 30, 2025 compared to 2024 was primarily driven by an increase in sales of annuities. The increase in trailing commission revenue for the three and six months ended June 30, 2025 compared to 2024 was primarily due to continued growth in trail earning assets held by customers.

Current wording

The increase in sales-based commission revenue for the three and nine months ended September 30, 2025 compared to 2024 was primarily driven by an increase in sales of annuities. The increase in trailing commission revenue for the three and nine months ended September 30, 2025 compared to 2024 was primarily due to continued growth in trail earning assets held by customers.

Previous wording

Asset-based revenue for the three and six months ended June 30, 2025 increased by $101.3 million and $195.9 million, respectively, compared to the same periods in 2024, due to increases in client cash and other asset-based revenue. Other asset-based revenue for the three and six months ended June 30, 2025 increased compared to 2024 primarily due to increases in recordkeeping and sponsorship program revenue. Client cash revenue for the three and six months ended June 30, 2025 increased compared to 2024 due to higher average client cash balances during the three and six months ended June 30, 2025 as compared to 2024. For the three months ended June 30,

Current wording

Asset-based revenue for the three and nine months ended September 30, 2025 increased by $156.1 million and $351.9 million, respectively, compared to the same periods in 2024, due to increases in client cash and other asset-based revenue. Other asset-based revenue for the three and nine months ended September 30, 2025 increased compared to 2024 primarily due to increases in recordkeeping and sponsorship program revenue. Client cash revenue for the three and nine months ended September 30, 2025 increased compared to 2024 due to higher average client cash balances during the three and nine months ended September 30, 2025 as compared to 2024. For the three months ended September 30, 2025, our average client cash balances increased to $50.3 billion compared to $42.6 billion in 2024. For the nine months ended September 30, 2025, our average client cash balances increased to $49.9 billion compared to $43.3 billion in 2024.

Previous wording

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 and six months ended June 30, 2025 increased compared to 2024, primarily due to increases in custodian fees, trading, licensing, and registration fees.

Current wording

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 and nine months ended September 30, 2025 increased compared to 2024, primarily due to increases in custodian fees, trading, licensing, conference services and registration fees.

Previous wording

Interest income is primarily generated from bank deposits, client margin loans, client cash account balances segregated under federal or other regulations and advisor repayable loans. Interest income, net for the three and six months ended June 30, 2025 increased compared to 2024 primarily due to interest earned on higher corporate cash balances resulting from debt and equity issuances completed during the year in anticipation of the Commonwealth transaction.

Current wording

Interest income is primarily generated from bank deposits, client margin loans, client cash account balances segregated under federal or other regulations and advisor repayable loans. Interest income, net for the three and nine months ended September 30, 2025 increased compared to 2024 primarily due to interest earned on overnight investment accounts driven by an increase in average daily balances.

Previous wording

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 and six months ended June 30, 2025 increased compared to 2024, primarily due to increases in the number of transactions and transaction charges for managed assets.

Current wording

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 and nine months ended September 30, 2025 increased compared to 2024, primarily due to increases in the number of transactions and transaction charges for managed assets.

Previous wording

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 increased for the three and six months ended June 30, 2025 as compared to 2024 primarily due to an increase in unrealized gains in our deferred compensation plan assets.

Current wording

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 increased for the three and nine months ended September 30, 2025 as compared to 2024 primarily due to an increase in unrealized gains in our deferred compensation plan assets.

Previous wording

Our payout rate for the three and six months ended June 30, 2025 increased compared to 2024, primarily due to

Current wording

Our payout rate for the three and nine months ended September 30, 2025 increased compared to 2024, primarily due to higher payouts resulting from our strategic relationship with Prudential Financial, Inc.

Previous wording

Compensation and benefits expense for the three and six months ended June 30, 2025 increased by $45.1 million and $76.3 million, respectively, compared to 2024, primarily due to an increase in headcount.

Current wording

Compensation and benefits expense for the three and nine months ended September 30, 2025 increased by $319.0 million and $395.3 million, respectively, compared to 2024, primarily due to acquisition related expenses incurred in conjunction with the Commonwealth transaction as well as an increase in headcount. See Note 4 - Acquisitions, within the notes to the condensed consolidated financial statements for additional information.

Previous wording

Occupancy and equipment expense includes the costs of leasing and maintaining our office spaces, software licensing and maintenance costs, and maintenance expense on computer hardware and other equipment. Occupancy and equipment expense for the three and six months ended June 30, 2025 increased by $11.9 million and $22.9 million, respectively, compared to 2024, primarily due to increased expense related to software licenses and our technology portfolio.

Current wording

Occupancy and equipment expense includes the costs of leasing and maintaining our office spaces, software licensing and maintenance costs, and maintenance expense on computer hardware and other equipment. Occupancy and equipment expense for the three and nine months ended September 30, 2025 increased by $229.8 million and $252.7 million, respectively, compared to 2024, primarily due to acquisition related expenses incurred in conjunction with the Commonwealth transaction. See Note 4 - Acquisitions, within the notes to the condensed consolidated financial statements for additional information.

Previous wording

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 and six months ended June 30, 2025 increased by $41.4 million and $60.5 million, respectively, compared to 2024, primarily due to increases in recruited assets and advisors that led to higher costs to support transition assistance and retention, partially offset by decreases in large institutional onboarding costs.

Current wording

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 and nine months ended September 30, 2025 increased by $44.0 million and $104.5 million, respectively, compared to 2024, primarily due to increases in recruited assets and advisors that led to higher costs to support transition assistance and retention, partially offset by decreases in large institutional onboarding costs.

Previous wording

Interest expense on borrowings includes the interest associated with the Company’s senior notes, Term Loan A (“Term Loan A”) 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 and six months ended June 30, 2025 increased by $41.3 million and $67.1 million, respectively, compared to 2024, primarily as a result of the issuance of $1.0 billion senior unsecured notes in May 2024, $1.25 billion senior unsecured notes in February 2025 and $1.5 billion senior unsecured notes in April 2025. See Note 9 -Corporate Debt and Other Borrowings, Net, within the notes to the condensed consolidated financial statements for additional information.

Current wording

Interest expense on borrowings includes the interest associated with the Company’s senior notes, Term Loan A (“Term Loan A”) 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 and nine months ended September 30, 2025 increased by $38.5 million and $105.6 million, respectively, compared to 2024, primarily as a result of the issuance of $1.0 billion senior unsecured notes in May 2024, $1.25 billion senior unsecured notes in February 2025 and $1.5 billion senior unsecured notes in April 2025. See Note 9 -Corporate Debt and Other Borrowings, Net, within the notes to the condensed consolidated financial statements for additional information.

Previous wording

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 and six months ended June 30, 2025 increased by $25.2 million and $50.4 million, respectively, compared to 2024, primarily due to our continued investment in technology to support integrations, enhance our advisor platform and experience, and support onboarding of institutions.

Current wording

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 and nine months ended September 30, 2025 increased by $21.4 million and $71.8 million, respectively, compared to 2024, primarily due to our continued investment in technology to support integrations, enhance our advisor platform and experience, and support onboarding of institutions.

Previous wording

Professional services expense includes costs paid to outside firms for assistance with legal, accounting, technology, regulatory, marketing, and general corporate matters, as well as non-capitalized costs related to service and technology enhancements. Professional services expense for the three and six months ended June 30, 2025 increased by $19.0 million and $42.0 million, respectively, compared to 2024, primarily due to technology enhancement projects and acquisition-related support.

Current wording

Professional services expense includes costs paid to outside firms for assistance with legal, accounting, technology, regulatory, marketing, and general corporate matters, as well as non-capitalized costs related to service and technology enhancements. Professional services expense for the three and nine months ended September 30, 2025 increased by $49.2 million and $91.3 million, respectively, compared to 2024, primarily due to technology enhancement projects and acquisition-related support.

Previous wording

Amortization of other intangibles represents the benefits received for the use of long-lived intangible assets established through our acquisitions. Amortization of other intangibles for the three and six months ended June 30, 2025 increased by $15.5 million and $29.5 million, respectively, compared to 2024, primarily due to additional intangible assets acquired during the period.

Current wording

Amortization of other intangibles represents the benefits received for the use of long-lived intangible assets established through our acquisitions. Amortization of other intangibles for the three and nine months ended September 30, 2025 increased by $32.2 million and $61.7 million, respectively, compared to 2024, primarily due to additional intangible assets acquired during the period.

Previous wording

Brokerage, clearing and exchange expense includes expenses originating from trading or clearing operations as well as any exchange membership fees. These fees fluctuate largely in line with the volume of sales and trading activity. Brokerage, clearing and exchange expense for the three and six months ended June 30, 2025 increased by $10.3 million and $23.9 million, respectively, compared to 2024, primarily due to an increase in the volume of trades and expenses for quote services.

Current wording

Brokerage, clearing and exchange expense includes expenses originating from trading or clearing operations as well as any exchange membership fees. These fees fluctuate largely in line with the volume of sales and trading activity. Brokerage, clearing and exchange expense for the three and nine months ended September 30, 2025 increased by $13.6 million and $37.6 million, respectively, compared to 2024, primarily due to an increase in the volume of trades and expenses for quote services.

Previous wording

Our effective income tax rate was 25.9% and 26.1% for the three months ended June 30, 2025 and 2024, respectively, and 24.7% and 24.4% for the six months ended June 30, 2025 and 2024, 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 slight increase in our effective tax rate for the six months ended June 30, 2025 was primarily driven by lower share-based compensation tax benefits through the second quarter of 2025 as compared to the prior year.

Current wording

Our effective income tax rate was 13.5% and 26.5% for the three months ended September 30, 2025 and 2024, respectively, and 25.2% and 25.1% for the nine months ended September 30, 2025 and 2024, 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 September 30, 2025 was primarily driven by state tax reserves which reduced the tax benefit on the pre-tax book loss in the third quarter of 2025.

Previous wording

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 $2.25 billionuns ecured revolving credit facility, which it has the ability to borrow against for working capital and general corporate purposes.

Current wording

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 $2.25 billion unsecured revolving credit facility, which it has the ability to borrow against for working capital and general corporate purposes.

Previous wording

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, Credit Agreement requirements and internal capital thresholds. During the six months ended June 30, 2025 and 2024, LPL Financial paid dividends of $150.0 million and $260.0 million to the Parent, respectively.

Current wording

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, Credit Agreement requirements and internal capital thresholds. During the nine months ended September 30, 2025 and 2024, LPL Financial paid dividends of $800.0 million and $410.0 millionto the Parent, respectively.

Previous wording

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, LPL Enterprise, The Private Trust Company, N.A. (“PTC”), and Atria’s introducing broker- dealer subsidiaries in excess of the capital requirements of the Credit Agreement and (3) cash and equivalents held at non-regulated subsidiaries.

Current wording

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, LPL Enterprise, The Private Trust Company, N.A. (“PTC”), CES, and Atria’s introducing broker-dealer subsidiaries in excess of the capital requirements of the Credit Agreement and (3) cash and equivalents held at non-regulated subsidiaries.

Previous wording

Corporate Cash is monitored as part of our liquidity risk management strategy, and we target maintaining approximately $200 million of Corporate Cash to meet our near-term corporate debt obligations. Corporate Cash increased by $3.1 billion during the six months ended June 30, 2025 primarily as a result of proceeds received from our $1.25 billion debt issuance in February 2025 and our $1.5 billion debt issuance and $1.7 billion equity offering in April 2025. See Note 9 - Corporate Debt and Other Borrowings, Net, and Note 11 -Stockholders’ Equity within the notes to the condensed consolidated financial statements for additional information.

Current wording

Corporate Cash is monitored as part of our liquidity risk management strategy, and we target maintaining approximately $200 million of Corporate Cash to meet our near-term corporate debt obligations. Corporate Cash increased by $89.0 million during the nine months ended September 30, 2025 primarily as a result of proceeds received from our $1.25 billion debt issuance in February 2025 and our $1.5 billion debt issuance and $1.7 billion equity offering in April 2025 offset by payments related to the acquisition of Commonwealth. See Note 4 -Acquisitions, Note 9 - Corporate Debt and Other Borrowings, Net, and Note 11 -Stockholders’ Equity within the notes to the condensed consolidated financial statements for additional information.

Previous wording

We engage in a share repurchase program that was approved by our 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. The Company repurchased 289,371 shares for a total of $100.0 million during the six months ended June 30, 2025, and as of June 30, 2025, had $630.0 million remaining under our existing repurchase program. We paused share repurchases in anticipation of the Commonwealth acquisition. Given the closing of the transaction, we expect to 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.

Current wording

We engage in a share repurchase program that was approved by our 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. The Company repurchased 289,371 shares for a total of $100.0 million during the nine months ended September 30, 2025, and as of September 30, 2025, had $630.0 million remaining under our existing repurchase program. We paused share repurchases in anticipation of the Commonwealth acquisition. Given the closing of the transaction, we expect to 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.

Previous wording

Our other regulated subsidiaries, including LPL Enterprise, Atria’s seven introducing broker-dealer subsidiaries, and PTC, are 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 their operations. As of June 30, 2025, the Company’s other regulated subsidiaries met all capital adequacy requirements to which they were subject.

Current wording

Our other regulated subsidiaries, including LPL Enterprise, Atria’s seven introducing broker-dealer subsidiaries, Commonwealth’s introducing broker-dealer subsidiary, and PTC, are 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 their operations. As of September 30, 2025, the Company’s other regulated subsidiaries met all capital adequacy requirements to which they were subject.

Previous wording

During the six months ended June 30, 2025, there were no material changes in our contractual obligations, other than in the ordinary course of business, from those disclosed in our 2024 Annual Report on Form 10-K. See Note 4 -Acquisitions, Note 9 -Corporate Debt and Other Borrowings, Netand 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 2024 Annual Report on Form 10-K, for further detail.

Current wording

During the nine months ended September 30, 2025, there were no material changes in our contractual obligations, other than in the ordinary course of business, from those disclosed in our 2024 Annual Report on Form 10-K. See Note 4 -Acquisitions, Note 9 -Corporate Debt and Other Borrowings, Netand 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 2024 Annual Report on Form 10-K, for further detail.