LPL Financial Holdings Inc.

Previous 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):

Current wording

The following discussion presents an analysis of our results of operations for the three months ended March 31, 2026 and 2025 (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 nine months ended September 30, 2025.

Current wording

Advisory revenue represents fees charged to advisors’ clients’ advisory accounts on our corporate registered investment adviser (“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% of the underlying assets for the three months ended March 31, 2026.

Previous wording

We also support independent RIA firms that conduct their business through our separate registered investment advisor firms (“Independent RIAs”) advisory platform, which allows advisors to engage us for technology, clearing and custody services, as well as access the capabilities of our investment platforms. The assets held under an Independent RIA’s investment advisory accounts custodied with LPL Financial are included in total advisory assets and net new advisory assets. However, the advisory revenue generated by an Independent RIA is not included in our advisory revenue. We charge separate fees to Independent RIAs for technology, clearing, administrative, oversight and custody services, which may vary and are included in our service and fee revenue in our condensed consolidated statements of income.

Current wording

We also support independent RIA firms that conduct their business through our separate registered investment adviser firms (“Independent RIAs”) advisory platform, which allows advisors to engage us for technology, clearing and custody services, as well as access the capabilities of our investment platforms. The assets held under an Independent RIA’s investment advisory accounts custodied with LPL Financial are included in total advisory assets and net new advisory assets. However, the advisory revenue generated by an Independent RIA is not included in our advisory revenue. We charge separate fees to Independent RIAs for technology, clearing, administrative, oversight and custody services, which may vary and are included in our service and fee revenue in our condensed consolidated statements of income.

Previous 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.

Current wording

Advisory revenue increased during the three months ended March 31, 2026 as compared to the same period in 2025 due primarily to an increase in advisory asset balances and related revenue from the acquisition of Commonwealth.

Previous 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.

Current wording

The increase in sales-based commission revenue for the three months ended March 31, 2026 compared to 2025 was primarily driven by an increase in sales of annuities. The increase in trailing commission revenue for the three months ended March 31, 2026 compared to 2025 was primarily due to continued growth in trail earning assets held by customers.

Previous 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.

Current wording

Asset-based revenue for the three months ended March 31, 2026 increased by $125.6 million compared to the same period in 2025 due to increases in client cash and other asset-based revenue. Other asset-based revenue for the three months ended March 31, 2026 increased compared to 2025 primarily due to increases in recordkeeping and sponsorship program revenue. Client cash revenue for the three months ended March 31, 2026 increased compared to 2025 due to higher average client cash balances. For the three months ended March 31, 2026, our average client cash balances increased to $55.5 billion compared to $50.4 billion for the same period in 2025.

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 nine months ended September 30, 2025 increased compared to 2024, primarily due to increases in custodian fees, trading, licensing, conference services 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 months ended March 31, 2026 increased compared to 2025, primarily due to increases in brokerage account fees.

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 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.

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 months ended March 31, 2026 increased compared to 2025, primarily due to increases in the number of transactions and transaction charges for managed assets.

Previous 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.

Current wording

Our payout rate for the three months ended March 31, 2026 increased compared to 2025, primarily due to changes in the mix of brokerage products and advisory platforms.

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 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.

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 months ended March 31, 2026 increased by $62.8 million compared to 2025, primarily due to increases in recruited assets and advisors that led to higher costs to support transition assistance and retention as well as training and education.

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 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.

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 months ended March 31, 2026 increased by $41.3 million compared to 2025, primarily due to increased expense related to software licenses and our technology portfolio.

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 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.

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 months ended March 31, 2026 increased by $13.4 million compared to 2025, primarily due to our continued investment in technology to support integrations, enhance our advisor platform and experience, and support onboarding of institutions.

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 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.

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 months ended March 31, 2026 increased by $14.4 million compared to 2025, primarily as a result of the issuance of $1.25 billion and $1.5 billion of senior unsecured notes in February 2025 and April 2025, respectively. See Note 9 -Corporate Debt and Other Borrowings, Net, within the notes to the condensed consolidated financial statements for additional information.

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 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.

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 months ended March 31, 2026 increased by $23.7 million compared to 2025, 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 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.

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 months ended March 31, 2026 increased by $11.3 million compared to 2025, primarily due to an increase in clearing charges.

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 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.

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 months ended March 31, 2026 increased by $14.1 million compared to 2025, primarily due to technology enhancement projects and acquisition-related support.

Previous 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.

Current wording

Our effective income tax rate was 26.5% and 23.6% for the three months ended March 31, 2026 and 2025, 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 increase in our effective tax rate for the three months ended March 31, 2026 was primarily driven by lower share-based compensation tax benefits as compared to the prior year.

Previous wording

Our liquidity needs are primarily driven by capital requirements at LPL Financial, interest due on our corporate debt and other capital returns to stockholders. Our liquidity needs at LPL Financial are driven primarily by the level and volatility of our client activity. Management maintains a set of liquidity sources and monitors certain business trends and market metrics closely in an effort to ensure we have sufficient liquidity. We believe that based on current levels of cash flows from operations and anticipated growth, together with available cash balances and external liquidity sources, we have adequate liquidity to satisfy our short-term and long-term working capital needs, the payment of all of our obligations and the funding of anticipated acquisitions and other capital expenditures.

Current wording

Our liquidity needs are primarily driven by capital requirements at LPL Financial, interest due on our corporate debt and other capital returns to stockholders. Our liquidity needs at LPL Financial are driven primarily by the level and volatility of our client activity. Management maintains a set of liquidity sources and monitors certain business trends and market metrics closely in an effort to ensure we have sufficient liquidity. We believe that based on current levels of cash flows from operations and anticipated growth, together with available cash balances and external liquidity sources, including continued access to the equity and investment-grade debt markets, we have adequate liquidity to satisfy our short-term and long-term working capital needs, meet all of our obligations, and fund anticipated capital expenditures. The Company maintains ongoing access to the debt markets supported by our investment-grade credit profile, and we also have meaningful liquidity available at the parent level, which can be utilized to support funding needs across the organization as required.

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 nine months ended September 30, 2025 and 2024, LPL Financial paid dividends of $800.0 million and $410.0 millionto 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 three months ended March 31, 2026 and 2025, LPL Financial paid dividends of $210.0 million and $150.0 million to 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”), 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.

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”), and CES, 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 $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.

Current wording

Corporate Cash is monitored as part of our liquidity risk management strategy. Corporate Cash increased by $97.6 million during the three months ended March 31, 2026 as we continue our normal course of operations and reinvestments into the business.

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 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.

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. As of March 31, 2026, the Company had $630.0 million remaining under our existing repurchase program. We had previously paused share repurchases in anticipation of the Commonwealth acquisition; however, have resumed share repurchases in April 2026. We estimate that we will complete share repurchases of approximately $125 million during the second quarter of 2026 and have repurchased 214,652 of our outstanding shares for a total of $67.7 million between April 1, 2026 and May 1, 2026. 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, 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.

Current wording

Our other regulated subsidiaries, including LPL Enterprise, 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 these subsidiaries’ operations. As of March 31, 2026, the Company’s other regulated subsidiaries met all capital adequacy requirements to which they were subject.

Previous wording

•engage in certain transactions with affiliates;

Current wording

•engage in certain transactions with affiliates; and

Previous wording

Our Credit Agreement allows us to pay dividends and distributions or repurchase our common stock only when certain conditions are met. In addition, our revolving credit facility requires us to be in compliance with certain financial covenants as of the last day of each fiscal quarter. The financial covenants require the calculation of Credit Agreement EBITDA, as defined in, and calculated by management in accordance with, the Credit Agreement. The Credit Agreement defines Credit Agreement EBITDA 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.

Current wording

In addition, our revolving credit facility requires us to be in compliance with certain financial covenants as of the last day of each fiscal quarter. The financial covenants require the calculation of Credit Agreement EBITDA, as defined in, and calculated by management in accordance with, the Credit Agreement. The Credit Agreement defines Credit Agreement EBITDA 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.

Previous 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.

Current wording

During the three months ended March 31, 2026, there were no material changes in our contractual obligations, other than in the ordinary course of business, from those disclosed in our 2025 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 2025 Annual Report on Form 10-K, for further detail.