LPL Financial Holdings Inc Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Alexander Blostein - Goldman Sachs Group Inc - Analyst : I was hoping we could start with a question around Commonwealth. Obviously, it's a big focus for investors. Congrats on the deal, I guess, closing here tomorrow. But maybe to just start with how the conversations with the team are evolving. You guys are clearly sticking with a 90% retention expectation. So a little bit of color on what gives you confidence in being able to achieve that. And then financially, Matt, I was hoping you maybe could hit on reasons behind keeping EBITDA run rate at $120 million to start off despite the fact that the asset levels are a decent amount higher from the time you announced the deal?

Question: Craig Siegenthaler - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Thank you. Good afternoon, everyone. I had a question on net new assets in the independent RIA channel. What drove the modest outflows this quarter? And can you provide us an update on the long-term growth trajectory in this channel? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 9:00PM, LPLA.OQ - Q2 2025 LPL Financial Holdings Inc Earnings Call

Question: Craig Siegenthaler - Bofa Merrill Lynch Asset Holdings Inc - Analyst : The independent RIA channel, I think, had modest negative net new assets this past quarter. I had a question on what drove that? And then maybe you could just refresh us on the long-term growth trajectory in this channel.

Question: Devin Ryan - Citizens JMP Securities LLC - Analyst : Another one here on Commonwealth. So first off, great to confirm the retention target there, and congrats on closing that here tomorrow. Several industry newswires in recent weeks have talked about how some of these Commonwealth advisors are setting up their own RIAs or looking into doing the same thing? And maybe that's actually connected to the last answer you made. But Rich, would love to get some thoughts on what this means for LPL in the context of the deal? Do you lose those advisors? Are they in that 10%? Or is there an opportunity to continue to work with them. And so just trying to think about kind of the implications of this more broadly. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 9:00PM, LPLA.OQ - Q2 2025 LPL Financial Holdings Inc Earnings Call

Question: Benjamin Budish - Barclays Services Corp - Analyst : Hi, good evening and thank you for taking my question. I was wondering if you could kind of comment at a high level about your overall gross profit ROA. It's been declining for a few years now, and I'm sure some of that is mix. Some of that is as you onboard larger enterprises kind of move upmarket with larger financial institutions. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 9:00PM, LPLA.OQ - Q2 2025 LPL Financial Holdings Inc Earnings Call Just curious, how do you think about how the next couple of years should look, especially ex cash. How much of this is sort of due to that kind of rapid growth, M&A? How much of this trend can be booked? How should we think about that sort of medium-term outlook for that KPI?

Question: Michael Cyprys - Morgan Stanley - Analyst : Hey, good afternoon. Thanks for the question. I just wanted to ask about capital allocation with the deal closing tomorrow. Just how are you thinking about that in the quarters ahead? And then related to that, on Liquidity & Succession, I was hoping you could update us on the progress there. How that's contributing to results? And how you anticipate the pace of deals and capital allocation to that going forward from here?

Question: Kyle Voigt - Keefe Bruyette & Woods Inc - Analyst : Hi, good evening, everyone. Thanks for my question. So it's been a volatile quarter for sweep cash. Obviously, there was a focus on the level of decline in the May cash number. So it's good to see the rebound in June. Just wondering if you could hit on some of the bigger factors that drove the volatility in cash in the quarter, particularly over the past two months. And it would be great to hear if there's been any change in yield-seeking behavior or whether it's been driven by different factors. And then, Matt, maybe you could also update us on July sweep cash as well.

Question: Bill Katz - Cowen and Company LLC - Analyst : Just maybe a couple of embedded questions. Inside of the AUM for Commonwealth, just wondering if you could update us on the split between cash and the rest of the business. And then secondly, the broader question, just on the Liquidity & Succession, what we continue to hear is that private equity firms continue to be quite aggressive in terms of scaling wealth management platforms. I'm wondering, is that having any impact on the deal multiple in terms as you deploy that capital, whether it be internally or externally? Thank you.