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LPL Financial's (LPLA) Q2 Earnings Beat on Higher Revenues
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LPL Financial’s (LPLA - Free Report) second-quarter 2024 adjusted earnings of $3.88 per share handily outpaced the Zacks Consensus Estimate of $3.66. The bottom line, however, reflects a year-over-year decline of 2%.
Results benefited from robust improvement in revenues, partly offset by an increase in expenses. LPLA recorded growth in brokerage and advisory assets, which acted as a tailwind.
After considering certain non-recurring items, net income was $243.8 million or $3.23 per share, down from $285.5 million or $3.65 per share in the prior-year quarter. Our estimate for net income was $248.1 million.
Revenues Improve, Expenses Rise
Total net revenues of $2.93 billion grew 19% year over year. The top line beat the Zacks Consensus Estimate of $2.83 billion.
Total expenses jumped 25% year over year to $2.60 billion. The rise was due to an increase in almost all cost components, except for communications and data processing costs. Our estimate for total expenses was $2.43 billion.
As of Jun 30, 2024, LPL Financial’s total brokerage and advisory assets were $1,497.8 billion, up 21% year over year.
In the reported quarter, total net new assets were $34 billion, up from $21.7 billion in the prior-year quarter.
Total client cash balances declined 11% year over year to $44 billion.
Balance Sheet Position Solid
As of Jun 30, 2024, total assets were $11.5 billion, up 4% on a sequential basis. As of the same date, cash and cash equivalents totaled $1.3 billion, up from $1.1 billion in the prior-quarter end.
Total stockholders’ equity was $2.5 billion as of Jun 30, 2024, up 11% sequentially.
Share Repurchase Update
In the reported quarter, the company did not repurchase any shares.
Our View
LPL Financial’s recruiting efforts and solid advisor productivity will likely continue aiding advisory revenues. Strategic acquisitions will keep supporting financials.
However, mounting expenses and a tough operating backdrop are major near-term concerns for the company.
LPL Financial Holdings Inc. Price, Consensus and EPS Surprise
Charles Schwab’s (SCHW - Free Report) second-quarter 2024 adjusted earnings of 73 cents per share met the Zacks Consensus Estimate. The bottom line, however, declined 3% from the prior-year quarter.
SCHW’s results benefited from the solid performance of the asset management business, which drove revenues. The absence of fee waivers and solid brokerage account numbers acted as tailwinds. However, higher funding costs posed a major headwind. Schwab also recorded a rise in adjusted expenses.
Interactive Brokers Group’s (IBKR - Free Report) second-quarter 2024 adjusted earnings per share of $1.76 beat the Zacks Consensus Estimate of $1.69. Also, the bottom line reflects a rise of 33.3% from the prior-year quarter.
Notably, in the reported quarter, IBKR recognized a loss of $48 million on positions taken over as customer accommodation due to a technical issue at the NYSE on Jun 3, 2024.
IBKR’s Results were primarily aided by an increase in revenues. The company recorded growth in customer accounts during the quarter, which, along with a rise in daily average revenue trades, was another tailwind. However, marginally higher expenses hurt the results to some extent.
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LPL Financial's (LPLA) Q2 Earnings Beat on Higher Revenues
LPL Financial’s (LPLA - Free Report) second-quarter 2024 adjusted earnings of $3.88 per share handily outpaced the Zacks Consensus Estimate of $3.66. The bottom line, however, reflects a year-over-year decline of 2%.
Results benefited from robust improvement in revenues, partly offset by an increase in expenses. LPLA recorded growth in brokerage and advisory assets, which acted as a tailwind.
After considering certain non-recurring items, net income was $243.8 million or $3.23 per share, down from $285.5 million or $3.65 per share in the prior-year quarter. Our estimate for net income was $248.1 million.
Revenues Improve, Expenses Rise
Total net revenues of $2.93 billion grew 19% year over year. The top line beat the Zacks Consensus Estimate of $2.83 billion.
Total expenses jumped 25% year over year to $2.60 billion. The rise was due to an increase in almost all cost components, except for communications and data processing costs. Our estimate for total expenses was $2.43 billion.
As of Jun 30, 2024, LPL Financial’s total brokerage and advisory assets were $1,497.8 billion, up 21% year over year.
In the reported quarter, total net new assets were $34 billion, up from $21.7 billion in the prior-year quarter.
Total client cash balances declined 11% year over year to $44 billion.
Balance Sheet Position Solid
As of Jun 30, 2024, total assets were $11.5 billion, up 4% on a sequential basis. As of the same date, cash and cash equivalents totaled $1.3 billion, up from $1.1 billion in the prior-quarter end.
Total stockholders’ equity was $2.5 billion as of Jun 30, 2024, up 11% sequentially.
Share Repurchase Update
In the reported quarter, the company did not repurchase any shares.
Our View
LPL Financial’s recruiting efforts and solid advisor productivity will likely continue aiding advisory revenues. Strategic acquisitions will keep supporting financials.
However, mounting expenses and a tough operating backdrop are major near-term concerns for the company.
LPL Financial Holdings Inc. Price, Consensus and EPS Surprise
LPL Financial Holdings Inc. price-consensus-eps-surprise-chart | LPL Financial Holdings Inc. Quote
Currently, LPL Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performances of Other Brokerage Firms
Charles Schwab’s (SCHW - Free Report) second-quarter 2024 adjusted earnings of 73 cents per share met the Zacks Consensus Estimate. The bottom line, however, declined 3% from the prior-year quarter.
SCHW’s results benefited from the solid performance of the asset management business, which drove revenues. The absence of fee waivers and solid brokerage account numbers acted as tailwinds. However, higher funding costs posed a major headwind. Schwab also recorded a rise in adjusted expenses.
Interactive Brokers Group’s (IBKR - Free Report) second-quarter 2024 adjusted earnings per share of $1.76 beat the Zacks Consensus Estimate of $1.69. Also, the bottom line reflects a rise of 33.3% from the prior-year quarter.
Notably, in the reported quarter, IBKR recognized a loss of $48 million on positions taken over as customer accommodation due to a technical issue at the NYSE on Jun 3, 2024.
IBKR’s Results were primarily aided by an increase in revenues. The company recorded growth in customer accounts during the quarter, which, along with a rise in daily average revenue trades, was another tailwind. However, marginally higher expenses hurt the results to some extent.