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LPL Grows Net Income 88 Percent, Beats Earnings Estimates

LPL Financial announced net income of $50 million, or 56 cents a share, for the first quarter, beating analysts’ expectations by 12 cents, according to Seeking Alpha. That’s a slight decline from $51 million, or 52 cents a share, a year ago, and an 88 percent jump from $26.8 million, or 28 cents a share, last quarter.

The improvement, executives say, was due to increases in the firm’s cash sweep balances and transactions as well as lower expenses. Total expenses were down 4 percent sequentially to $219 million. That includes a decline in regulatory expenses of $7 million from last quarter.

Total net revenues of $1 billion, down 9 percent from $1.1 billion a year ago, missed analysts’ expectations by $30 million, according to Seeking Alpha.

“This quarter demonstrated the resilience of our business model,” said Matt Audette, Chief Financial Officer, in a statement. “Our gross profit grew as volatility drove increases in cash sweep balances and transactions, offsetting declines in areas more tied to equity market levels.”

In February, LPL CEO Mark Casady said that the volatile market environment at the end of 2015 as well as an industry-wide slowdown in sales of alternative investments attributed to the poor earnings results last quarter.

Here are some of the highlights:

  • The firm added 39 net new advisors during the first quarter, bringing total headcount to 14,093. That compares to 14,098 in the first quarter 2015.
  • Annual revenue per advisor was $215,000, down 13 percent from a year ago and 4 percent sequentially.
  • LPL brought in $2 billion in net new advisory assets, representing a 4 percent annualized growth rate.
  • Brokerage and advisory assets grew 7 percent from last quarter to $479 billion.
  • In early April, the independent broker/dealer announced a partnership with FutureAdvisor and BlackRock to provide a robo platform. The robo will be accessible through a web portal and integrated into the firm’s custodial platform.
  • The firm’s shares rallied on the release of the Department of Labor’s final fiduciary rule on April 6. “We need to carefully review the rule as we finalize our plans, but we are now working to implement the rule for our advisors, their clients and our company,” Casady said in a statement. “We are looking forward to introducing new services designed to support advisors through the DOL transition and as they continue to grow their practices.”
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