For the first time in the fast-growing companys history, LPL has posted nearly $1 billion dollars in net quarterly revenue.
Net revenue for LPL Financial Holdings, the parent company of LPL Financial, increased 8.1% to a record $974.8 million for the quarter ending March 31, up from $901.8 million a year earlier.
Earnings increased almost 33% to $54.7 million from $41.2 million in the previous quarter. LPL announced last month an outsourcing initiative that will cost it between $70 million and $75 million over three years -- but, says CFO Dan Arnold, will result in annualized operational savings of $30 million to $35 million beginning in 2015.
The company reported earnings per share of 64 cents -- above analyst forecasts of 55 cents, according to Reuters. Shares were up 2.4% in midday trading Thursday.
The company's footprint also expanded. Assets under custody on LPL Financials platform for independent RIAs rose 72.3% year over year to $46.7 billion at the end of the first quarter, up from $27.1 billion a year earlier. The platform served 199 RIA firms as of as of March 31, up from 152.
The quarterly earnings report was a great example of LPLs ability to deliver ... top-line numbers and pull through strong earnings growth and margin expansion," Arnold said.
Mark Casady, LPL's chief executive officer, attributed the gains in part to advisor productivity. "Strong advisor productivity, rising markets and the accelerating production of advisors added in the last 12 months supported our revenue growth of 8%," he said in a statement.
ADVISOR RETENTION, CUSTOMER SATISFACTION
Responding to criticism that LPL may be spreading itself too thin with its rapid growth, Arnold pointed to good strong results on the firms "net promoter score," which tests for consumer service experience; he also cited the firm's high advisor retention rate, which he said was in the 96% to 97% range.
He also said LPLs ability to generate good strong free cash flow allowed it to be flexible in allocating capital to business needs such as technology and acquisitions, as well as to shareholders.
The total number of advisors for the company, the nations leading independent broker-dealer, rose 3.2% to 13,337 at the end of March. Advisory and brokerage assets under custody increased 11% to $394 billion.
In announcing its growth numbers, LPL also highlighted its expanded retirement capabilities. The company launched Worksite Financial Solutions, a retirement plan platform, and introduced the Retirement Partners Group, a network of advisors focused on advising retirement plans for client companies.
LPL also said it enhanced its consulting services for bank and credit union advisors through a partnership with EPIC Platforms, which outsources services licensed branch employee programs.
Veteran industry analyst Chip Roame called LPLs business strategy very impressive.
The firm has expanded its distribution channels to include banks, retirement oriented advisors, clearing relationships and custody relationships, said Roame, managing partner of Tiburon Strategic Advisors. Most other IBDs have stuck narrowly to their knitting as IBDs.
Roame also praised LPL for thinking ahead. He pointed to NestWise, a next-generation midmarket financial planning business headed by company veteran Esther Stearns. That is a sign of success, Roame said, investing in the next big thing.
Dan Inveen, director of research at FAInsight, an industry consulting firm, noted that since 2005 LPL has roughly doubled their advisor base while nearly tripling revenues. Their size now rivals the major wirehouses," he noted in an email. "Not only have they had dramatic growth in absolute terms but they have made significant gains in garnering greater revenue per rep. Their acquisitions of Fortigent and Veritat signal a desire to further growth through broad market appeal.
As a market consultant and researcher, Inveen said he would typically advise a broker-dealer to follow a more targeted strategy. LPL has the track record and scale, however, to suggest that it can continue to grow and succeed across a wide spectrum of the industry.