Wealthfront Corporation

04/24/2026 | Press release | Distributed by Public on 04/24/2026 14:26

Annual Report for Fiscal Year Ending January 31, 2026 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and operating results should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this Form 10-K. A discussion of the results of operations for fiscal year 2025 compared to fiscal year 2024 can be found in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our final prospectus filed with the SEC on December 12, 2025. There have been no material changes to those results since that filing. In addition to our historical operating results and financial position, this discussion contains forward-looking statements that are subject to risks and uncertainties. You should read the sections titled "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" included elsewhere in this Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our fiscal year ends on January 31, and our fiscal quarters end on April 30, July 31, October 31, and January 31.
Company Overview
Wealthfront is a technology-driven financial solutions platform specifically engineered to help digital native generations build long-term wealth through a broad, automated suite of investment, cash management, financial planning and borrowing and lending products. As of January 31, 2026, our platform served 1.4 million funded clients and had $94.1 billion in platform assets reflecting the deep trust we have established through fundamentally aligned incentives and a commitment to our clients' financial success.
Our business model is designed to optimize for our clients' success. Our focus on delivering fully automated services results in being one of the lowest cost producers in each category in which we participate. We share the savings directly with our clients, significantly reducing their fees, improving their financial outcomes, and enhancing their trust in us. This trust leads clients to add more money to our platform as they save, adopt new products and refer their friends, family, and co-workers. Our cost structure and our organic growth are business model advantages, and have enabled us to achieve our historic profitability, which allows us to further invest in our platform.
Our revenue, earned primarily from platform asset-based fees, grows as clients' wealth increases and they trust us with more assets. This aligns our incentives directly with our clients' long-term financial success, allowing us to focus solely on growing and maintaining their wealth. We primarily generate revenue from cash management and investment advisory products. Cash management revenue is primarily earned from fees received for the delivery of cash management services, including our cash sweep program.2 Investment advisory revenue consists of fees charged for investment advisory and portfolio management services. Investment advisory fees are earned based on the market value, less fee waivers, of investment advisory assets. Other revenue primarily consists of fees earned from clients' borrowings on margin and proxy distribution revenue earned through a partnership with a third-party investor communications company.
2 Wealthfront is not a bank, and we do not provide banking services or products directly to our clients. Clients are notified, via our website (including our Wealthfront Cash Account product page and Help Center), disclaimers included in certain advertising materials, legal disclosures provided on client account pages, and Wealthfront Advisers LLC's Form ADV Part 2A Client Brochure, that Wealthfront does not provide direct banking services and such services are provided through third-party banking partners. Clients are able to view the names of our specific banking partners and the services which they provide on our website and certain disclosures.
Key Business Metrics
We monitor the following key business metrics to help us evaluate our business, identify trends, formulate business plans and make strategic decisions:
Fiscal Year Ended January 31,
2026 2025 $ Change % Change
Platform assets ($ millions) $ 94,106 $ 80,175 $ 13,931 17 %
Cash management 45,361 42,411 2,950 7 %
Investment advisory 48,745 37,764 10,981 29 %
Net deposits ($ millions) $ 6,659 $ 17,714 $ (11,055) (62) %
Funded clients (thousands) 1,417 1,212 205 17 %
Platform assets: We define "platform assets" as the total value of financial assets held by clients in their accounts as of a stated date on our platform. Net deposits and changes in value attributable to financial market performance are included in the change in platform assets in any given period. We further break down platform assets into two categories of products: cash management and investment advisory.
Platform assets were $94.1 billion as of January 31, 2026, an increase of $13.9 billion, or 17%, compared to January 31, 2025. The increase in platform assets was primarily due to a 7% year-over-year increase in cash management assets and a 29% year-over-year increase in investment advisory assets.
Net deposits: We define "net deposits" as the value of all assets clients have placed into products on our platform, net of withdrawals, over a defined period of time. We exclude changes in value attributable to financial market performance from this metric. We view net deposits as an important barometer of our ability to scale and grow organically and accumulate assets onto our platform. We view the relevant metric as net deposits on a platform-wide basis, not by individual product. Although net deposits can vary by product based on the economic environment, as described below, total net deposits provides a more comprehensive view of our growth because our platform offers diverse financial products that are designed to perform under a wide range of economic conditions, allowing the business to maintain resilience and increase total platform assets across market cycles and through extraordinary events.
Net deposits were $6.7 billion during the fiscal year ended January 31, 2026, a decrease of $11.1 billion, or 62%, compared to the prior fiscal year. The decline was primarily due to Cash Management net deposits as a lower absolute level of interest rates combined with Federal Reserve cuts toward the end of the fiscal year created a tough comparison to the prior fiscal year. When interest rates decline, we expect to see a slowdown in cash management asset growth but an increase in investment advisory asset growth, and vice versa. We refer to these periods as transition environments. Transition environments create an opportunity for us to grow cross product flows, that is cash management clients' cross account transfers to existing investment advisory accounts as well as cash management clients' cross product adoption of new investment advisory accounts, and vice versa. During the fiscal year ended January 31, 2026, we recorded the second-highest annual volume of cross product flows in our history enabling us to grow and retain platform assets through a transition environment.
Funded clients: We define "funded clients" as clients who, across all accounts, have a balance greater than zero as of the measurement date or had a balance greater than zero in at least one account at any time during the 45 consecutive calendar days ending as of the measurement date, including clients with a zero balance across all accounts as of the measurement date who met this criterion during that period. Individuals who shared funded joint accounts are each considered to be a separate funded client. The number of funded clients is as of a stated date and reflects our scale and monetization potential.
Funded clients were 1.4 million as of January 31, 2026, an increase of 0.2 million , or 17%, compared to January 31, 2025. The increase in funded clients was primarily due to an increase in new cash management clients.
Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDA Margin
We collect and analyze operating and financial data to evaluate the health of our business, allocate our resources, and assess our performance. In addition to total revenue, net income (loss) and other results under GAAP, we utilize non-GAAP calculations of adjusted earnings before interest, taxes, depreciation, and amortization ("Adjusted EBITDA"). Adjusted EBITDA is defined as net income (loss), excluding:(i) interest expenses, (ii) provision for (benefit from) income taxes, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) change in fair value of the convertible note, warrant liabilities, and SAFEs, and (vi) nonrecurring expenses, if any. The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, or because the amount and timing of these items is unpredictable, are not driven by core results of operations and render comparisons with prior periods and competitors less meaningful. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenue. We believe Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our business performance. Moreover, we have included Adjusted EBITDA and Adjusted EBITDA Margin in this Form 10-K because they are key measurements used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, identify trends affecting our business and perform strategic planning and annual budgeting.
The following table presents a reconciliation of net income (loss) and net income (loss) margin, the most directly comparable GAAP measures, to Adjusted EBITDA and Adjusted EBITDA margin, respectively:
Fiscal Year Ended January 31,
(in thousands, except percentages) 2026 2025
Net income (loss) $ (42,066) $ 194,447
Add:
Interest expenses 891 2,810
Provision for (benefit from) income tax (59,182) (55,218)
Depreciation and amortization of property, software, and equipment, net 7,397 6,236
EBITDA (non-GAAP) (92,960) 148,275
Stock-based compensation expense 259,824 9,364
Change in fair value of convertible note, warrant liabilities, and SAFEs (1,450) (14,951)
Employer payroll taxes on IPO-triggered vesting of equity awards 5,275 -
Adjusted EBITDA $ 170,689 $ 142,688
Total revenue 364,993 308,859
Net income (loss) margin (12) % 63 %
Adjusted EBITDA Margin 47 % 46 %
Components of Results of Operations
Revenue
Cash Management
Cash management primarily consists of fees earned from program banks in our cash sweep program with respect to clients' cash swept to each program bank ("Cash Account fees"). Cash Account fees are recognized daily and received on a monthly basis in arrears. We recognize Cash Account fees on a gross basis. We offer a referral incentive program for Cash Accounts whereby both the referred and referring
clients receive a promotional benefit on Cash Account balances for a limited period of time. Consideration paid, additional interest, to a referred client is accounted for as a reduction to Cash Account fees. Consideration paid, additional interest, to clients for referring a new client is accounted for as a marketing expense within our consolidated statements of operations. The amount of consideration paid in connection with Cash Account referrals through this promotional benefit program varies based on the Cash Account balance of each client participating in the program, as each such client receives a benefit in the form of an increased APY being passed along to that client for a period of time. From time to time we have also paid consideration to clients in connection with Cash Account referrals in the form of a fixed amount flat fee cash bonus.
Investment Advisory
Investment advisory consists of fees charged for investment advisory and portfolio management services. Investment advisory fees are earned based on a percentage applied to the market value, less fee waivers, of assets held in client accounts at the close of market. Investment advisory fees are recognized daily and charged to client accounts on a monthly basis in arrears. Advisory fee waivers are offered in connection with certain investing account referrals to each of the referred and referring clients on a portion of each such client's own investing account balance, and such advisory fee waivers are accounted for as a reduction to investment advisory fees. We may also pay consideration to new clients in connection with investing account referrals in the form of a partial deposit match on deposits placed in the new client's account within a specified period of time. Such consideration paid to a referred client is accounted for as a reduction to investment advisory fees, while the consideration paid to clients for referring a new client is accounted for as a marketing expense within our consolidated statements of operations.
Other Revenue
Other revenue primarily consists of net interest margin revenue and proxy distribution revenue. For the fiscal year ended January 31, 2026, other revenue decreased compared to the prior fiscal year due to the discontinuation of a product offering in November 2024.
Costs and Operating Expenses
Cost of revenue primarily consists of expenses related to cash management, brokerage platform, and data costs, inclusive of amortization of internally-developed software.
Cash management costs primarily consist of amounts paid to a third party for the administration of our cash sweep program and debit card platform costs. Brokerage platform costs primarily consist of clearing and execution, money movement, tax reporting, client account maintenance, and individual retirement accounts custodial expenses. Data costs primarily consist of amounts paid for access to real-time market data and account linking.
A large portion of our cost of revenue is variable and tied to Cash Account assets, new and existing clients and accounts, or money movement volumes. As the assets on our platform increase, the costs associated with maintaining and moving these assets to and from our platform also increase. We expect our cost of revenue to fluctuate from period to period and increase on an absolute basis as we grow. However, as a percentage of revenue our cost of revenue has declined and we expect our existing products' cost of revenue as a percentage of revenue to continue to decline in the long term as we benefit from the scalability of our platform.
Product Development
Product development expense primarily consists of personnel-related costs, including stock-based compensation, for engineers, data scientists, product managers, and designers, and allocated overhead as well as certain costs for cloud computing, and other costs incurred in connection with the development of our platform and new products as well as the improvement of existing products.
We expect product development expense to increase on an absolute basis in the future as we continue to invest in enhancements to our platform, develop new products and improve existing products to serve the needs of our clients. As a percentage of revenue, we expect product development expense to decrease in the long term as we benefit from the scalability of our platform.
General and Administrative
General and administrative expense primarily consists of personnel-related costs, including stock-based compensation, for executive management and administrative functions, including finance and accounting, legal and compliance, and people operations, as well as general corporate and director and officer insurance. General and administrative expense also includes certain professional services costs, allocated overhead, and other business costs.
We expect to incur additional expenses as a result of operating as a public company, including expenses to comply with the rules and regulations applicable to companies listed on a national securities exchange, expenses related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for general and director and officer insurance, investor relations, and professional services.
We expect general and administrative expenses to increase on an absolute basis to support the growth of our business. As a percentage of revenue, we expect general and administrative expense to decrease in the long term as we benefit from the scalability of our platform.
Marketing
Marketing expense primarily consists of performance and brand advertising, client referral costs, personnel-related costs, including stock-based compensation, and allocated overhead. Consideration paid to clients for referrals, including promotional incentives and cash awards, is recognized as a marketing expense as incurred. The consideration paid to the client for the act of referring another individual represents a distinct service provided by that client.
We intend to continue investing in marketing to support client growth and expect marketing expense to fluctuate on an absolute and percentage of revenue basis from period to period depending on the attractiveness of efficient client acquisition opportunities.
Operations and Support
Operations and support expense primarily consists of personnel-related costs, including stock-based compensation and allocated overhead, inclusive of amortization of internally-developed software costs.
We plan to continue to invest in operations and support expenses to adequately support significant client growth and expect operations and support to increase on an absolute basis. As a percentage of revenue, we expect operations and support expenses to decrease in the long term as we benefit from the scalability of our platform.
Interest Expense
Interest expense for the fiscal year ended January 31, 2026 primarily consists of commitment fees recognized as interest expense in connection with the our credit agreements with a third party, as defined in Note 7.- Financing Activities to the consolidated financial statements included in this Form 10-K. Interest expense for the fiscal year ended January 31, 2025 primarily consists of interest expense related to the loan agreement entered into in January 2022 with an investor and member of our board of directors to borrow up to $20.0 million (the "Bridge Loan"). We borrowed $10.0 million under the Bridge Loan in each of January 2022 and March 2022 for a total of $20.0 million. Borrowings under the Bridge Loan agreement accrued simple interest on the outstanding amounts at an interest rate of 10.0% per annum, based upon a year of 365 days and actual days elapsed. The Bridge Loan agreement was amended in August 2023 to extend the maturity date from April 2, 2024 to September 30, 2025 and allow for interest
to accrue on the outstanding balance of the Bridge Loan as of April 3, 2024 at a rate of 12.5% per annum, compounded annually from April 3, 2024 until September 30, 2025. The Bridge Loan was paid off in full in November 2024.
Other Expense (Income), Net
Other expense (income), net primarily consists of fair value changes arising from remeasurements of our convertible note, warrant liabilities, SAFEs, and dividend income from our money market sweep program.
Provision for (Benefit From) Income Taxes
The provision for (benefit from) income taxes primarily consists of federal, state and local, and foreign income taxes. Our effective tax rate fluctuates from period to period due to changes in the mix of income and losses in jurisdictions with a wide range of tax rates, changes resulting from the amount of recorded valuation allowance, permanent differences between GAAP and local tax laws, research and development tax credits, stock-based compensation, executive compensation, certain one-time items, and changes in uncertain tax positions related to research and development tax credits.
Results of Operations
The following table sets forth our consolidated statements of operations data for the periods indicated:
Fiscal Year Ended January 31,
(in thousands) 2026 2025
Revenue:
Cash management $ 271,700 $ 230,946
Investment advisory 91,899 73,045
Other revenue 1,394 4,868
Total revenue 364,993 308,859
Costs and operating expenses:
Cost of revenue $ 38,007 $ 30,964
Product development 212,437 64,515
General and administrative 149,128 29,092
Marketing 51,755 52,196
Operations and support 24,836 10,619
Total costs and operating expenses 476,163 187,386
Interest expense 891 2,810
Other expense (income), net (10,813) (20,566)
Income (loss) before income taxes
(101,248) 139,229
Provision for (benefit from) income taxes (59,182) (55,218)
Net income (loss)
$ (42,066) $ 194,447
The following table sets forth stock-based compensation expense for the periods indicated below:
Fiscal Year Ended January 31,
(in thousands) 2026 2025
Product development $ 127,414 $ 7,325
General and administrative 110,677 2,041
Marketing 8,472 536
Operations and support 13,261 1,099
Total stock-based compensation expense 259,824 11,001
Capitalized stock-based compensation expense - (1,637)
Total stock-based compensation expense, net of amounts capitalized $ 259,824 $ 9,364
During the fiscal year ended January 31, 2026, we recognized share-based compensation for awards with performance-based conditions that vested and settled upon completion of the IPO. During the fiscal year ended January 31, 2025, share-based compensation for these awards was not yet recognized because the qualifying event, such as an IPO, had not occurred and therefore could not be considered probable. See Note 12. - Stock-Based Compensation of our consolidated financial statements included in this Form 10-K for more information.
The following table sets forth the components of our consolidated statements of operations data, for each of the periods presented, as a percent of revenue:
Fiscal Year Ended January 31,
(as a percentage of revenue)
2026 2025
Revenue:
Cash management 75 % 74 %
Investment advisory 25 % 24 %
Other revenue - % 2 %
Total revenue 100 % 100 %
Costs and operating expenses:
Cost of revenue 10 % 10 %
Product development 58 % 21 %
General and administrative 41 % 9 %
Marketing 14 % 17 %
Operations and support 7 % 3 %
Total costs and operating expenses 130 % 60 %
Interest expense - % 1 %
Other expense (income), net (3) % (7) %
Income (loss) before income taxes
(27) % 46 %
Provision for (benefit from) income taxes (16) % (18) %
Net income (loss)
(11) % 64 %
Comparison of the Fiscal Years Ended January 31, 2026 and January 31, 2025
Total Revenue
Fiscal Year Ended January 31,
(in thousands, except percentages) 2026 2025 $ Change % Change
Cash management $ 271,700 $ 230,946 $ 40,754 18 %
Investment advisory 91,899 73,045 18,854 26 %
Other revenue 1,394 4,868 (3,474) (71) %
Total revenue $ 364,993 $ 308,859 $ 56,134 18 %
Total revenue increased by $56.1 million, or 18% for the fiscal year ended January 31, 2026 compared to the prior fiscal year, primarily driven by an increase in cash management and investment advisory assets.
Cash Management3
Fiscal Year Ended January 31,
(in millions, except annualized rate and percentages) 2026 2025 Change % Change
Cash management assets (off-balance sheet), beginning of the period $ 42,411 $ 29,361 $ 13,050 44 %
Cash management assets (off-balance sheet), end of the period 45,361 42,411 2,950 7 %
Average (1)
43,886 35,886 8,000 22 %
Cash management revenue 271.7 230.9 40.8 18 %
Annualized cash management fee rate (2)
0.62 % 0.64 % (0.02) % (4) %
_______________
(1)Average balance rows represent the simple average of the beginning of period and end of period balances.
(2)Annualized cash management fee rate is calculated by annualizing revenue for the given period and dividing by the applicable average asset balance.
Cash management revenue increased by $40.8 million, or 18%, for the fiscal year ended January 31, 2026 compared to the prior fiscal year. The increase in cash management revenue was primarily attributable to a 22% increase in the average balance of cash management assets for the fiscal year ended January 31, 2026 compared to the prior fiscal year. The annualized cash management fee rate declined by 4% for the fiscal year ended January 31, 2026 compared to the prior year. The compression in our cash management fee rate during the period primarily resulted from two factors: our strategic practice of maintaining client interest rates for a standard grace period (typically seven calendar days) following a Federal Reserve rate cut, and the inherent mathematical impact of converting annual percentage rates (APR) to annual percentage yields (APY) in a declining rate environment. These temporary yield protections are designed to enhance client trust and retention, though they result in a short-term reduction in the net fee captured.
Investment Advisory4
Fiscal Year Ended January 31,
(in millions, except annualized rate and percentages) 2026 2025 Change % Change
Investment advisory assets (off-balance sheet), beginning of the period $37,764 $28,240 $9,524 34 %
Investment advisory assets (off-balance sheet), end of the period 48,745 37,764 10,981 29 %
Average(1) 43,255 33,002 10,253 31 %
Investment advisory revenue 91.9 73.0 18.9 26 %
Annualized investment advisory fee rate (2) 0.21 % 0.22 % (0.01) % (4) %
_______________
(1)Average balance rows represent the simple average of the beginning of period and end of period balances.
(2)Annualized investment advisory fee rate is calculated by annualizing revenue for the given period and dividing by the applicable average asset balance.
Investment advisory revenue increased by $18.9 million, or 26%, for the fiscal year ended January 31, 2026 compared to the prior fiscal year. The increase in investment advisory revenue was primarily driven by a 31% increase in the average balance of investment advisory assets for the fiscal year ended January 31, 2026 compared to the prior fiscal year. The annualized investment advisory fee rate declined
3 We accrue and/or recognize cash management revenue on a daily basis. The chart shows resulting averages for the periods presented.
4 We accrue and/or recognize investment advisory revenue on a daily basis. The chart shows resulting averages for the periods presented.
by 4% for the fiscal year ended January 31, 2026, compared to the prior fiscal year. The annualized investment advisory fee rate for the fiscal year ended January 31, 2026 was consistent with the prior year when using the daily average balance instead of the simple average. Utilizing daily average balances neutralizes the impact of significant investment advisory asset appreciation and net deposits that were concentrated in the latter portion of the reporting period.
Other Revenue
Other revenue decreased by approximately $3.5 million, or 71% for the fiscal year ended January 31, 2026 compared to the prior fiscal year. The decline in other revenue was primarily due to the discontinuation of a product offering in November 2024.
Total Costs and Operating Expenses
Fiscal Year Ended January 31,
(in thousands, except percentages) 2026 2025 $ Change % Change
Cost of revenue $ 38,007 $ 30,964 $ 7,043 23 %
Product development 212,437 64,515 147,922 229 %
General and administrative 149,128 29,092 120,036 413 %
Marketing 51,755 52,196 (441) (1) %
Operations and support 24,836 10,619 14,217 134 %
Total costs and operating expenses $ 476,163 $ 187,386 $ 288,777 154 %
Cost of Revenue
Cost of revenue increased by $7.0 million, or 23%, for the fiscal year ended January 31, 2026 compared to the prior fiscal year. The increase was primarily due to:
•an increase of $3.2 million in cash management costs for the fiscal year ended January 31, 2026 compared to the prior fiscal year. The increase in cash management costs was primarily due to increased cash assets held by clients in the cash sweep program;
•an increase of $2.3 million in brokerage platform fees for the fiscal year ended January 31, 2026 compared to the prior fiscal year. The increase in brokerage platform costs was primarily due to an increase in money movement volumes, clients and accounts; and
•an increase of $1.6 million in other cost of revenue for the fiscal year ended January 31, 2026 compared to the prior fiscal year due primarily to increased amortization of internally developed software.
See the section titled "Components of Operations-Costs and Operating Expenses" for additional information.
Product Development
Product development expenses increased by $147.9 million, or 229%, for the fiscal year ended January 31, 2026 compared to the prior fiscal year. The increase was primarily due to an increase of $120.1 million in stock-based compensation due to IPO-triggered vesting of equity awards during the period. The increase was also due to an increase of $26.3 million in personnel-related expenses due to increased headcount,
General and Administrative
General and administrative expenses increased by $120.0 million, or 413%, for the fiscal year ended January 31, 2026 compared to the prior fiscal year. The increase was primarily due to an increase of $108.6 million in stock-based compensation due to IPO-triggered vesting of equity awards during the
period. The increase was also due to an increase of $5.3 million in personnel-related expenses due to increased headcount and an increase of $3.6 million in professional fees.
Marketing
Fiscal Year Ended January 31,
(in thousands, except percentages) 2026 2025 $ Change % Change
Performance and brand advertising 27,048 30,953 $ (3,905) (13) %
Client referral costs 8,626 12,799 (4,174) (33) %
Personnel-related costs 13,429 4,284 9,145 213 %
Other marketing 1,958 3,619 (1,661) (46) %
Allocated overhead 695 541 154 28 %
Total $ 51,755 $ 52,196 $ (441) (1) %
Marketing expenses decreased by $0.4 million, or 1%, for the fiscal year ended January 31, 2026 compared to the prior fiscal year. The decrease was primarily due to a decrease of $8.1 million in advertising and client referral costs for the fiscal year ended January 31, 2026 compared to the prior fiscal year, partially offset by an increase of $7.9 million in stock-based compensation due to IPO-triggered vesting of equity awards.
Operations and Support
Operations and support expenses increased by $14.2 million, or 134%, for the fiscal year ended January 31, 2026 compared to the prior fiscal year. The increase was primarily due to an increase of $12.2 million in stock-based compensation due to IPO-triggered vesting of equity awards as well as an increase of $2.1 million in personnel-related expenses due to increased headcount.
Interest Expense
Fiscal Year Ended January 31,
(in thousands, except percentages) 2026 2025 $ Change % Change
Interest expense $ 891 $ 2,810 $ (1,919) (68) %
Interest expense decreased by $1.9 million, or 68%, for the fiscal year ended January 31, 2026 compared to the prior fiscal year. The decrease was primarily due to the repayment of the Bridge Loan in November 2024.
Other Expense (Income), Net
Fiscal Year Ended January 31,
(in thousands, except percentages) 2026 2025 $ Change % Change
Other expense (income), net $ (10,813) $ (20,566) $ 9,753 47 %
Other expense (income), net increased by $9.8 million, or 47%, for the fiscal year ended January 31, 2026 compared to the prior fiscal year. The increase was primarily due to an increase of $13.5 million in fair value change in convertible note, warrant liabilities, and SAFEs partially offset by an increase of $3.7 million in dividend income from corporate cash swept into a money market fund.
Provision for (Benefit From) Income Taxes
Fiscal Year Ended January 31,
(in thousands, except percentages) 2026 2025 $ Change % Change
Provision for (benefit from) income taxes $ (59,182) $ (55,218) $ (3,964) NM
Effective income tax rate (58.6) % (39.7) %
The provision for (benefit from) income taxes decreased by $4.0 million for the fiscal year ended January 31, 2026 compared to the prior fiscal year, primarily due to the income tax benefit recorded on pre-tax losses for the fiscal year ended January 31, 2026, compared to the release of the valuation allowance on our U.S. federal and state deferred tax assets for the fiscal year ended January 31, 2025. For additional information, refer to Note 14. - Income Taxes to our consolidated financial statements included in this Form 10-K.
Liquidity and Capital Resources
Since inception, prior to our IPO, we have financed operations primarily through issuances of redeemable convertible preferred stock, borrowings, and cash flow from operating activities. On December 15, 2025, we completed our IPO, in which we issued 21,468,038 shares of common stock at a public offering price of $14.00 per share, resulting in net proceeds to us of approximately $282.1 million after deducting underwriting discounts and commissions but before deducting net settlement of equity awards in connection with the IPO and offering expenses payable by us. In addition, selling stockholders sold 13,147,346 shares of common stock in the IPO. We did not receive any proceeds from the sale of shares of common stock by selling stockholders.
As of January 31, 2026, our primary sources of liquidity were our unrestricted cash and cash equivalents of $440.8 million.
As of January 31, 2026, we were party to a credit agreement with a third-party financial institution to provide a revolving line of up to $250.0 million with a maturity date of October 13, 2028 (the "Amended Revolver"). No amounts were outstanding under the Amended Revolver as of January 31, 2026
Based on our current level of operations, we believe our available cash and cash provided by operations will be adequate to meet our future liquidity needs for at least the next 12 months. Our future capital requirements and the adequacy of available funds will depend on many factors, including, but not limited to our growth, our ability to attract and retain platform assets, efforts to develop and improve our platform, the growth of new and existing products, marketing activities, potential merger and acquisition activity, and other strategic initiatives.
Borrowings
Revolving Credit Facility
On October 31, 2024, we entered into a credit agreement (the "Credit Agreement") with Wells Fargo Bank, N.A., as administrative agent, Wells Fargo Securities, LLC, as sole lead arranger and sole bookrunner, the letter of credit issuers from time to time party thereto, and the lenders from time to time party thereto to provide a revolving line of up to $50.0 million with a maturity date of October 30, 2025. On October 14, 2025, the Credit Agreement was amended and restated (the "Amended and Restated Credit Agreement") to provide for a revolving credit facility of up to $250.0 million, including a subfacility of up to $25.0 million for letters of credit. The Amended Revolver provided us with the right to increase commitments under the Amended Revolver in an aggregate principal amount not to exceed $100.0 million.
Loans under the Amended Revolver will incur interest, at our option at a rate per annum equal to either (i) a base rate determined by reference to the highest of (x) prime rate, (y) the federal funds
effective rate plus 0.50%, and (z) the adjusted daily Secured Overnight Financing Rate ("SOFR") plus 1.00%, in each case plus the applicable interest margin, or (ii) the adjusted daily SOFR plus the applicable interest margin. The applicable interest margin for base rate loans ranges from 0.50% per annum to 1.00% per annum, and the applicable interest margin for adjusted daily SOFR loans ranges from 1.50% per annum to 2.00% per annum, in each case based on our consolidated total net leverage ratio. Additionally, we will be required to pay commitment fees of 0.25% per annum on the undrawn portion of the commitments under the Amended Revolver based on a consolidated total net leverage ratio less than 2.00 to 1.00, which increases to 0.375% per annum based on a consolidated total net leverage ratio greater than or equal to 2.00 to 1.00 but less than 3.00 to 1.00 and 0.50% per annum based on a consolidated total net leverage ratio greater than or equal to 3.00 to 1.00.
The Amended and Restated Credit Agreement contains financial covenants that require us (i) not to exceed a maximum consolidated total net leverage ratio of 3.50 to 1.00, (ii) to have a consolidated fixed charge coverage ratio of at least 1.25 to 1.00, and (iii) to have a tangible net worth of at least $200 million, in each case as of the end of each fiscal quarter. The Amended and Restated Credit Agreement also contains customary representations and customary affirmative and negative covenants (including restrictions on indebtedness, liens, investments, asset sales or dispositions, affiliate transactions, and certain payments, each subject to customary exceptions and baskets) and customary events of default (including, among other things, non-payment of obligations, inaccuracy of representation or warranty, non-performance of covenants and obligations, default on other material debt or hedging agreements, change of control, bankruptcy, or insolvency, ERISA events, material judgments, and actual or asserted invalidity or unenforceability of any financing documentation or liens securing obligations under financing documentation). The obligations under the Amended Revolver are guaranteed by certain wholly owned subsidiaries, including Wealthfront Advisers LLC and Wealthfront Software LLC, and subject to certain customary and other exceptions, are secured by liens on substantially all of our and the guarantors' assets. The Amended Revolver is not guaranteed by Wealthfront Brokerage LLC, Wealthfront Home Lending LLC, or Wealthfront Strategies LLC, or secured by a lien on any of their assets. The Amended Revolver matures on October 13, 2028.
On December 5, 2025, we drew $200.0 million on the Amended Revolver in order to pay $140.9 million of anticipated tax withholding, inclusive of both employee and employer payroll taxes, and remittance obligations in connection with the RSU Net Settlement and used a portion of the net proceeds from the IPO to repay such indebtedness. The $140.9 million of anticipated tax withholding and remittance obligations in connection with the RSU Net Settlement reduced the net proceeds from the IPO that we retained. No amounts were outstanding under the Amended Revolver as of January 31, 2026.
Cash Flows
The following table presents summarized consolidated cash flow information for the periods presented (in thousands):
Fiscal Year Ended January 31,
(in thousands, except percentages) 2026 2025
Net cash provided by operating activities $ 152,189 $ 123,150
Net cash used in investing activities (1,138) (5,843)
Net cash provided by (used in) financing activities 148,186 (58,546)
Operating Activities
Cash provided by operating activities was $152.2 million for the fiscal year ended January 31, 2026, primarily due to non-cash adjustments of $210.2 million, offset by net loss of $42.1 million and $15.9 million of changes in operating assets and liabilities. Non-cash adjustments of $210.2 million primarily reflect deferred income taxes, stock-based compensation, depreciation and amortization, non-cash lease expense, and fair value changes.
Cash provided by operating activities was $123.2 million for the fiscal year ended January 31, 2025, primarily due to the net income of $194.4 million and changes in operating assets and liabilities of $10.0 million, offset by $54.2 million non-cash adjustments. Non-cash adjustments of $54.2 million primarily reflect deferred income taxes, stock-based compensation, depreciation and amortization, non-cash lease expense, and fair value changes.
Investing Activities
Cash used in investing activities was $1.1 million and $5.8 million, respectively, for the fiscal year ended January 31, 2026 and January 31, 2025, primarily due to $1.1 million of purchase of property, software, and equipment in the fiscal year ended January 31, 2026 and capitalized internally developed software of $5.3 million in the fiscal year ended January 31, 2025, respectively.
Financing Activities
Cash provided by financing activities was $148.2 million for the fiscal year ended January 31, 2026, primarily due to net proceeds from the issuance of common stock related to the IPO of $282.1 million, the issuance of common stock related to the ESPP of $0.2 million, and the exercise of stock options of $12.4 million, offset by taxes paid related to the net settlement of RSUs of $136.9 million, representing employee tax obligations, and equity issuance costs of $9.2 million.
Cash used in financing activities was $58.5 million for the fiscal year ended January 31, 2025, primarily due to repayment of our outstanding borrowings of $29.1 million and repurchases of common stock of $37.0 million.
Share Repurchase Program
In March 2026, our board of directors approved a share repurchase program with authorization to purchase up to $100.0 million of our outstanding common stock. Repurchases under the share repurchase program may be made in the open market, in privately negotiated transactions, or by other methods, with the amount and timing of repurchases to be determined at our discretion, depending on market conditions and corporate needs. Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Exchange Act. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of our shares under this authorization. The share repurchase program does not obligate us to acquire any particular amount of our common stock, and may be modified, suspended, or terminated at any time at the discretion of our board of directors. We expect to fund repurchases with existing cash and cash equivalents and cash from operations.
Regulatory Capital Requirements
One of our subsidiaries, Wealthfront Brokerage LLC, is a broker-dealer subject to the SEC Uniform Net Capital Rule (Rule 15c3-1 under the Exchange Act), administered by the SEC and FINRA, which requires the maintenance of minimum net capital, as defined in SEC Rule 15c3-1. Net capital and the related net capital requirements may fluctuate on a daily basis. Wealthfront Brokerage LLC computes net capital under the alternative method as permitted by SEC Rule 15c3-1. Under the alternative method, Wealthfront Brokerage LLC is required to maintain minimum net capital equal to the greater of $250,000 or 2.0% of aggregate client debits (e.g., client-related receivables) as computed per Rule 15c3-3's reserve formula. As of January 31, 2026, Wealthfront Brokerage LLC's net capital was $150.3 million, which exceeded the alternative method minimum net capital requirement by $145.2 million.
Contractual Obligations
Leases
Our principal contractual obligations as of January 31, 2026 include payments on minimum lease payments for operating leases. See Note 6. - Leases to the consolidated financial statements for the
fiscal years ended January 31, 2026 and 2025 included in this Form 10-K. As of January 31, 2026, the total future minimum lease payments for operating leases was $11.1 million.
Purchase Commitments
We also enter into guarantees and other similar arrangements in the ordinary course of business. For information on these arrangements, see Note 8. - Commitments and Contingencies to the consolidated financial statements for the fiscal years ended January 31, 2026 and 2025 included in this Form 10-K. As of January 31, 2026, our non-cancelable purchase commitments primarily relate to our cloud computing services consisting of total future minimum service payments of $14.2 million.
Off-Balance Sheet Arrangements
We did not have, and we do not currently have, any off-balance sheet financing arrangements, as defined in Regulation S-K, during the periods presented that have or are reasonably likely to have a current or future material effect on our financial condition, changes in our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources.
Recent Accounting Pronouncements
See Note 2. - Summary of Significant Accounting Policies to the consolidated financial statements included in this Form 10-K for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this Form 10-K.
Critical Accounting Policies and Estimates
Management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements and the related notes thereto, which have been prepared in accordance with GAAP. In preparing the consolidated financial statements, we apply accounting policies and estimates that affect the reported amounts and related disclosures. Inherent in such policies are certain key assumptions and estimates made by management, which we believe best reflect our underlying business and economic conditions. Our estimates are based on historical experience and various other factors and assumptions that we believe are reasonable under the circumstances. We regularly re-evaluate our estimates used in the preparation of the consolidated financial statements based on our latest assessment of the current and projected business and economic environment. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these estimates.
Income Taxes
We make significant judgments and estimates to determine any valuation allowance recorded against deferred tax assets. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent we believe that they will not be realized. We consider many factors when assessing the likelihood of future realization of our deferred tax assets including, but not limited to, historical cumulative loss experience and expectations of future earnings, tax planning strategies, and the carry-forward periods available for tax reporting purposes. Our judgment regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute business plans and/or tax planning strategies. Should there be a change in the ability to recover deferred tax assets, our tax provision would increase or decrease in the period in which the assessment is changed.
We recognize a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized. We account for uncertain tax positions as a component of income tax expense or benefit. We make adjustments to these uncertain tax positions in accordance
with applicable income tax guidance and based on changes in facts and circumstances. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact to our consolidated financial statements and operating results.
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